Luxfer (LXFR) 30 Oct 242024 Q3 Earnings call transcript

Good morning, ladies and gentlemen. My name is Bo and I will be your conference operator today. Welcome, everyone, to Luxfer's Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Now at this time, I'll turn things over to Kevin Grant, Vice President of Investor Relations and Business Development at Luxfer. Kevin, please go ahead.

good and Bo you, morning, everyone. Thank Luxfer's to Third Quarter Call. Conference Earnings XXXX Welcome be results Luxfer's quarter morning, reviewing This we'll financial XX, ended XXXX. for September third the Executive by I'm Officer. Financial Butcher, joined to Steve today pleased our our be Chief Officer; Chief and Webster, Andy

note, accompanied in Please the the references Today's appendix at webcast can accessed financials a of by is to that non-GAAP presentation be luxfer.com. any reconciled are presentation.

are company's subject reminder that future any statements of expected begin, financial We we the the presentation results statements, whether uncertainties. to a further friendly and of as Before obligations X a or today's for events safe refer update to otherwise. future forward-looking made risks to forward-looking statement no harbor result details. Slide about undertake information, Please new any on

we call, recoveries business, Arts XXXX XXXX. providing the adjusted both and be legal excluding results, will XXXX third financial today's quarter Graphic and for expenses During

introduce X. me let CEO Please Andy go Butcher. please Now Andy, to Luxfer, Slide of turn ahead.

Kevin strong on market and Thank $X.X steady build us. the to continued also and million. sustained for improvements we've achieving while throughout We enhancing Luxfer New some revenue for property the Lakehurst, the Jersey our team this pleased adaptability sale organization. third efficiency announce improved profitability. joining and Thank In on established to year, the you positive conditions, capitalizing quarter, you, momentum the of morning, operational everyone. quality demonstrating I'm of the good

the sectors, First powders in by Healthcare particularly demand X.X% year-over-year. supported increase quarter and Our the Ready-to-Eat the lines. sales Meals product a for Defense, our This the at and in $XX.X representing came defense million, third in was Response

prospects into a sales QX several to potential margin yielding advantage improvements. expedited further of the contributed volumes and fourth, took by strong hurricanes the driven we customers who tactical their port from This and from supporting quarter the strikes. third orders of performance, Additionally, shift higher-than-anticipated

EBITDA adjusted is achieved over we XX.X% profitability, improvement year. of of an last a which $XX.X terms In million,

margin generated by cost growth, our also EBITDA driven This of reduction XX.X%. adjusted efficiency ongoing reaching We and operational efforts. result third was consecutive quarter our

for quarter further contributed our and net which cash reducing leverage to was the $XX.X X.Xx. to our operating sheet balance Our flow strong maintaining million,

we focus months are encouraged. deliver XXXX. a to elevated made The investments sets of closing puts year approach we track as So on on the full we and efficiencies in we notably have into X and strategic operational first that XXXX XXXX, our progress foundation the anticipate guidance us quarters firm an

as and of positioned make well challenges navigate am progress. most are to emerging the I to pleased market our We opportunities they with develop. recent

is best turn close Arts possible for business progress update has let's interested been good and to expected Slide generating Luxfer Graphic strategic are to specific business. on remain in a review securing although with on shareholders timely outcome The the half parties. we Arts profitability our our did XXXX. for expectations We fully in buyer the our sale engaged making now and with quick of divestiture identified meet cash, a not first the the originally of Now in other valuation a Graphic the X committed turning manner. and towards comprehensive to of focus now The

this strategic profitable encouraging. we continue Cylinders opportunities growth and by made we segments Meanwhile, costs advancements Elektron year by investments. executing enhancing been The our have Gas and reducing driven and innovation

for provide to XXXX. Steve conditions attentive the to call Steve? maximize remain in year a shareholder I'll also At into future We assessing updated our point, financial full dive and over deeper to results this value. the turn market guidance

on comparisons. non-GAAP by recoveries and from financial numbers third quarter an note the XXXX morning, are like excluding of Please to expenses adjusted everyone. results reviewing and basis, I'd the Graphic legal start XXXX the to Arts XXXX. good excluding business and for our Thanks, bridges or that consolidated Andy I the refer and

X. Now reflecting a gross margin Slide and million, mix. the quarter, was let's lower results. resulting Sales turn $XX.X profit XX.X%, were gross to third $XX.X input of favorable impressive In in we costs a million sales and delivered

showing Our came EBITDA with margins of in $XX.X million adjusted at XXX sequential basis improvement of XX.X%, a points.

million, flow $XX.X We sheet excluding driven million, share management. to the both cost strengthening flow operations XX% our management. ended our $X.XX, balance robust totaled Cash $XX debt million with effective X.Xx, Adjusted up the per highlighting to earnings cash with our leverage disciplined improving Arts. to capital free demonstrating to initiatives remained $X.X by further and approximately rose reduced year-over-year, approach restructuring quarter improved our net at from and Graphic profitability,

contribution Looking a for the at from million period was tailwind million and third compared revenue was $XX.X $XX.X our net a sales million exchange driven by adjustments. $X.X bridge, to same the quarter This million year. price $X.X the primarily last foreign in increase

in benefit reductions segment increases by Cylinders, continue Gas input we Elektron pass that from pricing costs. we offset our lower Note to through in as largely

from improvements $X.X Gas also in We offset by with a impact lower Cylinders. million volumes in Elektron experienced declines

bridge. turning Now profit the to

boost Our $XX.X year. related to million, costs. of magnesium from net EBITDA from QX up was adjusted $XX last in This improvement quarter a $X.X lower deflation, included third million million primarily

and adjustments. also from the volume impact benefited positive mix of We price improved

significant increase which prior million the in $X.X by pleased bottom in adding year, modest XXX improvement line. points sales, EBITDA by we rose relatively the over our to were approximately adjusted especially our basis the margin, Given

hurricane quarter, a of sequentially. Now This Sales third million customers of year-over-year Slide improvements consecutive both port a reflected Adjusted $XX.X in margin favorable also year-over-year operational pull a by let's EBITDA million, in margin up and X continued was improvements. growth, profitability. in This our efficiency sales, marks supported the the rebound ongoing by and reflecting some forward defense XX.X% recovery $X.X season. delivered of quarter a strong gains. and in detailed of the revenues strikes turn were Elektron's with financial X% quarter for XX.X%, to strong third and third In although gains anticipation review pricing demonstrating results. Elektron

from First early Ready-to-Eat markets. Defense, performance, efficiency, with appear success of Healthcare resilience. magnesium benefited and notable stronger industrial Meals contributions Demand strong stages results from RotaMag to while Response Catalysis in be Auto of a and was on the general in the weaker underscore Transportation markets recovery. segments powders innovation and offsetting sales, particularly focus our gradual Elektron's

a of normal sales. results. SCBA was review stability demonstrating some decrease to let's a Cylinders headwinds. reflecting financial Gas Slide Cylinders' year-over-year quarter Sales quarter Now but third for resilient turn X.X% detailed $XX.X for Gas performance the million, were X of levels with more despite

following point first the a EBITDA the XX.X%. well end Adjusted are as of as by $X.X improvement Indeed, primarily driven up SCBA with new closure tailwinds partial strong from established pricing XXX XXXX basis the at reached the XX.X% year-to-date California increase of in the performance benefits of The was margin of sales year-over-year contracts margins half. representing million, long-term operation. Pomona,

performance, the Healthcare market sales the of lower due Response First experienced in remained to care projects, quarter terms segment and timing demand steady. the Defense, though SCBA In health of

for the growth signs driving encouraging European demand stronger of market, saw cylinders. our industrial in also We

basis. anticipated as from Overall, the as and considerably a the benefiting long-term in gains. quarter, on Transportation, new from while remained initially efficiency year-to-date stability slower well year-to-date showing segment the is is pricing than Gas Cylinders steady agreements

will long-term especially initiatives, revenue increases. profitability that strategic We in drive growth clean our area the confident future of and are energy,

Now X year our an XXXX please for update financial turn to Slide on guidance. full

our XXXX As Arts a Graphic reminder, the guidance excludes business.

a EPS, guidance diluted adjusted both with we've by the granularity EBITDA view and clearer without core added an adjusted recoveries, nonrecurring our presenting quarter, providing This operations. for additional impact of of level cost of and legal

Excluding to diluted we and our of to legal EPS increased guidance anticipate and We to $X.XX legal outlook -- cost EPS cost adjusted even is adjusted recoveries, between million, EBITDA million $XX $XX is a higher $X.XX. diluted our adjusted $XX $X.XX. recoveries, Including ranging million. be $XX diluted from with to for EBITDA higher. Therefore, million increased now between now $X.XX adjusted our range

flow. free to specifically Turning cash

million We million. be $XX expect $XX to between and

net fee recoveries the from Jersey and the received business Lakehurst, Our the updated flow of improved benefits land includes free October. early performance, range cash proceeds in legal sale New

our working maintaining to sheet flow. and stability robust also underline we decrease supports to proceeds a sales So anticipate in will ratio opportunities, with commitment growth down debt-to-EBITDA our and X.Xx. ongoing our strategic investments continued This improvements these ongoing thoughtful cash balance These net financial and approximately free capital while for enhancing returning our debt shareholders. initiatives, paying allowing to improvements, capital

to Andy? Andy. I'd turn the Now call to back like

to some Steve. help will that Luxfer some Please now take to to sustainable growth. of the to Slide highlight future again want X. time with Thanks, I innovations drive turn you

which segment Business growth focus through Our of key the on is the innovation development, Luxfer System. is long-term products achieving and

strategy our of foundation the customer and is system business delivering the that remember growth. value will You sustainable for achieving

characterize drive strategic our and enthusiasm Last with time significant transition in energy over and is opportunities our intent remain in long-term we clean quarter, transportation, to We happening CNG especially the products potential hydrogen and growth the sectors. confident in shared our impactful the being surge expect shipment as to modules than Nottingham growth of gas bulk here, although CNG that the expectations for though, our alongside be XXXX. and next during in to other I our first gas from electrification would bulk call, trends. our new rather steady for In facility. I announce immediate for sales an the able

and smaller product innovation, represent our alloy, ranges LXX and want expanded medical to I X For our RotaMag HeaterMeals today, and commitments growth to cylinders that portfolio. updated spotlight

years, grown fuel First, for the in increasing performance, RotaMag that the and automotive as rapid annum adoption value growth automotive RotaMag. boost an X Sales This driven underscores over added materials. per last sustainability. option of the advanced lightweight, materials high-performance XX% have by efficiency market's demand

orders medical has to product from lightweight refills. delivery. presence This strengthened our XXXX. in for market significant than achieved XXXX partners, more this cylinders with global has logistics LXX efficient adoption, oxygen a care and solution doubling success health Second, delivering With provide LXX sales key cost from and industrial our savings notably secured

by QX, to am developments our that and ensuring features Business on strategy our growth proud and commitment profitable disaster such relief value affected been have in our responsive busier-than-normal important QX year be play supply inventories season. solutions chain. and especially hurricane and These to enabled packaging in of portfolio quantities hurricane key to Luxfer warm Magtech Third, the of I new meals. team's meals as simpler recent innovations our need Luxfer to to expected market of are supplied and under sustainable an those the HeaterMeals access focus stored are in work and These drive ahead easy-to-use revamped and able efforts of what supported in role indicative create a into strategic these This a to in growth. menus add was significant long-term were was new in more Product in System. has last

to please XX. Now Slide turn

high-end and reiterate strength, markets. We defense This quarter, demonstrates to which low achieved automotive in totaled improvements and financial for million, reducing leverage Growth Maintaining in at cash X.Xx. free Meals QX, in strong continue primarily demand critical defense and growth to growing for remains solutions our a both stands reflects stability including we enabled debt in pleased Financial and key are capital ratio flow, lightweight to balance profitability elevated important strong markets. us while to sectors, key X and have returning shareholders. powders opportunities sheet our Ready-to-Eat, RotaMag. the supporting growth and by investments $X.X This driven ability capture and perspectives. our demand advanced sales

Operational excellence.

margin enhancing and initiatives. EBITDA improvements cost operational disciplined Driving clean with Our energy efficiency reaching has reflects efforts. processes restructuring continued for XX.X%. our to This the now quarter led adjusted control third to approach focus and margins streamlining consecutive on

the advancing renewable growth in groundwork and our towards we are projects, and as for CNG look energy gas laying XXXX bulk We transportation beyond. markets future

be While position for in gradual, space. this the success we ongoing us clean growth expect to long-term our energy well innovations

to Graphic alignment. core as opportunities progress with moving strategic alignment the steady our capitalize an business we growth vision. the long-term highlights is our last, strategic This demonstrate key And allow ensuring our focus us transaction forward will XXXX. a with in on of expected Arts areas, on The of maintain ability close XXXX. and first half These sale approach sharpen to

that, like to back turn With for I'd the the ahead. operator question-and-answer to session. please go call the Bo,

go we'll this to at Ferazani Sidoti. Steve And Instructions] [Operator morning first

your that Elektron. a of to asking from to Is it the margin? to you asking Or passing what you're lower-cost benefit forward? there margins trying we of I is there. higher-cost magnesium that close through did all much is are in wanted now magnesium pull the still this working And sustainable that's how statement? margins income What a impressive are about start think get with sense getting I'm is, the more through? sustainable I'm

ask is been by continued with some in Andy. of were and we mix color. Webster that's perhaps improved This as the to Yes, Elektron in improvement product pleased bit margins little a well. Steve Steve. the Thanks, helped I'll provide

you'd mean, -- about on number with margin $X on $X the of that forward. an of million additional terms that. guess, element I with, Yes. of that. very Meals of pull Ready-to-Eat difficult about you terms probably cost the mean, get exact deleveraging, probably maybe in asked of the to business, on up get well clearly, plus around the million to the It's activity. hurricane quarter I fixed side revenue did the It's in I

a thought back sort to. I couple mean, years, about XX%, an margin we for was would Normally, XX% you Elektron have an we of if Elektron. margin that's terms go would margin, of aspire In sustainability, of and

But So I to which on in still future. close little There's and come a guess, there back, could lower, bit we're the think we're the not that the some XX% yet. get revenues clearly, us to volumes. I quite recovery

in in the Q, me I European other up was sales the strength looks like I Great. major at surprise ask to because your it about, when you wanted market. looked European the to were every

industrial about Europe counterintuitive. little what's a little growth? seems Can driving talk a On the you going bit in that and on side, what's that

Yes.

also been some Andy. -- stronger Europe. the traditional out cylinders. industrial sales gas So in seen that part in into which of Europe, We've that of then some the Part has has performance of cylinder of this been lines is helpful,

that yes, was Steve. quarter, an for in improved the So area us

lot with And that's Okay. the a it -- new being -- you produced? talked Can question. are I'll talk engines. yet? a Can you're said the seeing you you with what U.K. that you with touch new -- on you make where that engine talk the far bigger gradual also, producing facility? Can about you Is with CNG about so now

Yes.

me to both of Let talk those.

all, of first facility. So the bulk module transportation gas Nottingham

It's we're That first The assembly. at in final the looking the looking through field module it first of the our good the with seeing customer. to is end will U.K. year. going in be and forward

market. going high-capacity So I that really do think and product into the a in be that is hydrogen transportation of green to important hydrogen lightweight, chain to providing pleased link the be

as XXXX. So up we'll but see that that's slowly on track ramp and through steadily we go

You also American market. now the through orders. to larger product, some coming some you CNG fleet North And in the initial follow-on customer with asked mentioned some prototype that's CNG the engine at support new about trial out coming that. level We're the orders interest seeing

that's manufacturing just now the engine through the planned up on XXXX. of to to only starting Now is and ramp go

there we bit So XXXX earlier ramp going on think more some middle for recent of good I in levels. a next are now the little measured forecasts maybe than of maybe the year. But see higher the a should

Okay.

right it's primarily, testing now. You think

initial what slower be then ramp see to the sort that going I'm orders, you hearing? later. Is of are these So with success,

Yes.

the in got down the with remember, needle amounts us starting But of really for of of I even you in good But North preloaded system certainly by get -- of levels. on these some to looking into that that's we've quarter now prototype as year, the expecting get any impact not move maybe quarter think not X middle I'm adoption we And next in the certainly significant some to inventory. X. we terms for drawn CNG trial Now and America.

Can of had me. you where great. lot a I Arts stand interested on originally sale? you parties. Last That's Graphic for know just you the touch one with

reopened sounds talk it you that you've where like of narrowed half Can that. conversations where would had one. It the is, process about it why you down next in close and can the are year? have you You first to confidence

are to single the warranties Ultimately, With any -- before weren't to year. transaction. our of we're meet and take shareholders with our I do year exclusive rush be with parties mean were I'll Steve. fair mean we hope also now sensible go half basis next important on to of which this we willing an previously buyer. previously end an so able are on. of some had we also exclusive. to first we to Yes, price in a by this got a I looking We that, deal exclusive were we chose interested, ultimately individual so engaged buyer, we've and want said have a for they working with aim. don't it valuation, a of number moved who Yes, for already is we our

some done are work. ones amount But So coming of new couple of reasonable there well. of have a as already parties those a in

longer think of with year. we're a them, sort of a in these can the already it the done. reasonable the road I But So there's to we next of take far bit down first half it can fairly way do get think things some chance I

Mr. And questions to no to Butcher, I'd like any it we you have comments. today. things appears further back turn closing for

Bo with just strategic profitability, you, clean the driving in quarter. we're has strengthened the that progress efficiencies, our performance now closing, proud third this Steve. think I the want market that year to foundation challenges, we're growth investments we've questions, for sequential emphasize operational I the not made The and we and responding energy in Thank especially in future. you are actively laid to Luxfer of thank In how mean

are remain the committed stronger, value shareholders. is maximizing and is our about focus sharper, our for to balance our promising. Our opportunities future sheet We're excited

your for look updating and support We quarter. confidence next you in continued to Luxfer. you Thank forward

of recording much so at Luxfer's recording in of www.luxfer.com. will wish all A be Call. A great link this Earnings webcast XXXX QX Luxfer's available thanks Again, day. us, conclude this hours. we X for does Goodbye. website joining the be about everyone and on conference a you This available to you. will Thank