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| Statement |
|---|
| We are making substantial progress on actions that we expect to unlock shareholder value and gaining confidence that we will return Luxfer to a path of margin improvement and sustainable earnings growth |
| Despite flat sales, we achieved a significant increase in adjusted EBITDA, more than doubling to $6.5 million, supported by the cost pass-through on our newly negotiated cylinder supply arrangements and by increased demand |
| I'm really very pleased with the work on the strategic review process, and I look forward to discussing those three elements with you further in the quarters ahead, the disposal of the Graphic Arts business, the improved performance that we will see in Gas Cylinders and Elektron as we deliver profitable growth and the optionality that we now have in our portfolio |
| We are entering 2024 with favorable momentum as the structural changes to our operations, improve our cost base, our strategic pricing drives sustainable margin improvements and the definitive directions from our strategic review process gives us the opportunity to further unlock shareholder value |
| Quarter Four was also a very strong period for demand in SCBA cylinders and we're really pleased with the way the Luxfer operations in Riverside stepped up to address that |
| They delivered solid and improved results against the backdrop of challenging market conditions as well as the added demand of our strategic review process, I am very grateful for their commitment |
| Additionally, we will share important positive information on our self-help actions including new SCBA agreements, go-forward insurance coverage for our elevated legal expenses and some lower upcoming costs for magnesium |
| We achieved adjusted fourth quarter sales of $87.8 million, approximately 3% above the midpoint of guidance, underpinned by an increase in gas cylinder demand |
| Like our sales outlook, our expectation is that earnings will strengthen during the year with notable improvement as Elektron rebuilds from their depressed quarter four performance |
| In addition to better-than-expected sales and earnings, we generated improved operating cash flow and full year free cash flow more than doubled the prior year |
| And so, yes, we're very pleased that Luxfer Gas Cylinders and their two largest customers have recently formalized these new multiyear supply agreements |
| Steve, we're very proud to be a leading supplier into the firefighter SCBA market and to be able to provide our lightweight high-pressure cylinders into what is a very important life-saving application |
| Steve will walk through the financial performance for the quarter and full year in more detail but we are encouraged with the sequential momentum of our ongoing business as we exited 2023 with a number of positive developments that we believe position us well for 2024 and beyond |
| Though pricing is still at elevated levels relative to 2021, there is greater pricing stability and this should help support our demand recovery in some of the Elektron, Industrial and Transportation sectors |
| So we have qualified and contracted for an additional source of magnesium and this should support an improved position in a number of our end markets |
| Returning to the year ahead, I'm optimistic regarding Luxfer's 2024 outlook and our market position to capture growth in key end markets that have been muted recently |
| In addition, we've made further progress in the fourth quarter with the tactical operational actions we are taking to improve financial performance, including minimizing expenses, passing through higher input costs and improving cash flow |
| The motivation for this comprehensive and portfolio-wide exercise is to improve the performance of our businesses and unlock shareholder value |
| This is a good business, delivering quality products and supported by an outstanding team |
| Look, this is a good business, delivering quality products, led by a strong team with some significant assets |
| We expect positive overall growth momentum for the Gas Cylinders business for the full year although we see softer demand sequentially in quarter one coming out of an unseasonably strong quarter three -- quarter four 2023 |
| I'm encouraged by the projected demand levels, which gives us confidence that we will see volume growth as we emerge from the first quarter into the remainder of the year |
| We have identified several end market megatrends that will drive higher demand for our products, including positive developments in the transportation sector where Gas Cylinders is realizing increased demand for a number of alternative fuel products, especially related to CNG in North America |
| We are increasingly confident that both the Gas Cylinders and Elektron segments can deliver attractive profitable growth during 2025 and beyond |
| Increasingly, of course, the business opportunity grew in Graphic Arts very successfully, but moving more and more away from Elektron's core competence in material technology and allies |
| While the industrial macro environment remains uncertain, we're already seeing a rebound in demand for a number of higher-margin Elektron applications, and we are pleased with the recent elevated performance of Gas Cylinders |
| Helped, no doubt by the upcoming lower magnesium costs, which should provide higher levels of profitability |
| For the full year, Defense, First Response and Healthcare was up 23.9%, demonstrating both the strength and secular nature of our largest end market |
| Defense, First Response and Healthcare sales remained strong, growing 9.7% compared with last year, driven by ongoing strength in lightweight SCBA as well as medical cylinders, offsetting anticipated lower fourth quarter demand for flameless ration heaters and chemical kits |
| The acceleration and expansion of our annual strategic review has clearly identified optionality to the Board of Directors and the Luxfer leadership, which we can execute successfully |
| Statement |
|---|
| For the full year 2023, adjusted sales were $373.5 million, a decline of 2.9% from the prior year, reflecting the industrial macro challenges we faced, particularly during the third quarter |
| Fourth quarter sales decreased 17.4% from the prior year to $87.8 million |
| 2023 was a challenging year with several factors having an adverse impact on our full year results |
| General industrial end markets continued to face macro headwinds resulting in sales decreasing by 42.8% in quarter four |
| Transportation sales decreased 22.3% in the quarter and full year sales decreased 10.2% compared with the prior year |
| Elektron fourth quarter sales decreased 33.8% from the prior year to $36.1 million, driven by lower demand and unfavorable mix in the general industrial end market, slightly offset by pricing and FX tailwinds |
| Adjusted EBITDA of $1.6 million decreased from $8.2 million primarily as a result of lower demand that more than offset positive price versus inflation |
| Full year adjusted sales decreased 25.6% |
| Fourth quarter adjusted EBITDA decreased $3.1 million from the prior year to $8.1 million |
| And also, I think you mentioned Q1 will be softer after a particularly strong volume quarter |
| So a difficult Q4 for Elektron and an increasingly brighter period ahead |
| However, the business was not able to absorb end market demand pressures impacting volume, which were primarily in Elektron |
| In the quarter, areas of softer demand included auto catalysis material and aerospace applications |
| As was the case in previous quarters, this impacted demand in applications such as commercial magnesium powders, industrial zirconium and oil and gas |
| And we'd flagged some lower sales of products such as military, meals ready-to-eat, flameless ration heaters |
| This is a tremendous development and eliminates some uncertainty from our results going forward |
| In the USA, supply of magnesium remains restricted and price premiums in this region remain abnormally high |
| The supply chain challenges we faced with our commercial magnesium have, to some extent, eased, particularly in areas outside of the USA |
| So yes, while magnesium pricing is still up from historic levels, it's considerably lower than we saw at the peak in 2022 |
| And we do think that quarter four represents a low mark for Elektron last year |
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