Luxfer Holdings Plc · NYSE:LXFR
Luxfer — Q4 2014 Earnings Presentation
33 slides from Luxfer's earnings presentation, 2015
Slide 1: Q4 2014 Conference Call
slide 1 Q4 2014 CONFERENCE CALL A global materials technology company LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 2: Forward-Looking Statements
slide 2 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 Group’s results of operations and financial condition, (ii) statements of plans, objectives or goals of
Slide 3: Agenda
slide 3 AGENDA • Brian Purves, Chief Executive – Q4 2014 and full-year overview – Market situation – Divisional performance • Andy Beaden, Group Finance Director – Quarterly and full-year earnings review – Liquidity and capital resources – Financial issues • Brian Purves, Chief Executive – Summary –
Slide 4: Q4 2014 overview
slide 4 Q4 2014 overview • Net revenue – Up 7.0% to $123.1m compared to $115.0m Q4 2013, and adjusted for FX translation, up 10.3%. – $8.2m from Luxfer Magtech acquisition. – $0.9m from Luxfer Utah acquisition. • Profitability – Trading profit $10.7m, down $4.3m on Q4 2013. • In line with expectatio
Slide 5: Q4 2014 overview
slide 5 Q4 2014 overview • Trading continued to be affected by disruption to some key North American markets and by continued weakness in European economies: – MSA announced regulatory approval for their G1 SCBA kit on November 21st – much later than expected. – Some manufacturers were still awaitin
Slide 6: 2014 overview
slide 6 2014 overview • Net revenue – Up 3.0% to $487.3m compared to $472.9m in 2013, and adjusted for FX translation, up 2.1%. – $14.7m from Luxfer Magtech acquisition. – $2.3m from Luxfer Utah acquisition. • Profitability – Trading profit $44.8m, down $14.4m on 2013. – Adjusted EBITDA $64.8m, down
Slide 7: 2014 overview
slide 7 2014 overview • Difficult year for Gas Cylinders, with SCBA market disrupted, particularly in the first half, and lower European medical demand. • AF market much weaker than prior year, increasingly hit by fall in oil prices. • Aluminum cylinder sales up, but margins still thinner than compo
Slide 8: Luxfer Magtech acquisition update
slide 8 Luxfer Magtech acquisition update • The acquisitions that formed Luxfer Magtech Inc. (LMI) have been successfully integrated into the Elektron Division. – $59.3m was paid, and with the acquired businesses having $4.0m of cash, the net cash cost was $55.3 million, with further deferred consid
Slide 9: Elektron Division
slide 9 ELEKTRON DIVISION • Underlying Q4 revenue (which excludes FX translation effects, acquisitions and rare earth (RE) surcharge) increased by $0.2 million (0.3%) compared to ELEKTRON Q4 2013. Q4 YTD $m $m – Q4 2014 rare earth surcharge was $0.7m lower Net revenue 50.9 211.3 than in Q4 2013, dow
Slide 10: Gas Cylinders Division
slide 10 GAS CYLINDERS DIVISION • Q4 underlying revenue (excluding FX translation and acquisitions) up $2.2 million or 3.5% on GAS CYLINDERS Q4 2013. Q4 YTD $m $m – SCBA improved, though sales were partly met through selling cylinders from stock rather Net revenue 64.1 261.6 than from production. RE
Slide 11: Update on selected strategic growth initiatives
slide 11 Update on selected strategic growth initiatives • Continued focus on moving forward with strategic growth projects. • Magnesium alloys for aircraft seating – After achieving our first magnesium usage in aircraft seating for a low-volume niche project, we continued working with several seat
Slide 12: Update on selected strategic growth initiatives
slide 12 Update on selected strategic growth initiatives • SmartFlow® and Intelligent Oxygen System™ – We made good progress in 2014 in ongoing development of our portable medical oxygen system featuring our ultra-lightweight composite cylinder technology and our patented SmartFlow® valve-regulator.
Slide 13: Andy Beaden, Group Finance Director
slide 13 GROUP FINANCE DIRECTOR ANDY BEADEN LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 14: Group revenue
slide 14 Group revenue Gas Elektron 2014 Cylinders 2014 Group 2014 Q4 YTD Q4 YTD Q4 YTD $m $m $m $m $m $m Net revenue 50.9 211.3 64.1 261.6 115.0 472.9 RE surcharge 1.0 8.4 ‐ ‐ 1.0 8.4 2013 Revenue analysis 51.9 219.7 64.1 261.6 116.0 481.3 Changes in period: FX translation (1.2) 2.4 (2.2) 1.9 (3.4)
Slide 15: Geographic sales trends
slide 15 Geographic sales trends Q4 2014 Q4 2013 $123.4 million $116.0 million LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 16: Trading profit and adjusted EBITDA analysis
slide 16 Trading profit and adjusted EBITDA analysis 2014 2014 2014 2014 2014 2013 2013 2013 2013 2013 Trading profit $M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Gas Cylinders Trading profit $M 1.6 1.7 1.7 0.9 5.9 5.2 4.8 4.2 4.8 19.0 ROS % 2.4% 2.6% 2.7% 1.4% 2.3% 7.6% 7.4% 6.5% 7.5% 7.3% Elektron Trading profit $M
Slide 17: Group trading profit 2013 v 2014
slide 17 Group trading profit 2013 v 2014 LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 18: Elektron trading profit 2013 v 2014
slide 18 Elektron trading profit 2013 v 2014 LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 19: Gas Cylinders trading profit 2013 v 2014
slide 19 Gas Cylinders trading profit 2013 v 2014 LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 20: Summary income statement
slide 20 Summary income statement 2014 2014 2014 2014 2014 2013 2013 2013 2013 2013 Variance Q4 $m Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $m % Revenue 123.3 121.9 120.9 123.4 489.5 122.4 123.0 119.9 116.0 481.3 7.4 6.4% Costs of sales (94.4) (94.6) (92.3) (95.3) (376.6) (94.1) (92.5) (90.9) (86.0) (363.5) Gross ma
Slide 21: Balance sheet analysis
slide 21 Balance sheet Luxfer December Trading FX Luxfer Utah MagTech December analysis 2013 Translation Acquisition Acquisition 2014 $M $M $M $M $M $M Tangible Fixed Assets 137.9 3.3 (5.7) 1.1 7.2 143.8 Intangible Fixed Assets 41.4 0.7 (2.9) 4.7 49.4 93.3 Investments 7.9 (0.2) (0.3) ‐ ‐ 7.4 Deferre
Slide 22: Cash flow
slide 22 Cash flow 2014 2014 2014 2014 2014 2013 2013 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $m $m $m $m $m $m $m $m $m $m Operating profit 12.3 10.4 10.0 8.2 40.9 14.5 15.1 13.7 13.2 56.5 Depreciation & amortization 4.3 4.3 4.6 4.9 18.1 3.7 3.9 4.1 4.1 15.8 Share based compensation charges 0.3 0.8
Slide 23: Return on invested capital
slide 23 Return on invested capital (2012 & 2011 restated for IAS 19 revised) Notes: 1. Return on invested capital (ROIC) is defined as : Trading profit X (1 - effective tax rate for the period) Invested capital 2. Invested capital is defined as shareholders’ equity plus debt less cash (“Net debt”).
Slide 24: Brian Purves, Chief Executive: Summary and Outlook
slide 24 CHIEF EXECUTIVE BRIAN PURVES SUMMARY AND OUTLOOK LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 25: Summary Q4 2014
slide 25 Summary Q4 2014 • Gas Cylinders – A particularly weak quarter, mainly due to losses in AF business stream, including impairments of stock and receivables. – U.S. SCBA market showing signs of returning to normality in final few weeks of the year. – Focus on stock reduction hurt profitability
Slide 26: Summary full year 2014
slide 26 Summary full year 2014 • Gas Cylinders – SCBA market disrupted all year, but increasingly less so as year progressed. – Problem has increasingly become lack of AF sales. – Collapse in price of oil has, in certain sectors, lengthened payback of investing in conversion to CNG. • Elektron – Sa
Slide 27: Outlook for 2015
Outlook for 2015 slide 27 • Elektron – Elektron Division remains highly profitable, and with a full year of contribution from our new Luxfer Magtech business (acquired July 29, 2014), we expect a higher profit result from Elektron in 2015. – Improvement expected in demand for military powders and mo
Slide 28: Group outlook for 2015
slide 28 Group outlook for 2015 – Because of continuing losses in our AF business, the lag on cost-saving initiatives in Gas Cylinders and other items, we expect Q1 to be the weakest quarter in 2015. Planned inventory reductions will also impact profit somewhat. – Weaker euro likely to progressively
Slide 29: Questions?
slide 29 QUESTIONS? LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 30: Appendices
slide 30 APPENDICES LUXFER GROUP © 2015 Luxfer Group Limited, All Rights Reserved
Slide 31: Reconciliation of non-GAAP measures: adjusted net income and EBITDA
slide 31 Reconciliation of non-GAAP measures Adjusted net income and EBITDA: 2014 2014 2014 2014 2014 2013 2013 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $m $m $m $m $m $m $m $m $m $m Net income for the period ‐ as reported 7.2 5.7 4.5 11.8 29.2 8.3 8.6 8.4 8.8 34.1 Accounting charges relating to acqui
Slide 32: Reconciliation of non-GAAP measures: segmental adjusted EBITDA
slide 32 Reconciliation of non-GAAP measures Segmental adjusted EBITDA and trading profit: 2014 2014 2014 2014 2014 2013 2013 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Gas Cylinders EBITDA $M 3.6 3.9 4.0 3.2 14.7 6.9 6.8 6.2 6.9 26.8 Other Share based compensation charges (0.1) (0.3) (0.4) ‐ (0.8) ‐ (0
Slide 33: Reconciliation of non-GAAP measures: ROIC
slide 33 Reconciliation of non-GAAP measures Return on invested capital (ROIC): 2011 2012 2013 Q4 2013 2014 Q4 2014 (restated) (restated) $M $M $M $M $M $M Trading profit ‐ per income statement 63.7 68.5 59.2 15.0 44.8 10.7 Effective rate tax per income statement 23.7% 28.8% 27.0% 16.2% 19.6% 3.3% N