Luxfer Holdings PLC (NYSE:LXFR) Q4 2022 Earnings Conference Call March 1, 2023 8:30 AM ET Company Participants Michael Gaiden - VP, IR and Business Development Andy Butcher - CEO Steve Webster - CFO Conference Call Participants Philip Gibbs - KeyBanc Chip Moore - EF Hutton Operator Good morning. My name is Shelby, and I will be your conference operator today. Welcome to Luxfer's Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Now I will turn the call over to Mike Gaiden, Vice President ...

Financial Performance - Consolidated net sales increased by 16.9% in 2022, reaching $423.4 million, after adjusting for foreign exchange headwinds of $13.9 million[170] - Gross profit as a percentage of sales decreased by 3.3 percentage points in 2022 to 22.4%, primarily due to increased material and labor costs[172] - Net income from continuing operations was $32.0 million in 2022, a 6.7% increase from $30.0 million in 2021[169] - Adjusted net income from continuing operations rose to $37.4 million in 2022, up from $36.2 million in 2021[187] Expenses and Costs - Research and development costs increased by 25.6% in 2022, reflecting a focus on new product investment and future growth capabilities[175] - Selling, general and administrative expenses (SG&A) as a percentage of sales decreased by 2.4 percentage points in 2022, benefiting from price increases and cost reduction programs[174] - The impact of material availability and inflation is anticipated to continue into 2023, with the expectation to pass on cost increases to customers[166] - Net interest expense increased to $3.9 million in 2022 from $3.1 million in 2021 due to higher interest rates and increased drawings[178] Taxation - The effective tax rate increased to 22.0% in 2022 from 15.3% in 2021[169] - The effective tax rate increased by 6.7 percentage points in 2022, primarily due to the U.K. tax rate change from 19% to 25%[183] Cash Flow and Financing - Cash provided by operating activities was $15.8 million in 2022, down from $26.0 million in 2021, with $10.0 million and $4.0 million spent on restructuring activities in those years respectively[210] - Net cash used for financing activities was $2.0 million in 2022, significantly lower than $16.1 million in 2021, with net drawdowns on borrowing facilities increasing to $24.8 million in 2022 from $6.4 million in 2021[217] - The company had drawn down $31.9 million under the Revolving Credit Facility (RCF) as of December 31, 2022, compared to $10.8 million at the end of 2021[223] Capital Expenditures - Capital expenditures in 2022 were $8.3 million, a decrease from $9.1 million in 2021, with anticipated capital expenditures for 2023 expected to be around $15 million[211] - As of December 31, 2022, the company had capital expenditure commitments of $1.4 million, slightly down from $1.5 million in 2021[237] Dividends - The company paid dividends of $14.2 million in 2022, an increase from $13.6 million in 2021, equating to $0.515 per ordinary share compared to $0.50 in 2021[232] Supply Chain and Material Costs - The company has successfully secured alternative sources of supply for key material inputs affected by supply chain disruptions[166] - The company utilizes fixed-price supply contracts to mitigate raw material price volatility, particularly for carbon fiber and magnesium-based products[265] - The company is exposed to commodity price risks, particularly for magnesium and zirconium, with substantial price increases noted in 2021 and 2022[265] Restructuring and Charges - The restructuring charges in 2022 were $1.9 million, a significant decrease from $6.2 million in 2021[176] Pension and Benefits - Defined benefit pension credit was $0.1 million in 2022, including a $3.0 million credit on the U.K. plan, offset by $2.9 million of losses on the U.S. plan[179] - The discount rate for U.K. pension plans was 4.80% in 2022, up from 1.90% in 2021, while the U.S. plans had a discount rate of 5.10% in 2022, compared to 2.70% in 2021[248] - A 0.1% increase in the discount rate for U.K. plans would increase the pension surplus by approximately $2.4 million and the projected 2023 income statement credit by $0.1 million[249] - The expected rate of return on U.K. plan assets was 5.60% in 2022, compared to 3.30% in 2021, while the U.S. plans had an expected return of 4.70% in 2022, up from 2.50% in 2021[255] Business Strategy and Growth - The company expects continued high activity on revenue growth initiatives and actions to ensure continuity of supply of critical materials in 2023[168] - The company anticipates organic sales growth, which will require increased working capital, particularly in the short term[209] - The company expects to increase investment in new products and technologies as part of its business strategy to enhance cash flow generation[208] Segment Performance - Gas Cylinders segment net sales increased by 3.0% to $183.7 million in 2022, driven by demand for composite cylinders, despite a $7.8 million foreign exchange headwind[192][193] - Adjusted EBITDA for Gas Cylinders decreased by 43.6% to $12.8 million in 2022, representing 7.0% of net sales[192][196] - Elektron segment net sales increased by 22.4% to $239.7 million in 2022, benefiting from material cost inflation pass-through[198][199] - Adjusted EBITDA for Elektron rose by 23.6% to $50.3 million in 2022, accounting for 21.0% of net sales[198][201] Compliance and Agreements - The company has maintained compliance with covenants under the Loan Notes and the Revolving Credit Facility since September 30, 2011[205] - The company has maintained compliance with the covenants under the Note Purchase Agreement and Senior Facilities Agreement throughout all quarterly measurement dates from September 30, 2011, to December 31, 2022[218][230] Legal and Contingencies - A loss contingency of $3.3 million has been recognized related to litigation and environmental liabilities from the closure of a French site[258] Goodwill and Impairment - Goodwill was tested for impairment qualitatively in Q3 2022 and 2021, showing no indicators of impairment, thus no quantitative review was required[244]

Financial Performance - The company achieved nearly 10% year-over-year sales growth in Q3 2022, driven by successful cost pass-throughs that offset foreign-exchange headwinds [7][8] - Adjusted diluted earnings per share (EPS) for Q3 was $0.35, aligning with the company's full-year guidance of $1.35 to $1.40 [8][10] - Consolidated adjusted EBITDA for Q3 was $16.1 million, a 16.7% increase from the prior year, aided by inflation cost recovery and growing volume [21] Business Segment Performance - Sales in the general industrial segment grew by 30% year-over-year, leading overall revenue expansion [19] - The defense, first response, and healthcare markets saw a 6.8% increase in sales, driven by defense aerospace alloys and medical cylinders [17] - Gas Cylinders segment sales decreased by 4.8% due to foreign-exchange impacts and challenges in passing through cost inflation [22] Market Conditions - Overall demand remained solid in Q3, with a 30% revenue growth in general industrial markets and 7% growth in defense and healthcare [9] - Some signs of slowing demand were noted in certain European markets, particularly in industrial gas cylinders and magnesium products [11] - The company ended Q3 with a healthy order backlog, well ahead of the previous year [11] Company Strategy and Industry Competition - The company is focused on executing its long-term EPS goal of $2 or more, despite macroeconomic uncertainties [10][40] - The Luxfer Business System is being developed to enhance operational efficiency and support profitable growth [32] - The company is prioritizing investments in innovation and productivity to drive organic revenue growth [28] Management Commentary on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but expressed confidence in the company's ability to navigate these issues [12][15] - The company is preparing for potential recession scenarios while maintaining optimism about its order book and medium-term demand [59] - Management highlighted the positive impact of government incentives on clean energy investments and the recovery of the aerospace market [33] Other Important Information - The company generated $1.3 million of free cash flow in Q3, an increase from $0.6 million in Q2 [23] - The net debt to EBITDA ratio stands at 1.2 times, providing financial flexibility [24] - The company has repurchased $6.9 million of shares year-to-date, exceeding the total for all of 2021 [29] Q&A Session Summary Question: Signs of softness in Europe affecting Gas Cylinders - Management confirmed early signs of reduced order intake in the Gas Cylinders business and graphic arts in Europe, but noted stronger orders in magnesium products and alternative fuels [37] Question: Pricing recovery in Gas Cylinders - Management indicated that 99% of year-to-date cost increases have been recovered, with expectations for further improvements in Q1 2023 [38][39] Question: Revenue exposure in Europe - Approximately 20% of total revenue comes from Europe, with the majority of production based in North America [46] Question: Energy cost management - The company is actively managing energy costs through hedging strategies and contract negotiations [50] Question: Working capital expectations for Q4 - Management expects working capital to decrease to 23% to 25% of annualized revenue in Q4, freeing up some cash [51] Question: Cash restructuring costs in Q4 - Expected cash restructuring costs for Q4 are between $1 million to $1.5 million [55] Question: Innovation and new product pipeline - Management highlighted ongoing developments in zirconium solutions, magnesium electrode technology, and lightweight materials for aerospace applications [60] Question: M&A activity - The company remains active in exploring bolt-on acquisitions but prefers reinvestment in organic growth due to macro uncertainties [62]

CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK L U X F E R THIRD QUARTER 2022 EARNINGS PRESENTATION October 26, 2022 1 FORWARD-LOOKING STATEMENTS This presentation 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 limited to: (i) statements regarding the Company's ...

Financial Data and Key Metrics Changes - The company achieved over 10% year-over-year sales growth in Q2 2022, continuing the double-digit gains from Q1 [5][6] - Q2 adjusted diluted earnings per share (EPS) was $0.36, aligning with the full-year guidance of $1.35 to $1.50 [5][7] - Consolidated adjusted EBITDA for Q2 was $16.9 million, a decrease of 2.3% from the prior year, impacted by cost inflation and supply chain disruptions [16][17] Business Line Data and Key Metrics Changes - The Elektron segment reported revenues of $63.4 million, up 20.8% year-over-year, driven by strong demand in aerospace and automotive markets [17] - Transportation sales increased by 26.1% in Q2, benefiting from recovery in aerospace and automotive demand [13] - Sales in the General Industrial end market rose by 13.8%, supported by growth in electronic games and commercial categories [15] Market Data and Key Metrics Changes - Revenue in transportation markets grew by over 25%, while industrial end markets saw a 14% increase [6] - Demand for hydrogen systems in Europe is increasing, indicating a positive long-term growth outlook in alternative fuels [8][14] - The defense and first response segment experienced a 4.8% decline due to lower replenishment orders for flameless ration heaters [12] Company Strategy and Development Direction - The company is focusing on growth opportunities in clean energy, light weighting, and safety, health, and technology [25][26] - A balanced approach to capital allocation is emphasized, with reinvestment in organic growth and shareholder returns [22] - The management aims to enhance internal operating models to support growth strategies [25] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2022 adjusted diluted EPS guidance, despite potential softness in defense-related sales [19][20] - The company is well-positioned to handle evolving macroeconomic conditions due to its diversified portfolio and strong balance sheet [10][11] - Supply chain conditions remain uneven, but improvements in raw material price increases have been noted [9] Other Important Information - The company reported a net debt to EBITDA ratio of 1.2 times, indicating a solid capital position [18] - Free cash flow generation returned to positive territory with $0.6 million in Q2, improving from a $10.3 million outflow in Q1 [18] - The company plans to address cost inflation through price adjustments and expects significant improvements in free cash flow conversion in the second half of the year [20] Q&A Session Summary Question: Order growth versus backlog growth - Management indicated strong order intake in Q2, with a higher order backlog compared to the end of Q1 and the same time last year, despite some weakness in specific areas [30] Question: Revenue growth guidance and volume assumptions - The revenue growth guidance remains at 12% to 20%, with expectations for stronger volumes as supply chain issues improve [31] Question: Cost pass-throughs on gas cylinders - Management is passing through material cost increases to customers where contracts allow, with further cost pass-throughs planned for the second half of the year [32] Question: Second half expectations for Elektron - Management expects a weak mix in Elektron for Q3, with significant orders weighted towards Q4, but overall order strength remains solid [36] Question: Pension contributions and restructuring payments - The company does not anticipate further pension contributions this year and expects restructuring payments to be around $10 million total for the year [39][41] Question: Supply chain and raw material availability - Supply chain conditions have improved, but challenges remain, particularly with magnesium and certain fibers [44] Question: Long-term product pipeline and growth focus - Management is optimistic about long-term growth opportunities in clean energy and hydrogen systems, with several customers entering low volume production [46][47]

CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK L U X F E R SECOND QUARTER 2022 EARNINGS PRESENTATION Conference Call July 27, 2022 1 FORWARD-LOOKING STATEMENTS This presentation 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 limited to: (i) statements regarding ...

FIRST QUARTER 2022 EARNINGS PRESENTATION Earnings Conference Call April 26, 2022 Click here to edit key takeaway CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 1 FORWARD-LOOKING STATEMENTS This presentation 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 limited ...

Financial Data and Key Metrics Changes - The company reported a 14% year-over-year sales growth in Q1 2022, with adjusted diluted EPS of $0.33, reflecting a strong start to the year [4][5][7] - First quarter sales reached $97 million, an increase of $11.8 million or 13.8% from the prior year, driven by price increases and the SCI acquisition [13][15] - Consolidated adjusted EBITDA for the quarter was $16.1 million, a decrease of $1.6 million or 9% from the prior year due to cost inflation and supply chain disruptions [13][14] Business Line Data and Key Metrics Changes - Sales in the defense, first response, and healthcare markets increased by 2.9%, driven by strong demand for magnesium powders [12] - Transportation sales grew by 11.6%, benefiting from the SCI acquisition and double-digit growth in auto catalysis products [12] - General industrial sales increased by 28.4%, supported by strong performance in the Elektron segment [12][15] Market Data and Key Metrics Changes - The company noted elevated order flow across many end markets, including industrial and aerospace, with potential for rising defense activity [5][10] - Supply chain constraints continued to impact raw material availability, particularly magnesium, carbon fiber, and zircon sand, but improvements were noted in supplier qualification [8][9] Company Strategy and Development Direction - The company aims to focus on organic growth and strategic bolt-on acquisitions, transitioning from a cost reduction focus to growth acceleration [20][55] - The outlook for 2022 has been improved, with adjusted diluted EPS guidance raised to $1.35 to $1.50, up from $1.30 to $1.50 [7][18] - The company is investing in new product developments and enhancing its manufacturing capabilities to support growth in alternative fuels and defense markets [21][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges and maintaining a customer-first approach, with a healthy backlog supporting future growth [11][24] - The geopolitical backdrop is expected to drive demand for military and humanitarian products, with the company prepared to meet additional needs for U.S. and NATO troops [10][11] - Management remains optimistic about achieving the goal of $2 or more in adjusted diluted EPS by 2025 [8][22] Other Important Information - The company has a solid balance sheet with a net debt to EBITDA ratio of 1.1, allowing for flexibility in capital allocation [17] - A quarterly dividend increase of 4% to $0.13 per share was announced, along with share repurchases totaling $1.5 million in Q1 [18] Q&A Session Summary Question: What is the biggest difference expected from the change in management? - Management transition is expected to focus on growth after completing the transformation plan, with continuity in leadership [26][28] Question: How does cost pass-through differ from price increases? - Cost pass-through refers to adjustments made to pass on increased costs to customers, which may not always be retained if costs decrease [29] Question: What is the volume assumption within the revenue growth guidance? - Approximately half of the total growth is expected to come from volume, with the other half from price increases [30] Question: Will the Gas Cylinders business recover from supply chain challenges? - Management is confident that supply chain conditions will improve, leading to better performance in the Gas Cylinders segment [38] Question: What opportunities exist in the hydrogen market? - The company sees significant opportunities in hydrogen markets, particularly in the U.S. and Europe, and is investing in new products and capabilities [44][45] Question: What are the expectations for SoluMag sales? - The outlook for SoluMag has improved due to high oil prices, with better order rates and sales expected [46][47] Question: What are the biggest opportunities for the company in the medium to long term? - The focus will be on organic growth, particularly in alternative fuels and new product developments, while also considering strategic acquisitions [55]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35370 Luxfer Holdings PLC (Exact Name of Registrant as Specified in Its Charter) England and Wales 98-1024030 State or Other Jurisdiction of Incorporation or Organization 8989 No ...

Financial Data and Key Metrics Changes - The company reported a 20% year-over-year sales growth in Q4 2021, with full-year sales increasing by 15.2% and EBITDA rising by 17.6% despite manufacturing inefficiencies [8][10][36] - Full-year cash flow remained strong, with $18.2 million paid to achieve zero pension deficit and approximately $20 million returned to shareholders through dividends and share buybacks [11][45] - The net debt to EBITDA ratio was reported at 0.8 times, indicating a strong balance sheet [11][40] Business Line Data and Key Metrics Changes - Sales in the defense, first response, and healthcare market increased by 5.8% for the year, driven by strong demand for SCBA and magnesium products [29] - Transportation sales grew by 27%, significantly aided by the SCI acquisition, with notable growth in auto catalyst products [30] - General industrial sales increased by 15.6%, reflecting a strong recovery in magnesium products [31] Market Data and Key Metrics Changes - The company faced unprecedented shortages of magnesium, zirconium, and carbon fiber, impacting its ability to meet demand [14][17] - The supply chain challenges were exacerbated by force majeure declarations from key suppliers, particularly US Magnesium LLC [14][15] - The company is optimistic about resolving supply issues in the second half of 2022, which would allow for new customer orders [20] Company Strategy and Development Direction - The company is focusing on investing in new products to capitalize on macro trends in alternative fuel, healthcare, aerospace, and defense markets [21] - The integration of SCI is progressing well, with expectations of breakeven by the end of 2022 and accretive contributions by 2023 [24][72] - The long-term EPS goal is set at $2 or more by 2025, driven by aerospace recovery and supply chain normalization [12][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges and highlighted strong demand levels across end markets [19][47] - The company anticipates revenue, EBITDA, and EPS growth in 2022, with EPS expected to be in the range of $1.30 to $1.50 [12][54] - Management acknowledged the uncertainty in the current inflation environment but remains optimistic about long-term growth prospects [46][49] Other Important Information - The company maintained its quarterly dividends and share buybacks, returning a total of $20 million to shareholders in 2021 [45] - The company has no debt maturities in the next 12 months, providing financial flexibility for growth investments [49] Q&A Session Summary Question: Can you elaborate on the raw material shortages and pricing catch-up? - Management indicated that pricing recovery may take six to nine months due to higher volatility and uncertainty in the supply chain [66][68] Question: How do you rank the uncertainty of raw material shortages? - Magnesium is the highest concern, followed by zirconium, with carbon fiber and aluminum also affected [70] Question: What are the expectations for SCI's performance in 2022? - The company expects SCI to be breakeven by the end of 2022, with a projected loss of about $0.10 for 2021 [71][72] Question: How is pricing handled in the Elektron and Gas Cylinders segments? - Management noted that multiple pricing adjustments have been made, with expectations of a 5% pricing impact in 2022 [75][76] Question: What is the outlook for the SoluMag business? - Management is optimistic about SoluMag's performance, projecting sales in the range of $10 to $14 million for 2022 [86] Question: How much of the revenue guidance for 2022 is driven by volume versus price? - Management suggested a split of approximately half volume and half price for the revenue growth guidance [89] Question: What is the size of the commercial aerospace business? - The total aerospace business was around $8 million in Q4, with expectations of recovery to $30 million in the coming years [91][94]