Luxfer PLC(LXFR) - 2024 Q4 - Annual Report

Financial Performance - Consolidated net sales for 2024 were $391.9 million, a decrease of 3.2$405.0 million in 2023[179]. - Gross profit increased to $85.7 million in 2024, representing a gross margin of 21.9$48.1 million in 2024, slightly down by 1.2% from 48.7 million in 2023, with SG&A as a percentage of sales increasing by 0.3 percentage points[179][182]. - Research and development costs remained flat at 4.4 million in 2024, maintaining a 1.1% share of net sales[179][183]. - Restructuring charges in 2024 totaled $4.7 million, influenced by decreased demand in several product lines, including zirconium products and chemical response kits[179][184]. - Net income from continuing operations was$18.3 million in 2024, a significant recovery from a loss of $2.6 million in 2023[179]. - The effective tax rate for 2024 was 30.9$12.2 million related to the divestiture of the Graphic Arts segment[179][188]. - Other income of $7.7 million in 2024 was primarily from the recovery of legal costs related to a previous case, with no such income reported in 2023[179][189]. - Adjusted net income from continuing operations for 2024 was$30.9 million, significantly up from $16.4 million in 2023, representing an increase of 88.4$54.6 million, compared to $38.8 million in 2023, reflecting a growth of 40.7$1.14, compared to $0.61 in 2023, marking an increase of 86.9$45.2 million, up from $26.9 million in 2023, indicating a growth of 67.5$186.3 million, a slight decrease of 0.1% from $186.4 million in 2023, but an increase of 1.5$183.7 million in 2022[202][203]. - The segment adjusted EBITDA for Gas Cylinders in 2024 was $18.0 million, compared to$12.8 million in 2023, showing an increase of 40.6%[198]. - Adjusted EBITA for Gas Cylinders increased by 15.9% to $14.6 million in 2024, compared to$12.6 million in 2023, and up 57.5% from $8.0 million in 2022[202]. - Elektron segment net sales decreased by 5.9$176.0 million in 2024 from $187.1 million in 2023, and down 6.9$201.0 million in 2022[205]. - Adjusted EBITA for Elektron increased by 61.1% to $33.5 million in 2024, compared to$20.8 million in 2023, but decreased by 43.2% from $36.6 million in 2022[205]. - Adjusted EBITDA for Elektron rose by 48.5$39.5 million in 2024, compared to $26.6 million in 2023, and decreased by 37.4$42.5 million in 2022[205]. - Graphic Arts segment net sales fell by 6.0% to $29.6 million in 2024 from$31.5 million in 2023, and down 18.6% from $38.7 million in 2022[208]. Cash Flow and Financing - Cash provided by operating activities was$51.1 million in 2024, significantly up from $26.2 million in 2023, including$5.0 million spent on restructuring activities[217]. - Capital expenditures in 2024 were $10.3 million, an increase from$9.4 million in 2023, with anticipated expenditures for 2025 projected between $12 million and$15 million[219]. - Net cash used for financing activities in 2024 was $44.0 million, compared to$27.5 million in 2023, including $14.0 million in dividend payments[221]. - The company paid dividends of$14.0 million in 2024, maintaining the same amount as in 2023, equating to $0.52 per ordinary share[234]. - As of December 31, 2024, the company had drawn down$17.2 million under the Revolving Credit Facility (RCF), a decrease from $43.1 million as of December 31, 2023[240]. - The company is required to maintain a minimum interest coverage ratio of 4.0:1 and a leverage ratio of no more than 3.0:1 under the Senior Facilities Agreement[232]. - Total contractual cash obligations amount to$69.7 million, with $10.5 million due within one year and$49.3 million due within 1-3 years[237]. - The company had capital expenditure commitments of $0.5 million as of December 31, 2024, down from$2.3 million in 2023[240]. Pension and Interest Rates - The weighted-average discount rate for the company's U.K. pension plans was 5.40% in 2024, up from 4.50% in 2023[249]. - The expected rate of return on plan assets for the U.K. plans was 5.80% in 2024, compared to 4.80% in 2023[257]. - The life expectancies for members aged 65 on December 31, 2024, are assumed to be 20.1 years for males and 22.7 years for females[255]. - As of December 31, 2024, the company had both fixed and variable rate debt, with no interest hedge agreements in place[267]. - The company may decide to hedge interest payable based on a combination of forward rate agreements, interest rate caps, and swaps due to exposure to variable interest rates[268]. Commodity Price Risks - The company is exposed to commodity price risks, particularly for magnesium, zirconium, and carbon fiber, with significant price volatility observed in 2022 and 2023, and a slow decline in 2024[265]. - Fixed-price supply contracts are in place for a portion of raw materials to mitigate price volatility, but the company remains exposed to rising prices over time[265]. - The price of high-grade aluminum, which is actively traded on the LME, has fluctuated significantly, impacting the costs of aluminum purchases for the Gas Cylinders Segment[266]. - The company has made additional physical purchases of magnesium and rare earth chemicals to delay the impact of higher prices, affecting cash flow and leading to greater utilization of revolving credit facilities[265]. - The company relies on the ability to pass on major price increases to customers to maintain profitability, especially for carbon fiber wrapped composite cylinders and magnesium-based products[265]. Hedging and Exchange Rates - As of December 31, 2024, the company had sales hedges totaling £36.5 million for Canadian dollars and £0.2 million for U.S. dollars, with maturity dates ranging from January 2025 to March 2025[263]. - The maturity dates for purchase hedges include various dates in early 2024, with contract totals for U.S. dollars, euros, and Australian dollars amounting to £0.4 million, £0.8 million, and £15.6 million respectively[263]. - The exchange rates for sales hedges as of December 31, 2024, ranged from $1.2511 to$1.2999 for Canadian dollars and $1.7969 for U.S. dollars[263].