Luxfer PLC(LXFR) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales for Q2 2024 decreased by 9.7% to $99.7 million compared to $110.4 million in Q2 2023[80] - Gross profit for Q2 2024 was $22.0 million, a decrease of 9.1% from $24.2 million in Q2 2023, with a gross profit margin of 22.1%[80] - Operating income for Q2 2024 fell by 51.9% to $3.8 million, down from $7.9 million in Q2 2023, resulting in an operating margin of 3.8%[80] - Net loss from continuing operations in Q2 2024 was $0.4 million, a decline of 108.2% compared to net income of $4.9 million in Q2 2023[80] - Year-to-date net sales for the first six months of 2024 decreased by 10.7% to $189.1 million from $211.7 million in the same period of 2023[82] Cost and Expenses - Research and development costs as a percentage of net sales increased by 0.2 percentage points in both Q2 and the first six months of 2024[86] - Restructuring charges in Q2 2024 were $1.1 million, significantly lower than $2.5 million in Q2 2023, reflecting cost-saving initiatives[88] - Acquisition and disposal related costs for Q2 2024 amounted to $9.2 million, primarily due to the divestiture of the Graphic Arts segment[90] - The effective tax rate for Q2 2024 was 114.8%, a significant increase from 26.9% in Q2 2023[80] - Net interest expense decreased by 27.8% to $1.3 million in Q2 2024 from $1.8 million in Q2 2023, with a total of $2.7 million for the first half of 2024 compared to $3.1 million in the same period of 2023[92] Strategic Focus - The company anticipates ongoing focus on cost control, new product launches, and productivity improvements as part of its strategic objectives for 2024[79] - The company initiated a process to divest the Graphic Arts business, expecting completion within the current year, which is reflected in the financial summaries[96] Adjusted Financial Metrics - Adjusted net income for Q2 2024 was $10.5 million, compared to $7.4 million in Q2 2023, while year-to-date adjusted net income reached $14.5 million, up from $12.8 million in 2023[97] - Adjusted diluted earnings per share for Q2 2024 was $0.39, compared to $0.27 in Q2 2023, reflecting improved operational performance[98] - Adjusted EBITDA for Q2 2024 was $17.4 million, an increase from $14.4 million in Q2 2023, indicating strong operational growth[98] - Adjusted net income from continuing operations for Q2 2024 was $10.5 million, compared to $7.4 million in Q2 2023, representing a 41.9% increase[100] Segment Performance - Gas Cylinders segment net sales increased by 2.7% to $49.8 million in Q2 2024 from $48.5 million in Q2 2023, with year-to-date sales up 5.8% to $95.2 million[104][105] - Adjusted EBITDA for Gas Cylinders remained flat at $4.9 million in Q2 2024, while year-to-date adjusted EBITDA increased by 21.6% to $9.0 million[104][107] - Elektron segment net sales decreased by 20.8% to $42.0 million in Q2 2024, and year-to-date sales fell by 24.4% to $79.7 million[109][110] - Adjusted EBITDA for Elektron increased by 30.5% to $12.4 million in Q2 2024, with a year-to-date adjusted EBITDA of $18.8 million, a slight decrease of 1.1%[109][110] - Graphic Arts segment net sales decreased by 11.2% to $7.9 million in Q2 2024, with year-to-date sales down 12.9% to $14.2 million[111][112] - Graphic Arts achieved a small positive EBITDA of $0.1 million in Q2 2024, compared to breakeven in Q2 2023, but reported a loss of $1.6 million for the first six months of 2024[111][113] Cash Flow and Financing - Cash generated from operating activities was $12.5 million in the first six months of 2024, compared to an outflow of $1.3 million in the same period of 2023[119] - Net cash used in investing activities was $4.1 million for the first six months of 2024, a decrease from $4.9 million in 2023 due to reduced capital expenditures[120] - In the first six months of 2024, net cash used by financing activities was $6.3 million, compared to $1.2 million provided in 2023[121] - Year-to-date dividends paid in 2024 amounted to $7.0 million, with an additional $3.5 million declared, maintaining a dividend of $0.260 per ordinary share[122] - The company made a net drawdown of $2.0 million on banking facilities, having drawn $6.4 million on the revolving credit facility and repaid $4.4 million of short-term debt[121] Obligations and Compliance - Total contractual cash obligations as of June 30, 2024, were $110.9 million, with $11.7 million due within one year[126] - Interest payments due total $11.3 million, with $4.7 million due within one year[126] - The company maintains compliance with covenants under the Loan Notes and Senior Facilities Agreement throughout all quarterly measurement dates[116] - The company has authorized share capital of 40.0 million ordinary shares with a par value of £0.50 per share[125] - No off-balance sheet arrangements were reported as of June 30, 2024, other than bonding facilities[127] Market Risk - There were no material changes in market risk during the first half of 2024[131] - The company’s dividend payments depend on cash flows from its subsidiaries, as it operates as a holding company[123]