LXFR - Earnings call transcript Q4 2017

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Operator

Good morning. My name is Lorie, and I will be your conference operator today. Welcome to the Luxfer Fourth Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

the to turn Luxfer. Stanford will I conference Cassandra over from Now, please ahead. Cassandra, go

Cassandra Stanford

And Luxfer's our Thanks, conference everyone Chief welcome Lorie. to me and Harding, is Financial Officer; Officer. call. fourth today Alok Executive Maskara, Chief Heather our With XXXX quarter

Alok provide on performance. slide Luxfer's for and an then Alok transformation the will Heather's XXXX. of provide be found section can Investors website. outlook is which a overview, plan presentation, an First, return accompanied Today's by to followed review the financial will update by Luxfer's webcast an offer in of

We will presentation. refer in Any throughout to are appendix non-GAAP the our prepared references reconciled these financials remarks. slides the of to

company's and begin, to me and Before please prepared anticipated answers. further Please any uncertainties. time remind results let have forward-looking our After questions are for to remarks, today's future presentation that we of subject reserved slide about details. two risks we you financial refer the statements made for

now will ahead. to turn Alok, Maskara. We over please go the call Alok

Alok Maskara

Thanks, Please summary. turn executive three the for everyone. and welcome to slide Cassandra,

in $XX.X ending is Stock fourth terminated we last to conversion $X.XX, Full which our million an cash Chief are $X Resources a XX% team later revenue was and our million same higher in our leadership of today's all for year December fully For Heather which Luxfer diluted addition team Full for XXXX. seamlessly hear ADR trade had will and was Officer. York net part compared both of Chief Exchange. to EBITDA Heather strong reduce shares, They is XXXX Financial a XXXX. to $XXX.X million. of facility in quarter compared Recently, other by you Officer of on-boarding adjusted we to increase of to enabled as as On the XXst, $X.XX, from year Dyke and debt to bolstered We our our us compared the XXXX, December to great XX% quarter also EPS New ordinary diluted EPS adjusted by adjusted transformation $X.XX XXXX, on ahead $X.XX higher ADSs on our fully in Human the exchanged plan, Peter continue as Harding presentation. successfully fronts, and year.

million year. revenue turn Now on performance. quarter four Total for impact Elektron positive group's million compared the fourth fourth fourth please quarter to Volume million impact in for revenue to year, higher, $XX.X quarter million driven to previous a division. the previous $XXX.X growth quarter $XXX,XXX. overview largely and XX% the revenue million, QX our FX pricing an of XX% was increase $X.X million, in and which Adjusted Luxfer's volume. EBITDA in of $XX was fourth The slide in $XX.X driven of was is negative the $XX.X fourth the the the higher, for was compared was the by of EBITDA by quarter

sales quarter fourth for to Cylinders than the FX a large a $XXX,XXX. of primarily loss impact fuel by of Volume million the offset of which that in one decline one-time by debt is customers. Cylinder product in from and bad decline by growth decline slightly Profits the such resulting medical of XXXX. volume line, caused $X.X was to cylinders lower of impairment customer was alternative XX% which Superform to $X.X higher in slide $XX.X relation is were an five driven million and Cylinders adversely overview year, challenges aluminum Gas and revenue XXXX compounded $X.X EBITDA positive a by million, of affected division Now, performance. the please Gas of at for productivity by was continued large also turn Cylinders for million, was cylinders four our cylinders. Quarter partially in offset compared Gas was other as XXXX from oxygen last adjusted

Flameless significantly after of sales continued to challenges leadership productivity $XX.X of and bad hurricanes lean to million were for FX. we the as earlier credit future. six deploying more quarter the Elektron debt and are overall we the in reported the for in expertise saw to at as impairment overcome Please performance. are benefited Superform We was and in in to controls higher replenishment turn previous minimize than orders growth higher disaster-relief from also the QX Elektron's volume Ration year, our fourth tightening an Heaters revenue XXXX. slide and large our overview fulfill Defense division's we

in We million, revenue which slide XXX% Elektron's general to $XX year, to expectations. adjusted volume quarter driven are as prior Zirconium fourth for the to for EBITDA were SoluMag was strong sales a alloy also continue and our EBITDA in year XXXX exceed and largely the uptick experiencing higher military Magnesium growth. full orders. turn sales Luxfer. by was compared seven Please summary

year. our both higher Heather year of us now full least $XXX than full at revenue the enabled the to appendix the Chief XX% call Financial XX. improvement and prior million new turn XX was XXXX Officer. of Luxfer's Heather, XXXX, adjusted in go summary performance higher to Harding, will of the the meet over our I EBITDA. full half million second divisions EBITDA expectations in year ahead. adjusted Strong is of the year The please pages for our than and XX% X% was For results in year $XX.X XXXX of

Heather Harding

and to Welcome you, Thank hello, Alok, call. the everyone.

Electric, and large industrials As you Emerson Eaton bio, I've from can my Corporation. career see Industries most recently my spent Cooper in including

results, these lean M&A with and in as the for expansion including spent working sides time capital both profit participating operational I of as initiatives, driving well organizations, manufacturing manufacturing, from career my transaction. During

past for of opportunities. Please fit. nine and and this income at felt I strategic improvements poised can looked I to is statement turn partner profit I review as be an with meaningful drive expansion. part a slide key Luxfer I to As and to metrics. excellent coupled journey M&A growth aspirations, my career Luxfer with operational experiences growth know Alok

QX both quarter our which XXXX, divisions the QX of a as and the in to were year. number both summarized adjusted higher quarter, on XX. restructuring For was of previous to There million EBITDA revenues profits across Fourth costs $XX.X compared XXXX. are XX% compared QX of grown slide have

the charges, QX compared However, million in was an operating IAS profit as of year. this net million year. of cost, of Net $X.X exceptional of Adjusted previous of QX a compared of $X.XX a quarter with $X.X result XX $X.X excluding income loss adjusted we for quarter was diluted last $X.X loss QX $X.X these a the prior of QX an $X.X net to underlying net finance of recorded for million had a profit for the period million, XXXX. items for quarter pension the compared for compared to profit to million, the year. for $X.XX, EPS Fourth and million

prior $X.X for For QX Again, position grew $XX.X pension slide $XX.X to million, $X the XX%. to Please million $XXX.X control acquisition $X.XX million EBITDA from Thanks million the and the year, Net increase the positive XX QX XXXX $XX.X XXXX. million our in flow diluted revenue for over outflow profit was of $X.X the XX% Adjusted $X.XX reduction for cash million a tight a XXXX part expenditures exceptional key of flow full million. quarter year. Net flow $X.X compared million year previous the cash XXXX, had to operating compared cost, despite sheet and strong $XX.X of Net net EBITDA cash million, finance cash a year, the year. metrics. financing million EPS excluding versus $XX.X cash, profits on prior items adjusted IAS and full was for before an year we prior million, for balance Adjusted in capital XX a significantly the million in to ESM. increased for both debt with year. compared million, of of turn million in of than from $X increased to on higher QX of have year. was was $XX.X of of positive $XXX.X for the over a XX% underlying the $XX.X the income

has to higher primarily receivables capital due working associated QX strong sales. million, Our with to $XX.X increased

$XX.X million, driven was balance sheet $XX.X Net a year year slides financing $XX.X full and cash the cash performance. the performance. at before cash of appendices. from expenditures in cash favorable be controls capital flow Operating of was for the year, the million than on higher over posted flow found Looking million. can again $XX.X prior by and positive year strong prior capital working improvement Detailed million,

impacts. tariff of Now recent to XX a and please turn summary the slide for tax

a recorded Jobs Following Act the December credit year full on $X our exceptional XX, Luxfer US XXXX in Cuts results. enacted million and XXXX, Tax

have benefit we reviewed will no as After will tax the announcement and as excluded. exports decline aluminum from fall expect there United to and We March on White immediate US the recent XXXX House Xth our States tax and direct aluminum to proposed determined effective steel Canada to and XX%. long the rate approximately tariffs, are is changes our business, impact the rate

secondary unclear, metal is a US. summary impact XX any in slide restructuring activities. concerned Please we turn of to long-term about inflationary the While of impacts are this for the

regarding charge line of case, close we largest cost acceptable. simplify brings structure. and the redundancies with Within have a number during We other year resulting The and charge quarter. to impairments non-cash decision large to infringement to sites quarter been restructuring magnesium the of the million in a discontinued to now A million. incurred business. relation the achieve a our pursuing is we a primary of of we back fixed Across recycling $X.X to oxygen This impact ADS have tough productivity of a call made our in systems further of you. a also a Elektron product corporate, hand which were number And And we divisions, end, returns settlement recognized we $X.X Alok. the number over flatten both of the improvements total million. both product have for asset our the rationalization organization and operation. lastly, conversion Czech division, our across costs competitor to related have resulted the operations, been a we $X.X million. fourth the patent conversion our from incurred I in the these Furthermore, $X.X divisions project. of to charge had will not the a our Thank with After reached in at the agreement to advanced as made which

Alok Maskara

slide Thank you, plan. Heather. XX Please of turn overview for Luxfer's an to transformation

enhancement, cultural a we years. the of over acceleration, key months, recovery, company few past portfolio plan growth performance are higher talent transform plan the and pillars optimization. next a have developed five into productivity to Over three Luxfer The growth and simplification, this

New solid into converting a are shares have this on the as upgrading and progress Stock our We actions team regular making traded the ADS on plan York such completed few and leadership Exchange. of

has majority are an and overview experience refreshed. have Board XX for deliver slide shareholders, impressive employees. Board Luxfer's We journey, to which expected been and members significant of is about have Independent Board a to Director, excited our less. team. this Please customers Luxfer which benefit the and five continues executive our to years members be of to turn Board Board transformational for an of the of on of broad range talented

has on an the driver step in for early as and of Luxfer transformation Meeting. Chairman, Bonn, Joe us transformation XXXX Chairman was who re-election an important intention Annual the Joe momentum Having We plan. Non-Executive the during of XXXX plan, his General stand not to down have established informed Independent

a executive Chairman. process the appointing of new also talented. two Board is new new very leadership started recruiting have Luxfer's members We team and

to grateful businesses am leaders Luxfer. and We driven to to with for Board's team's across have establish are leaders slide eager lean experience achieve factory and efforts. transformation factories across significant business functional transforming both Please complete grow who are we support greater our the who consolidation Luxfer. We highlights opportunities and to functional on from the deep the before margins leadership excellence for industry our scale are turn enterprise. to their towards dedication to I transformation announced successfully two gross consolidate drive recently efficiencies, projects and our track year end. have to improve and To productivity XX

office our delayering by our of structure is this G&A We existing shared reducing corporate building An week's manufacturing to cost implementing Manchester our our management effort move example by facility. our also services. and ongoing an productivity of standalone are within

of expect for by highlights We deliver Please million annual our to our $XX XX slide productivity to XXXX gross turn to savings transformation. in growth initiatives. due

on focusing conduct we seen advisory this the our our have growth significant firm an an sales building results establish of are had end of state. the assessment of in areas through sales review excellence, to organic we our The drive that growth To within by sales in We momentum team's current and as independent innovation. improvement of slide top the reveal investment team. served potential markets recently currently

going of Our products of our around innovation and revolves needs launching basics back basics, to transformation new the that fulfill developing customers. the

Gas this As we you highlighted the and on refocusing exiting from and on example Cylinder loss products making see can are projects. our page, core

Over XXXX, on long-term, share the new Stock The Please an for New the past also paid corporate into XX% dividends makes successfully fees on we XX trade products to the In XX% within to to our strive from depository we slide conversion join the five our to our from converted ordinary generate ordinary introduced eliminates shares, turn our update years. eligible deducted indices simplification. Russell been ADS revenues to December seamlessly of certain such our to shareholders XXXX. as continued York shares and which to had that Exchange.

will we that on US initial these not investor Based expand assessment, GAAP base We on domestic the private will require will convert part from shares. simplification we a US from to a foreign to comply issuer potential ongoing activities rules believe which intend impact to of material X, As a issuer us transition simplification Luxfer domestic with our corporate our the January status, for our earnings. believe status process, XXXX. to the reporting have

generate bolt-on and to for our please growth we existing XXXX, ESM the of on line track line recent Metal small Now from and powders December divestures. an update is slide XX integration In we Magnesium Specialty product to completed acquisition our the operational acquisition turn for on acquisition and product expect Powders improvements. Group. to from synergies This

product lines have Hotpack we divested in the The two UK months, product line our product few also division. small lines past our a portfolio. Elektron the effort divested Over simplify continued product in to in and were

HyPerComp product start. to our Engineering The line Gas plan second the summary, line a In off was transformation good portfolio. in product our is Cylinder

We transformation full turn Luxfer, next plan for the to initiated we outlook. on improved to our three ensure Please release the two further XX will earnings first during delivers and double-digit an our year XXXX for where quarter plan. slide transformation that to XXXX year provide the results encouraging years. years updates increase was for our Luxfer EPS

favorable We by US XXXX year will expect you. earnings that XXXX adjusted operational full Thank share to Tax and per due increase from the of the XX% to Reform. improvements impact XX%

We will now take questions.

Operator

Your first FBR. of B.Riley Sherbetchyan comes Instructions] from of question Sarkis line [Operator

Sarkis Sherbetchyan

Good morning, Alok and Heather.

Alok Maskara

Sarkis. How morning, are Good you?

Sarkis Sherbetchyan

Thanks you. question my taking Thank Good. here. for

achieve on share for at plan cash information look free you and conversion, as kind some more opportunities As Can I the capital improvement? working you maybe mentioned. of how that management you of to some

Alok Maskara

Sure.

it separate spend. capital first into about break the if I So, two just one is buckets,

out On earlier. on management scrutinizing within every inventories we capital business, to lot also we we more each to do sure and place, working that in capital much We lot and $XX inventory the it million spend is productivity and incentive putting in are job that a and putting through the more continue that plans of in $XX could areas spend working and generate have generate mentioned million $XX can to pieces. the savings to have a we that a controls that million to better that the the deploy and put plan of in to is payback use probably we or reduction capital, spread growth. in to we generate right Today make reasonable years about few opportunities next capital over so justified based

we in management So quite steps. reduction. consolidation inventory capital a taking are just working And think end, itself footprint few will the we in also and help

in team, a So, portion is entire the plans. XXXX, incentive cash management for our significant of

Sarkis Sherbetchyan

to realized? mentioned about, -- should by transformation think, annual plan. What's $XX right, I rate Understood. I the to That's think were from for I we And you in that gross the suppose be million helpful. expect XXXX, that if the savings

Alok Maskara

year as make productivity quite to will of aspect although, gross to moves. For first in, a bit those we be on two, things the have move cost the some get savings the coming we spending such such when and be will or savings the lack we

would spread be entire the out So expect while be would effort stick, it not a be I years. hockey would three actual richer savings, the to in of half achieved second the over amount although

am guidance we you higher achieve you start to I will it those exact just now, there then greater cost see giving but in beginning from of the 'XX year, we on look realization So be and numbers where the 'XX. not project are 'XX, and at much to per if

Sarkis Sherbetchyan

That's to remind XX% sales introduced XX% to I of past of Understood. helpful. within And, organization percent new represent as mentioned, a where you today? the your for piece us about of sit striving new you the products Can sales. products think, years five that

Alok Maskara

We X% are now. right below

significant put have working that's so the to come there now to investor that, room didn't detail back analysis, we on it, and reason community more because X% Sarkis. still improve around the than are but through we right date we specifics I are less we that So with one a can

Sarkis Sherbetchyan

that. someone the will in hop Thank else. I queue for back Thanks for you.

Alok Maskara

Thanks.

Operator

from comes Instructions] [Operator Gibbs line KeyBanc of Your Capital of the question next Phil Markets.

Phil Gibbs

How morning, Alok. you? Hi. are Good

Alok Maskara

Phil. Good, are you? How

Phil Gibbs

Heather. welcome and well Doing

Heather Harding

Thank you, Phil.

Phil Gibbs

I first cylinders. a on question had

fourth getting guess, then into So first have quarter? is that as how do the was how And good I got my move next this the visibility debt much question. we the there to of better expense and is subsection obviously profits we whacked pretty in bad year,

Alok Maskara

better the $X something something on is this a be we manage was bad better that's million little that have believe able Cylinders. because in debt future. controls Gas And we will and -- The obviously over need the going Yeah. we to quarter on much to credit fourth a expense in

On Superform challenge lower to and biggest are its related scrap have monitoring that that the other all we it's is in constantly alloy weekly specific rate. productivity around on basis, a side, introduced, and our one we

expected So confident than we have are just us take. quarter and seen it some that in took to something fix, we we we longer can progress first that's it

the getting it was we new hence make have negative business, this we So better. can talent be. before, in we QX and got more are are we confident talent we done there little some have we engineering expected But in this than a to some new lean

Phil Gibbs

You and 'XX? you're seeing mentioned talk the about cost from impacts higher in Are tariffs as you are maybe in substrate seeing well you that expecting what you can business the and cylinders there.

Alok Maskara

We in that's the higher seeing aluminum, are based but on some inflation just LME.

impact any But quite situation we exempt monitoring would a yet, the as But closely, secondary you a the is We then If know expected prices are significant impact XXXX. that expecting indeed if tariffs then that bit a Phil. this haven't seen concern confusing. had up, direct would at have it of tariff there not impact, U.S. was we stage, be in Canada we been there mentioned duties, in from impact are direct for may not any and go But, Heather be in XXXX. us.

portion price get contract it but we can a able between a have will Now versus when on increases, to we material riders back. we lag large the do be usually and our there's of inflation actual any recover

Phil Gibbs

number, by the it segments? XXXX of terms sales of just how of impressive very magnitude terms that SG&A is thinking of cost are the and rationalization in of then in how and your Okay. the million, buckets about a in of And that goods you terms big much goal maybe versus $XX then of

Alok Maskara

come of deploy XX% going say but and back -- is cost probably XX% sold G&A it's going that's in we SG&A, some I said G&A would to to from sales. come have of and you and goods know probably would I from reduction

million net the So from impact cost I $XX G&A side. from do think million but and we probably agree that, fixed that's $X to on

Phil Gibbs

segments Elektron the be breakup the in the that going heavily is between largely then And division? -- to

Alok Maskara

No.

have think, pretty segments, I evenly across so. spread the pretty I good be think, opportunities to there both it's and going two

Phil Gibbs

me, And FX the trading Okay. year-over-year. the quarter, fourth profit was what impact the last then for in one one to

I that up think in between was and 'XX? we how were the positive, is expect the for $X.X do I and coming to million split what with FX case sure that you want make segments

Alok Maskara

pound as 'XX, For kind mean, has of a know, you I recovered bit.

more when 'XX wash expect So much to where at we year lower QX we than looking were at we of a do release earnings or be the have full spoken timeframe.

number does later one of tables can million million looked follow the front divisions have me, mean, the back. I right seem don't of we the But we So split in Phil. right, up know at in about but follow of number. in $X can about that our have I I off, a it's $X.X that bit internally we

Phil Gibbs

Thank you.

Operator

[Operator further this turn there or now management to At closing any I Instructions] time, the additional remarks. for call will questions. no are

Alok Maskara

our thank to for transformation your Thank in conference Operator, on you, Lorie. close greater forward can plan. everybody investment And you QX Appreciate our transformation your support you call. now. details We look it. for and plan our the providing earnings of you thank you

Operator

That you. the conclude Luxfer earnings conference quarter fourth call. XXXX Thank does

You disconnect. may now

Luxfer (LXFR) 20 Mar 182017 Q4 Earnings call transcript