Slide 1: Q1 2015 conference call
Q1 2015 conference call
Slide 2: Forward-looking statements
2 This presentation contains forward-looking statements. Examples of such forward-looking statements include, but are not limited to: (i) statements regarding the Group’s results of operations and financial condition, (ii) statements of plans, objectives or goals of the Group or its management, incl
Slide 3: Agenda
3 • Brian Purves, Chief Executive • Q1 2015 overview • Market situation • Divisional performance • Andy Beaden, Group Finance Director • Quarterly earnings review • Liquidity and capital resources • Brian Purves • Summary • Outlook • Questions? © 2015 Luxfer Group Limited, All Rights Reserved
Slide 4: Q1 2015 overview: revenue and profitability
4 • Revenue • $116.9m compared to $123.3m in Q1 2014. • FX translation differences reduced revenue by $8.6m. • Rare earth surcharge now nil—was $0.9m in Q1 2014. • Luxfer Magtech added $7.1m, and AF revenues were down $7.1m. • Other trading revenues up $3.1m. • Profitability • Trading profit $10.5m,
Slide 5: Market situation
5 • Underlying strengthening in certain key markets; continued weakness in AF; different timing of certain Elektron revenues. • Demand has improved for SCBA composite cylinders with year-on-year growth as the North American market recovers from regulatory issues of 2014. • Continued low oil price ha
Slide 6: Rationalization of AF manufacturing
6 • During Q1 we have established plans to rationalize our AF manufacturing to reduce break-even point in the face of continued weak demand and low oil price. • Utah manufacturing facility mothballed and employees laid off. • Type 4 AF cylinder production to be focused on Riverside, California, plan
Slide 7: Impairment and restructuring costs
7 • Q1 – Decision to rationalize facilities results in need to impair certain assets as a post-balance sheet adjustment (non-cash $7.5m). • Manufacturing assets not being transferred elsewhere and intangibles. • Certain inventories. • Q1 – Planned workforce reductions already announced and/or implem
Slide 8: Outlook for AF operations
8 • Outlook for AF operations • Near-term benefit from closure of Utah and consolidation into Riverside. • Some near-term benefit from lower headcount in Germany, and by year-end from planned further consolidation of manufacturing facilities. • Overall objective to be able, post restructuring, to br
Slide 9: Elektron revenue analysis
9 • Underlying Q1 revenue decreased by Elektron $1.7m or 2.8% compared to Q1 2014. Q1 $m • Luxfer Magtech added $7.1m. Net revenue 56.3 RE surcharge 0.9 • Higher demand for recycling and 2014 Revenue analysis 57.2 commercial alloys offset lower sales Changes i n period: of high-performance aerospace
Slide 10: Gas Cylinders revenue analysis
10 Gas • Q1 underlying revenue (excluding Cylinders FX translation) down $2.3m or 3.8% Q1 $m on Q1 2014. Net revenue 66.1 • AF revenue down 7.1m or 67%. RE surcharge -‐ 2014 Revenue analysis 66.1 • Non-AF revenue up 4.8m or 9.8%. Changes i n period: • Demand is improving for our SCBA FX translation
Slide 11: Magnesium alloys for aircraft seating and AF Type 4 cylinders
11 • Magnesium alloys for aircraft seating • Market development work continues. • At the April Hamburg Aircraft Interiors Expo, one aircraft seat manufacturer publicly exhibited a prototype seat containing our magnesium alloys, and two other seat companies privately exhibited prototypes containing o
Slide 12: Synermag bio-absorbable alloys and zirconium sorption technology
12 • Synermag® bio-absorbable medical alloys • Our partner in the biomedical industry reported good progress with medical trials of an in-body device intended to support a request for CE (Conformité Européenne) approval. • In support of this project, we have now qualified our medical alloy productio
Slide 13: © 2015 Luxfer Group Limited, All Rights Reserved
13 © 2015 Luxfer Group Limited, All Rights Reserved
Slide 14: Group revenue analysis
14 Gas Elektron Cylinders Group Q1 Q1 Q1 $m $m $m Net revenue 56.3 66.1 122.4 RE surcharge 0.9 -‐ 0.9 2014 Revenue analysis 57.2 66.1 123.3 Changes i n period: FX translation (3.2) (5.4) (8.6) Rare e arth surcharge (0.9) -‐ (0.9) Luxfer Magtech 7.1 -‐ 7.1 Trading movements (1.7) (2.3) (4.0) Net r
Slide 15: Q1 2015 vs Q1 2014 revenue
15 Q1 2015 Q1 2014 $116.9 million $123.3 million © 2015 Luxfer Group Limited, All Rights Reserved
Slide 16: Trading profit and adjusted EBITDA
16 2015 2014 Trading profit $M Q1 Q1 Gas Cylinders Trading profit $M 1.3 1.6 ROS % 2.2% 2.4% Elektron Trading profit $M 9.2 10.7 ROS % 15.7% 18.7% GROUP Trading profit $M 10.5 12.3 ROS % 9.0% 10.0% Changes for Gas Cylinders (18.8%) 2015 v 2014 Elektron (14.0%) GROUP (14.6%) N.B. trading profit is Lu
Slide 17: Income statement and net income
17 2015 2014 Variance Q1 $m Q1 Q1 $m % Revenue 116.9 123.3 (6.4) (5.2%) Costs of sales (90.8) (94.4) Gross margin 26.1 28.9 (2.8) (9.7%) Gross margin % 22.3% 23.4% Distribution costs (1.8) (2.1) Administrative e xpenses (13.8) (14.5) Share of results of joint ventures -‐ -‐ TRADING PROFIT 10.5 12.
Slide 18: Balance sheet movements
18 December Trading FX March 2014 Translation Rationalization 2015 $M $M $M $M $M Tangible Fixed Assets 143.8 (2.1) (4.5) (2.1) 135.1 Intangible Fixed Assets 93.3 (0.4) (2.3) (3.6) 87.0 Investments 7.4 0.5 (0.3) -‐ 7.6 Deferred Tax Assets 19.2 (1.3) (0.9) 1.6 18.6 Long term assets 263.7 (3.3) (8.0)
Slide 19: Cash flow
19 2015 2014 Q1 Q1 $m $m Operating profit 2.5 12.3 Depreciation & amortization 4.6 4.3 Non-‐cash restructuring 7.5 -‐ Share based compensation charges 0.3 0.3 Share of results of joint venture -‐ -‐ Increase i n assets classified as held for sale -‐ (1.2) Increase i n working capital (4.6) (12.
Slide 20: © 2015 Luxfer Group Limited, All Rights Reserved
20 © 2015 Luxfer Group Limited, All Rights Reserved
Slide 21: Divisional summary
21 • Gas Cylinders • With the exception of AF revenues, the Gas Cylinders Division had a stronger first quarter. • North American SCBA market showing signs of improvement on 2014. • Strong first quarter from Superform. • Elektron • Solid contribution from Luxfer Magtech. • Timing of industrial catal
Slide 22: Outlook: Elektron and Gas Cylinders
22 • Elektron • Remains highly profitable, and with a full year of contribution from our new Luxfer Magtech business (acquired July 29, 2014), we still expect a higher profit result from Elektron in 2015. • Improvement expected in the military powders sector after a difficult 2014. • We continue to
Slide 23: Group outlook
23 • Improvement expected in both Gas Cylinders (supported by AF rationalization) and Elektron (supported by full-year of Luxfer Magtech) • Continued focus on improving working capital turns. • Overall trading profit expected to be at least in line with current analyst consensus. • Continued milesto
Slide 24: © 2015 Luxfer Group Limited, All Rights Reserved
24 © 2015 Luxfer Group Limited, All Rights Reserved
Slide 25: © 2015 Luxfer Group Limited, All Rights Reserved
25 © 2015 Luxfer Group Limited, All Rights Reserved
Slide 26: Adjusted net income and EBITDA
26 2015 2014 Adjusted net income and EBITDA: Q1 Q1 $m $m Net (loss) / income for the period -‐ as reported (0.5) 7.2 Accounting charges relating to acquisitions and disposals of businesses Unwind of discount on contingent consideration 0.1 -‐ Acquisitions and disposals -‐ 0.2 Amortization on acqu
Slide 27: Segmental adjusted EBITDA and trading profit
27 Segmental adjusted EBITDA and trading profit: 2015 2014 Q1 Q1 Gas Cylinders Adjusted EBITDA $M 3.2 3.6 Other Share based compensation charges (0.1) (0.1) Depreciation and amortization (1.8) (1.9) Trading Profit $M 1.3 1.6 Elektron Adjusted EBITDA $M 12.2 13.3 Other Share based compensation charge
Slide 28: Return on invested capital (ROIC)
28 Return on invested capital (ROIC): 2012 (restated) 2013 2014 Q1 2014 Q1 2015 $M $M $M $M $M Trading profit -‐ per i ncome statement 68.5 59.2 44.8 12.3 10.5 Effective rate tax per income statement 28.8% 27.0% 19.6% 28.0% 28.0% 1 Notional tax (19.7) (16.0) (8.8) (3.4) (2.9) Trading profit after n