Luxfer Holdings PLC · NYSE:LXFR
Luxfer — Q3 2023 Earnings Presentation
27 slides from Luxfer's earnings presentation, Oct 26, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
THIRD QUARTER 2023 EARNINGS PRESENTATION October 26, 2023 CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 1
Slide 2: Forward-Looking Statements
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 limite
Slide 3: Quarterly Highlights and Key Messages
Quarterly Highlights and Key Messages $M except per share Q3 2023 Q3 2022 CHANGE Sales $97.4 $100.2 (2.8%) Adj. EBITDA $6.0 $16.1 (62.7%) Adj. EBITDA Margin 6.2% 16.1% (990 bps) Adj. Diluted EPS $0.04 $0.35 (88.6%) Operating Cash Flow $11.5 $3.6 +219% Free Cash Flow $8.9 $1.3 +585% Net Debt $78.7 $7
Slide 4: Business Conditions Update
Business Conditions Update ▪ Fallout from U.S. Magnesium force majeure intensifying competitive pressures, especially affecting Graphic Arts in Europe ▪ New lower cost sources of Magnesium have been identified ▪ Lower priced Asia-based materials also impacting demand S U P P LY C H A I N ▪ Continue
Slide 5: Actions to Improve Performance
Actions to Improve Performance LU X F E R B U S I N E S S SYS T E M R ED U CI N G CO STS A N D D R I V I N G CA S H F LOW ▪ Reducing headcount, for example Graphic Arts and Magtech down by over 20%, as well in Cylinders ▪ Identified $750K productivity savings in Graphic Arts over 2023 & 2024 ▪ Simpl
Slide 6: Sales Performance by End Market
Sales Performance by End Market 41% 32% 27% DEFENSE, T R A N S P O R TAT I O N GENERAL T O TA L FIRST RESPONSE ( A LT E R N AT I V E F U E L , INDUSTRIAL & H E A LT H C A R E A E R O S PA C E , A U T O M O T I V E ) FY 2020 -6.4% -14.7% -18.0% -13.0% FY 2021 +5.9% +27.0% +15.5% +15.2% FY 2022 +5.6%
Slide 7: Q3 2023 Financial Bridge: Consolidated
Q3 2023 Financial Bridge: Consolidated Sales ($M) Adj. EBITDA ($M) Luxfer Consolidated Luxfer Consolidated -2.8% $0.1 $2.0 $0.9 $2.0 $4.9 $5.0 $2.1 $100.2 $16.1 -62.7% $97.4 $4.1 $6.0 Q3 2022 FX Price Volume/Mix Q3 2023 Q3 2022 FX Price Inflation Vol/Mix Other Q3 2023 Sales decreased by 2.8% from pr
Slide 8: Q3 2023: Segment Results
Q3 2023: Segment Results ELEKTRON GAS CYLINDERS Sales Adj. EBITDA Sales Adj. EBITDA Q3 2023 $52.7 $3.2 $44.7 $2.8 Q3 2022 $56.8 $12.7 $43.4 $3.4 Change -7.2% -74.8% 3.0% -17.6% Q 3 2 0 2 3 C O M M E N TA R Y ▪ Margin deterioration due to competitive ▪ Higher SCBA partially offset by lower sales of p
Slide 9: Balanced Approach to Capital Deployment
Balanced Approach to Capital Deployment ▪ Invested $2.5M in Q3, including hydrogen ‘bulk gas transport system’ facility in Nottingham, for a YTD total capex of $7.5M. REI NV EST MENT I N O RGANIC ▪ Investing thoughtfully in secular growth opportunities tied to niche GROWT H materials engineering foc
Slide 10: Updating 2023 EPS Guidance
Updating 2023 EPS Guidance FULL YEAR 2023 GUIDANCE ASSUMPTIONS Sales Growth Free Cash Flow Conversion - 5% to -7% 100% (incl. volume, price, and FX) excl. Exceptionals1 Adjusted Diluted EPS $0.51 - $0.56 Operating Working Capital % of Sales 27% to 29% LEVERAGE & LIQUIDITY Capex $10M - $11M (October
Slide 11: Comprehensive Strategic Review
Comprehensive Strategic Review AC C E L E R AT I N G A N D Comprehensive, portfolio-wide E X PA N D I N G O U R A N N UA L evaluation of all businesses, the capital S T R AT EG I C R E V I E W P R O C E S S structure, and available opportunities ▪ Board has engaged with leading global investment ban
Slide 12: Q&A
Q&A THIRD QUARTER 2023 EARNINGS PRESENTATION CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 12
Slide 13: Charting a Path to Value Creation
Charting a Path to Value Creation Luxfer Has Unique Industry Facing Supply We are Taking Actions to Position Serving Diverse, Chain Issues and Macro- Improve Profitability and Niche Applications economic Headwinds Unlock Value Unique customer value proposition Magnesium supply disruption Executing i
Slide 14: Appendices
APPENDICES Segment Financial Detail and Reconciliation of Non-GAAP Measures CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 14
Slide 15: Q3 2023: Elektron Segment Results
Q3 2023: ELEKTRON SEGMENT RESULTS Sales ($M) Adj. EBITDA ($M) -7.2% -74.8% $1.5 $0.4 $2.1 $3.5 $2.1 $12.7 $1.9 $56.8 $1.5 $52.7 $3.6 $3.2 Q3 2022 FX Price Volume/Mix Q3 2023 Q3 2022 FX Price Inflation Volume/Mix Other Q3 2023 CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELO
Slide 16: Q3 2023: Gas Cylinders Segment Results
Q3 2023: GAS CYLINDERS SEGMENT RESULTS Sales ($M) Adj. EBITDA ($M) +3.0% -17.6% $1.4 $1.4 $4.1 $3.1 $43.4 $44.7 $0.6 $0.5 $4.1 $0.5 $3.4 $2.8 Q3 2022 FX Price Volume/Mix Q3 2023 Q3 2022 FX Price Inflation Volume/Mix Other Q3 2023 CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DE
Slide 17: YTD Q3 2023: Consolidated Results
YTD Q3 2023: CONSOLIDATED RESULTS Sales ($M) Adj. EBITDA ($M) +0.8% -35.4% $14.1 $0.5 $2.0 $18.5 $18.5 $20.6 $7.7 $306.7 $309.1 $49.1 $7.1 $31.7 Q3 2022 FX Price Volume/Mix Q3 2023 Q3 2022 FX Price Inflation Volume/Mix Other Q3 2023 CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL
Slide 18: YTD Q3 2023: Elektron Segment
YTD Q3 2023: ELEKTRON SEGMENT Sales ($M) Adj. EBITDA ($M) -0.2% -45.3% $1.2 $6.2 $7.8 $0.1 $6.2 $11.8 $174.8 $174.4 $5.6 $39.3 $6.5 $21.5 Q3 2022 FX Price Volume/Mix Q3 2023 Q3 2022 FX Price Inflation Volume/Mix Other Q3 2023 CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELO
Slide 19: YTD Q3 2023: Gas Cylinders Segment
YTD Q3 2023: GAS CYLINDERS SEGMENT Sales ($M) Adj. EBITDA ($M) +2.1% +4.1% $3.2 $12.3 $6.3 $131.9 $134.7 $8.8 $0.4 $12.3 $2.1 $0.6 $9.8 $10.2 Q3 2022 FX Price Volume/Mix Q3 2023 Q3 2022 FX Price Inflation Volume/Mix Other Q3 2023 CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DE
Slide 20: Condensed Consolidated Statements of Income (Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) 1The calculation of earnings per share is performed separately for continuing and discontinued operations. As a result, the sum of the two in any particular period may not equal the earnings-per-share amount in total. 2The loss per share for di
Slide 21: Condensed Consolidated Balance Sheets (Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 18 21
Slide 22: Condensed Consolidated Statements of Cash Flows (Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 19 22
Slide 23: Reconciliation: Adjusted Net Income and Adjusted EPS
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE (UNAUDITED) (1) For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares outstanding during the financial year has been adjusted for the dilutive effect
Slide 24: Reconciliation: Adjusted EBITDA and Adjusted Effective Tax Rate
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: ADJUSTED EBITDA AND ADJUSTED EFFECTIVE TAX RATE (UNAUDITED) CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 21 24
Slide 25: Reconciliation: Net Debt Ratio and Free Cash Flow
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: NET DEBT RATIO AND FREE CASH FLOW (UNAUDITED) CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 22 25
Slide 26: Reconciliation: Operating Working Capital as % Annualized Net Sales
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: OPERATING WORKING CAPITAL AS A % ANNUALIZED NET SALES (UNAUDITED) CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 23 26
Slide 27: CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK
CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 27