Luxfer Holdings PLC 10-Q for FY2020 Q2
Luxfer Holdings PLC (LXFR)
10-Q
2020-07-27
For: 2020-06-28
View Original
Added on
April 08, 2026
About this 10-Q
Luxfer Holdings PLC filed this 10-Q on July 27, 2020, covering the quarter ended June 28, 2020 (FY2020 Q2).
Headline figures
Quarter ended June 28, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $89.5M
- down 23.2% from $116.5M a year earlier
- Net income
- $4.1M
- up 17.1% from net income of $3.5M a year earlier
- Diluted EPS
- $0.15
- up 15.4% from $0.13 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 June 28, 2020
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 June 28, 2020, was 27,615,704 .
TABLE OF CONTENTS | ||
| Page | ||||||||||||||||||||||||||
| PART I FINANCIAL INFORMATION | ||||||||||||||||||||||||||
| Item 1. | Condensed Financial Statements (unaudited) | 1 | ||||||||||||||||||||||||
| Condensed Consolidated Statements of Income (unaudited) | 1 | |||||||||||||||||||||||||
| Condensed Consolidated Statements of Comprehensive Income / (Loss) (unaudited) | 2 | |||||||||||||||||||||||||
| Condensed Consolidated Balance Sheets (unaudited) | 3 | |||||||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows (unaudited) | 4 | |||||||||||||||||||||||||
| Condensed Consolidated Statements of Changes in Equity (unaudited) | 5 | |||||||||||||||||||||||||
| Notes to Condensed Consolidated Financial Statements (unaudited) | 7 | |||||||||||||||||||||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||||||||||||||||||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31 | ||||||||||||||||||||||||
| Item 4. | Controls and Procedures | 31 | ||||||||||||||||||||||||
| PART II OTHER INFORMATION | ||||||||||||||||||||||||||
| Item 1. | Legal Proceedings | 32 | ||||||||||||||||||||||||
| Item 1A. | Risk Factors | 32 | ||||||||||||||||||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 | ||||||||||||||||||||||||
| Item 6. | Exhibits | 33 | ||||||||||||||||||||||||
| Signatures | 34 | |||||||||||||||||||||||||
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (unaudited)
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Second Quarter | Year-to-date | |||||||||||||||||||||||||||||||||||||||||||
| In millions, except share and per-share data | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Research and development | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Restructuring charges | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Impairment charges | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and disposal related gains / (costs) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Defined benefit pension credit | ||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes and equity in net income of affiliates | ||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Income / (loss) before equity in net (loss) / income of affiliates | ( | |||||||||||||||||||||||||||||||||||||||||||
| Equity in net (loss) / income of affiliates (net of tax) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Earnings / (loss) per share | ||||||||||||||||||||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Diluted1 | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Weighted average ordinary shares outstanding | ||||||||||||||||||||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
1
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)
| Second Quarter | Year-to-date | |||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income / (loss) | ||||||||||||||||||||||||||||||||||||||||||||
| Net change in foreign currency translation adjustment | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Pension and post-retirement actuarial gains, net of $ | ||||||||||||||||||||||||||||||||||||||||||||
Cash flow hedges, 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)
| June 28, | December 31, | ||||||||||||||||
| In millions, except share and per-share data | 2020 | 2019 | |||||||||||||||
| Current assets | |||||||||||||||||
| Cash and cash equivalents | $ | $ | |||||||||||||||
| Restricted cash | |||||||||||||||||
Accounts and other receivables, net of allowances of $ | |||||||||||||||||
| Inventories | |||||||||||||||||
| 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 | |||||||||||||||||
| Total assets | $ | $ | |||||||||||||||
| Current liabilities | |||||||||||||||||
| Accounts payable | $ | $ | |||||||||||||||
| Accrued liabilities | |||||||||||||||||
| Taxes on income | |||||||||||||||||
| 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 | $ | $ | |||||||||||||||
| Shareholders' equity | |||||||||||||||||
Ordinary shares of £ | $ | $ | |||||||||||||||
Deferred shares of £ | |||||||||||||||||
| Additional paid-in capital | |||||||||||||||||
| Treasury shares | ( | ( | |||||||||||||||
| Own 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)
| Year-to-date | ||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | ||||||||||||||||||||||||||||||
| Operating activities | ||||||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | ( | |||||||||||||||||||||||||||||
| Adjustments to reconcile net income / (loss) to net cash provided by / (used for) operating activities | ||||||||||||||||||||||||||||||||
| Equity in net loss / (income) of affiliates | ( | |||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||
| Amortization of purchased intangible assets | ||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||||||||||||||
| Share-based compensation charges | ||||||||||||||||||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||||||||||||||
| Gain on disposal of property, plant and equipment | ( | |||||||||||||||||||||||||||||||
| Asset impairment charges | ||||||||||||||||||||||||||||||||
| Defined benefit pension credit | ( | ( | ||||||||||||||||||||||||||||||
| Defined benefit pension contributions | ( | ( | ||||||||||||||||||||||||||||||
| Changes in assets and liabilities | ||||||||||||||||||||||||||||||||
| Accounts and other receivables | ( | |||||||||||||||||||||||||||||||
| Inventories | ( | ( | ||||||||||||||||||||||||||||||
| Other current assets | ( | |||||||||||||||||||||||||||||||
| Accounts payable | ( | ( | ||||||||||||||||||||||||||||||
| Accrued liabilities | ( | ( | ||||||||||||||||||||||||||||||
| Other current liabilities | ||||||||||||||||||||||||||||||||
| Other non-current assets and liabilities | ( | ( | ||||||||||||||||||||||||||||||
| Net cash provided by / (used for) operating activities | $ | $ | ( | |||||||||||||||||||||||||||||
| Investing activities | ||||||||||||||||||||||||||||||||
| Capital expenditures | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| Proceeds from sale of property, plant and equipment | ||||||||||||||||||||||||||||||||
| Proceeds from sale of businesses and other | ||||||||||||||||||||||||||||||||
| Net cash used for investing activities | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| Financing activities | ||||||||||||||||||||||||||||||||
| Net drawdown of short-term borrowings | $ | $ | ||||||||||||||||||||||||||||||
| Net drawdown of long-term borrowings | ||||||||||||||||||||||||||||||||
| Deferred consideration paid | ( | ( | ||||||||||||||||||||||||||||||
| Proceeds from sale of shares | ||||||||||||||||||||||||||||||||
| Share-based compensation cash paid | ( | ( | ||||||||||||||||||||||||||||||
| Dividends paid | ( | ( | ||||||||||||||||||||||||||||||
| Net cash (used for) / from financing activities | $ | ( | $ | |||||||||||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ( | ||||||||||||||||||||||||||||||
| Net (decrease) / increase | $ | ( | $ | |||||||||||||||||||||||||||||
| Cash, cash equivalents and restricted cash; beginning of year | ||||||||||||||||||||||||||||||||
| Cash, cash equivalents and restricted cash; end of the Second Quarter | ||||||||||||||||||||||||||||||||
| Supplemental cash flow information: | ||||||||||||||||||||||||||||||||
| Interest payments | $ | $ | ||||||||||||||||||||||||||||||
| Income tax payments | ||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
4
LUXFER HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
| In millions, | Ordinary shares | Deferred 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, 2020 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Utilization of shares from ESOP to satisfy share based compensation | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At March 29, 2020 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares sold from ESOP | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of shares from ESOP to satisfy share based compensation | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At June 28, 2020 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary share capital represents 29,000,000
Deferred share capital represents 761,835,338,444
5
| In millions, | Ordinary shares | Deferred 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, 2019 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares sold from ESOP | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of treasury shares to satisfy share based compensation | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At March 31, 2019 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares sold from ESOP | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilization of shares from ESOP to satisfy share based compensation | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At June 30, 2019 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary share capital represents 29,000,000
Deferred share capital represents 761,835,338,444
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 consolidated condensed 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, except for the adoption for Accounting Standards Update ("ASU") 2016-13, "current expected credit loss model". 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, 2019. 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 of a normal recurring nature, necessary for presentation 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.
Impact of COVID-19 on the Financial Statements
In March 2020, the World Health Organization characterized the coronavirus ("COVID-19") a pandemic. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. At this time, Luxfer is operating all of its facilities, following earlier temporary closures at a small number of locations. However, due to weaker demand resulting from uncertain economic conditions, potential supply constraints, and the continued spread of COVID-19, Luxfer has temporarily reduced capacity at certain facilities with partial furloughing of the workforce. We have also identified additional cost saving programs, including headcount reductions as a direct response to the impact of the pandemic. As the situation evolves and if warranted, the Company may suspend or reduce operations at additional facilities. In view of the rapidly changing business environment, unprecedented market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business. However, we are monitoring the progression of the pandemic and its potential effect on our financial position, results of operations and cash flows.
In relation to liquidity, the Company has access to a revolving credit facility (see Note 8) and has performed stress testing on financial covenants using current forecast information and has not identified any liquidity concerns.
7
Adoption of new accounting standards
Current expected credit loss ("CECL") model
On January 1, 2020, the Company adopted ASU 2016-13, financial instruments - Credit Losses (Topic 326): Measurement of credit losses on Financial Instruments prospectively. The ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables.
•Under the CECL model, the Company is required to consider whether expected credit losses should be recognized for trade receivables that are considered “current” (i.e., not past due).
•When using historical loss rates in a provision matrix, the Company is required to consider whether and, if so, how the historical loss rates differ from what is currently expected over the life of the trade receivables (on the basis of current conditions and reasonable and supportable forecasts about the future).
Upon adoption, there was no adjustment needed to opening retained earnings as at January 1, 2020.
As a result of implementing ASU 2016-13, the Company did not recognize any material additional allowance within Accounts and Other Receivables as at January 1, 2020. Accounts and Other Receivables are shown net of a $1.6 million allowance at June 28, 2020.
The Company is exposed to credit losses primarily through sales of products. The Company’s expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of accounts receivable amounts that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted.
Estimates are used to determine the allowance. It is based on assessment of anticipated receipts and all other historical, current and future information that is reasonably available.
The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.
| 2020 | |||||||||||||||||
| In millions | QTD | YTD | |||||||||||||||
| Balance at March 30, / January 1, | $ | $ | |||||||||||||||
| Provisions for expected credit losses | ( | ||||||||||||||||
| Other, including foreign currency translation | ( | ||||||||||||||||
| Balance at June 28, | $ | $ | |||||||||||||||
Accounting standards issued but not yet effective
None that will be material to the Company.
8
2. Earnings per share
Basic earnings 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:
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| In millions except share and per-share data | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Basic earnings: | |||||||||||||||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
Weighted average number of € | |||||||||||||||||||||||||||||||||||||||||
| For basic earnings per share | |||||||||||||||||||||||||||||||||||||||||
| Dilutive effect of potential common stock | |||||||||||||||||||||||||||||||||||||||||
| For diluted earnings per share | |||||||||||||||||||||||||||||||||||||||||
| Earnings / (loss) per share using weighted average number of ordinary shares outstanding: | |||||||||||||||||||||||||||||||||||||||||
| Basic earnings / (loss) per ordinary share | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
| Diluted earnings / (loss) per ordinary share | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
In 2019 year-to-date, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive since the Company generated a net loss for the period. As a result, 662,832 shares combined were not included in the computation of diluted EPS.
3. Net Sales
Disaggregated sales disclosures for the quarter and year-to-date ended June 28, 2020, and June 30, 2019, are included below and in Note 12, Segmental Information.
| Second Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
| In millions | Gas Cylinders | Elektron | Total | Gas Cylinders | Elektron | Total | |||||||||||||||||||||||||||||||||||||||||
| General industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Transportation | |||||||||||||||||||||||||||||||||||||||||||||||
| Defense and emergency | |||||||||||||||||||||||||||||||||||||||||||||||
| Healthcare | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Year-to-date | |||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
| In millions | Gas Cylinders | Elektron | Total | Gas Cylinders | Elektron | Total | |||||||||||||||||||||||||||||||||||||||||
| General industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Transportation | |||||||||||||||||||||||||||||||||||||||||||||||
| Defense and emergency | |||||||||||||||||||||||||||||||||||||||||||||||
| Healthcare | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
9
The Company’s performance obligations are satisfied over time as work progresses or at a point in time. Design and tooling arrangements are the only contracts for which sales are recognized over time. Sales from these sources combined accounted for less than 1
The following table provides information about contract receivables, contract assets and contract liabilities from contracts with customers:
| In millions | June 28, 2020 | December 31, 2019 | |||||||||||||||
| Contract receivables | $ | $ | |||||||||||||||
| Contract assets | |||||||||||||||||
| Contract liabilities | ( | ( | |||||||||||||||
Contract assets consist of $0.1 million accrued unbilled amounts relating to tooling revenue and are recognized in prepayments and accrued income in the consolidated balance sheets. Of the $1.3 million contract assets recognized as of December 31, 2019, $1.2 million was billed to customers and transferred to receivables as of June 28, 2020.
Contract liabilities of $0.7 million consist of advance payments and billing above costs incurred and are recognized as other current liabilities. Significant changes in contract liabilities balances during the period are as follows:
| In millions | 2020 | ||||||||||
| As at January 1, | $ | ( | |||||||||
| Net (payments received) / amounts billed | ( | ||||||||||
| Net (costs incurred) / revenue recognized | |||||||||||
| As at June 28, | $ | ( | |||||||||
4. Restructuring
During the Second Quarter of 2020 we continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business. The $0.8 million restructuring charge in the Second Quarter of 2020 was predominantly ($0.6 million) the result of further costs associated with the announced closure of Luxfer Gas Cylinders France, including one-time employee benefits, and associated legal and professional fees. There was an additional $0.2 million of one-time employee benefits resulting from actions to reduce our fixed cost-base in light of the COVID-19 pandemic.
Restructuring-related costs included within Restructuring charges in the Condensed Consolidated Financial Statements by reportable segment were as follows:
| Second Quarter | Year-to-date | |||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||
| Severance and related costs | ||||||||||||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
| Elektron segment | ||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Asset impairments | ||||||||||||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
| Elektron segment | ||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Total restructuring charges | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
10
Activity related to restructuring, recorded in Other current liabilities in the consolidated balance sheets is summarized as follows:
| In millions | 2020 | ||||||||||||||||
| Balance at January 1, | $ | ||||||||||||||||
| Costs incurred | |||||||||||||||||
| Cash payments and other | ( | ||||||||||||||||
| Balance at June 28, | $ | ||||||||||||||||
5. Acquisition and disposal related gains / (costs)
Acquisition-related costs of $0.2 million were incurred during the First Quarter of 2020 and represents amounts incurred in relation to M&A exploration activities net of a $0.1 million release of deferred contingent consideration.
Acquisition-related gains of $2.9 million in the Second Quarter, 2019 related to the sale of Magnesium Elektron CZ s.r.o. This gain was offset by a $4.6 million charge in the First Quarter of 2019 in relation to a reimbursement of costs following the terminated Neo acquisition.
11
6. Supplementary balance sheet information
| June 28, | December 31, | |||||||||||||||||||
| In millions | 2020 | 2019 | ||||||||||||||||||
| 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 | ||||||||||||||||||||
| Held-for-sale 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 | $ | $ | ||||||||||||||||||
| Other current liabilities | ||||||||||||||||||||
| Contingent liabilities | $ | $ | ||||||||||||||||||
| Derivative financial instruments | ||||||||||||||||||||
| Operating lease liability | ||||||||||||||||||||
| Other current liabilities | ||||||||||||||||||||
| Total other current liabilities | $ | $ | ||||||||||||||||||
| Other non-current liabilities | ||||||||||||||||||||
| Contingent liabilities | $ | $ | ||||||||||||||||||
| Operating lease liability | ||||||||||||||||||||
| Other non-current liabilities | ||||||||||||||||||||
| Total other non-current liabilities | $ | $ | ||||||||||||||||||
12
6. Supplementary balance sheet information (continued)
Held-for-sale assets and liabilities
| Held-for-sale assets | June 28, | December 31, | |||||||||||||||
| In millions | 2020 | 2019 | |||||||||||||||
| Property, plant and equipment | $ | $ | |||||||||||||||
| Inventory | |||||||||||||||||
| Held-for-sale assets | $ | $ | |||||||||||||||
During 2018, a building within our Elektron Segment was classified as held-for-sale assets, presented within other current assets. The building was part of a site closure announced in 2017 and was readily available for sale at December 31, 2018. The site at Riverhead, NY is now expected to be sold during 2020 and is included within held-for-sale assets as at June 28, 2020 and December 31, 2019.
7. Goodwill and other identifiable intangible assets
Changes in goodwill during the first two quarters ended June 28, 2020, were as follows:
| In millions | Gas Cylinders | Elektron | Total | ||||||||||||||||||||
| At January 1, 2020 | $ | $ | $ | ||||||||||||||||||||
| Exchange difference | ( | ( | ( | ||||||||||||||||||||
| Balance at June 28, 2020 | $ | $ | $ | ||||||||||||||||||||
Identifiable intangible assets consisted of the following:
| June 28, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | Gross | Accumulated amortization | Net | Gross | Accumulated amortization | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Technology and trading related | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Identifiable intangible asset amortization expense was $0.4 million and $0.6 million for the first two quarters of 2020 and 2019 respectively.
Intangible asset amortization expense during the remainder of 2020 and over the next five years is expected to be approximately $0.3 million in 2020, $0.7 million in 2021, $0.7 million in 2022, $0.7 million in 2023, $0.7 million in 2024 and $0.7 million in 2025.
13
8. Debt
Debt outstanding was as follows:
| In millions | June 28, 2020 | December 31, 2019 | |||||||||||||||
| $ | $ | ||||||||||||||||
| Revolving credit facility | |||||||||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||||||||
| Total debt | $ | $ | |||||||||||||||
| Less current portion | $ | $ | |||||||||||||||
| Non-current debt | $ | $ | |||||||||||||||
The weighted-average interest rate on the revolving credit facility was 2.19 % for the Second Quarter of 2020 and 2.47 % for the full-year 2019.
The maturity profile of the Company's debt, excluding unamortized issuance costs and discounts, is as follows:
| In millions | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Loan Notes due 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Loan Notes due 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Notes due 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revolving credit facility | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total debt | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
Loan notes due and shelf facility
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 June 28, 2020.
The Loan Notes due 2021, 2023 and 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 Second Quarter of 2020, we repaid $18.4 million on the Revolving Credit Facility and the balance outstanding at June 28, 2020, was $16.3 million, and at December 31, 2019, was $17.5 million, with $133.7 million undrawn at June 28, 2020, $132.5 million at December 31, 2019.
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 June 28, 2020.
9. Income Taxes
14
10. Share Plans
Total share-based compensation expense for the quarters ended June 28, 2020, and June 30, 2019, was as follows:
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Total share-based compensation charges | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
In March 2020, 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 130,000 and the weighted average fair value of options granted in 2020 was estimated to be $11.30 per share.
In May 2020, we issued our additional annual share-based compensation grants under the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan. The total number of awards issued was 2,000 and the weighted average fair value of options granted in 2020 was estimated to be $13.13 per share.
In June 2020, 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 27,280 and the weighted-average fair value of options granted was estimated to be $13.38 per share.
The following table illustrates the assumptions used in deriving the fair value of share options granted during 2020 and the year-ended December 31, 2019:
| 2020 | 2019 | ||||||||||||||||
| Dividend yield (%) | |||||||||||||||||
| Expected volatility range (%) | |||||||||||||||||
| Risk-free interest rate (%) | |||||||||||||||||
| Expected life of share options range (years) | |||||||||||||||||
| Weighted average exercise price ($) | $ | $ | |||||||||||||||
| 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.
11. Shareholders' Equity
Dividends paid and proposed
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Dividends declared and paid during the year: | |||||||||||||||||||||||||||||||||||||||||
Interim dividend paid February 6, 2019 ($ | $ | — | $ | — | $ | — | $ | ||||||||||||||||||||||||||||||||||
Interim dividend paid May 1, 2019 ($ | — | — | |||||||||||||||||||||||||||||||||||||||
Interim dividend paid February 5, 2020 ($ | — | — | — | ||||||||||||||||||||||||||||||||||||||
Interim dividend paid May 6, 2020 ($ | — | ||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | |||||||||||||||||||||
| Dividends declared and paid after the quarter end (not recognized as a liability at the quarter end): | |||||||||||||||||||||||
Interim dividend declared July 1, and paid August 1, 2019: ($ | $ | — | $ | ||||||||||||||||||||
Interim dividend declared July 6, and to be paid August 5, 2020: ($ | — | ||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
15
12. Segmental Information
We classify our operations into two core business segments, Gas Cylinders and Elektron, 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 the two reportable segments. Luxfer Gas Cylinders and Luxfer Superform aggregate into the Gas Cylinders segment, and Luxfer MEL Technologies, Luxfer Magtech and Luxfer Graphic Arts aggregate into the Elektron segment. In the first two quarters of 2019, prior to its divestiture, Luxfer Czech Republic also aggregated into the Elektron Segment. A summary of the operations of the segments is provided below:
Gas Cylinders segment
Our Gas Cylinders segment manufactures and markets specialized products using aluminum, titanium and carbon composites, 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 vehicles, and general industrial. The segment also forms lightweight aluminum and titanium panels into highly complex shapes that are used mainly in the transportation industry.
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; photoengraving plates for graphic arts; and high-performance zirconium-based materials and oxides used as catalysts and in the manufacture of advanced ceramics, fiber-optic fuel cells, and many other performance products.
Other
Other primarily represents unallocated corporate expense and includes non-service related defined benefit pension cost / credit.
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, who is responsible for allocating resources and assessing performance of the operating segments as the CEO, using adjusted EBITA2 and adjusted EBITDA, which we defined as segment income and are based on operating income adjusted for share based compensation charges; loss on disposal of property, plant and equipment, restructuring charges; impairment charges; acquisition and disposal related gains and costs; other charges; depreciation and amortization; and unwind of discount on deferred consideration.
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 Second Quarter and year-to-date ended June 28, 2020, and June 30, 2019, is included in the following summary:
| Net sales | Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter | Year-to-date | Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Elektron segment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | Restructuring charges | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter | Year-to-date | Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Elektron segment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 Adjusted EBITA is adjusted EBITDA less depreciation
16
12. Segmental Information (continued)
| Total assets | Capital expenditures | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 28, | December 31, | Second Quarter | Year-to-date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gas Cylinders segment | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Elektron segment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment, net | ||||||||||||||||||||||||||||||||
| June 28, | December 31, | |||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | ||||||||||||||||||||||||||||||
| United States | $ | |||||||||||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||||||||
| France | ||||||||||||||||||||||||||||||||
| Asia Pacific | ||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||
The following table presents a reconciliation of Adjusted EBITDA to net income / (loss):
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Other share-based compensation charges | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Unwind discount on deferred consideration | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Restructuring charges | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Impairment charges | |||||||||||||||||||||||||||||||||||||||||
| Acquisition and disposal related gains / (costs) | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Defined benefits pension credit | |||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Net income / (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
17
12. Segmental Information (continued)
The following tables present certain geographic information by geographic region for the First Quarter ended June 28, 2020, and June 30, 2019:
Net Sales(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $M | Percent | $M | Percent | $M | Percent | $M | Percent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.K. | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| France | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Italy | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Germany | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top five countries | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rest of Europe | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (2) | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Net sales are based on the geographic destination of sale.
(2) Other includes Canada, South America, Latin America and Africa.
13. Commitments and Contingencies
Committed and uncommitted banking facilities
The Company had committed banking facilities of $150.0 16.3 million was drawn at June 28, 2020, and $17.5 million at December 31, 2019.
The Company had a separate (uncommitted) facility for letters of credit which at June 28, 2020, was £1.0 million ($1.2 million) and December 31, 2019, was £1.0 million ($1.3 million). None of these were utilized at June 28, 2020 and December 31, 2019.
The Company also has two separate (uncommitted) bonding facilities for bank guarantees; one denominated in GBP sterling of £4.5 million (2020: $5.6 million, 2019: $5.9 million), and one denominated in USD of $0.4 million. Of that denominated in GBP, £1.6 million (2020: $2.0 million, 2019: $2.3 million) was utilized at June 28, 2020, and December 31, 2019, respectively. Of that dominated in USD, all was fully utilized at June 28, 2020 and December 31, 2019 respectively.
The Company also has a $4.0 million (December 31, 2019: nil ) separate overdraft facility of which no ne was drawn at June 28, 2020.
Capital commitments
At June 28, 2020, the Company had capital expenditure commitments of $0.7 million for the acquisition of new plant and equipment.
Inventory commitments
Within our Elektron Division, we have committed to purchase $1.0 million of rare earth materials.
Contingencies
During February 2014, a cylinder was sold to a long-term customer and ruptured at one of their gas facilities. As a result of this rupture, three people were noted to have minor injuries such as loss of hearing. There was no major damage to assets of the customer. A claim was launched by the three people who were injured in the incident. We have reviewed our quality control checks from around the time which the cylinder was produced and no instances of failures have been noted. It has also been noted by the investigator that the customer has poor quality and safety checks. As a result, we do not believe that we are liable for the incident, and therefore, do not currently expect this case to have a material impact on the Company's financial position or results of operations.
18
14. Subsequent Events
19
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;
•risks related to the impact of the global COVID-19 pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, supply chain disruptions and other impacts to the business, and the Company’s ability to execute business continuity plans, as a result of the COVID-19 pandemic;
•worldwide economic and business conditions and conditions in the industries in which we operate;
•fluctuations in the cost of raw materials and utilities;
•currency fluctuations and other financial risks;
•our ability to remediate the material weakness in our internal controls over financial reporting;
•our ability to protect our intellectual property;
•the significant 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;
•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;
•regulatory, environmental, legislative and judicial developments; and
•our intention to pay dividends.
Please read the sections "Business" and "Risk factors" included within the 2019 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.
20
About Luxfer
Luxfer is a global manufacturer of highly-engineered industrial materials, which focuses on value creation by using its broad array of technical know-how and proprietary technologies. Luxfer's high-performance materials, components, and high-pressure gas containment devices are used in defense and emergency response, healthcare, transportation, and general industrial applications. For more information, visit www.luxfer.com.
Key trends and uncertainties regarding our existing business
Impact of COVID-19 on operations
Luxfer’s top priority during this global pandemic is the health and well-being of our employees, customers, shareholders, and the communities in which we operate. The Company continues to monitor the COVID-19 situation closely, while simultaneously executing business continuity plans. These business continuity plans include, but are not limited to, (i) retooling operations to maintain social distance and maximize employee safety; (ii) increasing resources and efforts to satisfy demand from the most impactful parts of our business; (iii) expanding flexible work arrangements and policies, where practical, to maximize employee safety; (iv) increased monitoring of short-term cash flow, including measures to reduce costs and generate cash; and (v) providing regular updates to our shareholders, employees, customers, and suppliers in a transparent and timely manner.
At this time, Luxfer is operating all of its facilities, following earlier temporary closures at a small number of locations. However, due to weaker demand resulting from uncertain economic conditions, potential supply constraints, and the continued spread of COVID-19, Luxfer has temporarily reduced capacity at certain facilities with partial furloughing of the workforce. We have also implemented additional cost saving programs, including headcount reductions as a direct response to the impact of the pandemic. As the situation evolves and if warranted, the Company may suspend or reduce operations at additional facilities.
Luxfer’s second quarter results reflect the global macro environment resulting from the COVID-19 pandemic, including broad-based market weakness, which is especially evident in our industrial and transportation end-markets. Our industrial and transportation end-markets have declined 17.8% and 22.5% (excluding impact of Czech divestiture) respectively in the first half of 2020 relative to the same period in the prior year. However, the Company has a strong balance sheet and access to an existing $150 million credit facility, of which only $16.3 million was drawn at the end of the second quarter. Furthermore, with a net debt to EBITDA ratio of 1.5x at the end of the second quarter, we have identified no issues in relation to financial covenants nor availability of funding for continued operations. We continue to learn more about the impact of the COVID-19 pandemic, and these assumptions and judgments may change over time.
Operating objectives and trends
In 2020, we expect the following operating objectives and trends to impact our business:
•Proactive response to COVID-19 pandemic, including the health and well-being actions highlighted above, in addition to initiatives to stimulate demand for products, ensure continuity of supply and action focused cost saving programs;
•Productivity acceleration and growth recovery as we progress towards a lean manufacturing process and increase focus on faster innovation;
•Leveraging delivered plant consolidation projects in our Gas Cylinders and Graphic Arts businesses to further reduce fixed costs and safeguard competitiveness;
•Continued focus on developing global talent and implementing a high-performance culture; and
•Improved operating cash generation with lower restructuring activity and stronger working capital performance.
21
CONSOLIDATED RESULTS OF OPERATIONS
The consolidated results of operations for the Second Quarter of 2020 and 2019 of Luxfer were as follows:
| Second Quarter | % / point change | |||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 v 2019 | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 89.5 | $ | 116.5 | (23.2) | % | ||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | (70.7) | (85.5) | (17.3) | % | ||||||||||||||||||||||||||||||||||||||||
| Gross profit | 18.8 | 31.0 | (39.4) | % | ||||||||||||||||||||||||||||||||||||||||
| % of net sales | 21.0 | % | 26.6 | % | (5.6) | |||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | (11.8) | (14.4) | (18.1) | % | ||||||||||||||||||||||||||||||||||||||||
| % of net sales | 13.2 | % | 12.4 | % | 0.8 | |||||||||||||||||||||||||||||||||||||||
| Research and development | (0.9) | (1.6) | (43.8) | % | ||||||||||||||||||||||||||||||||||||||||
| % of net sales | 1.0 | % | 1.4 | % | (0.4) | |||||||||||||||||||||||||||||||||||||||
| Restructuring charges | (0.8) | (12.7) | (93.7) | % | ||||||||||||||||||||||||||||||||||||||||
| % of net sales | 0.9 | % | 10.9 | % | (10.0) | |||||||||||||||||||||||||||||||||||||||
| Acquisition and disposal related gains | — | 2.9 | (100.0) | % | ||||||||||||||||||||||||||||||||||||||||
| % of net sales | — | % | 2.5 | % | (2.5) | |||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 5.3 | $ | 5.2 | 1.9 | % | ||||||||||||||||||||||||||||||||||||||
| % of net sales | 5.9 | % | 4.5 | % | 1.4 | |||||||||||||||||||||||||||||||||||||||
| Net interest expense | (1.1) | (1.1) | — | % | ||||||||||||||||||||||||||||||||||||||||
| % of net sales | 1.2 | % | 0.9 | % | 0.3 | |||||||||||||||||||||||||||||||||||||||
| Defined benefit pension credit | 1.1 | 0.5 | 120.0 | % | ||||||||||||||||||||||||||||||||||||||||
| % of net sales | 1.2 | % | 0.4 | % | 0.8 | |||||||||||||||||||||||||||||||||||||||
| Income before income taxes and equity in net income of affiliates | $ | 5.3 | $ | 4.6 | 15.2 | % | ||||||||||||||||||||||||||||||||||||||
| % of net sales | 5.9 | % | 3.9 | % | 2.0 | |||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | (1.1) | (1.4) | (21.4) | % | ||||||||||||||||||||||||||||||||||||||||
| Effective tax rate | 20.8 | % | 30.4 | % | (9.6) | |||||||||||||||||||||||||||||||||||||||
| Income before equity in net income / (loss) of affiliates | $ | 4.2 | $ | 3.2 | 31.3 | % | ||||||||||||||||||||||||||||||||||||||
| % of net sales | 4.7 | % | 2.7 | % | 2.0 | |||||||||||||||||||||||||||||||||||||||
| Equity in income of unconsolidated affiliates (net of tax) | (0.1) | 0.3 | n/a | |||||||||||||||||||||||||||||||||||||||||
| % of net sales | (0.1) | % | 0.3 | % | (0.4) | |||||||||||||||||||||||||||||||||||||||
| Net income | $ | 4.1 | $ | 3.5 | 17.1 | % | ||||||||||||||||||||||||||||||||||||||
| % of net sales | 4.6 | % | 3.0 | % | 1.6 | |||||||||||||||||||||||||||||||||||||||
22
The consolidated results of operations for the two-quarters ended June 28, 2020 and June 30, 2019 of Luxfer were as follows:
| Year-to-date | % / point change | |||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 v 2019 | |||||||||||||||||||||||||||||
| Net sales | $ | 193.3 | 236.9 | (18.4) | % | |||||||||||||||||||||||||||
| Cost of goods sold | (150.0) | (175.8) | (14.7) | % | ||||||||||||||||||||||||||||
| Gross profit | 43.3 | 61.1 | (29.1) | % | ||||||||||||||||||||||||||||
| % of net sales | 22.4 | % | 25.8 | % | (3.4) | |||||||||||||||||||||||||||
| Selling, general and administrative expenses | (24.6) | (30.8) | (20.1) | % | ||||||||||||||||||||||||||||
| % of net sales | 12.7 | % | 13.0 | % | (0.3) | |||||||||||||||||||||||||||
| Research and development | (1.6) | (3.0) | (46.7) | % | ||||||||||||||||||||||||||||
| % of net sales | 0.8 | % | 1.3 | % | (0.5) | |||||||||||||||||||||||||||
| Restructuring charges | (3.6) | (21.7) | (83.4) | % | ||||||||||||||||||||||||||||
| % of net sales | 1.9 | % | 9.2 | % | (7.3) | |||||||||||||||||||||||||||
| Impairment charges | — | 0.2 | (100.0) | % | ||||||||||||||||||||||||||||
| % of net sales | — | % | (0.1) | % | 0.1 | |||||||||||||||||||||||||||
| Acquisition and disposal related costs | (0.2) | (1.7) | (88.2) | % | ||||||||||||||||||||||||||||
| % of net sales | 0.1 | % | (0.7) | % | 0.8 | |||||||||||||||||||||||||||
| Operating income | 13.3 | 4.1 | 324.4 | % | ||||||||||||||||||||||||||||
| % of net sales | 6.9 | % | 1.7 | % | 5.2 | |||||||||||||||||||||||||||
| Net interest expense | (2.3) | (2.2) | 4.5 | % | ||||||||||||||||||||||||||||
| % of net sales | 1.2 | % | 0.9 | % | 0.3 | |||||||||||||||||||||||||||
| Defined benefit pension credit | 2.2 | 1.1 | 100.0 | % | ||||||||||||||||||||||||||||
| % of net sales | 1.1 | % | 0.5 | % | 0.6 | |||||||||||||||||||||||||||
| Income before income taxes and equity in net income / (loss) of affiliates | 13.2 | 3.0 | 340.0 | % | ||||||||||||||||||||||||||||
| % of net sales | 6.8 | % | 1.3 | % | 5.5 | |||||||||||||||||||||||||||
| Provision for income taxes | (2.8) | (3.5) | (20.0) | % | ||||||||||||||||||||||||||||
| Effective tax rate | 21.2 | % | 116.7 | % | (95.5) | |||||||||||||||||||||||||||
| Income / (loss) before equity in net income / (loss) of affiliates | 10.4 | (0.5) | n/a | |||||||||||||||||||||||||||||
| % of net sales | 5.4 | % | (0.2) | % | 5.6 | |||||||||||||||||||||||||||
| Equity in income / (loss) of unconsolidated affiliates (net of tax) | (0.1) | 0.2 | n/a | |||||||||||||||||||||||||||||
| % of net sales | (0.1) | % | 0.1 | % | (0.2) | |||||||||||||||||||||||||||
| Net income / (loss) | $ | 10.3 | $ | (0.3) | n/a | |||||||||||||||||||||||||||
| % of net sales | 5.3 | % | (0.1) | % | 5.4 | |||||||||||||||||||||||||||
23
Net sales
The 23.2% and 18.4% decrease in consolidated net sales in the second quarter and first half, respectively, of 2020 from 2019 was heavily influenced by the economic downturn resulting from the COVID-19 pandemic, with the adverse impact most pronounced across the industrial and transportation end markets, including:
•Decreased sales of zirconium-based industrial and automotive catalysis materials;
•Lower sales of our proprietary SoluMag® alloy in the second quarter;
•Lower Superform tooling and formed part sales, predominantly to European luxury automotive customers impacted by temporary facility shutdowns; and
•Decreased sales of photo-engraving plates in Luxfer Graphic Arts in the second quarter.
In addition, sales were negatively impacted by $3.1 million and $7.5 million in the second quarter and first half, respectively following the divestiture of our Czech business in Q2, 2019.
These decreases were partially offset by growth in sales of medical oxygen cylinders in the second quarter.
Gross profit
The 5.6 and 3.4 percentage point decrease in gross profit as a percentage of sales in the second quarter and first half, respectively of 2020 from 2019 was primarily the result of adverse product sales mix, especially the impact of lower sales of SoluMag® alloy in the second quarter and zirconium catalysis products in the first half.
These adverse factors were partially offset by the impact of productivity improvements in Luxfer Gas Cylinders Europe, following closure of the French operation in 2019 and transfer of production to the U.K.
Selling, general and administrative expenses ("SG&A")
The 0.8 percentage point increase in SG&A costs as a percentage of sales in the second quarter of 2020 from 2019 was primarily the result of the COVID led fall in revenue not being fully matched by cost reductions.
SG&A as a percentage of sales was relatively unchanged in the first half of 2020 from 2019.
Research and development costs
Research and development cost as a percentage of sales reduced by 0.4 and 0.5 percentage points in the second quarter and first half of 2020 relative to 2019 respectively.
Restructuring charges
The $0.8 million and $3.6 million restructuring charge in the second quarter and first half of 2020 was predominantly ($0.6 million and $3.2 million respectively) the result of further costs associated with the announced closure of Luxfer Gas Cylinders France, including one-time employee benefits, and associated legal and professional fees.
The $12.7 million restructuring charge in the second quarter of 2019, was mainly $7.7 million of further costs associated with the announced closure of Luxfer Gas Cylinders France, including one-time employee benefits, asset write-offs, environmental remediation and legal and professional fees. In addition, restructuring charges in the second quarter of 2019 included $4.6 million related to asset write-downs and one-time employee benefits following the decision to scale down production at one of our Luxfer Magtech sites as part of our simplification activities.
The $21.7 million restructuring charge in the first half of 2019 included $16.6 million in relation to the closure of Luxfer Gas Cylinders France, as well as the second quarter expenditure relating to simplification and other activities.
Impairment charges
The impairment credit of $0.2 million in the first half of 2019 reflects a fair value adjustment to the held-for-sale assets in the Elektron segment.
24
Acquisition and disposal related gains / (costs)
Net costs of $0.2 million incurred in the first half of 2020 include amounts incurred in relation to M&A exploration activities net of a $0.1 million release of deferred contingent consideration.
Acquisition and disposal related costs in 2019 of $1.7 million relate to a $3.5 million reimbursement payment and $1.1 million of professional and legal fees incurred in connection with the terminated acquisition of Neo Performance Materials, occurring in the first quarter; offset in the second quarter by a $2.9 million gain on disposal of Elektron's magnesium recycling business in the Czech Republic.
Net interest expense
Net interest expense in 2020 from 2019 was flat in the quarter and increased by only $0.1 million in the first half.
Defined benefit pension credit
The $0.6 million and $1.1 million increase in defined benefit pension credit to $1.1 million and $2.2 million in the second quarter and first half of 2020 from $0.5 million and $1.1 million in 2019 is primarily due to the combined effect on the U.K. plan of a fall in the discount rate and lower inflation, partially offset by lower projected asset returns.
Provision for income taxes
The movement in the statutory effective tax rate from 116.7% in 2019, to 21.2% in 2020, was primarily due to non-deductible expenses related to the aborted acquisition and restructuring activities in the prior year. When stripping out the effect of these expenses, the adjusted effective tax rate has increased marginally to 20.1% in 2020 from 19.7% in 2019.
25
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
The following table of non-GAAP summary financial data presents a reconciliation of net income to adjusted net income for the periods presented, being the most comparable GAAP measure. 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 and adjusted earnings per share in isolation as an alternative to net income and earnings per share when evaluating Luxfer's operating performance or measuring Luxfer's profitability.
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| In millions except per share data | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Net income / (loss) | $ | 4.1 | $ | 3.5 | $ | 10.3 | $ | (0.3) | |||||||||||||||||||||||||||||||||
| Accounting charges relating to acquisitions and disposals of businesses: | |||||||||||||||||||||||||||||||||||||||||
| Unwind of discount on deferred consideration | — | 0.1 | — | 0.1 | |||||||||||||||||||||||||||||||||||||
| Amortization on acquired intangibles | 0.2 | 0.3 | 0.4 | 0.6 | |||||||||||||||||||||||||||||||||||||
| Acquisition and disposal related (gains) / costs | — | (2.9) | 0.2 | 1.7 | |||||||||||||||||||||||||||||||||||||
| Defined benefit pension credit | (1.1) | (0.5) | (2.2) | (1.1) | |||||||||||||||||||||||||||||||||||||
| Restructuring charges | 0.8 | 12.7 | 3.6 | 21.7 | |||||||||||||||||||||||||||||||||||||
| Impairment charges | — | — | — | (0.2) | |||||||||||||||||||||||||||||||||||||
| Share-based compensation charges | 0.8 | 0.8 | 1.3 | 3.4 | |||||||||||||||||||||||||||||||||||||
| Income tax on adjusted items | (0.1) | (1.6) | (0.5) | (2.3) | |||||||||||||||||||||||||||||||||||||
| Adjusted net income | $ | 4.7 | $ | 12.4 | $ | 13.1 | $ | 23.6 | |||||||||||||||||||||||||||||||||
| Adjusted earnings per ordinary share | |||||||||||||||||||||||||||||||||||||||||
| Diluted earnings / (loss) per ordinary share | $ | 0.15 | $ | 0.13 | $ | 0.37 | $ | (0.01) | |||||||||||||||||||||||||||||||||
| Impact of adjusted items | 0.02 | 0.31 | 0.10 | 0.86 | |||||||||||||||||||||||||||||||||||||
Adjusted diluted earnings per ordinary share(1) | $ | 0.17 | $ | 0.44 | $ | 0.47 | $ | 0.85 | |||||||||||||||||||||||||||||||||
(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.
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Adjusted net income | $ | 4.7 | $ | 12.4 | $ | 13.1 | $ | 23.6 | |||||||||||||||||||||||||||||||||
| Add back: | |||||||||||||||||||||||||||||||||||||||||
| Income tax on adjusted items | 0.1 | 1.6 | 0.5 | 2.3 | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 1.1 | 1.4 | 2.8 | 3.5 | |||||||||||||||||||||||||||||||||||||
| Net finance costs | 1.1 | 1.1 | 2.3 | 2.2 | |||||||||||||||||||||||||||||||||||||
| Adjusted EBITA | $ | 7.0 | $ | 16.5 | $ | 18.7 | $ | 31.6 | |||||||||||||||||||||||||||||||||
| Depreciation | 3.4 | 3.7 | 6.8 | 7.1 | |||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 10.4 | $ | 20.2 | $ | 25.5 | $ | 38.7 | |||||||||||||||||||||||||||||||||
26
The following table presents a reconciliation for the adjusted effective tax rate, which management believes is a KPI used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results.
| Second Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Adjusted net income | $ | 4.7 | $ | 12.4 | $ | 13.1 | $ | 23.6 | |||||||||||||||||||||||||||||||||
| Add back: | |||||||||||||||||||||||||||||||||||||||||
| Income tax on adjusted items | 0.1 | 1.6 | 0.5 | 2.3 | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 1.1 | 1.4 | 2.8 | 3.5 | |||||||||||||||||||||||||||||||||||||
| Adjusted income before income taxes | $ | 5.9 | $ | 15.4 | $ | 16.4 | $ | 29.4 | |||||||||||||||||||||||||||||||||
| Adjusted provision for income taxes | 1.2 | 3.0 | 3.3 | 5.8 | |||||||||||||||||||||||||||||||||||||
| Adjusted effective tax rate | 20.3 | % | 19.5 | % | 20.1 | % | 19.7 | % | |||||||||||||||||||||||||||||||||
SEGMENT RESULTS OF OPERATIONS
The summary that follows provides a discussion of the results of operations of each of our two reportable segments (Gas Cylinders and Elektron). Both segments comprise various product offerings that serve multiple end markets.
Adjusted EBITDA represents operating income adjusted for share based compensation charges; loss on disposal of property, plant and equipment, restructuring charges; impairment charges; acquisition and disposal related gains and costs; other charges; depreciation and amortization; and unwind of discount on deferred consideration. A reconciliation to net income and taxes can be found in Note 12 to the condensed consolidated financial statements.
GAS CYLINDERS
The net sales and adjusted EBITDA for Gas Cylinders were as follows:
| Second Quarter | % / point change | Year-to-date | % / point change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 v 2019 | 2020 | 2019 | 2020 v 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 50.4 | $ | 58.1 | (13.3) | % | $ | 103.0 | $ | 116.5 | (11.6) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | 5.1 | 7.1 | (28.2) | % | 8.6 | 11.6 | (25.9) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| % of net sales | 10.1 | % | 12.2 | % | (2.1) | 8.3 | % | 10.0 | % | (1.7) | |||||||||||||||||||||||||||||||||||||||||||||||||
Net sales
The 13.3% and 11.6% decrease in Gas Cylinders sales in the second quarter and first half, respectively, of 2020 from 2019 was primarily the result of COVID-19 related disruption to the transportation end market, including:
•Decreased sales of Superform tooling and formed parts; and
•Decreased sales of alternative fuel (AF) cylinders specifically in the second quarter.
These decreases were partially offset by growth in medical oxygen cylinders in the second quarter.
Adjusted EBITDA
The 2.1 and 1.7 percentage point decrease in adjusted EBITDA for Gas Cylinders as a percentage of net sales in the second quarter and first half of 2020 from 2019 was primarily the result of adverse product mix partially offset by productivity improvements at Luxfer Gas Cylinders Europe following the 2019 closure of our French facility and further cost savings in Luxfer Gas Cylinders North America in the second quarter.
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ELEKTRON
The net sales and adjusted EBITDA for Elektron were as follows:
| Second Quarter | % / point change | Year-to-date | % / point change | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2020 | 2019 | 2020 v 2019 | 2020 | 2019 | 2020 v 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 39.1 | $ | 58.4 | (33.0) | % | $ | 90.3 | $ | 120.4 | (25.0) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | 5.3 | 13.1 | (59.5) | % | 16.9 | 27.1 | (37.6) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| % of net sales | 13.6 | % | 22.4 | % | (8.8) | 18.7 | % | 22.5 | % | (3.8) | ||||||||||||||||||||||||||||||||||||||||||||||
Net sales
The 33.0% and 25.0% increase in Elektron sales in the second quarter and first half, respectively, of 2020 from 2019 was primarily the result of COVID-19 related disruption to the industrial and transportation end markets, especially:
•Decreased sales of zirconium-based industrial and automotive catalysts;
•Lower sales of SoluMag® alloy; and
•Lower sales of Luxfer Graphic Arts photo-engraving plates.
Additionally there was $3.1 million and $7.5 million adverse impact in the second quarter and first half respectively following the divestiture of our Czech business in Q2, 2019.
Adjusted EBITDA
The 8.8 percentage point decrease in adjusted EBITDA for Elektron as a percentage of net sales in the second quarter of 2020 from 2019 was primarily the result of the impact of COVID-19 related reduction in volumes more than offsetting associated cost saving measures. This was supplemented by adverse product sales mix.
The first half 3.8 percentage point decrease over 2019 is largely explained by the second quarter impact tempered by an improved product sales mix in the first quarter of 2020 prior to COVID-19 taking full effect.
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 Notes due, 2021, 2023 and 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 and aluminum purchase price risks.
From time to time, we consider acquisitions or investments in other businesses that we believe would be appropriate additions to our business.
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.
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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 June 28, 2020.
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 provided by operating activities was $9.5 million for the year-to-date in 2020. It was primarily related to net income from operating activities, net of the following non-cash items: depreciation and amortization, pension contributions and net changes to assets and liabilities.
Cash used in operating activities was $15.6 million in the first half of 2019. It was primarily related to net loss from operating activities, net of the following non-cash items: depreciation and amortization; asset impairment charges, pension contributions and net changes to assets and liabilities.
Investing activities
Net cash used for investing activities was $4.4 million for the first half of 2020, compared to net cash used for investing activities of $1.3 million in 2019. The movement was primarily due to the impact of the proceeds from the sale of the Czech business in 2019, partially offset by a decrease in capital expenditures in the current year which were $4.4 million and $7.1 million, for the first half of 2020, and 2019, respectively. We anticipate capital expenditures for fiscal 2020 to be approximately $10 million.
Financing activities
In the first half of 2020, net cash used for financing activities was $6.9 million (2019: $23.5 million inflow). We made net drawdowns on our banking facilities of $0.4 million (2019: $32.0 million drawdown) and dividend payments of $6.8 million (2019: $6.8 million), equating to $0.25 per ordinary share. We received $1.1 million (2019: $3.3 million) in relation to proceeds from sales of shares and paid out $1.2 million (2019: $4.5 million) in settling share based compensation.
Capital Resources
Dividends
We paid year-to-date dividends in 2020 of $6.8 million (2019: $6.8 million year-to-date), or $0.25 per ordinary share.
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.
Authorized shares
Our authorized share capital consists of 40.0 million ordinary shares with a par value of £0.50 per share.
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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 2021 | $ | 25.0 | $ | — | $ | 25.0 | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Notes due 2023 | 25.0 | — | — | 25.0 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Notes due 2026 | 25.0 | — | — | — | 25.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revolving credit facility | 16.3 | — | 16.3 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Obligations under operating leases | 19.6 | 3.6 | 4.5 | 2.5 | 9.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital commitments | 0.7 | 0.7 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase commitments | 1.0 | 0.6 | 0.4 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest payments | 12.2 | 3.4 | 5.1 | 2.5 | 1.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total contractual cash obligations | $ | 124.8 | $ | 8.3 | $ | 51.3 | $ | 30.0 | $ | 35.2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Off-balance sheet measures
At June 28, 2020, we had no off-balance sheet arrangements other than the to bonding facilities disclosed in Note 14.
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 2019 Annual Report on Form 10-K, filed with the SEC on March 9, 2020, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements.
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Item 3. Quantitative and qualitative disclosures about market risk
There have been no material changes in our market risk during the first half ended June 28, 2020 except for the impact of COVID-19, which is addressed as a specific risk factor in ITEM-1A in Part II of this filing. For additional information, refer to Item 7A of our 2019 Annual Report on Form 10-K, filed with the SEC on March 9, 2020.
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 June 28, 2020, 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 not effective as of June 28, 2020, as a result of the material weakness described in Item 9A of the Form 10-K filed with the SEC on March 9, 2020 not having been fully remediated by the second quarter of 2020.
Ongoing Remediation of Material Weakness in Internal Control over Financial Reporting
As previously described in Plan for Remediation of Material Weakness in Internal Control Over Financial Reporting of Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 we began implementing a remediation plan to address the material weakness mentioned above. In line with the plan we have implemented enhanced controls to monitor and document privileged access to, and segregation of duties within, the ERP system; and have updated the design of certain process-level controls. However, the weakness will not be considered remediated until all the applicable controls have been implemented and seen to operate for a sufficient period of time.
In light of the material weakness, the Company performed additional analysis and other post-closing procedures to ensure our consolidated financial statements are prepared in accordance with generally accepted accounting principles. Our management, including our Chief Executive Officer and our Chief Financial Officer, has concluded that our consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with accounting principles generally accepted in the United States of America (GAAP) for the periods presented herein.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter and annual period ended June 28, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
While we are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, employee and product liability claims, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is subject. It is possible, however, that an adverse resolution of an unexpectedly large number of such individual claims or proceedings could in the aggregate have a material adverse effect on results of operations for a particular year or quarter.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Item 1A. of our 2019 Annual Report on Form 10-K, except that the adverse impact of the COVID-19 coronavirus outbreak has become more significant and widespread. The related risk factors under the caption "We depend upon our larger suppliers for a significant portion of our raw materials, and a loss of one of these suppliers, or a significant supply interruption could negatively impact our financial performance" as previously disclosed in Item 1A. of our 2019 Annual Report on Form 10-K relating to COVID-19, remain applicable. In addition to the supply-side risks there are additional risks related to a fall in customer demand. We therefore highlight the following additional risk.
Our results of operations may be negatively impacted by the coronavirus disease pandemic
In December 2019, the 2019 novel coronavirus disease (COVID-19) surfaced in Wuhan, China. In March 2020, the World Health Organization characterized the coronavirus ("COVID-19") a pandemic. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy, resulting in an economic downturn that could impact demand for our products and our ability to produce them. With many countries in 'lockdown', non-essential manufacturers and suppliers have been forced to shut down operations. This has caused disruptions from the temporary closure of third-party supplier and manufacturer facilities and interruptions in product supply. To date the outbreak has resulted in a decline in revenues and profitability as highlighted in Item 2, Management Discussion and Analysis of Financial Condition and Results of Operations. While there have been some positive indicators such as lockdown measures being reduced in many countries, the future impact remains highly uncertain and cannot be predicted and there is no assurance that the outbreak will not have a material adverse impact on the future results of the Company. The extent of the impact will depend on future developments, including global and country-specific actions taken to contain the spread of the coronavirus.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
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Item 6. Exhibits
101 The financial statements from the Company’s Interim Report on Form 10-Q for the quarter ended March 29, 2020, formatted in XBRL: (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.
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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/Alok Maskara | ||||||||||||||
| Alok Maskara | ||||||||||||||
| Chief Executive Officer | ||||||||||||||
| (Duly Authorized Officer) | ||||||||||||||
| July 27, 2020 | ||||||||||||||
34
Section 302 Certificate
Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
I, Alok Maskara, 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: July 27, 2020 | __/s/ Alok Maskara____________________ | ||||
| Alok Maskara 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, Heather Harding, 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: July 27, 2020 | __/s/Heather Harding___________________ | ||||
| Heather Harding 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, Alok Maskara, 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 June 28, 2020 (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: July 27, 2020 | __/s/Alok Maskara____________________ Alok Maskara 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, Heather Harding, 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 June 28, 2020 (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: July 27, 2020 | __/s/ Heather Harding__________________ Heather Harding Chief Financial Officer | ||||