Luxfer Holdings PLC 10-Q for FY2024 Q3
Luxfer Holdings PLC (LXFR)
10-Q
2024-10-29
For: 2024-09-29
View Original
Added on
April 08, 2026
About this 10-Q
Luxfer Holdings PLC filed this 10-Q on October 29, 2024, covering the quarter ended September 29, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 29, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $99.4M
- up 2.1% from $97.4M a year earlier
- Net income
- $12.7M
- compared with a net loss of $1.3M a year earlier
- Diluted EPS
- $0.47
- compared with -$0.05 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the Quarterly Period Ended September 29, 2024
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission File Number 001-35370
(Exact Name of Registrant as Specified in Its Charter)
| State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification No. | |||||||
Address of principal executive offices
Registrant’s telephone number, including area code: +1 414 -269-2419
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer | o | x | |||||||||
Non-accelerated filer | o | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The number of shares outstanding of Registrant’s only class of ordinary stock on September 29, 2024 , was 26,784,848 .
TABLE OF CONTENTS | ||
| Page | |||||||||||||||||
| PART I FINANCIAL INFORMATION | |||||||||||||||||
| Item 1. | Condensed Consolidated Financial Statements (unaudited) | ||||||||||||||||
| Condensed Consolidated Statements of Income / (Loss) (unaudited) | |||||||||||||||||
| Condensed Consolidated Statements of Comprehensive Income / (Loss) (unaudited) | |||||||||||||||||
| Condensed Consolidated Balance Sheets (unaudited) | |||||||||||||||||
| Condensed Consolidated Statements of Cash Flows (unaudited) | |||||||||||||||||
| Condensed Consolidated Statements of Changes in Equity (unaudited) | |||||||||||||||||
| Notes to Condensed Consolidated Financial Statements (unaudited) | |||||||||||||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||||||||||||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||||||||||||||||
| Item 4. | Controls and Procedures | ||||||||||||||||
| PART II OTHER INFORMATION | |||||||||||||||||
| Item 1. | Legal Proceedings | ||||||||||||||||
| Item 1A. | Risk Factors | ||||||||||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||||||||||||||
| Item 5. | Other Information | ||||||||||||||||
| Item 6. | Exhibits | ||||||||||||||||
| Signatures | |||||||||||||||||
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME / (LOSS) (UNAUDITED)
| Third Quarter | Year-to-date | |||||||||||||||||||||||||||||||
| In millions, except share and per-share data | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Research and development | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Restructuring charges | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Acquisition and disposal related costs | ( | ( | ||||||||||||||||||||||||||||||
| Gain on disposal of assets held-for-sale | ||||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Net interest expense | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Defined benefit pension credit / (charge) | ( | |||||||||||||||||||||||||||||||
| Income / (loss) before income taxes | ( | |||||||||||||||||||||||||||||||
| (Provision) / credit for income taxes | ( | ( | ( | |||||||||||||||||||||||||||||
| Net income / (loss) from continuing operations | ( | |||||||||||||||||||||||||||||||
| Income / (loss) from discontinued operations, net of tax | ( | |||||||||||||||||||||||||||||||
| Net income / (loss) from discontinued operations | ( | |||||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Earnings / (loss) per share1 | ||||||||||||||||||||||||||||||||
| Basic from continuing operations | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
Basic from discontinued operations2 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Basic | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Diluted from continuing operations | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Diluted from discontinued operations2 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Diluted | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Weighted average ordinary shares outstanding | ||||||||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
1 The calculation of earnings per share is performed separately for continuing and discontinued operations. As a result, the sum of the two in any particular period may not equal the earnings-per-share amount in total.
2 The loss per share for continuing operations for the third quarter of 2023 and for discontinued operations for first nine months of 2024, has not been diluted since the incremental shares included in the weighted-average number of shares outstanding would have been anti-dilutive.
1
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
| Third Quarter | Year-to-date | |||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Other comprehensive income / (loss) | ||||||||||||||||||||||||||||||||
| Net change in foreign currency translation adjustment, net of tax | ( | |||||||||||||||||||||||||||||||
Pension and post-retirement actuarial gains, net of $ | ||||||||||||||||||||||||||||||||
| Other comprehensive income / (loss), net of tax | ( | |||||||||||||||||||||||||||||||
| Total comprehensive income / (loss) | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
2
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| September 29, | December 31, | ||||||||||||||||
| In millions, except share and per-share data | 2024 | 2023 | |||||||||||||||
| Current assets | |||||||||||||||||
| Cash and cash equivalents | $ | $ | |||||||||||||||
| Restricted cash | |||||||||||||||||
Accounts and other receivables, net of allowances of $ | |||||||||||||||||
| Inventories | |||||||||||||||||
| Current assets held-for-sale | |||||||||||||||||
| Other current assets | |||||||||||||||||
| Total current assets | $ | $ | |||||||||||||||
| Non-current assets | |||||||||||||||||
| Property, plant and equipment, net | $ | $ | |||||||||||||||
| Right-of-use assets from operating leases | |||||||||||||||||
| Goodwill | |||||||||||||||||
| Intangibles, net | |||||||||||||||||
| Deferred tax assets | |||||||||||||||||
| Investments and loans to joint ventures and other affiliates | |||||||||||||||||
| Pensions and other retirement benefits | |||||||||||||||||
| Total assets | $ | $ | |||||||||||||||
| Current liabilities | |||||||||||||||||
| Current maturities of long-term debt and short-term borrowing | $ | $ | |||||||||||||||
| Accounts payable | |||||||||||||||||
| Accrued liabilities | |||||||||||||||||
| Taxes on income | |||||||||||||||||
| Current liabilities held-for-sale | |||||||||||||||||
| Other current liabilities | |||||||||||||||||
| Total current liabilities | $ | $ | |||||||||||||||
| Non-current liabilities | |||||||||||||||||
| Long-term debt | $ | $ | |||||||||||||||
| Pensions and other retirement benefits | |||||||||||||||||
| Deferred tax liabilities | |||||||||||||||||
| Other non-current liabilities | |||||||||||||||||
| Total liabilities | $ | $ | |||||||||||||||
Commitments and contingencies (Note 16) | |||||||||||||||||
| Shareholders' equity | |||||||||||||||||
Ordinary shares of £ | |||||||||||||||||
| Additional paid-in capital | |||||||||||||||||
| Treasury shares | ( | ( | |||||||||||||||
| Company shares held by ESOP | ( | ( | |||||||||||||||
| Retained earnings | |||||||||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||||||||
| Total shareholders' equity | |||||||||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||||||||
See accompanying notes to condensed consolidated financial statements
3
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
See accompanying notes to condensed consolidated financial statements
| Year-to-date | ||||||||||||||||||||||||||
| In millions | 2024 | 2023 | ||||||||||||||||||||||||
| Operating activities | ||||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||
| Net loss from discontinued operations | ||||||||||||||||||||||||||
| Net income from continuing operations | ||||||||||||||||||||||||||
| Adjustments to reconcile net income to net cash provided / (used) by operating activities | ||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||
| Amortization of purchased intangible assets | ||||||||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||||||||
| Share-based compensation charges | ||||||||||||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||||||||
| Loss on disposal of property, plant and equipment | ||||||||||||||||||||||||||
| Asset impairment charges | ||||||||||||||||||||||||||
| Gain on disposal of held for sale assets | ( | |||||||||||||||||||||||||
| Loss on held for sale asset group | ||||||||||||||||||||||||||
| Defined benefit pension (credit) / charge | ( | |||||||||||||||||||||||||
| Defined benefit pension contributions | ( | |||||||||||||||||||||||||
| Changes in assets and liabilities | ||||||||||||||||||||||||||
| Accounts and other receivables | ( | ( | ||||||||||||||||||||||||
| Inventories | ( | |||||||||||||||||||||||||
| Current assets held-for-sale | ( | |||||||||||||||||||||||||
| Accounts payable | ( | ( | ||||||||||||||||||||||||
| Accrued liabilities | ( | |||||||||||||||||||||||||
| Current liabilities held-for-sale | ( | |||||||||||||||||||||||||
| Other current liabilities | ( | |||||||||||||||||||||||||
| Other non-current assets and liabilities | ( | |||||||||||||||||||||||||
| Net cash provided by operating activities - continuing | ||||||||||||||||||||||||||
| Net cash provided by operating activities - discontinued | ||||||||||||||||||||||||||
| Net cash provided by operating activities | ||||||||||||||||||||||||||
| Investing activities | ||||||||||||||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||||||||||||||
| Purchase of intangible assets | ( | |||||||||||||||||||||||||
| Net cash used by investing activities - continuing | ( | ( | ||||||||||||||||||||||||
| Net cash used by investing activities - discontinued | ( | ( | ||||||||||||||||||||||||
| Net cash used by investing activities | ( | ( | ||||||||||||||||||||||||
| Financing activities | ||||||||||||||||||||||||||
| Net repayment of short-term borrowings | ( | ( | ||||||||||||||||||||||||
| Net (repayment) / drawdown of long-term borrowings | ( | |||||||||||||||||||||||||
| Repurchase of own shares | ( | ( | ||||||||||||||||||||||||
| Share-based compensation cash paid | ( | ( | ||||||||||||||||||||||||
| Dividends paid | ( | ( | ||||||||||||||||||||||||
| Net cash used by financing activities | ( | ( | ||||||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||||||||||||||||||||
| Net increase / (decrease) | $ | $ | ( | |||||||||||||||||||||||
| Cash, cash equivalents and restricted cash; beginning of year | ||||||||||||||||||||||||||
| Cash, cash equivalents and restricted cash; end of the third quarter | ||||||||||||||||||||||||||
| Supplemental cash flow information: | ||||||||||||||||||||||||||
| Interest payments | $ | $ | ||||||||||||||||||||||||
| Income tax payments, net | ||||||||||||||||||||||||||
4
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
| In millions, | Ordinary shares | Additional paid-in capital | Treasury shares Number | Treasury shares Amount | Own shares held by ESOP Number | Own shares held by ESOP Amount | Retained earnings | Accumulated other comprehensive loss | Total equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| At January 1, 2024 | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share buyback | — | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Utilization of shares from ESOP to satisfy share based compensation | — | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| At March 31, 2024 | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share buyback | — | — | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of treasury shares to satisfy share based compensation | — | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of shares from ESOP to satisfy share based compensation | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At June 30, 2024 | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share buy back | — | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of shares from ESOP to satisfy share based compensation | — | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| At September 29, 2024 | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
5
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
| In millions, | Ordinary shares | Additional paid-in capital | Treasury shares Number | Treasury shares Amount | Own shares held by ESOP Number | Own shares held by ESOP Amount | Retained earnings | Accumulated other comprehensive loss | Total equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| At January 1, 2023 | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share buyback | — | — | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of shares from ESOP to satisfy share based compensation | — | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| At April, 2023 | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share buyback | — | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of treasury shares to satisfy share based compensation | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of shares from ESOP to satisfy share based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At July 2, 2023 | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share buy back | — | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| At October 1, 2023 | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
6
LUXFER HOLDINGS PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation and Responsibility for interim Financial Statements
We prepared the accompanying unaudited condensed consolidated financial statements of Luxfer Holdings PLC and all wholly-owned, majority owned or otherwise controlled subsidiaries on the same basis as our annual audited financial statements. We condensed or omitted certain information and footnote disclosures normally included in our annual audited financial statements, which we prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
Our quarterly financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023. As used in this report, the terms "we," "us," "our," "Luxfer" and "the Company" mean Luxfer Holdings PLC and its subsidiaries, unless the context indicates another meaning.
In the opinion of management, our financial statements reflect all adjustments, which are only of a normal recurring nature, necessary for the fair statement of financial statements for interim periods in accordance with U.S. GAAP and with the instructions to Form 10-Q in Article 10 of Securities and Exchange Commission (SEC) Regulation S-X.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates, and any such differences may be material to our financial statements.
Accounting standards issued but not yet effective
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements. The new guidance requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included in the reported measure of segment profit or loss. It does not change the definition of a segment or the guidance for determining reportable segments. The new guidance is effective for the Company in the annual period beginning January 1, 2024 and in 2025 for interim periods. Adoption of this ASU will result in additional disclosure, but it will not impact the Company’s consolidated financial position, results of operations or cash flows.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures, which enhances the transparency of income tax disclosures in ASC 740, Income Taxes, primarily related to rate reconciliation and income taxes paid information. The ASU is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. The Company is currently assessing the impact on its Consolidated Condensed Financial Statements and related disclosures.
7
2. Earnings / (loss) per share
Basic earnings / (loss) per share are computed by dividing net income or (loss) for the period by the weighted-average number of ordinary shares outstanding, net of treasury shares and shares held in ESOP. Diluted earnings per share are computed by dividing net income for the period by the weighted average number of ordinary shares outstanding and the dilutive ordinary shares equivalents.
Basic and diluted earnings per share were calculated as follows:
| Third Quarter | Year-to-date | ||||||||||||||||||||||||||||
| In millions except share and per-share data | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
| Basic earnings / (loss): | |||||||||||||||||||||||||||||
| Net income / (loss) from continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Net income / (loss) from discontinued operations | ( | ||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
Weighted average number of £ | |||||||||||||||||||||||||||||
| For basic earnings / (loss) per share | |||||||||||||||||||||||||||||
| Dilutive effect of potential common stock | |||||||||||||||||||||||||||||
| For diluted earnings / (loss) per share | |||||||||||||||||||||||||||||
Earnings / (loss) per share using weighted average number of ordinary shares outstanding(1): | |||||||||||||||||||||||||||||
| Basic earnings / (loss) per ordinary share for continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Basic earnings / (loss) per ordinary share for discontinued operations | |||||||||||||||||||||||||||||
| Basic earnings / (loss) per ordinary share | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Diluted earnings / (loss) per ordinary share for continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Diluted earnings / (loss) per ordinary share for discontinued operations | |||||||||||||||||||||||||||||
| Diluted earnings / (loss) per ordinary share | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
(1) The calculation of earnings per share is performed separately for continuing and discontinued operations. As a result, the sum of the two in any particular period may not equal the earnings-per-share amount in total
Basic average shares outstanding and diluted average shares outstanding were the same for discontinued operations in 2024 year-to-date and for continuing operations in the third quarter of 2023 because the effect of potential shares of common stock was anti-dilutive since the Company generated a net loss from discontinued operations.
8
3. Net Sales
Disaggregated sales disclosures for the third quarter and year-to-date ended September 29, 2024, and October 1, 2023, are included below and in Note 15, Segmental Information.
| Third Quarter | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||
| In millions | Gas Cylinders | Elektron | Graphic Arts | Total | Gas Cylinders | Elektron | Graphic Arts | Total | |||||||||||||||||||||||||||
| Defense, First Response & Healthcare | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Transportation | |||||||||||||||||||||||||||||||||||
| General industrial | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Year-to-date | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||
| In millions | Gas Cylinders | Elektron | Graphic Arts | Total | Gas Cylinders | Elektron | Graphic Arts | Total | |||||||||||||||||||||||||||
| Defense, First Response & Healthcare | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Transportation | $ | ||||||||||||||||||||||||||||||||||
| General industrial | $ | ||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
4. Restructuring
The $0.5 million and $2.3 million restructuring charge in the third quarter and first nine months, respectively, of 2024 predominantly relates to continued costs aimed at reducing our fixed cost structure and realigning our business.
Restructuring-related costs by reportable segment were as follows:
| Third Quarter | Year-to-date | |||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| Severance and other costs | ||||||||||||||||||||||||||||||||
| Gas Cylinders | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Elektron | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Asset impairments | ||||||||||||||||||||||||||||||||
| Gas Cylinders | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Elektron segment | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total restructuring charges | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Activity related to restructuring, recorded in Other current liabilities in the consolidated balance sheets is summarized as follows:
9
| In millions | 2024 | ||||||||||||||||
| Balance at January 1, | $ | ||||||||||||||||
| Costs incurred | |||||||||||||||||
| Cash payments and other | ( | ||||||||||||||||
| Balance at September 29, | $ | ||||||||||||||||
5. Other income
In December 2023, it was established that any potential liability arising from the lawsuits and reasonable defense costs related to the previously disclosed US Ecology case are covered by insurance. The Company recognized $1.9 million and $7.2 million in the third quarter and first nine months, respectively, of 2024, in relation to these costs previously incurred by the Company. $5.3 million cash has been received in the first nine months of 2024 with a further $1.9 million accrued at September 2024.
6. Income Taxes
We manage our affairs so that we are centrally managed and controlled in the United Kingdom (“U.K.”) and therefore have our tax residency in the U.K. The provision for income taxes consists of provisions for the U.K. and international income taxes. We operate in an international environment with operations in various locations outside the U.K. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates.
The effective income tax rate on continuing operations for the first nine months ended September 29, 2024, was a 34.2 %, tax charge compared to a 39.3 % tax credit for the first nine months ended October 1, 2023. The rate was impacted by non-deductible expenses and the loss on held-for-sale asset group. 2023 was also impacted by a deferred tax credit primarily in relation to the U.S. pension buyout.
7. Acquisition and disposal related costs
| Third Quarter | Year-to-date | |||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| Loss on held-for-sale asset group | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Disposal related costs | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||
The $7.5 million loss on held-for-sale asset group in the first nine months of 2024 relates to the Graphic Arts' assets which have been revalued to the expected consideration the Company will receive.
Disposal-related costs of $0.1 million and $2.0 million in the third quarter and first nine months of 2024, respectively, represent professional fees incurred and accrued in relation to the planned divestiture of the Graphic Arts segment.
10
8. Supplementary balance sheet information
| September 29, | December 31, | ||||||||||||||||
| In millions | 2024 | 2023 | |||||||||||||||
| Accounts and other receivables | |||||||||||||||||
| Trade receivables | $ | $ | |||||||||||||||
| Related parties | |||||||||||||||||
| Prepayments and accrued income | |||||||||||||||||
| Derivative financial instruments | |||||||||||||||||
| Other receivables | |||||||||||||||||
| Total accounts and other receivables | $ | $ | |||||||||||||||
| Inventories | |||||||||||||||||
| Raw materials and supplies | $ | $ | |||||||||||||||
| Work-in-process | |||||||||||||||||
| Finished goods | |||||||||||||||||
| Total inventories | $ | $ | |||||||||||||||
| Other current assets | |||||||||||||||||
| Income tax receivable | |||||||||||||||||
| Total other current assets | $ | $ | |||||||||||||||
| Property, plant and equipment, net | |||||||||||||||||
| Land, buildings and leasehold improvements | $ | $ | |||||||||||||||
| Machinery and equipment | |||||||||||||||||
| Construction in progress | |||||||||||||||||
| Total property, plant and equipment | |||||||||||||||||
| Accumulated depreciation and impairment | ( | ( | |||||||||||||||
| Total property, plant and equipment, net | $ | $ | |||||||||||||||
| Current maturities of long-term debt and short-term borrowings | |||||||||||||||||
| Overdrafts | |||||||||||||||||
| Total current maturities of long-term debt and short-term borrowings | $ | $ | |||||||||||||||
| Other current liabilities | |||||||||||||||||
| Restructuring provision | $ | $ | |||||||||||||||
| Short term provision | |||||||||||||||||
| Derivative financial instruments | |||||||||||||||||
| Advance payments | |||||||||||||||||
| Total other current liabilities | $ | $ | |||||||||||||||
| Other non-current liabilities | |||||||||||||||||
| Contingent liabilities | $ | $ | |||||||||||||||
| Other non-current liabilities | |||||||||||||||||
| Total other non-current liabilities | $ | $ | |||||||||||||||
11
9. Goodwill and other identifiable intangible assets
Changes in goodwill during the first nine months ended September 29, 2024, were as follows:
| In millions | Gas Cylinders | Elektron | Total | ||||||||||||||||||||
| At January 1, 2024 | $ | $ | $ | ||||||||||||||||||||
| Exchange difference | |||||||||||||||||||||||
| Net balance at September 29, 2024 | $ | $ | $ | ||||||||||||||||||||
Accumulated goodwill impairment losses in relation to continuing activities were $8.0
Identifiable intangible assets consisted of the following:
| In millions | Customer relationships | Technology and trading related | Total | ||||||||||||||||||||
| Cost: | |||||||||||||||||||||||
| At January 1, 2024 | $ | $ | $ | ||||||||||||||||||||
| Additions | |||||||||||||||||||||||
| Exchange movements | |||||||||||||||||||||||
| At September 29, 2024 | $ | $ | $ | ||||||||||||||||||||
| Accumulated amortization: | |||||||||||||||||||||||
| At January 1, 2024 | $ | $ | $ | ||||||||||||||||||||
| Charge | |||||||||||||||||||||||
| Exchange movements | |||||||||||||||||||||||
| At September 29, 2024 | $ | $ | $ | ||||||||||||||||||||
| Net book values: | |||||||||||||||||||||||
| At January 1, 2024 | $ | $ | $ | ||||||||||||||||||||
| At September 29, 2024 | $ | $ | $ | ||||||||||||||||||||
Identifiable intangible asset amortization expense was $0.6 million and $0.6 million for the first nine months of 2024 and 2023 respectively.
Intangible asset amortization expense during each of the following five years is expected to be approximately $0.8
10. Debt
Debt outstanding was as follows:
| September 29, | December 31, | ||||||||||||||||
| In millions | 2024 | 2023 | |||||||||||||||
| $ | $ | ||||||||||||||||
| Revolving credit facility | |||||||||||||||||
| Bank overdraft | |||||||||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||||||||
| Total debt | |||||||||||||||||
| Less current portion | ( | ( | |||||||||||||||
| Non-current debt | $ | $ | |||||||||||||||
The weighted-average interest rate on the revolving credit facility was 7.80 % for first nine months of the year and 7.70 % for the full-year 2023.
12
10. Debt (continued)
Loan notes due and shelf facility
The Note Purchase Agreement and Private Shelf Agreement requires us to maintain compliance with a minimum interest coverage ratio and a leverage ratio. We have been in compliance with the covenants under the Note Purchase and Private Shelf Agreement throughout all of the quarterly measurement dates from and including September 30, 2014, to September 29, 2024.
The Loan Notes due 2026, the Shelf Facility and the Note Purchase and Private Shelf Agreement are governed by the law of the State of New York.
Senior Facilities Agreement
During the first nine months of 2024, we repaid net $2.9 million on the Revolving Credit Facility and the balance outstanding at September 29, 2024, was $41.1 million, and at December 31, 2023, was $43.1 million, with $83.9 million undrawn at September 29, 2024.
We have been in compliance with the covenants under the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011 to September 29, 2024.
Bank Overdraft
The bank overdraft is an uncommitted facility with no expiration date, this is reviewed annually and can be cancelled by either the bank or the Company on demand.
11. Discontinued Operations
Our Superform aluminum superplastic forming business operating in the U.S. was historically included in the Gas Cylinders segment. As a result of our decision to exit non-strategic aluminum product lines, we have reflected the results of operations of this business as discontinued operations in the Condensed Consolidated Statements of Income for all periods presented. We expect the sale of our Superform business to occur in the next twelve months.
The assets and liabilities of the Superform business have been presented within assets held-for-sale and liabilities held-for-sale in the consolidated balance sheets for 2024 and 2023.
Results of discontinued operations in the third quarter and first nine months of 2024 and 2023 were as follows:
| Third Quarter | Year-to-date | |||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Restructuring charge | ( | ( | ||||||||||||||||||||||||||||||
| Operating income / (loss) | ( | |||||||||||||||||||||||||||||||
| Tax (charge) / credit | ( | ( | ||||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
13
11. Discontinued Operations (continued)
The assets and liabilities classified as held-for-sale related to discontinued operations were as follows:
| Held-for-sale assets | September 29, | December 31, | |||||||||||||||
| In millions | 2024 | 2023 | |||||||||||||||
| Inventory | $ | $ | |||||||||||||||
| Accounts and other receivables | |||||||||||||||||
| Current assets | |||||||||||||||||
| Right-of-use-assets | |||||||||||||||||
| Held-for-sale assets | $ | $ | |||||||||||||||
| Held-for-sale liabilities | |||||||||||||||||
| Accounts payable | $ | $ | |||||||||||||||
| Accrued liabilities | |||||||||||||||||
| Other liabilities | |||||||||||||||||
| Held-for-sale liabilities | $ | $ | |||||||||||||||
There was $0.1 m and $0.2 m of capital expenditure in the third quarter and first nine months of 2024 respectively (2023: none ), there was no depreciation and amortization or any other significant non-cash items.
12. Held-for-sale assets and liabilities
The total assets and liabilities classified as held-for-sale, including those that qualify as discontinued operations are as follows:
| Held-for-sale assets | September 29, | December 31, | |||||||||||||||
| In millions | 2024 | 2023 | |||||||||||||||
| Inventory | $ | $ | |||||||||||||||
| Accounts and other receivables | |||||||||||||||||
| Current assets | |||||||||||||||||
| Property, plant and equipment | |||||||||||||||||
| Right-of-use-assets | |||||||||||||||||
| Non-current assets | |||||||||||||||||
| Total held-for-sale assets | $ | $ | |||||||||||||||
| Held-for-sale liabilities | |||||||||||||||||
| Accounts payable | |||||||||||||||||
| Accrued liabilities | |||||||||||||||||
| Other liabilities | |||||||||||||||||
| Held-for-sale liabilities | $ | $ | |||||||||||||||
As a result of the Company’s strategic review process announced in October 2023, the Company concluded that its Graphic Arts business no longer aligns with the Company’s overall business and value proposition. In 2024, the Company initiated a sale process for its Graphic Arts business with the intention of divesting this business in 2024.
In the first nine months of 2024, the company recognized a $7.5 million loss on held-for-sale asset group recognized in continuing operations, relating to our Graphic Arts segment to reflect the the fair value of Graphic Arts. A $1.4 million accrual, also recognized within acquisition and disposal related costs in the Income Statement, has been recognized for expected costs in relation to professional fees in relation to the planned divestiture of the Graphic Arts segment.
In accordance with ASC 205-20 and ASC 360-10, our Graphic Arts business is classified as held-for-sale at September 29, 2024, however the business does not meet the criteria to be classified as a discontinued operation.
14
12. Held-for-sale assets and liabilities (continued)
In the third quarter and first nine months of 2024, the Company recognized a $6.1 m gain on disposal of assets in relation to the sale of previously disclosed held-for-sale land and buildings in our Elektron division, net consideration of $7.3 million was received in the fourth quarter of 2024.
13. Share Plans
Total share-based compensation expense for the quarters ended September 29, 2024, and October 1, 2023, was as follows:
| Third Quarter | Year-to-date | ||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
| Total share-based compensation charges | $ | $ | $ | $ | |||||||||||||||||||||||||
In March 2024, we issued our annual share-based compensation grants under the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan. The total number of awards issued was approximately 155,000 and the weighted average fair value of options granted in 2024 was estimated to be $10.44 per share.
In June 2024, we issued our annual share-based compensation grants under the Luxfer Holdings PLC Non-Executive Directors' Equity Incentive Plan. The total number of awards issued was 47,012 and the weighted-average fair value of options granted was estimated to be $10.53 per share.
The following table illustrates the assumptions used in deriving the fair value of share options granted during 2024 and the year-ended December 31, 2023:
| 2024 | 2023 | ||||||||||||||||
| Dividend yield (%) | |||||||||||||||||
| Expected volatility range (%) | |||||||||||||||||
| Risk-free interest rate (%) | |||||||||||||||||
| Expected life of share options range (years) | |||||||||||||||||
| Forfeiture rate (%) | |||||||||||||||||
| Weighted average exercise price ($) | $ | $ | |||||||||||||||
| Model used | Black-Scholes & Monte-Carlo | Black-Scholes & Monte-Carlo | |||||||||||||||
The expected life of the share options is based on historical data and current expectations, and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
15
14. Shareholders' Equity
Dividends paid and proposed
| Third Quarter | Year-to-date | ||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
| Dividends declared and paid / accrued during the year: | |||||||||||||||||||||||||||||
Interim dividend declared January 3, 2023 and paid February 1, 2023 ($ | $ | — | $ | — | $ | — | $ | ||||||||||||||||||||||
Interim dividend declared April 3, 2023 and paid May 3, 2023 ($ | — | — | — | ||||||||||||||||||||||||||
Interim dividend declared June 29, 2023 and paid August 2, 2023 ($ | — | — | — | ||||||||||||||||||||||||||
Interim dividend declared September 25, 2023 and paid November 1, 2023 ($ | — | — | |||||||||||||||||||||||||||
Interim dividend declared January 19, 2024 and paid February 7, 2024 ($ | — | — | — | ||||||||||||||||||||||||||
Interim dividend declared April 9, 2024 and paid May 8, 2024 ($ | — | — | — | ||||||||||||||||||||||||||
Interim dividend declared July 8, 2024 and paid August 7, 2024 ($ | — | — | |||||||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||||||||
| In millions | 2024 | 2023 | |||||||||||||||||||||
| Dividends declared and paid after the quarter end (not recognized as a liability at the quarter end): | |||||||||||||||||||||||
Interim dividend declared October 4, 2024 and to be paid November 6, 2024 ($ | $ | $ | — | ||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
16
15. Segmental Information
We classify our operations into business segments, based primarily on shared economic characteristics for the nature of the products and services; the nature of the production processes; the type or class of customer for their products and services; the methods used to distribute their products or provide their services; and the nature of the regulatory environment. The Company has five identified business units, which aggregate into three reportable segments within continuing operations, and one within discontinued operations. Luxfer Gas Cylinders forms the Gas Cylinders segment, and Luxfer MEL Technologies and Luxfer Magtech aggregate into the Elektron segment. As of December 31, 2023, it was determined that the Luxfer Graphic Arts reporting segment no longer met the criteria, specifically, similar economic characteristics, to be aggregated within the Elektron segment for 2023. As a result, Luxfer Graphic Arts has been disaggregated from the Elektron segment and is being reported separately as the Graphic Arts segment. The Elektron segment's results for 2023 have been adjusted to exclude Graphic Arts' results. Our Superform business unit used to aggregate into the Gas Cylinders segment but is now recognized within discontinued operations. A summary of the operations of the segments within continuing operations is provided below:
Gas Cylinders segment
Our Gas Cylinders segment manufactures and markets specialized highly-engineered cylinders, using composites and aluminum alloys, including pressurized cylinders for use in various applications including self-contained breathing apparatus ('SCBA') for firefighters, containment of oxygen and other medical gases for healthcare, alternative fuel ('AF') vehicles, and general industrial applications.
Elektron segment Our Elektron segment focuses on specialty materials based primarily on magnesium and zirconium, with key product lines including advanced lightweight magnesium alloys with a variety of uses across a variety of industries; magnesium powders for use in countermeasure flares, as well as heater meals; and high-performance zirconium-based materials and oxides used as catalysts and in the manufacture of advances ceramics, fiber-optic fuel cells, and many other performance products.
Graphic Arts segment
Our Graphic Arts segment provides a full range of pre-sensitized magnesium, copper and zinc plates, along with associated chemicals, for the production of foil-stamping and embossing dies. In addition, non-sensitized polished brass and magnesium plates are also manufactured for computer numerical control ('CNC') engraving. The segment also advises on turnkey engraving operations, complete with etching machines, computer-to-plate ('CtP') machines, exposure units and film setters.
Other
Other, as used below, primarily represents unallocated corporate expense and includes non-service related defined benefit pension credit / charge.
Management monitors the operating results of its reportable segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated by the chief operating decision maker, the CEO, who is responsible for allocating resources and assessing performance of the operating segments, using adjusted EBITA(1) and adjusted EBITDA, which is defined as segment income, and is based on operating income adjusted for share-based compensation charges; restructuring charges; loss on disposal of property, plant and equipment; gain on disposal of held for sale assets; acquisitions and disposals costs; and depreciation and amortization.
Unallocated assets and liabilities include those which are held on behalf of the Company and cannot be allocated to a segment, such as taxation, investments, cash, retirement benefits obligations, bank and other loans and holding company assets and liabilities.
Financial information by reportable segment for the Third Quarter and first half ended September 29, 2024, and October 1, 2023, is included in the following summary:
| Net sales | Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Third Quarter | Year-to-date | Third Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Elektron segment | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Graphic Arts segment | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
(1) Adjusted EBITA is adjusted EBITDA less depreciation and loss on disposal of property, plant and equipment.
17
15. Segmental Information (continued)
| Depreciation and amortization | Restructuring charges | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Third Quarter | Year-to-date | Third Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Elektron segment | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Graphic Arts segment | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Total assets | Capital expenditures | ||||||||||||||||||||||||||||||||||||||||
| September 29, | December 31, | Third Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Elektron segment | |||||||||||||||||||||||||||||||||||||||||
| Graphic Arts segment | |||||||||||||||||||||||||||||||||||||||||
| Total reportable segments | |||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||
| Discontinued operations | |||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Property, plant and equipment, net | |||||||||||||||||||||||
| September 29, | December 31, | ||||||||||||||||||||||
| In millions | 2024 | 2023 | |||||||||||||||||||||
| U.S. | $ | $ | |||||||||||||||||||||
| United Kingdom | |||||||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Rest of Europe | |||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
The following table presents a reconciliation of Adjusted EBITDA to net income before income taxes, from continuing operations:
| Third Quarter | Year-to-date | ||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||||||||
| Other share-based compensation charges | ( | ( | ( | ( | |||||||||||||||||||||||||
| Gain on disposal of held for sale assets | 0 | ||||||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||||||||
| Loss on disposal of property, plant and equipment | ( | ( | |||||||||||||||||||||||||||
| Restructuring charges | ( | ( | ( | ( | |||||||||||||||||||||||||
| Acquisition and disposal related costs | ( | ( | |||||||||||||||||||||||||||
| Defined benefits pension credit / (charge) | ( | ||||||||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net income before income taxes from continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
18
15. Segmental Information (continued)
The following tables present certain geographic information by geographic region for the Third Quarter ended September 29, 2024, and October 1, 2023:
Net Sales(1) | |||||||||||||||||||||||||||||||||||||||||
| Third Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||
| $M | Percent | $M | Percent | $M | Percent | $M | Percent | ||||||||||||||||||||||||||||||||||
| United States | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||
| Germany | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| United Kingdom | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Japan | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Canada | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Top five countries | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Rest of Europe | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Asia Pacific | % | % | % | % | |||||||||||||||||||||||||||||||||||||
Other (2) | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
(1) Net sales are based on the geographic destination of sale.
(2) Other includes South America, Latin America and Africa.
19
16. Commitments and Contingencies
Committed and uncommitted banking facilities
The Company had committed banking facilities of $125.0 41.1 million was drawn at September 29, 2024 and $43.1 million at December 31, 2023. The Company also had an additional $25.0
| Uncommitted Facilities | ||||||||||||||
| September 29, 2024 | December 31, 2023 | |||||||||||||
| Facility | Drawn | Facility | Drawn | |||||||||||
| Bond and Guarantees | $ | $ | $ | $ | ||||||||||
| Letters of Credit | $ | $ | $ | $ | ||||||||||
| Overdraft | $ | $ | $ | $ | ||||||||||
| $ | $ | $ | $ | |||||||||||
Contingencies
In November 2018, an alleged explosion occurred at a third-party waste disposal and treatment site in Grand View, Idaho, reportedly causing property damage, personal injury, and one fatality. The Company had contracted with a service company for removal and disposal of certain waste resulting from the magnesium powder manufacturing operations at the Reade facility in Manchester, New Jersey. The Company believes this service company, in turn, contracted with the third-party disposal company, at whose facility the explosion occurred, for treatment and disposal of the waste. In November 2020, we were named as a defendant in three lawsuits in relation to the incident – one by the third-party disposal company, one by the estate of the decedent, and one by an injured employee of the third-party disposal company. The three lawsuits were administratively consolidated and, to date, two lawsuits remain ongoing. The Company believes that we are not liable for the incident, have asserted such, and, in conjunction with our insurers, continue to fully defend the Company against these lawsuits. Therefore, we do not currently expect any eventual outcome in these matters to have a material impact on the Company's financial position or results of operations.
17. Pension Settlement
In the first quarter of 2023, there was a $9.2 million charge in relation to the sale of the U.S. pension plan liability to an insurer, which included $2.3 million cash and $6.9 million in relation to the derecognition of the U.S. pension liability and reallocation of accumulated actuarial losses from other comprehensive income. This was partially offset by a $0.3 million defined benefit credit on the U.K. pension plan.
There was also a $0.3 million and $0.8 million defined benefit credit on the U.K pension plan for the third quarter and first nine months of 2024 respectively, consistent with the $0.3 million and $1.0 million for the third quarter and first nine months of 2023.
18. Subsequent Events
Other than those disclosed elsewhere in the note to the financial statements, no material subsequent events to report.
20
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Information regarding forward-looking statements
This Interim Report on Form 10-Q contains certain statements, statistics and projections that are, or may be, forward-looking. These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. The accuracy and completeness of all such statements, including, without limitation, statements regarding our future financial position, strategy, plans and objectives for the management of future operations, is not warranted or guaranteed. These statements typically contain words such as "believes," "intends," "expects," "anticipates," "estimates," "may," "will," "should" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors identified in "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," or elsewhere in this Interim Report, as well as:
•general economic conditions, or conditions affecting demand for the services offered by us in the markets in which we operate, both domestically and internationally, being less favorable than expected;
•worldwide economic and business conditions and conditions in the industries in which we operate;
•our ability to execute a turnaround plan in our Graphic Arts business to safeguard revenues and reduce costs;
•post-pandemic impact of COVID-19 and future pandemics;
•fluctuations in the cost and / or availability of raw materials, labor and energy, as well as our ability to pass on cost increases to customers;
•currency fluctuations and other financial risks;
•our ability to protect our intellectual property;
•the amount of indebtedness we have incurred and may incur, and the obligations to service such indebtedness and to comply with the covenants contained therein;
•relationships with our customers and suppliers;
•increased competition from other companies in the industries in which we operate;
•changing technology;
•our ability to execute and integrate new acquisitions;
•claims for personal injury, death or property damage arising from the use of products produced by us;
•the occurrence of accidents or other interruptions to our production processes;
•changes in our business strategy or development plans, and our expected level of capital expenditure;
•our ability to attract and retain qualified personnel;
•restrictions on the ability of Luxfer Holdings PLC to receive dividends or loans from certain of its subsidiaries;
•climate change regulations and the potential impact on energy costs;
•regulatory, environmental, legislative and judicial developments; and
•our intention to pay dividends.
Please read the sections "Business" and "Risk factors" included within the 2023 Annual Report on Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk factors" of this Interim Report on Form 10-Q for a more complete discussion of the factors that could affect our performance and the industries in which we operate, as well as those discussed in other documents we file or furnish with the SEC.
21
About Luxfer
Luxfer Holdings PLC ("Luxfer," "the Company," "we," "our") is a global industrial company innovating niche applications in materials engineering. Luxfer focuses on value creation by using its broad array of technical know-how and proprietary technologies to help create a safe, clean and energy-efficient world. Luxfer's high performance materials, components and high-pressure gas containment devices are used in defense, first response and healthcare, transportation and general industrial applications.
Luxfer is a global industrial company innovating niche applications in materials engineering. Luxfer focuses on value creation by using its broad array of technical know-how and proprietary technologies to help create a safe, clean and energy-efficient world. Luxfer's high-performance materials, components and high-pressure gas containment devices are used in defense, first response and healthcare, transportation and general industrial applications.
Key trends and uncertainties regarding our existing business
Uncertainty of demand in certain end-markets
Macro-economic conditions have continued to impact our general industrial end-market with demand softening for our products across all segments. We have also experienced variability of demand for certain products in our defense, first response & healthcare end-market, particularly defense applications, including countermeasure flares and flameless ration heaters, although we have seen the former improve in the third quarter. We have been able to navigate these challenges through productivity and cost management initiatives resulting in improved margins. Legal recoveries and inventory management contributed to solid cash conversion and reduced net debt levels.
While the outlook remains uncertain there are some signs of recovery within the industrial and defense end-markets within our Elektron segment, which we are well-placed to capitalize on.
Operating objectives and trends
In 2024, we expect the following operating objectives and trends to impact our business:
•Addressing continuing general macro uncertainty and building resilience into the outlook;
•Ongoing focus on cost control, new product launches and productivity improvements across the business, driving margin improvement;
•Execution of actions identified upon completion of the previously announced expanded and accelerated strategic review, including the divestiture of Graphic Arts;
•Execution of selected capital investment projects, especially those related to clean energy, to support our strategy of profitable growth while maintaining our infrastructure;
•Continued emphasis on operating cash generation and maintaining strong working capital performance;
•Further improvements in ESG standing through focus on sustainability and on our values of teamworking and accountability; and
•Focus on recruiting, developing and maintaining talent, including our new leadership development programs, while driving a high-performance culture.
22
CONSOLIDATED RESULTS OF OPERATIONS
The consolidated results of operations for the third quarter of 2024 and 2023 of Luxfer were as follows:
| Third Quarter | % / point change | |||||||||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 v 2023 | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 99.4 | $ | 97.4 | 2.1 | % | ||||||||||||||||||||||||||||||||
| Cost of goods sold | (77.0) | (82.8) | (7.0) | % | ||||||||||||||||||||||||||||||||||
| Gross profit | $ | 22.4 | $ | 14.6 | 53.4 | % | ||||||||||||||||||||||||||||||||
| % of net sales | 22.5 | % | 15.0 | % | 7.5 | |||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | (11.4) | (11.3) | 0.9 | % | ||||||||||||||||||||||||||||||||||
| % of net sales | 11.5 | % | 11.6 | % | (0.1) | |||||||||||||||||||||||||||||||||
| Research and development | (1.0) | (1.2) | (16.7) | % | ||||||||||||||||||||||||||||||||||
| % of net sales | 1.0 | % | 1.2 | % | (0.2) | |||||||||||||||||||||||||||||||||
| Restructuring charges | (0.5) | (1.6) | (68.8) | % | ||||||||||||||||||||||||||||||||||
| % of net sales | 0.5 | % | 1.6 | % | (1.1) | |||||||||||||||||||||||||||||||||
| Acquisition and disposal related costs | (0.1) | — | n/a | |||||||||||||||||||||||||||||||||||
| % of net sales | 0.1 | % | — | % | 0.1 | |||||||||||||||||||||||||||||||||
| Gain on disposal of assets hed for sale | 6.1 | — | n/a | |||||||||||||||||||||||||||||||||||
| % of net sales | (6.1) | % | — | % | (6.1) | |||||||||||||||||||||||||||||||||
| Other income | 1.9 | — | n/a | |||||||||||||||||||||||||||||||||||
| % of net sales | (1.9) | % | — | % | (1.9) | |||||||||||||||||||||||||||||||||
| Operating income | $ | 17.4 | $ | 0.5 | 3380.0 | % | ||||||||||||||||||||||||||||||||
| % of net sales | 17.5 | % | 0.5 | % | 17.0 | |||||||||||||||||||||||||||||||||
| Net interest expense | (1.4) | (1.6) | (12.5) | % | ||||||||||||||||||||||||||||||||||
| % of net sales | 1.4 | % | 1.6 | % | (0.2) | |||||||||||||||||||||||||||||||||
| Defined benefit pension credit | 0.3 | 0.3 | — | % | ||||||||||||||||||||||||||||||||||
| % of net sales | 0.3 | % | 0.3 | % | — | |||||||||||||||||||||||||||||||||
| Income / (loss) before income taxes | $ | 16.3 | $ | (0.8) | n/a | |||||||||||||||||||||||||||||||||
| % of net sales | 16.4 | % | (0.8) | % | 17.2 | |||||||||||||||||||||||||||||||||
| Provision for income taxes | (3.7) | (0.7) | 428.6 | % | ||||||||||||||||||||||||||||||||||
| Effective tax rate | 22.7 | % | (87.5) | % | 110.2 | |||||||||||||||||||||||||||||||||
| Net income / (loss) from continuing activities | $ | 12.6 | $ | (1.5) | n/a | |||||||||||||||||||||||||||||||||
| % of net sales | 12.7 | % | (1.5) | % | 14.2 | |||||||||||||||||||||||||||||||||
23
The consolidated results of operations for the first nine months of 2024 and 2023 of Luxfer were as follows:
| Year-to-date | % / point change | |||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 v 2023 | |||||||||||||||||||||||
| Net sales | $ | 288.5 | $ | 309.1 | (6.7) | % | ||||||||||||||||||||
| Cost of goods sold | (225.7) | (249.2) | (9.4) | % | ||||||||||||||||||||||
| Gross profit | 62.8 | 59.9 | 4.8 | % | ||||||||||||||||||||||
| % of net sales | 21.8 | % | 19.4 | % | 2.4 | |||||||||||||||||||||
| Selling, general and administrative expenses | (34.9) | (36.6) | (4.6) | % | ||||||||||||||||||||||
| % of net sales | 12.1 | % | 11.8 | % | 0.3 | |||||||||||||||||||||
| Research and development | (3.3) | (3.4) | (2.9) | % | ||||||||||||||||||||||
| % of net sales | 1.1 | % | 1.1 | % | — | |||||||||||||||||||||
| Restructuring charges | (2.3) | (4.4) | (47.7) | % | ||||||||||||||||||||||
| % of net sales | 0.8 | % | 1.4 | % | (0.6) | |||||||||||||||||||||
| Acquisition and disposal related costs | (9.5) | — | n/a | |||||||||||||||||||||||
| % of net sales | 3.3 | % | — | % | 3.3 | |||||||||||||||||||||
| Gain on disposal of assets held for sale | 6.1 | — | n/a | |||||||||||||||||||||||
| % of net sales | (2.1) | % | — | % | (2.1) | |||||||||||||||||||||
| Other income | 7.2 | — | n/a | |||||||||||||||||||||||
| % of net sales | (2.5) | % | — | % | (2.5) | |||||||||||||||||||||
| Operating income | $ | 26.1 | $ | 15.5 | 68.4 | % | ||||||||||||||||||||
| % of net sales | 9.0 | % | 5.0 | % | 4.0 | |||||||||||||||||||||
| Net interest expense | (4.1) | (4.7) | (12.8) | % | ||||||||||||||||||||||
| % of net sales | 1.4 | % | 1.5 | % | (0.1) | |||||||||||||||||||||
| Defined benefit pension credit / (charge) | 0.8 | (8.0) | n/a | |||||||||||||||||||||||
| % of net sales | 0.3 | % | (2.6) | % | 2.9 | |||||||||||||||||||||
| Income from continuing operations | $ | 22.8 | $ | 2.8 | 714.3 | % | ||||||||||||||||||||
| % of net sales | 7.9 | % | 0.9 | % | 7.0 | |||||||||||||||||||||
| (Provision) / credit for income taxes | (7.8) | 1.1 | n/a | |||||||||||||||||||||||
| Effective tax rate | 34.2 | % | (39.3) | % | 73.5 | |||||||||||||||||||||
| Net income from continuing operations | $ | 15.0 | $ | 3.9 | 284.6 | % | ||||||||||||||||||||
| % of net sales | 5.2 | % | 1.3 | % | 3.9 | |||||||||||||||||||||
24
Net sales
Adjusting for a foreign exchange tailwind of $1.8 million and $2.2 million in the third quarter and first nine months of 2024, respectively, net sales have increased by 0.2% and decreased 7.4% respectively.
Revenue for the quarter was positively impacted by:
•Elevated sales of magnesium powders, especially those used in military applications, including countermeasure flares;
•Increased sales of MRE and chemical response kits in our Magtech division;
•Strong sales of magnesium alloys, particularly those used in aerospace and automotive applications; and
•Improved sales of both medical and industrial gas cylinders.
These increases were partially offset by:
•Significant decrease in demand for zirconium products, particularly those used in auto-catalyst products, as well as those used by our industrial end-markets; and
•Lower sales for our AF cylinders, off the back of strong comparative performance, coupled with weaker demand for our SCBA cylinders.
Further to the above, the first nine months of the year were also affected by;
•Strong demand for SCBA cylinders in the first half of the year; and
•Offset by significant reductions in chemical response kit and magnesium powders' sales in the first six months of the year.
Gross profit
The 7.5 and 2.4 percentage point increase in gross profit as a percentage of sales in the third quarter and first nine months of 2024 from 2023 was primarily the result of contract renegotiation and manufacturing efficiencies having a positive impact on margins within the Gas Cylinders and Elektron Divisions respectively. This has been partially offset by adverse volume and mix.
Selling, general and administrative expenses ("SG&A")
SG&A costs as a percentage of sales in 2024 from 2023 has increased by 0.1 percentage points and 0.3 percentage points in the quarter and first nine months respectively. This is primarily the result of movement in variable management compensation in 2024 compared to 2023. SG&A costs in 2023 included $2.2 million and $4.5 million, respectively, in legal fees which did not re-occur in 2024, these predominantly related to the case described in Note 16 - Commitments and Contingencies.
Research and development costs
Research and development costs as a percentage of sales reduced by 0.2 percentage points in the third quarter although remained flat for first nine months of 2024 respectively. The slight reduction in the third quarter is a result of timing of research and development spend.
Restructuring charges
The $0.5 million and $2.3 million restructuring charge in the third quarter and first nine months respectively of 2024 predominantly relates to the execution of cost savings initiatives affecting our North American Gas Cylinders business. This amounted to $0.4 million and $1.4 million in the third quarter and first nine months of the year respectively. There was a further $0.1 million and $0.7 million in the third quarter and first nine months of the year primarily relating to site clean-up costs associated with the closure of Luxfer Gas Cylinders France, which ceased operations in 2019. Additionally, there were clean-up costs of $0.2 million in the first nine months of the year within our Elektron Division relating to the consolidation of production facilities in the Magnesium Powders operations.
The $1.6 million and $4.4 million restructuring charge in the third quarter and first nine months of 2023 relates predominantly to asset impairments in relation to rationalization of our North American Gas Cylinders businesses to reduce our fixed cost base. This amounted to $0.3 million in the third quarter and $2.6 million in the first nine months of the year respectively. There was an additional $0.9 million and $1.3 million of other expenses in the third quarter and first nine months of the year in relation to the aforementioned rationalization.
25
Acquisition and disposal related costs
Acquisition and disposal related costs of $0.1 million and $9.5 million in the third quarter and first nine months respectively of 2024 were incurred in relation to the divestiture of our Graphic Arts segment. $7.5 million represents a loss on held-for-sale asset group, recognized in the first half of 2024 and $0.1 million and $2.0 million respectively, represents professional fees. No acquisition and disposal related costs were incurred during 2023.
Other Income
Other Income of $1.9 million and $7.2 million in the third quarter and first nine months of 2024 relate to the recovery of legal costs from our insurer related to the previously disclosed US Ecology case.
Gain on Disposal of assets held for sale
The $6.1 million gain on disposal recognized in the third quarter and first nine months respectively of 2024 were in relation to the sale of previously disclosed held-for-sale land and buildings in our Elektron division. Net consideration of $7.3 million was received in the fourth quarter of 2024.
Net Interest Expense
Net interest expense of $1.4 million in the Third Quarter of 2024 decreased 12.5% from $1.6 million in the Third Quarter of 2023, due to a decrease in drawings and average lower interest rates. Interest expense of $4.1 million in the first nine months of 2024 was also lower than the $4.7 million in the first nine months of 2023.
Defined benefit pension credit
There was a defined benefit credit of $0.3 million and $0.8 million in the third quarter and first nine months respectively for the U.K. plan, consistent with 2023. 2023 was also impacted by the sale of the U.S. pension plan liability to an insurer, which included $2.3 million cash and $6.9 million in relation to the derecognition of the U.S. pension liability and reallocation of accumulated actuarial losses from other comprehensive income. In the second quarter of 2023, we received a $0.2 million contribution refund, resulting in a net cash outflow of $2.1 million and a half year charge of $9.0 million.
Provision for income taxes
The movement in the year to date statutory effective tax rate from negative 39.3% in 2023, to positive 34.2% in 2024, was primarily due to non-deductible expenses and deferred tax credit, predominantly in relation to the previously mentioned pension buy-out and impairment charges. When stripping out the impact of this, as well as other less significant adjusting items, the adjusted effective tax rate has increased to 23.4% in 2024 from 21.9% in 2023, largely as a result of the statutory tax rate increase in the U.K. from 19% to 25%, which came into effect in April 2023.
26
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
The following tables of non-GAAP summary financial data presents a reconciliation of net income from continuing operations and diluted earnings per ordinary share from continuing operations to adjusted net income from continuing operations, adjusted EBITA from continuing operations, adjusted income from continuing operations before income taxes, adjusted EBITDA from continuing operations, adjusted earnings per ordinary share from continuing operations, adjusted provision for income taxes and adjusted effective tax rate from continuing operations, for the periods presented, being the most comparable GAAP measures. Management believes that adjusted net income, adjusted earnings per share, adjusted EBITA and adjusted EBITDA are key performance indicators ("KPIs") used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results. In addition, Luxfer's CEO and other senior management use these KPIs, among others, to evaluate business performance. However, investors should not consider adjusted net income from continuing operations, adjusted earnings per share from continuing operations, adjusted EBITA from continuing operations and adjusted EBITDA from continuing operations in isolation as an alternative to net income and earnings per share when evaluating Luxfer's operating performance or measuring Luxfer's profitability. In 2024, the Company initiated a process to divest the Graphic Arts business. While Graphic Arts does not meet the 'strategic shift' criteria outlined in ASC 205-20 for it to be classified as a discontinued operation, we believe that given the expectation that divestiture will be completed in the current year, it is appropriate in the the tables below to separate out the results of Graphic Arts in order to provide a more complete financial summary for the period.
| Third Quarter | |||||||||||||||||||||||||||||
| In millions except per share data | 2024 | 2023 | |||||||||||||||||||||||||||
| Continuing operations | Graphic Arts | Adjusted Total | Continuing operations | Graphic Arts | Adjusted Total | ||||||||||||||||||||||||
| Net income / (loss) | $ | 12.6 | $ | — | $ | 12.6 | $ | (1.5) | (2.6) | $ | 1.1 | ||||||||||||||||||
| Accounting charges relating to acquisitions and disposals of businesses: | |||||||||||||||||||||||||||||
| Amortization on acquired intangibles | 0.2 | — | 0.2 | 0.2 | — | 0.2 | |||||||||||||||||||||||
| Acquisition and disposal related charge | 0.1 | 0.1 | — | — | — | — | |||||||||||||||||||||||
| Defined benefit pension credit | (0.3) | — | (0.3) | (0.3) | — | (0.3) | |||||||||||||||||||||||
| Restructuring charge | 0.5 | — | 0.5 | 1.6 | — | 1.6 | |||||||||||||||||||||||
| Gain on disposal of assets held-for-sale assets | (6.1) | — | (6.1) | — | — | — | |||||||||||||||||||||||
| Share-based compensation charge | 0.7 | 0.1 | 0.6 | 0.7 | — | 0.7 | |||||||||||||||||||||||
| Income tax on adjusted items | 1.1 | — | 1.1 | 0.4 | — | 0.4 | |||||||||||||||||||||||
| Adjusted net income / (loss) | $ | 8.8 | $ | 0.2 | $ | 8.6 | $ | 1.1 | $ | (2.6) | $ | 3.7 | |||||||||||||||||
Adjusted earnings / (loss) per ordinary share (1) | |||||||||||||||||||||||||||||
| Diluted earnings / (loss) per ordinary share | $ | 0.47 | $ | — | $ | 0.47 | $ | (0.06) | $ | (0.10) | $ | 0.04 | |||||||||||||||||
| Impact of adjusted items | (0.14) | 0.01 | (0.15) | 0.10 | — | 0.10 | |||||||||||||||||||||||
| Adjusted diluted earnings / (loss) per ordinary share | $ | 0.33 | $ | 0.01 | $ | 0.32 | $ | 0.04 | $ | (0.10) | $ | 0.14 | |||||||||||||||||
27
| Year-to-date | |||||||||||||||||||||||||||||
| In millions except per share data | 2024 | 2023 | |||||||||||||||||||||||||||
| Continuing operations | Graphic Arts | Adjusted Total | Continuing operations | Graphic Arts | Adjusted Total | ||||||||||||||||||||||||
| Net income / (loss) | $ | 15.0 | $ | (10.6) | $ | 25.6 | $ | 3.9 | (4.1) | $ | 8.0 | ||||||||||||||||||
| Accounting charges relating to acquisitions and disposals of businesses: | |||||||||||||||||||||||||||||
| Amortization on acquired intangibles | 0.6 | — | 0.6 | 0.6 | — | 0.6 | |||||||||||||||||||||||
| Acquisition and disposal related charge | 9.5 | 9.4 | 0.1 | — | — | — | |||||||||||||||||||||||
| Defined benefit pension (credit) / charge | (0.8) | — | (0.8) | 8.0 | — | 8.0 | |||||||||||||||||||||||
| Restructuring charge | 2.3 | — | 2.3 | 4.4 | — | 4.4 | |||||||||||||||||||||||
| Gain on disposal of assets held-for-sale | (6.1) | — | (6.1) | — | — | — | |||||||||||||||||||||||
| Share-based compensation charge | 2.1 | 0.3 | 1.8 | 2.0 | — | 2.0 | |||||||||||||||||||||||
| Income tax on adjusted items | 0.7 | (0.1) | 0.8 | (0.1) | — | (0.1) | |||||||||||||||||||||||
| Adjusted net income / (loss) | $ | 23.3 | $ | (1.0) | $ | 24.3 | $ | 13.9 | $ | (4.1) | $ | 18.0 | |||||||||||||||||
Adjusted earnings / (loss) per ordinary share (1) | |||||||||||||||||||||||||||||
| Diluted earnings / (loss) per ordinary share | $ | 0.56 | $ | (0.39) | $ | 0.95 | $ | 0.14 | $ | (0.15) | $ | 0.30 | |||||||||||||||||
| Impact of adjusted items | 0.30 | 0.36 | (0.05) | 0.37 | — | 0.36 | |||||||||||||||||||||||
| Adjusted diluted earnings / (loss) per ordinary share | $ | 0.86 | $ | (0.04) | $ | 0.90 | $ | 0.51 | $ | (0.15) | $ | 0.66 | |||||||||||||||||
(1) For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares outstanding during the financial year has been adjusted for the dilutive effects of all potential ordinary shares and share options granted to employees, except where there is a loss in the period, then no adjustment is made.
| Thid Quarter | |||||||||||||||||||||||||||||
| In millions except per share data | 2024 | 2023 | |||||||||||||||||||||||||||
| Continuing operations | Graphic Arts | Adjusted Total | Continuing operations | Graphic Arts | Adjusted Total | ||||||||||||||||||||||||
| Adjusted net income from continuing operations | $ | 8.8 | $ | 0.2 | $ | 8.6 | $ | 1.1 | $ | (2.6) | $ | 3.7 | |||||||||||||||||
| Add back: | |||||||||||||||||||||||||||||
| Income tax on adjusted items | (1.1) | — | (1.1) | (0.4) | — | (0.4) | |||||||||||||||||||||||
| Provision / (credit) for income taxes | 3.7 | — | 3.7 | 0.7 | (0.6) | 1.3 | |||||||||||||||||||||||
| Net finance costs | 1.4 | (0.3) | 1.7 | 1.6 | (0.1) | 1.7 | |||||||||||||||||||||||
| Adjusted EBITA | 12.8 | (0.1) | 12.9 | 3.0 | (3.3) | 6.3 | |||||||||||||||||||||||
| Loss on disposal of property, plant and equipment | 0.1 | — | 0.1 | — | — | — | |||||||||||||||||||||||
| Depreciation | 2.4 | — | 2.4 | 3.0 | 0.5 | 2.5 | |||||||||||||||||||||||
| Adjusted EBITDA | 15.3 | (0.1) | 15.4 | 6.0 | (2.8) | 8.8 | |||||||||||||||||||||||
| Year-to-date | |||||||||||||||||||||||||||||
| In millions except per share data | 2024 | 2023 | |||||||||||||||||||||||||||
| Continuing operations | Graphic Arts | Adjusted Total | Continuing operations | Graphic Arts | Adjusted Total | ||||||||||||||||||||||||
| Adjusted net income from continuing operations | $ | 23.3 | $ | (1.0) | $ | 24.3 | $ | 13.9 | $ | (4.1) | $ | 18.0 | |||||||||||||||||
| Add back: | |||||||||||||||||||||||||||||
| Income tax on adjusted items | (0.7) | 0.1 | (0.8) | 0.1 | — | 0.1 | |||||||||||||||||||||||
| Provision / (credit) for income taxes | 7.8 | (0.5) | 8.3 | (1.1) | (0.8) | (0.3) | |||||||||||||||||||||||
| Tax impact of defined benefit pension settlement | — | — | — | 4.9 | — | 4.9 | |||||||||||||||||||||||
| Net finance costs | 4.1 | (0.3) | 4.4 | 4.7 | (0.1) | 4.8 | |||||||||||||||||||||||
| Adjusted EBITA | 34.5 | (1.7) | 36.2 | 22.5 | (5.0) | 27.5 | |||||||||||||||||||||||
| Loss on disposal of property, plant and equipment | 0.1 | — | 0.1 | — | — | — | |||||||||||||||||||||||
| Depreciation | 6.9 | — | 6.9 | 9.2 | 1.5 | 7.7 | |||||||||||||||||||||||
| Adjusted EBITDA | 41.5 | (1.7) | 43.2 | 31.7 | (3.5) | 35.2 | |||||||||||||||||||||||
28
The following table presents a reconciliation for the adjusted effective tax rate, adjusted income before income taxes and adjusted provision for income taxes all of which are non-GAAP measures that management believes are KPIs used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results.
| Second Quarter | |||||||||||||||||||||||||||||
| In millions except per share data | 2024 | 2023 | |||||||||||||||||||||||||||
| Continuing operations | Graphic Arts | Adjusted Total | Continuing operations | Graphic Arts | Adjusted Total | ||||||||||||||||||||||||
| Adjusted net income / (loss) from continuing operations | $ | 8.8 | $ | 0.2 | $ | 8.6 | $ | 1.1 | $ | (2.6) | $ | 3.7 | |||||||||||||||||
| Add back: | |||||||||||||||||||||||||||||
| Income tax on adjusted items | (1.1) | — | (1.1) | (0.4) | — | (0.4) | |||||||||||||||||||||||
| Provision / (credit) for income taxes | 3.7 | — | 3.7 | 0.7 | (0.6) | 1.3 | |||||||||||||||||||||||
| Adjusted income / (loss) from continuing operations before income taxes | 11.4 | 0.2 | 11.2 | 1.4 | (3.2) | 4.6 | |||||||||||||||||||||||
| Adjusted provision for income taxes | 2.6 | — | 2.6 | 0.3 | (0.6) | 0.9 | |||||||||||||||||||||||
| Adjusted effective tax rate from continuing operations | 22.8 | % | n/a | 23.2 | % | 21.4 | % | 18.8 | % | 19.6 | % | ||||||||||||||||||
| Year-to-date | |||||||||||||||||||||||||||||
| In millions except per share data | 2024 | 2023 | |||||||||||||||||||||||||||
| Continuing operations | Graphic Arts | Adjusted Total | Continuing operations | Graphic Arts | Adjusted Total | ||||||||||||||||||||||||
| Adjusted net income / (loss) from continuing operations | $ | 23.3 | $ | (1.0) | $ | 24.3 | $ | 13.9 | $ | (4.1) | $ | 18.0 | |||||||||||||||||
| Add back: | |||||||||||||||||||||||||||||
| Income tax on adjusted items | (0.7) | 0.1 | (0.8) | 0.1 | — | 0.1 | |||||||||||||||||||||||
| Tax impact of defined benefit pension settlement | — | — | — | 4.9 | — | 4.9 | |||||||||||||||||||||||
| Provision / (credit) for income taxes | 7.8 | (0.5) | 8.3 | (1.1) | (0.8) | (0.3) | |||||||||||||||||||||||
| Adjusted income / (loss) from continuing operations before income taxes | 30.4 | (1.4) | 31.8 | 17.8 | (4.9) | 22.7 | |||||||||||||||||||||||
| Adjusted provision / (credit) for income taxes | 7.1 | (0.4) | 7.5 | 3.9 | (0.8) | 4.7 | |||||||||||||||||||||||
| Adjusted effective tax rate from continuing operations | 23.4 | % | 28.6 | % | 23.6 | % | 21.9 | % | 16.3 | % | 20.7 | % | |||||||||||||||||
29
SEGMENT RESULTS OF OPERATIONS
The summary that follows provides a discussion of the results of operations of each of our three reportable segments (Gas Cylinders, Elektron and Graphic Arts). The three segments comprise various product offerings that serve multiple end-markets.
During 2023, the Graphic Arts reporting segment has been disaggregated from the Elektron segment and is being reported separately as the Graphic Arts segment. The Elektron segment's results for 2023 has been adjusted to strip out Graphic Arts' results.
Adjusted EBITDA represents operating income adjusted for share based compensation charges; restructuring charges; acquisition and disposal related gains and costs; depreciation and amortization. A reconciliation to net income and taxes can be found in Note 15 to the condensed consolidated financial statements.
GAS CYLINDERS
The net sales and adjusted EBITDA for Gas Cylinders were as follows:
| Third Quarter | % / point change | Year-to-date | % / point change | |||||||||||||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 v 2023 | 2024 | 2023 | 2024 v 2023 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 42.6 | $ | 44.7 | (4.7)% | $ | 137.8 | $ | 134.7 | 2.3% | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | 4.6 | 2.8 | 64.3% | 13.6 | 10.2 | 33.3% | ||||||||||||||||||||||||||||||||||||||
| % of net sales | 10.8 | % | 6.3 | % | 4.5 | 9.9 | % | 7.6 | % | 2.3 | ||||||||||||||||||||||||||||||||||
Net sales
The 4.7% decrease in Gas Cylinders sales in the third quarter of 2024 from 2023 was primarily the result of reduced sales of SCBA and alternative fuel cylinders, these reductions have been partially offset by increases in cylinders sold to our medical and industrial end markets.
The 2.3% increase in sales for the first nine months of the year was primarily the benefit from renegotiated contracts, which previously constrained inflationary cost pass through in the first six months of 2023. These increases have been partially offset by reduced sales of aluminum cylinders used in our general industrial end market.
Adjusted EBITDA
The 4.5 and 2.3 percentage point increase in adjusted EBITDA for Gas Cylinders as a percentage of net sales in the third quarter and first nine months of 2024 relative to 2023 is predominantly the result of pricing improvements from new sales contracts partially offset by adverse sales mix and volume.
30
ELEKTRON
The net sales and adjusted EBITDA for Elektron were as follows:
| Third Quarter | % / point change | Year-to-date | % / point change | |||||||||||||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 v 2023 | 2024 | 2023 | 2024 v 2023 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 48.8 | $ | 45.6 | 7.0% | $ | 128.5 | $ | 151.0 | (14.9)% | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | 10.8 | 6.0 | 80.0% | 29.6 | 25.0 | 18.4% | ||||||||||||||||||||||||||||||||||||||
| % of net sales | 22.1 | % | 13.2 | % | 8.9 | 23.0 | % | 16.6 | % | 6.4 | ||||||||||||||||||||||||||||||||||
Net sales
The 7.0% increase in Elektron sales in the third quarter of 2024 from 2023 was primarily the result of:
•Elevated sales of magnesium powders, especially those used in military applications, including countermeasure flares;
•Increased sales of MRE and chemical response kits in our Magtech division; and
•Strong sales of magnesium alloys, particularly those used in aerospace and automotive applications.
These increases were partially offset by a decrease in demand for zirconium products, particularly those used in auto-catalyst products, as well as those used by our industrial end-markets
The 14.9% decrease in Elektron sales in the first nine months of 2024 from 2023 was also impacted by the significant reduction of magnesium powders sales in the first half of 2024.
Adjusted EBITDA
The 8.9 and 6.4 percentage point increase in adjusted EBITDA for Elektron as a percentage of net sales in the third quarter and first nine months respectively of 2024 from 2023 was a result of the net recovery from the previously disclosed US Ecology case in 2024 of $1.9 million and $7.2 million, compared to the net cost of $2.2 million and $4.5 million in 2023.This was partially offset by adverse price and unfavorable FX.
GRAPHIC ARTS
The net sales and adjusted EBITDA for Graphic Arts were as follows:
| Third Quarter | % / point change | Year-to-date | % / point change | |||||||||||||||||||||||||||||||||||||||||
| In millions | 2024 | 2023 | 2024 v 2023 | 2024 | 2023 | 2024 v 2023 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 8.0 | $ | 7.1 | 12.7% | $ | 22.2 | $ | 23.4 | (5.1)% | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | (0.1) | (2.8) | n/a | (1.7) | (3.5) | (51.4)% | ||||||||||||||||||||||||||||||||||||||
| % of net sales | (1.3) | % | (39.4) | % | 38.1 | (7.7) | % | (15.0) | % | 7.3 | ||||||||||||||||||||||||||||||||||
Net sales
The 12.7% increase and 5.1% decrease in Graphic Arts sales in the third quarter and first nine months of 2024 from 2023 respectively was primarily the result of fluctuating demand for photo-engraving plates, particularly outside the North American market.
Adjusted EBITDA
Graphic Arts made a small, negative EBITDA of $0.1 million for the third quarter of 2024, compared to a loss of $2.8 million in the third quarter of 2023. For the first nine months of 2024 there was an EBITDA loss of $1.7 million, compared to a $3.5 million loss in the first nine months of 2023. 2023 was significantly impacted by material cost inflation resulting in competitive constraints. Magnesium purchase price has reduced as we progress through 2024, consistent with the improvement in adjusted EBITDA in the second and third quarter of 2024.
31
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity requirements arise primarily from obligations under our indebtedness, capital expenditures, acquisitions, the funding of working capital and the funding of hedging facilities to manage foreign exchange and commodity purchase price risks. We meet these requirements primarily through cash flows from operating activities, cash deposits and borrowings under the Revolving Credit Facility and accompanying ancillary hedging facilities and the Loan Note due in 2026. Our principal liquidity needs are:
•funding acquisitions, including deferred contingent consideration payments;
•capital expenditure requirements;
•payment of shareholder dividends;
•servicing interest on the Loan Notes, which is payable at each quarter end, in addition to interest and / or commitment fees on the Senior Facilities Agreement;
•working capital requirements, particularly in the short term as we aim to achieve organic sales growth; and
•hedging facilities used to manage our foreign exchange risks and aluminum purchase price risks.
We believe that, in the long term, cash generated from our operations will be adequate to meet our anticipated requirements for working capital, capital expenditures and interest payments on our indebtedness. In the short term, we believe we have sufficient credit facilities to cover any variation in our cash flow generation. However, any major repayments of indebtedness will be dependent on our ability to raise alternative financing or to realize substantial returns from operational sales. Also, our ability to expand operations through sales development and capital expenditures could be constrained by the availability of liquidity, which, in turn, could impact the profitability of our operations.
We have been in compliance with the covenants under the Loan Notes and the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to September 29, 2024.
Luxfer conducts all of its operations through its subsidiaries, joint ventures and affiliates. Accordingly, Luxfer's main cash source is dividends from its subsidiaries. The ability of each subsidiary to make distributions depends on the funds that a subsidiary receives from its operations in excess of the funds necessary for its operations, obligations or other business plans. We have not historically experienced any material impediment to these distributions, and we do not expect any local legal or regulatory regimes to have any impact on our ability to meet our liquidity requirements in the future. In addition, since our subsidiaries are wholly-owned, our claims will generally rank junior to all other obligations of the subsidiaries. If our operating subsidiaries are unable to make distributions, our growth may slow, unless we are able to obtain additional debt or equity financing. In the event of a subsidiary's liquidation, there may not be assets sufficient for us to recoup our investment in the subsidiary.
Our ability to maintain or increase the generation of cash from our operations in the future will depend significantly on the competitiveness of and demand for our products, including our success in launching new products. Achieving such success is a key objective of our business strategy. Due to commercial, competitive and external economic factors, however, we cannot guarantee that we will generate sufficient cash flows from operations or that future working capital will be available in an amount sufficient to enable us to service our indebtedness or make necessary capital expenditures.
Cash Flows
Operating activities
Cash generated by continuing operating activities was $25.4 million inflow and $10.2 million inflow for the first nine months in 2024 and 2023 respectively. It was primarily related to net income from operating activities, net of the following non-cash items: depreciation and amortization; share-based compensation charges; pension credit / (charge); gain on disposal of held for sale assets; loss on held-for-sale asset group and net changes to assets and liabilities. Cash flow was impacted by the $5.3 million receipt arising from the reimbursement of legal costs in relation to the previously disclosed US Ecology case, the first nine months in 2023 had an equivalent outflow of $4.5 million. Also impacting the 2023 cash flow was the $2.1 million contribution the Company made in relation to the sale of the U.S. pension plan to an insurer.
Investing activities
Net cash used by continuing investing activities was $7.7 million for the first nine months of 2024, compared to net cash used by investing activities of $7.5 million in 2023, comparable quarter on quarter.
32
Financing activities
In the first nine months of 2024, net cash used by financing activities was $16.3 million, (2023: $15.5 million used by financing activities). We made a net repayment on our banking facilities of $3.8 million, having repaid $2.9 million on our revolving credit facility and paid back $0.9 million of short term debt (2023: $2.5 million net repayment). Dividend payments of $10.5 million (2022: $10.5 million), equating to $0.390 per ordinary share. We paid out $0.4 million, (2023: $0.3 million) in settling share based compensation and $1.6 million, (2023: $2.2 million) in repurchasing our own shares as part of the share buyback program which equates to approximately 150,000 shares (2023: 150,000 shares).
Capital Resources
Dividends
We paid year-to-date dividends in 2024 of $10.5 million and declared an additional $3.5 million in the fourth quarter of 2024 (2023: $14.0 million declared year-to-date and $10.5 million paid year-to-date), or $0.390 per ordinary share (2023: $0.390).
Any payment of dividends is also subject to the provisions of the U.K. Companies Act, according to which dividends may only be paid out of profits available for distribution determined by reference to financial statements prepared in accordance with the Companies Act and IFRS as adopted by the E.U., which differ in some respects from GAAP. In the event that dividends are paid in the future, holders of the ordinary shares will be entitled to receive payments in U.S. dollars in respect of dividends on the underlying ordinary shares in accordance with the deposit agreement. Furthermore, because we are a holding company, any dividend payments would depend on cash flows from our subsidiaries.
33
Authorized shares
Our authorized share capital consists of 40.0 million ordinary shares with a par value of £0.50 per share.
Contractual obligations
The following summarizes our significant contractual obligations that impact our liquidity:
| Payments Due by Period | |||||||||||||||||||||||||||||||||||
| Total | Less than 1 year | 1 – 3 years | 3 – 5 years | After 5 years | |||||||||||||||||||||||||||||||
| (in $ million) | |||||||||||||||||||||||||||||||||||
| Contractual cash obligations | |||||||||||||||||||||||||||||||||||
| Loan Notes due 2026 | 25.0 | — | 25.0 | — | — | ||||||||||||||||||||||||||||||
| Revolving credit facility | 41.1 | — | 41.1 | — | — | ||||||||||||||||||||||||||||||
| Overdraft facility | 3.7 | 3.7 | — | — | — | ||||||||||||||||||||||||||||||
| Obligations under operating leases | 22.0 | 4.7 | 7.0 | 2.3 | 8.0 | ||||||||||||||||||||||||||||||
| Capital commitments | 2.3 | 2.3 | — | — | — | ||||||||||||||||||||||||||||||
| Interest payments | 8.9 | 3.8 | 5.1 | — | — | ||||||||||||||||||||||||||||||
| Total contractual cash obligations | $ | 103.0 | $ | 14.5 | $ | 78.2 | $ | 2.3 | $ | 8.0 | |||||||||||||||||||||||||
Off-balance sheet measures
At September 29, 2024, we had no off-balance sheet arrangements other than the bonding facilities disclosed in Note 16.
NEW ACCOUNTING STANDARDS
See Note 1 of the Notes to Condensed Consolidated Financial Statements for information pertaining to recently adopted accounting standards or accounting standards to be adopted in the future.
CRITICAL ACCOUNTING POLICIES
We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. In our 2023 Annual Report on Form 10K, filed with the SEC on February 27, 2024, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements.
34
Item 3. Quantitative and qualitative disclosures about market risk
There have been no material changes in our market risk during the first nine months ended September 29, 2024. For additional information, refer to Item 7A of our 2023 Annual Report on Form 10-K, filed with the SEC on February 27, 2024.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures designed to provide reasonable assurance as to the reliability of our published financial statements and other disclosures included in this report. Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter ended March 31, 2024 ,pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon their evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level, as of the quarter ended September 29, 2024.
Remediation of Previously Reported Material Weakness
As previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31.2023 filed with the SEC on February 27,2024, we identified a material weakness in internal control over financial reporting as we did not properly design or maintain effective risk assessment control activities to allow for timely reassessment of the material risks of misstatement in financial reporting due to a lack of controls related to the accounting for inventory in-transit. During the first nine months of 2024, we undertook efforts to develop and design enhanced risk assessment procedures to identify and analyze changes in the business that could have a significant impact on financial reporting and determine actions necessary to mitigate new or evolving risks. We have also implemented a new period-end control over the recording of inventory in-transit and enhanced other post-closing controls. Management has operated the new risk assessment process for a sufficient period of time and have concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
Other than the changes related to the remediation activities related to the material weakness noted above, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the nine months or quarter ended September 29, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
35
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in various lawsuits and is subject to various claims that arise in the normal course of business, the most significant of which are summarized in Note 16 (commitments and contingencies) to the consolidated financial statements in ITEM 1. In the opinion of management, the likelihood that the ultimate disposition of these matters will have a material adverse impact is remote.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Item 1A. of our 2023 Annual Report on Form 10-K filed with the SEC on February 27, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 5. Other Information
Director and Officer Trading Arrangements
None of Luxfer’s directors or executive officers adopted terminated
Item 6. Exhibits
101.INS The financial statements from the Company’s Interim Report on Form 10-Q for the quarter ended September 29, 2024, formatted in inline XRBL: (i) Condensed Consolidated Statements of Income; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Changes in Equity; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags. The instance document does not appear in the Interactive Data File because its XRBL tags are embedded within the Inline XRBL document
101.SCH Inline XRBL Taxonomy Extension Schema Document
101.CAL Inline XRBL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XRBL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XRBL Taxonomy Extension Label Linkbase Document
101.PRE Inline XRBL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as inline XRBL and contained in Exhibit 101)
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Luxfer Holdings plc | ||||||||||||||
| (Registrant) | ||||||||||||||
| /s/Andrew Butcher | ||||||||||||||
| Andrew Butcher | ||||||||||||||
| Chief Executive Officer | ||||||||||||||
| (Duly Authorized Officer) | ||||||||||||||
| October 29, 2024 | ||||||||||||||
37
Section 302 Certificate
Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
I, Andrew Butcher, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Luxfer Holdings PLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: October 29, 2024 | __/s/ Andrew Butcher____________________ | ||||
| Andrew Butcher Chief Executive Officer | |||||
Section 302 Certificate
Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
I, Stephen Webster, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Luxfer Holdings PLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: October 29, 2024 | __/s/ Stephen Webster____________________ | ||||
| Stephen Webster Chief Financial Officer | |||||
Section 906 Certificate
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Andrew Butcher, the Chief Executive Officer of Luxfer Holdings PLC, a public limited company incorporated under English law (the “Company”), do hereby certify, to my knowledge, that:
•the Quarterly Report on Form 10-Q for the period ended September 29, 2024 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
•information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: October 29, 2024 | __/s/ Andrew Butcher_______ Andrew Butcher Chief Executive Officer | ||||
Section 906 Certificate
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Stephen Webster, the Chief Financial Officer of Luxfer Holdings PLC, a public limited company incorporated under English law (the “Company”), do hereby certify, to my knowledge, that:
•the Quarterly Report on Form 10-Q for the period ended September 29, 2024 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
•information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: October 29, 2024 | __/s/ Stephen Webster_______ Stephen Webster Chief Financial Officer | ||||