LXFR - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Shelby, and I will be your conference operator today. Welcome to Luxfer's First Quarter 2024 Earnings Conference Call. [Operator Instructions] Now I will turn the call over to Kevin Grant, Vice President of Investor Relations and Business Development at Luxfer. Kevin, please go ahead.

Kevin Grant

good and Shelby, you, morning, everyone. Thank Luxfer's to First Quarter Call. Conference Earnings XXXX Welcome be results Luxfer's quarter morning, reviewing This we'll financial XX, ended XXXX. for March first the

Executive by I'm Officer. Butcher, joined to Steve today pleased our Chief be Chief Officer; Financial and Webster, Andy

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

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

be During our based Arts an business. today's exclude quarter to that adjusted on that results XXXX divest we'll providing call, financial Graphic strategic decision review first

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

Andrew William Butcher

Thank everyone. report you, Thank despite in I'm markets. first that in cash Luxfer progress generating profitability Kevin, to solid quarter certain us. joining the and demand good and flow pleased XXXX, you increasing made for variable good of end morning,

our of their efforts a that outlook I expectations want our team for The moment thank dedicated was slightly to to remainder underpinned of first quarter result. ahead and our take the reinforced internal for XXXX. commend and this

ongoing some Sales reflecting came in $XX.X at softness. million,

the enhanced earnings primarily of we in of flameless $XX.X an signs quarter This of of per driven heaters. adjusted segment. encouraging saw some adjusted profitability quarter, XXXX, by improvement a areas, significant $X.XX. and notably we our in achieved reached share million Elektron over represents ration However, last important most In the recovery for EBITDA

of resulting net we Additionally, low levels leverage. reduced operating payments and our $X.X holding in maintaining debt, interest million of lower cash, our delivered

the results recent effectiveness operational of overall our reflect These adjustments.

over expenses. footprint our significant a company. we've time, first At Graphic maintained initiated control legal ensured our the of customers, collecting the insurance and service from rigorous to We also restructured sale same repayment our manufacturing have while Arts our

So a more look good next details start to year. to few forward sharing minutes. over I the the

Let's first X In our on performance to accelerated and enhance review. and October, annual we comprehensive update to our strategic Slide strategic expanded an value. unlock for review move business shareholder

recall, As produced you conclusions. may this important effort X

our First, well Graphic is advise from retained the Arts Capital We engagement buyers. significant of underway XMS we sale Partners the business. initiated potential sale. The with on to process

a targeting are We closing transaction year-end. by

provide near on from Elektron invest the to begin efforts Second, enhancing expect in we which their accelerating businesses, and also costs. a show and in competitive Elektron Cylinders in our continue starting positioning and continue optimize returns. demand to Gas term. alternative promising costs will products, is Gas intermediate to growth benefiting attractive to our to to Cylinders recovery, lower we capitalize fuel to growth

we result, beyond. prospects a sustainable remain businesses optimistic profitable As about XXXX and for growth in both the

and third, concluded minimal Gas with And previously Elektron strategic Cylinders segments our communicated, as that we synergies. operate

monitor both continuously improved performance maximize to full to will business maintain as optionality in both value. financial drive market businesses, So and we outcomes we conditions shareholder

turning Now Slide to X.

me actions the enhance XXXX. of to on our Let more you taken performance the in update we've detail in impact

but These and for us enhanced significant The our margin supported a moves profitability, were simplification to heater technology which our the leading continues quarter by only business, flameless have military anticipated assemblers. uplift establish Elektron, powders, results flare footprint the materializing. in in now packages with not demand supplier of ration and for as Luxfer positioned reduction also first encouraging expansion in in costs. Also choice for food our is Elektron fixed

improved first meals The confirming prior our the of role to critical sales. year, ready-to-eat production with in line quarter in our Defense XXXX Agency's Logistics and award is contributing

customers the our which renewed call, light with I the Air our equipment to as most half our of Today, partnership mention our last servicemen commitment those of customers. key collaboration supplying through access This dedication top-tier to women I'd one super like with ensuring this safety providing demonstrates supply During cylinders, is year. our to with agreements our in to technology. and multiyear have SCBA announced U.S. first well ongoing reliable advanced, our the Force as

in complete, initiatives and leveraging our footprint to bulk for excitement I our transportation customers in clean U.K. of transportation the are of growth, module American and our fuel for operations in the arena. this have products included our refining gas last future participate module the for is latter pleased reaffirms energy Our facility North alternative near-term pivotal construction month. The effort and potential growth Both the innovative discussions potential X with in on was keen their now

only a are by assisted strides Additionally, X accelerates cutting-edge type of we development This making Clean but symbolizes forward commitment Canada. Innovates in also product promising energy hydrogen recent in not to another awarded development, by in our cylinder funding grant solutions. step our Alberta Technology our

received historical payment finally, costs. million recouping legal an initial $X.X insurance we recovery have approximately And of our

to strong prior to updating efforts We reclaim to make forward legal you on progress. other look our I continuing expenses, are and

improved driving strong In and strategic profitability cash conclusion, our decisions are generation.

our that our innovative customers profitability our way the levels brings industries. value and to engineering to our We on that are reflect achieving

the Steve time, greater I'll and update XXXX this discuss to the our Steve? outlook. from the profitability results on explain call detail, turn over QX prior to our quarter improved in At

Stephen M. Webster

note Graphic quarter measure Arts numbers I'd basis, business. an and the Andy, the excluding this XXXX. financial to to adjusted by consolidated Thank Please you, bridges for morning, refer are good on non-GAAP I like and the our reviewing start everyone. that morning first results

to Slide turn X. Let's

at of profitability important quarter. an to in previous margins with while the Adjusted first from slide, quarter. sales comparing was $XX.X the the EBITDA of at it's $X the top and prior favorably the XX.X%, the reflect the million seen to Looking decrease $XX.X the X.X% prior since million considerable improvements quarter highlight million, for year, our XX.X%

our adjusted fourth $X.XX earnings in share rose per underlining to in quarter, our improvements the from the third $X.XX Additionally, -- profitability.

was flow and reached cash our seasonal million, sheet Cash the solid, balance our $X.X flow operations million, from from dynamics. flow our we significantly cash maintained free experienced improved leverage the X.Xx. of $X.X to and generating first strong quarter liquidity, And the the debt we ratio a of in with previous $XX.X ending year. and have net quarter outflow of million Shifting

million to exchange. from a an Looking alongside million revenue impact saw additional at the $XX.X $XX.X We contributing bridge, million the year. of prior sales pricing foreign million our from adjustments, favorable benefit $X.X compared $X.X a in

tough and the military a decrease the markets. in industrial prior were gains these million $XX general comps offset However, by year flare volume in with

the bridge. Turning to adjusted EBITDA

partially XX.X% Our by $X.X in was impact some price the macro from Despite previous in XX.X% our considerably deflation, incremental ongoing million quarter QX projections margin rebound. of at our slightly legal year, favorable manufacturing down Elektron. cost $XX.X EBITDA EBITDA first efficiencies adjusted adjusted quarter, the last adverse lower year's a costs, challenges, in million, came volumes, this with of only cylinders, the down and and offset from confirming prior

streamlining decline. an XXXX first improvement financial X in Elektron's despite Elektron's turnaround Please substantial cost first positive turn enhanced basis XXX anticipated shift manufacturing quarter through results. in our Slide the for volume increase EBITDA was and This sequential detailed year-over-year review ongoing with rise a to recovery, a X.X%. profitability We margin in exhibited driven strong sales and of a efficiencies of adjusted initiatives. a quarter gross from by of significant point saw to structure margin XX%

market. recovery, QX of we in notably Despite a heaters to are ration seeing lower pockets Defense, and busy sales Healthcare across XXXX, all within our segments Response compared flameless First

were broader in due noted powder decreased flare customer sales military to following end However, declines magnesium markets this destocking.

for segment primarily lower, also to The materials. catalysis softer Transportation was demand due auto

of market in to but prior declined improvement this sequential quarter margins Elektron's compared by quarter modestly weaker industrial given the very recovery this second year, All encouraged demonstrated as the X. last we year, performance general are the significant significant we start year. in that said, over half Finally,

contracts, for our reaching improvement momentum, of and XX%. points, breathing towards by first notable Cylinders million, results. gross turn firefighter a X.X% enhanced apparatus of Cylinders In quarter which review rose achieved in to seeing historic Gas quarter, $XX.X the self-contained margins a the long-term Slide X XXX please renewed basis Now market particularly norms. margin positive financial sales have lifted detailed up the Gas are year-over-year to

our end fuels Meanwhile, the part this products. a with Our medical continued to adjusted general sales X%. industrial Gas segments, Defense, EBITDA still the increased for In the quarter, Response although margin also sales decline market First thanks and encounters to stronger over of relatively small and this represent Healthcare sales increased lightweight by basis XXX SCBA continues headwinds, cylinders. market to business. alternative Transportation year, Cylinders points grew previous demand the for demand

demonstrated achievements operational the by quarter. encouraged are We this

to As excellence we and and remains technical our for capitalize driving Gas and our on Cylinders value customers. know-how, stakeholders strengths committed

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

a XXXX As not include guidance Arts the ]. reminder, Graphic our [ does

reflect fees. legal improvements Our and been has financial raised historical better-than-expected in recent the of first the the recovery outlook quarter to

and anticipated we between $XX with $XX with ranging flow $XX do $X.XX million. cash to adjusted be sales million, from challenge, million remain and free to a to While projecting million between now are and $XX be $X.XX adjusted EBITDA EPS diluted

to growth management, shareholders We our investment balance supports and allowing opportunities strategy continue repurchases. This capital a to enhancing dual to a through steady also flow. continued dividends robust returning share cash while free emphasize in capital maintaining sheet approach and for

result summary, genuinely embrace robust This in rates future collective margins and in In excited the readiness of I'm we've and sustainable Elektron, improvement to Gas cash recent strong conversion uptick Cylinders about performance position the achieved. our underscores the opportunities.

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

Andrew William Butcher

I Slide Thanks, remarks on prepared will conclude Steve. my XX.

half through by various track. see improvements and but demand there performance. of for outlook is presented are our long operational road ahead, XXXX, both I'm in to The end XXXX latter we bolstered is on promising, a market the we progress that right the and XXXX pleased challenges, As

we this long-term conclude made months have to like that progress our the update, in confidence significant highlight my few over last we I'd success. maintains As the

with Air our multiyear key SCBA secured cylinders. to Force super U.S. of supply customers, have incorporating light supply We agreements the

Elektron, on demand early recovery within certain capitalizing and Industrial Defense are signs We sectors. of

have Nottingham green role a in operations We energy and North new fuel American streamlined constructed transition. the in alternative enhancing U.K. our capability our

working free issues carefully our capital coverage started our future low have our have capital, driving historical maintained we net and the And and which fees. improved of providing have and debt, managed cash has recover charges insurance and our resilience recently flow some We optionality. addressed lower to

and our Gas generate in remains are Cylinder focused strong profitability rest a Despite environments, segment. on by market for applications about seeing customer encouraged am we I challenges, industrial and solve and strong flows. to performance the recovery leveraging the strategy engineering expertise cautiously cash our our long-term Elektron current progress optimistic of demand Luxfer's in XXXX. materials improve

are We initiatives making ability sustained and progress are earnings significant enhanced margins value unlock in to and shareholder achieve our confident our in to growth.

the I'd the go that, please call Q&A With turn to Shelby, to operator session. the for back ahead. like

Operator

[Operator Instructions] our question And we'll Steve take with Ferazani Sidoti. from first

Steve Ferazani

surprised than we Obviously, faster on and the really coming was suspected, not side. it much improvement sequential It lot your faster impressed was margin in how a with Elektron. sure

a where impact detail on some costs? could provided on seeing we color from on You call, material the deflationary little and material if add raw the you be costs, but what of to margin to improvement it lot you generate a given further were ability raw of expect bit

Andrew William Butcher

of were you, a we are our with for expectations. Yes, call. little Thank internal thanks Steve, they even results, joining QX and pleased ahead the and Yes.

So that was good.

the especially On Agency projected, sales that very, normal heaters. came able as at of be very higher sales had expected. the pleasing on levels the flameless were in was of to it That the Defense level we ration we deliver but to from was something the we Logistics award side, pleased

of we QX couple rebound very make ask saw comments that I'll So product to on on line. extra margins. Steve perhaps strong a from important a

Stephen M. Webster

mean, I X you of areas. there's of the main the I certainly, or Elektron. Yes. if that, in majority look improvement the in think, the at majority And was margin -- margin was improvement

our better One FRH is of of products. mean are mix. and margin volume sales the I them one

X/X, say improvement. that I'd So the roughly contributed margin

legal some some from the projects savings I cost about manufacturing also is That's done. and the another talked X/X. lower we've then X/X. cost probably And finally, remaining significant efficiencies about of the

then X costs. Volume So legal there. and efficiencies, mix, buckets savings cost manufacturing and lower

Steve Ferazani

upside so improved, Given more margin wouldn't early strength how much that on you guidance raise and recovery sustainability the in given reason Elektron? any why the

Andrew William Butcher

ongoing XXXX is This optimism me we am by in with by that. Andy, start of Thanks macro that uncertainties that cautious environment. in Yes. some we've Look, approach recent let I the Steve, for do encouraged, seen, remainder again. developments Elektron. despite underscoring the industrial especially And the

applications. demand witnessed Elektron the have in We expected certain recovery across

to our guidance provided, delivered Gas with and in recoveries. Cylinder performance think, And performance robust the pleased of the and annual fee able those we does to increase guidance. our in the confidence are segment. I It mix, a improved have uplift we're the pleased we been That's we've legal

Steve Ferazani

timing some the on gas detail And strength CNG in American bulk you provide update of North noted was you a little I market. what on, of bit Any can facility? think, the

Andrew William Butcher

Great. Yes. Yes.

solution. First hydrogen, all, on course, economy in where And or to preferred multi-element containers maybe gas, city used to the of of gas bulk a of containers move farm center. of it's a hydrogen infrastructure it's and hydrogen where needs remote from the course, wind produced, are industrial

facility we've we'll opportunity our the well, is a lightweight with rapid technology, U.K. Nottingham in cylinder XXXX. of growth later of from sales this do our year, expect that developed with facility The for containers. then range the first the we and make going these So development

momentum On Cummins demand the million that pretty continue, into It's being move the of been lightweight some compressed North particularly end to high. the high the the there, CNG and XXX the additional a prior quarter almost us year the towards throughout and the expect our to in natural give from to there CNG gas, should we compared highlight start XXXX. to upcoming we tailwinds cylinders as remains CNG and summer side, engine $X year doubled of new introduced that's Type American year. X Sales exciting capacity

Steve, excited CNG. and gas about quite both yes, So

Operator

There more to final At time, over questions the queue. the no I'll CEO, call remarks. Andy this Butcher are in for turn

Andrew William Butcher

covered for areas. and you Thank thanks your the vital for to question, we've joining call. Steve, everyone Today, Luxfer

are Our strategic initial demand. a strong an pace. setting market We're recovery developments commercial seeing in

these consolidations and to efficiencies. to is historic to business. started a legal We've strengthen. points to continues fees, determined are Our approach of our financial resilience improving enhancing successfully our health recover our our testament operational Each and

As and always, forward interest our Luxfer. quarter. you in updating your We on look thank support you for next to progress

Operator

Call. this Luxfer of the a be A website Earnings on about XXXX be hours. QX recording in this available link webcast Luxfer's A at concludes call will to This recording available will conference X of www.luxfer.com.

Luxfer (LXFR) 1 May 242024 Q1 Earnings call transcript