innovative solutions in material technology · innovative solutions in material technology ......

1 LUXFERGROUP ©2017LuxferHoldingsPLC,AllRightsReserved©2017LuxferHoldingsPLC,AllRightsReserved

Innovative solutions in material technology

KeyBanc IndustrialsConferenceBostonMay2017・

2 LUXFERGROUP ©2017LuxferHoldingsPLC,AllRightsReserved

Forward-lookingstatementsThispresentationcontainsforward-lookingstatements.Examplesofsuchforward-lookingstatementsinclude,butarenotlimitedto:(i)statementsregardingtheGroup’sresultsofoperationsandfinancialcondition,(ii)statementsofplans,objectivesorgoalsoftheGrouporitsmanagement,includingthoserelatedtofinancing,productsorservices,(iii)statementsoffutureeconomicperformance;and(iv)statementsofassumptionsunderlyingsuchstatements.Wordssuchas“believes”,“anticipates”,“expects”,“intends”,“forecasts”and“plans”andsimilarexpressionsareintendedtoidentifyforward-lookingstatementsbutarenottheexclusivemeansofidentifyingsuchstatements.Bytheirverynature,forward-lookingstatementsinvolveinherentrisksanduncertainties,bothgeneralandspecific,andrisksexistthatthepredictions,forecasts,projectionsandotherforward-lookingstatementswillnotbeachieved.TheGroupcautionsthatanumberofimportantfactorscouldcauseactualresultstodiffermateriallyfromtheplans,objectives,expectations,estimatesandintentionsexpressedinsuchforward-lookingstatements.Thesefactorsinclude,butarenotlimitedto:(i)futurerevenuesbeinglowerthanexpected;(ii)increasingcompetitivepressuresintheindustry;(iii)generaleconomicconditionsorconditionsaffectingdemandfortheservicesofferedbyusinthemarketsinwhichweoperate,bothdomesticallyandinternationally,includingasaresultoftheBrexitreferendum,beinglessfavorablethanexpected;(iv)worldwideeconomicandbusinessconditionsandconditionsintheindustriesinwhichweoperate;(v)fluctuationsinthecostofrawmaterialsandutilities;(vi)currencyfluctuationsandhedgingrisks;(vii)ourabilitytoprotectourintellectualproperty;and(viii)thesignificantamountofindebtednesswehaveincurredandmayincurandtheobligationstoservicesuchindebtednessandtocomplywiththecovenantscontainedtherein.TheGroupcautionsthattheforegoinglistofimportantfactorsisnotexhaustive.Thesefactorsaremorefullydiscussedinthesections“Forward-LookingStatements”and“Riskfactors”inourAnnualReportonForm20-FfortheyearendedDecember31,2016,filedwiththeU.S.SecuritiesandExchangeCommissiononMarch14,2017.Whenrelyingonforward-lookingstatementstomakedecisionswithrespecttotheGroup,investorsandothersshouldcarefullyconsidertheforegoingfactorsandotheruncertaintiesandevents.Suchforward-lookingstatementsspeakonlyasofthedateonwhichtheyaremade,andtheGroupdoesnotundertakeanyobligationtoupdateorreviseanyofthem,whetherasaresultofnewinformation,futureeventsorotherwise.


Luxfer foundedin1897inChicago

British advertisement, circa 1900.

Luxfer wasfoundedbyScottishinventorJamesPennycuick in1897inChicago,Illinois,toproduceprismaticglassproductstoilluminatearchitecturalinteriorsinNorthAmericanandEurope.ThenameLuxfer comesfromLatinlux(light)andferre (tocarry),soitliterallymeans“lightcarrier.”

ThecompanyestablisheditsfirstsubsidiaryinEnglandin1898,followedbyplantsinFrance,BelgiumandGermanyin1899.TheBritishcompanyisthemainancestoroftoday’sLuxfer Group.


Luxfer’s AlcanheritageManyofthecompaniesthatnowcompriseLuxferGroupwereownedbyBritishAlcanuntil1996,whenAlcansoldthesebusinesses—andseveralothers—toagroupofinvestors,includinganumberofformerAlcanmanagers.

In2000,thenewownerssoldaluminumplate,sheetandextrusionoperations,aswellasseveraldistributionbusinesses,toAlcoa.

Theremainingfourbusinesses—LuxferGasCylinders,Superform,MagnesiumElektron andMELChemicals—werethecoreoperationsofLuxferGroupwhenthecompanylistedontheNewYorkStockExchangeonOctober3,2012.


Luxfer’s expansiveglobalfootprint

Graham,NC

Swinton,UK(2locations)

Gerzat,France

Shanghai,China

Calgary,Canada

Manchester,UK

Worcester,UK

Nottingham,UK

Tamaqua,PA

Flemington,NJ

Lakehurst,NJ

NiagaraFalls,CanadaFindlay,OH

Shizuoka,Japan

Madison,IL

Riverside,CA(2locations)

NewDelhi,India

Sydney,Australia

1,800employees

LuxferGroupoperates20plantsinsevencountriesonfourcontinentswithjointventuresanddistributioncentersinfourmorecountries.

USA� Canada� UK� France� CzechRepublic� China� Japan� Australia� India

Cincinnati,OH

Riverhead,NY

Litvinov,CzechRepublic

BrighamCity,UT

Tulsa,OK


Luxfer’s globalend-markets


Luxfer’s globalbrandsGas Cylinders

Division:

Elektron Division:

Luxfer HoldingsPLC(LuxferGroup) isaglobalmaterialstechnologycompanyfocusedonsustainedvaluecreationusingitsbroadarrayofproprietarymaterialstechnologiesandtechnicalknow-how.

Organizedintotwodivisionswithfourglobalbrands,thecompanyspecializesinhigh-performancematerials,componentsandhigh-pressuregas-containmentdevices.


Luxfer aluminumcylinders

Luxfer GasCylindersistheworld’slargestmanufacturerofhigh-pressurealuminumcylinders.Weintroducedthefirstcommercialhigh-pressure,hot-extrudedaluminumcylinderin1941andinventedthecold-extrudedaluminumcylinderin1958.Wehavealonghistoryofcylinderinnovation,includingusingourownpatentedandproprietaryalloys.


AluminumcylindermarketsHealthcare Emergency

medical

Microchip&electronicsmanufacturing

Scubadiving

Fireextinguishers

Beverage


Luxfer compositecylindersLuxfer isalsotheworld’slargestmanufacturerofcarboncompositecylinders,includingsmall,portablecylindersforfirefighterlifesupportandlargecylindersforalternativefuel(AF)vehicles,aswellastransportationandstorage.

Luxfermakesbothaluminum-lined(Type3)andpolymer-lined(Type4)compositecylinders.


Luxfer compositecylinders

OurhighlyautomatedcompositecylindermanufacturingfacilityinRiverside,California.


SuperformSuperform UKhasbeenmakingexteriorbodypartsforMorganCarsformanyyears.

Superform manufacturescomplex,one-piece,lightweightcomponentsforrailcarexteriorsandinteriors,includingLondonMetrocars(shownbelow).

Superform producedthisaluminumcomponentforadvancedwingletsontheBoeing737Max.

Luxfer inventedandremainsthegloballeaderinthesuperforming processformakinghigh-value-added,complex,sheet-basedpartsfromaluminum,magnesiumandtitaniumforautomotive,aerospace,rail,medicalandarchitecturalmarkets.Wehaverecentlyinvestedinexpandingthemetal-formingcapabilitiesofthisbusiness.


Magnesium-ElektronMagnesium-Elektron isagloballeaderinmagnesiumaerospacealloysforbothmilitaryandcivilianapplications.Helicoptergearboxesareanimportantapplicationforouralloys.


Magnesium-Elektron

Magensium-Elektron istheworldleaderinbespokemagnesiumpowdersforcountermeasure

flaresthat protectaircraftfromattackbyheat-seekingmissiles.


Magnesium-Elektron

Magnesium-Elektron istheonlyWesternsupplierofhigh-qualitymagnesiumphotoengravingplate.Wealsomakemagnesiumsheet,extrusions andultra-finepowders andrunadedicatedrecycling operation.


MELChemicals

MELChemicalsproducesanextensive,proprietaryrangeofhigh-qualityzirconium-based

products usedinawidevarietyofapplications,includingautomotiveandindustrial

catalysis,ceramics,electroniccomponents,sorption,paint,

pigments,printingink,adhesives,antiperspirants,cosmeticsand

medicalproducts.


MELChemicals

Ourzirconiumoxidesareusedtocreateavarietyofadvancedceramicproductsusedforcircuitboards,filtrationofmoltenmetalalloysandassubstratesforcatalystsrequiringlargeinternalsurfaceareas.

Zirconiumoxideceramicfiltersremoveslag,drossandotherimpuritiesfrommoltenmetalduringproductionofhigh-qualitycastings.

X-raydiffractionensuresceramicstructuralintegrity.

Zirconiumisusedtomakehigh-qualityelectro-ceramics.


ValuedriversLuxfer haslong-standingrelationshipswiththeseandotherblue-chipcustomers:


Valuedrivers

Luxfer GasCylindersistheworld’slargestmanufacturerofportable,carboncomposite,self-containedbreathingapparatus(SCBA)life-supportcylindersforfirefightersandotherfirst-responders.Weoffertheworld’shighest-pressureSCBAcylinder,aswellastheworld’slightest-weightSCBAcylinder.WemaketheseproductsintheUSA,FranceandChina.

GloballeaderinportableSCBAlife-supportcylinders


Valuedrivers

Feedbackfromcustomersonlaboratorytestingofournext-

generationG6 producthasbeenverypositive,andwearenowawaiting

resultsfromenginetests.

Luxfer’s MELChemicalsbusinessisamajorplayerinzirconium-ceriumwashcoats for

automotivecatalyticconverters.

Wehave‘migrated’ourknow-howintonewtechnologyforcatalysisandpollutioncontrolinrefineries,chemicalplants

andotherlargeindustrialmanufacturingfacilities.

Migratingtechnologies

G6automotivecatalysisproduct


ValuedriversGeographicexpansionofLuxfer Magtech

LuxferMagtech Inc.(LMI)makesmagnesium-basedheatingpadsforself-heatingmealsusedbytheU.S.militaryandciviliandisaster-reliefagencies.WerecentlyacquiredaEuropeandistributortoexpandsalesofLMIproductsoutsidetheU.S.,andwearenowpursuingordersfromseverallargenon-U.S.buyersofself-heatingmeals.


Ourphotoengravingplatesareusedforspecialprintingeffects,suchasfoil-stamping,embossinganddie-cuttingforbooks,stationery,luxurypackagingandgreetingcards.WehaverecentlyexpandedourbusinessintheMiddleEast,IndiaandSouthAmerica.

Valuedrivers

Geographicexpansionofphotoengravingbusiness


• Luxfer hasalongcorporateheritageofproprietaryinnovationandacomprehensivematerialscienceknowledgebank.

• WestressmanufacturingexcellenceandIPprotection.• Wefocusonhigh-growthenvironmental,healthcareandprotection/safetyendmarkets.

• Wehavemulti-yeardevelopmentprograms,mostoftenwithpartners.• Weoperateinhighlyregulatedmarkets,andwe’readeptatobtainingrequiredapprovalsandcertificationsthatareoftenentrybarrierstocompetitors.

Continuousnewproductpipeline

• Ourpipelineofnewproductssupportsourend-marketandfinancialfocus.


Emergingnewproducts

Biotronik’s Magmaris®scaffoldusesLuxfer’s patented

SynerMag®alloy.

SynerMag®bioresorbable alloy

Biotronik,ourpartnerinajointresearchanddevelopmentprogram,hasnowlaunchedtheirMagmaris®magnesiumscaffoldinEurope,theMiddleEastandAustralasia—andwearenowreceivingroyaltypayments.

WeproduceourexclusiveSynerMagalloyatapurpose-

builtfacilityinSwinton,England.


Emergingnewproducts

SalesofournewSoluMag®dissolvingalloyforoilandgas

wellshavebeenincreasing,andwerecentlyintroducednew

high-ductility,high-strengthandfresh-waterversions.

SoluMag®evolvedfromourworkonourSynerMag®bioresorbable

medicalalloytechnology.

Migratingtechnologies

SoluMag®dissolvingalloySynerMag®alloy


Emergingnewproducts

SeatscontainingLuxfermagnesiumcomponentsondisplayattheAircraft

InteriorsShowinHamburg,Germany.

Magnesiumalloysforcommercialaircraftseats

Threemagnesiumalloycomponentsarecurrentlybeingtestedforinclusioninnewdesignsforaircraftseats.Weremainconfidentthatwewillgetseatcomponentsflyingin2017.


Emergingnewproducts

AdvancedOxygenSystem

AOSmedicaloxygendeliverysystemOurultra-lightweightsystemforambulatoryoxygenpatientsfeaturesourpatentedSmartFlow™value-regulatortechnology,a proprietaryhigh-pressurecylinderandattractiveergonomicdesign.

TheproductrecentlyreceivedCEapprovalandiscurrentlybeingcommercializedinEurope,wherepatienttestingisunderway.

TM


Emergingnewproducts

EnhancedSuperform capabilitiesWe’veinvestedinexpandingSuperform capabilities,includingopeningournewSuperform TechnologyCenter intheU.K.,tosupplyhigher-volumecontractsforHY22017onwardswithFerrariandanothermanufacturerofprestigesportscars.


Grouprevenue

Gas Cylinders Elektron Group

Q1 Q1 Q1$M $M $M

2016Revenue 59.1 49.7 108.8

Changesinperiod:

FXtranslation (2.0) (1.7) (3.7)

Tradingmovements (2.7) 1.0 (1.7)

2017Revenue 54.4 49.0 103.4

Tradingvariance (4.7%) 2.1% (1.6%)


GasCylindersDivision

• Q1underlyingrevenue*downby$2.7mor4.7%comparedtoQ12016.• SCBAsalesshowedimprovementoverthelatterquartersof2016.

• HighersalesintheEuropeanmedicalsectorwithouradvancedL7X®rangeofcylinders showingimprovement.

• Alternativefuel(AF)salesweredownonQ12016.

• Superform revenuewasdownonQ12016duetothetimingofprojects.

* At constant translation exchange rates.

Gas Cylinders

Q1$M

2016Revenue 59.1

Changesinperiod:

FXtranslation (2.0)

Tradingmovements (2.7)

2017Revenue 54.4

Tradingvariance (4.7%)


Elektron Division

• Q1underlyingrevenue*upby$1.0mor2.1%comparedtoQ12016.• LargeincreaseinourMREheatersalesfollowingtheshortageofordersseeninthelatterpartof2016.

• SalesofourproprietarySoluMag®alloyaregainingmarketacceptance.

• Q12017overallcatalysissalesimpactedbytimingofchemicalcatalysisshipments.

* At constant translation exchange rates.

ElektronQ1$M

2016Revenue 49.7

Changesinperiod:

FXtranslation (1.7)

Tradingmovements 1.0

2017Revenue 49.0

Tradingvariance 2.1%


Geographicsalestrends

Q12016

$108.8m $103.4m

Q12017

Revenuebydestination

UK

7%

Europe(other)24%

NorthAmerica53%

SouthAmerica

3%

AsiaPacific12%

Africa1%

UK

8%

Europe(other)23%

NorthAmerica55%

SouthAmerica

2%

AsiaPacific11%

Africa1%


TradingprofitandadjustedEBITDAanalysis

2017 2016 2015Tradingprofit$M Q1 Q1 Q1

GasCylinders Tradingprofit$M 3.3 3.0 1.3ROS% 10.2% 5.1% 2.2%

Elektron Tradingprofit$M 7.2 8.8 9.2

ROS% 18.0% 17.7% 15.7%GROUP Tradingprofit$M 10.5 11.8 10.5

ROS% 10.2% 10.8% 9.0%

Tradingprofit GasCylinders 10.0%

changesfor Elektron (18.2%)

2017v2016 GROUP (11.0%)

2017 2016 2015AdjustedEBITDA$M Q1 Q1 Q1

GasCylinders 5.2 5.0 3.2

Elektron 10.1 11.8 12.2

GROUP 15.3 16.8 15.4

GROUPadjustedEBITDAmargin% 14.8% 15.4% 13.2%

NOTE:TradingprofitisLuxfer’sIFRS8segmentprofitmeasure.AdjustedEBITDAisalsousedbythechiefoperatingdecisionmaker.Seeappendicesfornon-GAAPreconciliations.


NetincomeandEPS

NOTE:Thecalculationofearningspershareisperformedseparatelyforeachdiscretequarterlyperiod,andfortheyear-to-dateperiod.Asaresult,thesumofthediscretequarterlyearningspershareamountsinanyparticularyear-to-dateperiodmaynotbeequaltotheearningspershareamountfortheyear-to-dateperiod.

NOTE: Adjustednetincomeisusedbythechiefoperatingdecisionmaker.Seeappendicesfornon-GAAPreconciliations.

Q1 Q12017 2016

Otherincomestatementitems: $M $M

Tradingprofit 10.5 11.8Profitonsaleofredundantsite 0.4 2.1Restructuringandotherexpense (0.2) (0.1)Operatingprofit 10.7 13.8

Netincome: $M $M

Netincome 6.6 8.7Adjustednetincome 7.2 8.1Underlyingeffectivetaxrate 24.2% 25.7%

AdjustedbasicEPS $0.27 $0.30AdjusteddilutedEPS $0.27 $0.30Dividendpershare $0.125 $0.125


Liquidityandcapitalresources

NOTE: Seeappendicesfornon-GAAPreconciliations.

Q1 Q12017 2016$M $M

Returnoninvestedcapital 13% 13%Investedcapital 259.3 261.9

Netdebt 105.9 101.9Netdebt:AdjustedEBITDAforLTM(last12months) 2.0 1.6

Tradingworkingcapital 97.2 98.3

Netcashflowsfromcontinuingoperatingactivities 9.6 3.0

Netcashflowsbeforefinancing 6.2 3.7

Fundsreturnedtoshareholders 3.3 9.4(Dividendsandsharebuy-backs)


Groupoutlook

• Guidance:• ThefinancialresultforQ12017representsasignificantrecovery.

• Performancehasbeenbetterthanpreviouslyindicated.

• Revenue,EPSandcashflowallshowedstrongimprovementsfollowingQ3andQ4of2016,andourorderbookshaveimproved.

• Inparticular,themagnesiumoperationsperformedwell,andtheGasCylindersDivisionimprovedonQ12016.

• WeareconfidentthattheguidanceremainssoundandthatonEPSweexpecttoachieveanimprovementofatleast10%.

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