Luxfer Holdings PLC Announces Third Quarter 2021 Financial Results

25 October 2021

Third Quarter 2021 Summary (all comparisons year-over-year unless otherwise noted; results exclude aluminum products discontinued operations)

Net sales of $91.2 million increased 17.4%, including a 10.2% benefit from the SCI acquisition
GAAP net income of $6.0 million increased from $2.4 million; adjusted net income of $7.2 million increased 9.1%
GAAP EPS of $0.21 increased from $0.09; adjusted EPS of $0.26 increased 8.3%
Adjusted EBITDA of $13.8 million increased 0.7%; adjusted EBITDA margin of 15.1% decreased 250 basis points primarily due to SCI performance
Narrowing 2021 adjusted EPS guidance range to $1.20 to $1.25 from the prior range of $1.15 to $1.30.

MANCHESTER, UK - (BUSINESS WIRE) - Luxfer Holdings PLC (NYSE: LXFR), (“Luxfer” or the “Company”), a global manufacturer of highly-engineered industrial materials, today announced financial results for the third quarter, ending September 26, 2021.

Consolidated net sales increased 17.4% to $91.2 million from $77.7 million, including a favorable foreign currency benefit of $2.1 million, or 2.7%. The sales volume increase was most pronounced in industrial and transportation end markets. The sales growth also included $7.9 million from the SCI acquisition.

GAAP net income increased to $6.0 million, or $0.21 per diluted share, compared to $2.4 million, or $0.09 per diluted share one year ago. Results include $1.1 million in restructuring and other acquisition & divestiture charges compared to restructuring and other charges of $4.2 million in the prior year.

Adjusted net income increased 9.1% to $7.2 million from $6.6 million. Adjusted diluted earnings per share increased 8.3% to $0.26 from $0.24. Adjusted EBITDA increased 0.7% to $13.8 million. Adjusted EBITDA margin of 15.1% decreased 250 basis points, with base business margins flat to prior year.

“We saw strong demand for most of our product lines across our diverse end markets and executed well in an increasingly challenging environment, delivering year-over-year revenue growth”, said Alok Maskara, Luxfer’s Chief Executive Officer. “Ongoing supply chain disruptions constrained our ability to fully satisfy all customer demand during the quarter, but the localized nature of our supply chain gives us a competitive advantage in serving our customers. We are adjusting our inventory position to maintain customer service levels as global supply chain disruptions are expected to continue. While cost pressures impacted margins this quarter, we are confident in our ability to offset inflation with pricing in the medium- to long-term. We have accelerated investments in automation and digitization, using free cash flow to invest in manufacturing and innovation to facilitate future growth opportunities,” added Mr. Maskara.

Segment Results (all comparisons year-over-year unless otherwise noted; results exclude aluminum products discontinued operations)

Elektron Segment

Net sales of $45.6 million increased 0.4% including a $0.9 million, or 2.0%, benefit from foreign currency. Strong industrial growth was partially offset by lower defense sales.
Adjusted EBITDA of $8.4 million increased 27.3% and margin expanded 390 basis points to 18.4% from 14.5%.

Gas Cylinders Segment

Net sales of $45.6 million increased 41.2% including a $1.2 million, or 3.7%, benefit from foreign currency, and an $7.9 million, or 24.5%, contribution from the acquisition of SCI.
Adjusted EBITDA of $5.4 million decreased 23.9% and EBITDA margin decreased compared to the third quarter of 2020, primarily due to SCI performing as expected.

Capital Resources and Liquidity

Free cash flow was $7.7 million for the quarter, compared to an inflow of $25.6 million in the prior year. Resulting year to date free cash flow is $28.5 million. During the quarter, the Company paid $3.4 million in ordinary dividends, or $0.125 per share, and repurchased shares totaling $1.9 million related to the Company’s previously announced share buyback program. Given the strong cash flow, the Company maintains normal levels of funding for growth and productivity initiatives. At quarter end, net debt totaled $34.5 million, resulting in a net debt to EBITDA ratio of 0.6x.

2021 Guidance

“We are narrowing our previously announced guidance of Adjusted EPS to the range of $1.20 to $1.25, including an estimated $0.10 dilutive impact of the SCI acquisition. We remain focused on retaining a strong balance sheet, providing us the financial flexibility to continue investing in growth, returning cash to shareholders, and exploring acquisition opportunities to deliver long-term profitable growth and value creation,” Mr. Maskara concluded.

Conference Call Information

Luxfer has scheduled a conference call at 8:30 a.m. U.S. Eastern Daylight Time on Tuesday, October 26, 2021, during which management will provide a review of the Company’s financial results for the third quarter of 2021. U.S. participants may access the conference call by telephoning +1-877-876-9173. Participants from other countries may access the conference call by telephoning +1-785-424-1667. The participant conference ID code is LXFRQ321. The following link provides access to a webcast for the conference call:

https://event.on24.com/wcc/r/3460600/3C07357FFC966E311A83587D09510CFC

A recording of the conference call will be available for replay two hours after the completion of the call and will remain accessible until the next quarterly report is released. To hear the recording, please call +1-800-934-2730 in the U.S. and +1 402-220-1141 in other countries. Enter conference ID code LXFRQ321 when prompted. Slides used in the presentation and a recording of the call will also be available in the Investor Relations section of the Luxfer website at www.luxfer.com.

Non-GAAP Financial Measures

Luxfer Holdings PLC prepares its financial statements using U.S. Generally Accepted Accounting Principles (GAAP). When a company discloses material information containing non-GAAP financial measures, SEC regulations require that the disclosure include a presentation of the most directly comparable GAAP measure and a reconciliation of the GAAP and non-GAAP financial measures. Management’s inclusion of non-GAAP financial measures in this release is intended to supplement, not replace, the presentation of the financial results in accordance with GAAP. Luxfer management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any period. Management also believes that these non-GAAP financial measures enhance the ability of investors to analyze the Company’s business trends and understand the Company’s performance. In addition, management may utilize non-GAAP financial measures as a guide in the Company’s forecasting, budgeting, and long-term planning process. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.

Forward-Looking Statements

This release 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 results of operations and financial condition; (ii) statements of plans, objectives or goals of the Company or its management, including those related to financing, products, or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “forecasts,” and “plans,” and similar expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections, and other forward-looking statements will not be achieved. The Company cautions that several important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates, and intentions expressed in such forward-looking statements. These factors include, but are not limited to: (i) lower than expected future sales; (ii) increasing competitive industry pressures; (iii) general economic conditions or conditions affecting demand for the products and services it offers, both domestically and internationally, including as a result of post-Brexit regulation, being less favorable than expected; (iv) worldwide economic and business conditions and conditions in the industries in which it operates; (v) fluctuations in the cost of raw materials, utilities and other inputs; (vi) currency fluctuations and hedging risks; (vii) its ability to protect its intellectual property; (viii) the significant amount of indebtedness it has incurred and may incur and the obligations to service such indebtedness and to comply with the covenants contained therein; and (ix) risks related to the impact of the global COVID-19 pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, supply chain disruptions and other impacts to the business, and the Company’s ability to execute business continuity plans, as a result of the COVID-19 pandemic. The Company cautions that the foregoing list of important factors is not exhaustive. These factors are more fully discussed in the sections entitled “Forward-Looking Statements” and “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the U.S. Securities and Exchange Commission on March 2, 2021. When relying on forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and events. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update or revise any of them, whether because of new information, future events or otherwise.

About Luxfer Holdings PLC (“Luxfer”)

Luxfer is a global manufacturer of highly-engineered industrial materials focused on value creation by using its broad array of technical know-how and proprietary technologies. Luxfer’s high-performance materials, components, and high-pressure gas containment devices are used in defense and emergency response, healthcare, transportation, and general industrial applications. For more information, please visit www.luxfer.com.

Luxfer is listed on the New York Stock Exchange and its ordinary shares trade under the symbol LXFR.

Investor Contact:

Heather Harding

Chief Financial Officer

+1-414-269-2419

Investor.Relations@luxfer.com