Q1 2024 Luxfer Holdings PLC Earnings Call

Andrew William John Butcher: have delivered $3.6 million of operating cash, holding our lower levels of net debt, resulting in reduced interest payments, and maintaining our low leverage. These overall results reflect the effectiveness of our recent operational adjustments. We have maintained our service to our customers, restructured our manufacturing footprint, and ensured rigorous control over expenses. At the same time, we've initiated the sale of graphic arts while also collecting a first significant legal repayment from our insurance company. So, a good start to the year. I look forward to sharing more details over the next few minutes.

Positive operating cash holding a lower levels of net debt, resulting in reduced interest payments and maintaining a low leverage.

These overall results reflect the effectiveness of our recent operational adjustments.

We have maintained our service to our customers restructured our manufacturing footprint uninsured rigorous control over expenses.

Speaker Change: At the same time, we have initiated the sale of graphic cards, while also collecting a significant legal repayment from our insurance company.

Speaker Change: So a good start to the year.

Speaker Change: I look forward to sharing more details over the next few minutes.

Andrew William John Butcher: Let's first move to slide four for an update on our comprehensive strategic review. In October, we accelerated and expanded our annual strategic review to enhance business performance and unlock shareholder value. As you may recall, this effort produced three important conclusions.

Speaker Change: Let's first move to slide four for an update on our comprehensive strategic review.

Speaker Change: In October we accelerated and expanded our annual strategic review to enhance business performance and unlock shareholder value.

As you May recall this effort produced three important conclusions.

Speaker Change: First we initiated the sale of our graphic Arts business, we retained excess capital partners to advise on the sale.

Andrew William John Butcher: First, we initiated the sale of our graphic arts business. We retained XMS Capital Partners to advise on the sale. The process is well underway with significant engagement from potential buyers. We are targeting closing a transaction by year-end. Second, we continue to optimize costs and invest in our gas cylinders and electron businesses, enhancing their competitive positioning to provide attractive growth and returns. Electron is starting to show promising demand recovery, benefiting also from our efforts to lower costs. Gas cylinders will continue to capitalise on growth in alternative fuel products, which we expect to begin accelerating in the near-to-intermediate term.

Speaker Change: The process is well underway with significant engagement from potential buyers.

Speaker Change: We are targeting closing a transaction by year end.

Speaker Change: Second we continue to optimize costs and invest in our gas cylinders in elektron businesses enhancing their competitive positioning to provide attractive growth and returns.

Speaker Change: Elektron is starting to show a promising demand recovery benefiting also from our efforts to lower costs.

Speaker Change: Gas cylinders will continue to capitalize on growth in alternative fuel products, which we expect to begin accelerating in the near to intermediate term.

Andrew William John Butcher: As a result, we remain optimistic about the sustainable profitable growth prospects for both businesses in 2025 and beyond. Third, as previously communicated, we concluded that our gas cylinders and electron segments operate with minimal strategic synergies. Therefore, as we drive improved financial outcomes in both businesses, we will continuously monitor both business performance and market conditions to maintain full optionality to maximize shareholder value. Now turning to slide five, let me update you in more detail on the impact of the actions we've taken to enhance our performance in 2024.

Speaker Change: As a result, we remain optimistic about the sustainable profitable growth prospects for both businesses in 2025 and beyond.

Speaker Change: And third as previously communicated we concluded the tight gas cylinders in elektron segment's operate with minimal strategic synergies.

Speaker Change: So as we drive improved financial outcomes in both businesses, we will continuously monitor both business performance and market conditions to maintain full optionality to maximize shareholder value.

Speaker Change: Now turning to slide five let me update you in more detail on the impact of the actions we've taken to enhance our performance in 2024.

Speaker Change: The first quarter results were encouraging with significant margin expansion in our electric business supported by our footprint simplification and a reduction in fixed costs.

Andrew William John Butcher: The first quarter results were encouraging, with significant margin expansion in our electron business, supported by a footprint simplification and a reduction in fixed costs. These moves not only enhanced profitability but have also positioned us for the anticipated uplift in demand for military flare powders, which is now materializing. Also in electrons, our leading flameless Russian heater technology continues to establish Luxfer as the supplier of choice for food packages and assemblers.

Speaker Change: These moves not only enhanced profitability, but have also positioned us for the anticipated uplift in demand for military flair powders, which is now materializing.

Speaker Change: Also in electrical.

Speaker Change: Leading flameless Russian heaters technology continues to establish <unk> as the supplier of choice for food packages and assemblers.

Andrew William John Butcher: The Defence Logistics Agency's 2024 award is in line with the prior year, confirming our critical role in the production of meals ready to eat and contributing to our improved first quarter sales. During our last call, I announced our renewed multi-year supply agreements with key SCBA customers. Today I'd like to mention our collaboration with one of those customers in supplying the U.S. Air Force with our Super Light Cylinders, which is ongoing through the first half of this year. This partnership demonstrates our commitment to providing top-tier safety equipment, as well as our dedication to ensuring our servicemen and women have access to the most advanced, reliable technology.

Operator: The Defense Logistics Agency as 2024 award is in line with prior year confirming our critical role in the production of meals ready to eat and contributing to our improved first quarter sales.

Operator: During our last call I announced a renewed multiyear supply agreements with key CPA customers to.

Today I'd like to mention our collaboration with one of those customers and supply in the U S Air Force with our Super light cylinders, which is ongoing through the first half of this year.

Operator: This partnership demonstrates our commitment to providing top tier safety equipment as well as our dedication to ensuring our service men and women have access to the most advanced reliable technology.

Our initiatives in clean energy have included refining the footprint of our North American alternative fuel operations now complete and the construction of a bulk gas transportation module facility in the UK.

Andrew William John Butcher: Our initiatives in clean energy have included refining the footprint of our North American alternative fuel operations, now complete, and the construction of our bulk gas transportation module facility in the UK. The latter effort is pivotal for our future growth, and I was pleased to participate in discussions with two potential module customers last month. Both are keen on leveraging our innovative products for transportation, and their excitement reaffirms the potential for near-term growth in this area.

Operator: The latter effort is pivotal for our future growth and I was pleased to participate in discussions with two potential module customers last month.

Operator: Both are keen on leveraging our innovative products with transportation and their excitement reaffirms the potential for near term growth in this arena.

Operator: Additionally, we're making promising strides in product development assisted by a recent clean technology grants awarded by Alberta Innovates in Canada.

Andrew William John Butcher: Additionally, we are making promising strides in product development, assisted by a recent Clean Technology Grant awarded by Alberta Innovates in Canada. This funding not only accelerates our development of our cutting-edge Type 4 hydrogen cylinder but also symbolises another step forward in our commitment to energy solutions. And finally, we have received an initial insurance recovery payment, recouping approximately $1.3 million of our historical legal costs.

Operator: This funding not only accelerates our development of our cutting edge type for hydrogen cylinder, but also symbolises. Another step forward in our commitment to energy solutions.

Operator: And finally, we have received an initial insurance recovery payment recouping, approximately $1 3 million.

Operator: Historical legal costs we.

Andrew William John Butcher: We're continuing to make strong efforts to reclaim other prior legal expenses, and I look forward to updating you on our progress. In conclusion, our strategic decisions are driving improved profitability and strong cash generation. We are on our way to achieving profitability levels that reflect the value that our innovative engineering brings to our customers and our industries. At this time, I'll turn the call over to Steve to discuss our Q1 results in greater detail, explain our improved profitability from the prior quarter, and update on the 2024 outlook. Steve

Operator: We are continuing to make strong efforts to reclaim other prior legal expenses and I look forward to updating you on our progress.

Operator: In conclusion.

Operator: Our strategic decisions are driving improved profitability and strong cash generation.

Operator: We are on our way to achieving profitability levels that reflect the value that our innovative engineering brings to our customers and our industries.

At this time I will turn the call over to Steve to discuss our Q1 results in greater detail.

Steve: Explain our improved profitability from the prior quarter and update on the 2020 for outlook.

Steve: Thanks, Andy. And good morning, everyone. I'd like to start this morning by reviewing our consolidated financial results and bridges for the first quarter of 2024. Please note that the non-GAP numbers I referred to are on an adjusted basis, excluding the graphic arts business. Now, let's turn to slide six.

Steve: Steve Thanks.

Thanks, Andy and good morning, everyone.

Steve: Looking at the top of the slide, while our sales of $83.1 million reflect an 11.5% decrease from the prior year, it's important to highlight the considerable profitability improvement seen since the previous quarter. Adjusted EBITDA for the first quarter was $10.5 million, with margins at 12.6%, comparing favorably to the $8 million and 9.1% of the prior quarter. Additionally, our adjusted earnings per share rose to 20 cents from 13 cents in the fourth quarter, underlining the improvement in our profitability.

Steve: I'd like to start this morning by reviewing our consolidated financial results and bridges for the first quarter 2024.

Steve: Please note that our non-GAAP numbers I refer to on an adjusted basis, excluding the graphic arts business.

Speaker Change: Let's turn to slide six.

Speaker Change: Looking at the top of the slide while our sales of $83 $1 million reflect an 11, 5% decrease from the prior year.

Speaker Change: It's important to highlight the considerable profitability improvements seen since the previous quarter.

Speaker Change: Adjusted EBITDA for the first quarter was $10 5 million with margins at 12, 6% comparing favorably to the $8 million or nine 1% the prior quarter.

Speaker Change: Additionally, our adjusted earnings per share rose to <unk> from <unk>.

Speaker Change: <unk> in the third and fourth quarter.

Speaker Change: Underlying the improvements in our profitability.

Speaker Change: Shifting to our balance sheet and our cash flow dynamics cash flow from operations was solid generating $3 $6 million and our free cash flow reached $2 2 million significantly improved from the seasonal outflow we experienced in the first quarter of the previous year.

Steve: Shifting to our balance sheet and our cash flow dynamics, cash flow from operations was solid, generating $3.6 million, and our free cash flow reached $2.2 million, significantly improved from the seasonal outflow we experienced in the first quarter of the previous year. And we have maintained strong liquidity, ending the quarter with net debt of $71.6 million and a leverage ratio of 1.7 times. Looking at the sales bridge, our revenue of $83.1 million compared to $93.9 million in the prior year.

Speaker Change: And we have maintained strong liquidity ending the quarter with net debt of $71 $6 million and a leverage ratio of one seven times.

Speaker Change: Looking at the sales bridge, our revenue of $83 1 million compared to $93 9 million in the prior year.

Steve: We saw a favorable impact from pricing adjustments, contributing an additional $1.6 million, alongside a $0.6 million benefit from foreign exchange. However, these gains were offset by a $13 million decrease in volume with tough prior year comps in the general industrial and military flare markets.

Speaker Change: We saw a favorable impact from pricing adjustments contributing an additional $1 6 million alongside a zero point $6 million benefit from foreign exchange.

Speaker Change: However, these gains were offset by a $13 million.

Speaker Change: Kris and volume with tough prior year comps in the general industrial and military Flair markets.

Speaker Change: Turning to the adjusted EBITDA Bridge, our first quarter adjusted EBITDA was $10 5 million down $1 $5 million from the previous year with the impact of adverse volumes, partially offset by some cost deflation incremental pricing cylinders considerably lower legal costs and favorable manufacturing efficiencies intellect.

Steve: Turning to the adjusted EBITDA bridge, our first quarter adjusted EBITDA was $10.5 million, down $1.5 million from the previous year, with the impact of adverse volumes partially offset by some cost deflation, an incremental price in cylinders, considerably lower legal costs, and favorable manufacturing efficiencies in electrons. Despite the ongoing macro challenges, our adjusted EBITDA margin came in at 12.6% this quarter, only slightly down from last year's 12.8%, and confirming our prior projections of a Q1 rebound. Please turn to slide 7 for a detailed review of Electron's first quarter financial results.

Speaker Change: Strong.

Speaker Change: Despite the ongoing macro challenges our adjusted EBITDA margin came in at 12, 6% this quarter only slightly down from last year's 12, 8% and confirming our prior projections of the Q1 rebound.

Please turn to slide seven for a detailed review of electrons first quarter financial results.

Speaker Change: Elektron first quarter of 2024 exhibited a strong turnaround in profitability, despite a year over year sales decline.

Steve: Electron's first quarter of 2024 exhibited a strong turnaround in profitability, despite a year-over-year sales decline. We saw significant sequential improvement, with an 840 basis point increase in gross margin and a substantial rise in adjusted EBITDA margin to 17% from 4.4%. This positive shift was driven by anticipated volume recovery, enhanced manufacturing efficiencies, and the streamlining of our cost structure through ongoing initiatives. Despite lower sales across all segments compared to a busy Q1 2023, we are seeing pockets of recovery, notably in flameless ration heaters within our defense, first response, and healthcare market. However, broader declines were noted in this end market due to decreased military flare magnesium powder sales following customer destocking. The transportation segment was also lower, primarily due to softer demand for autocatalysis materials.

Speaker Change: We saw significant sequential improvement with an 840 basis point increase in gross margin and a substantial rise in adjusted EBITDA margin to 17% from four 4%.

Speaker Change: This positive shift was driven by anticipated volume recovery enhanced manufacturing efficiencies and the streamlining of our cost structure through ongoing initiatives.

Speaker Change: Despite lower sales across all segments compared to a busy Q1 2023, we are seeing pockets of recovery, notably in Flameless ration heaters within our defense first response and health care market.

Speaker Change: However, broader declines were noted in this end market due to decreased military flair magnesium powder sales following customer destocking.

Speaker Change: The transportation segment was also lower primarily due to softer demand for auto catalysis materials.

Steve: Finally, the general industrial market declined modestly this quarter compared to the prior year but demonstrated significant sequential improvement over quarter four. All that said, given Electron's weaker performance in the second half of last year, we are very encouraged by the significant recovery in margins as we start this year. Now please turn to slide 8 for a detailed review of the gas cylinder's first quarter financial results. Gas cylinders are seeing positive momentum, particularly in the firefighter self-contained breathing apparatus market, enhanced by renewed long-term contracts which have lifted our margins towards historic norms.

Speaker Change: Finally, the general industrial market declined modestly this quarter compared to prior year, but demonstrated significant sequential improvement over quarter four.

Speaker Change: All that said given electrons weak performance in the second half of last year. We are very encouraged by the significant recovery in margins as we start this year.

Speaker Change: Now please turn to slide eight for a detailed review of the gasoline this first quarter financial results.

Speaker Change: Gas cylinders are seeing positive momentum, particularly in the firefighter self contained breathing apparatus market enhanced by renewed long term contracts, which have lifted our margins towards historic norms.

Speaker Change: In the quarter sales rose to $45 4 million up nine 4% year over year and achieved a notable gross margin improvement of 450 basis points, reaching 17%.

Steve: In the quarter, sales rose to $45.4 million, up 9.4% year-over-year, and we achieved a notable gross margin improvement of 450 basis points, reaching 17%. Our adjusted EBITDA margin increased by 300 basis points to 9%. In our market segments, defense, first response, and healthcare sales increased over the previous year thanks to continued demand for lightweight SCBA and medical cylinders. Transportation sales also grew, with stronger demand for alternative fuels products. Meanwhile, the general industrial end market still encounters headwinds with a sales decline this quarter, although this continues to represent a relatively small part of the gas cylinder business.

Speaker Change: Our adjusted EBITDA margin increased by 300 basis points to 9%.

Speaker Change: In our market segments Defense first response and health care sales increased over the previous year.

Speaker Change: Thanks to continued demand for lightweight as CPA and medical cylinders.

Speaker Change: Transportation sales also grew with stronger demand for alternative fuels projects products.

Speaker Change: Meanwhile, the general industrial end markets still encountered headwinds with sales decline this quarter.

Speaker Change: Although this continues to represent a relatively small part of the gasoline in this business.

Speaker Change: We are encouraged by the operational achievements demonstrated this quarter.

Steve: We are encouraged by the operational achievements demonstrated this quarter. As we capitalise on our strengths and technical know-how, Gas Cylinders remains committed to driving value and excellence for our stakeholders and customers. Now, please turn to slide nine for an update on our full year 2024 financial guidance. As a reminder, our 2024 guidance does not include the graphic arts business.

Speaker Change: As we capitalize on our strengths and technical Knowhow gas cylinders remains committed to driving value and excellence for our stakeholders and customers.

Speaker Change: Now please turn to slide nine for an update on our first full year 2024 financial guidance.

Speaker Change: As a reminder, our 2024 guidance does not include the graphic Arts business.

Speaker Change: Our financial outlook has been raised to reflect the better than expected improvements in the first quarter.

Steve: Our financial outlook has been raised to reflect the better-than-expected improvements in the first quarter and the recent recovery of historical legal fees. While sales do remain a challenge, we are now projecting adjusted EBITDA to be between $44 million and $48 million, with adjusted diluted EPS ranging from 75 cents to 90 cents, and with free cash flow anticipated to be between $21 million and $25 million. We continue to emphasize maintaining a robust balance sheet and enhancing our free cash flow.

And the recent recovery of historical legal phase.

While sales do remain a challenge we are now projecting adjusted EBITDA to be between $44 million and $48 million with adjusted diluted EPS ranging from <unk> 75 to 90.

Speaker Change: And with free cash flow anticipated to be between $21 million and $25 million.

Speaker Change: We continue to emphasize maintaining a robust balance sheet and enhancing our free cash flow.

Steve: This strategy supports a dual approach to capital management, allowing for continued investment and growth opportunities while also returning capital to shareholders through steady dividends and share repurchases. In summary, I'm genuinely excited about the recent uptick in performance of Electron, the sustainable improvement in gas cylinders' margins, and the robust cash conversion rates we've achieved. This collective result underscores our strong position and readiness to embrace future opportunities. Now, I'd like to turn the call back to Andy. Andy?

Speaker Change: This strategy supports a dual approach to capital management, allowing for continued investments in growth opportunities. While also returning capital to shareholders through steady dividends and share repurchases.

In summary, I'm genuinely excited about the recent uptick in performance of Elektron, the sustainable improvement in gas cylinders margins and robust cash conversion rates we've achieved.

Speaker Change: This collective result, underscores our strong position in readiness to embrace future opportunities.

Speaker Change: Now I'd like to turn the call back to Randy.

Speaker Change: <unk>.

Randy: Thanks, Steve.

Andrew William John Butcher: Thanks Steve. I will conclude my prepared remarks on slide 10. As we progress through 2024, I'm pleased to see that we are on the right track. The latter half of 2023 presented various challenges, and there is a long road ahead, but the outlook for 2024 is promising, bolstered by both improvements in end market demand and our operational performance. As we conclude this update, I'd like to highlight the significant progress we have made over the last few months that maintains my confidence in our long-term success.

Randy: I'll conclude my prepared remarks on slide 10.

Randy: As we progress through 2024 I'm pleased to see that we are on the right track. The latter half of 2023 presented various challenges and there is a long road ahead, but the outlook for 2024 is promising bolstered by both improvements in end market demand and our operational performance.

Randy: As we conclude this update I'd like to highlight the significant progress we've made over the last few months that maintains my confidence in our long term success.

Randy: We have secured multi year supply agreements with key CBA customers, incorporating our supply to the U S Air Force of Super light cylinders.

Andrew William John Butcher: We have secured multi-year supply agreements with key SCBA customers, including our supply of Superlight Cylinders to the U.S. Air Force. We are capitalizing on early signs of demand recovery within certain electron, industrial, and defense sectors. We have streamlined our North American alternative fuel operations and constructed a new capability in Nottingham, UK, enhancing our role in the green energy transition. We have addressed our insurance coverage issues and have recently started to recover some of the historical fees.

Randy: We are capitalizing on early signs of demand recovery within certain elektron industrial and defense sectors.

Randy: We have streamlined our north American alternative fuel operations and constructed a new capability in Nottingham UK enhancing our role in the Green energy transition.

Randy: We have addressed our insurance coverage issues and have recently started to recover some of the historical fees.

Randy: And we have carefully managed our working capital, which has improved our free cash flow and maintained a low net debt driving lower capital charges, and providing resilience and future optionality.

Andrew William John Butcher: And we have carefully managed our working capital, which has improved our free cash flow and maintained our low net debt, driving lower capital charges and providing resilience and future optionality. I am encouraged by our progress and cautiously optimistic about the rest of 2024. Despite the current industrial market environments, we are seeing a recovery in demand for electron applications and strong performance in our gas cylinder segment. Luxfer's long-term strategy remains focused on leveraging our materials engineering expertise to solve customer challenges, improve profitability, and generate strong cash flows. We are making significant progress in our initiatives to unlock shareholder value and are confident in our ability to achieve enhanced margins and sustained earnings growth.

I am encouraged by our progress and cautiously optimistic about the rest of 2024.

Randy: Despite the current industrial market environment, we are seeing a recovery in demand for elektron applications and strong performance and I guess on the segments.

Randy: <unk> long term strategy remains focused on leveraging our materials engineering expertise to solve customer challenges improve profitability and generate strong cash flows.

Randy: We are making significant progress in our initiatives to unlock shareholder value and our confidence in our ability to achieve enhanced margins and sustained earnings growth.

Speaker Change: With that I'd like to turn the call back to the operator for the Q&A session.

Operator: With that, I'd like to turn the call back to the operator for the Q&A session. Shall we? Please go ahead.

Speaker Change: <unk>. Please go ahead.

Operator: At this time, if you would like to ask a question, please press the star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 to ask a question. We will pause for a moment to allow questions to queue, and we'll take our first question from Steve Ferazani with Sidoti. Your line is open.

Speaker Change: At this time, if you would like to ask a question. Please press star and one on your Touchtone phone.

Speaker Change: They remove yourself from the queue at any time by pressing star Teal.

Speaker Change: Once again that is star one.

Speaker Change: Ask a question, we'll pause for a moment to allow questions to queue.

Speaker Change: And we'll take our first question from Steve <unk> with Sidoti Your line is open.

Speaker Change: Good morning, Andy Good morning, Steve.

Stephen Michael Ferazani: Morning, Andy. Morning, Steve.

Steve: Obviously really surprised.

Speaker Change: <unk>.

Steve: Sequential margin improvement in electronics was coming a lot faster than we suspected not sure how much faster than it was on your side you provided a lot of color on the call, but if you could add a little bit of detail on where you were seeing it and <unk>.

Stephen Michael Ferazani: Obviously, we were really surprised and impressed with the sequential margin improvement in Electron. It was coming a lot faster than we suspected. I'm not sure how much faster it was on your side. You provided a lot of color on the call, but if you could add a little bit of detail on where you were seeing it and the ability to generate further margin improvement given what we expect to be some deflationary impact on raw material costs.

Speaker Change: The ability to generate.

Speaker Change: Further margin improvement given what we expect to be some some deflationary.

Speaker Change: Impact on raw material costs from raw material cost.

Speaker Change: Yes, Thank you, Steve and thanks for joining the call. Yes, we are pleased with our Q1 results.

Andrew William John Butcher: and they were a little ahead of our internal expectations, so that was good. On the sales side, we were especially pleased to be able to deliver on the higher level of sales of flameless ration heaters. That was something we projected, but it was very, very pleasing that the award from the Defence Logistics Agency came in at the normal levels as we had expected.

Speaker Change: And they were a little ahead even of internal expectation. So so that was that was good.

Speaker Change: On the on the sales side, we were especially pleased to be able to deliver on the higher level of sales of Flameless Russian heaters.

Speaker Change: I think we had projected.

Speaker Change: But it was a very very pleasing that the award from the Defense Logistics agency came in at the normal levels. As we had expected. So we saw a strong rebound from from Q4 on that's a very important product line.

Andrew William John Butcher: So, we saw a strong rebound from Q4 on that very important product line. I'll perhaps ask Steve to make a couple of extra comments on margins. Yes, I mean, I think certainly the majority of the margin improvement was in – or the majority of the margin improvement was in Electron. And if you look at that, there are three main areas. The third one of them is volume and mix.

Speaker Change: I'm sorry, Steve to make a couple of extra comments on margins, Yes, I mean I think.

Steve: The majority of the margin improvement was in the majority of the margin improvements in Elektron and if you look at others three main areas.

Steve: I mean, FRH sales are one of our better-margin products, so that contributed roughly a third, I'd say, of the margin improvement. I talked about manufacturing efficiencies and also some cost savings from some of the projects we've done. That's probably about another third. And then finally, the significantly lower legal costs are the remaining third, so three buckets there. Volume and mix, manufacturing efficiencies, cost savings, and then lower legal costs.

Speaker Change: One of them is volume and mix I mean, the VFR H sales are one of our better margin products.

Speaker Change: So that that contributed roughly a third I'd say at the margin improvement.

Speaker Change: It's about manufacturing efficiencies.

Speaker Change: And also some cost savings from some of the projects. We've done that's probably about another third and then finally, the significant lower legal costs as the remaining third so three buckets there.

Speaker Change: Volume and mix.

Speaker Change: Manufacturing efficiencies cost savings and then lower legal costs.

Stephen Michael Ferazani: given how much it improved, so the sustainability upside, and any reason why you wouldn't raise guidance more given the yearly strength in that margin recovery on Electron.

Speaker Change: Given how much and improve the sustainability.

Speaker Change: And any reason why you wouldn't.

Speaker Change: Sure.

Speaker Change: Raise guidance more given given the generally strength net margin comprehend electron.

Speaker Change: Yes. Thanks for that this is Andy again, let me start by underscoring the I am encouraged by the recent developments that we've seen especially in elektron.

Steve: Steve, by the recent developments that we've seen, especially in Electron, and we do approach the remainder of 2024 with some cautious optimism. Despite ongoing uncertainties in the industrial macro environment, we have witnessed the expected recovery in demand across certain Electron applications.

Andy: We do approach the remainder of 2020 fold with some cautious optimism.

Andy: Despite ongoing uncertainties in the industrial macro environments, we have witnessed the expected recovery in demand across certain elektron applications.

Steve: And we're pleased with the robust performance in our Gatterland, some of the segments. It does increase our confidence in the annual guidance we've provided. And we're pleased to have been able to uplift the guidance. That's a mix, I think, of the improved performance we've delivered and those legal fee recoveries.

Speaker Change: And we're pleased with pleased with our robust performance in August settling some of the segments.

Speaker Change: It does increase our confidence in the annual guidance, we provided and we are pleased to have been able to uplift.

Speaker Change: The guidance.

Speaker Change: Our mix I think of the improved performance we delivered.

Speaker Change: Those legal fee recoveries.

Stephen Michael Ferazani: Great. Any update on the timing of the bulk gas facility? And can you provide a little bit of detail on, I think, what you noted was some strength in the North American CNG market?

Speaker Change: Okay.

Speaker Change: Any update on timing of the bulk gas facility can you provide a little bit of detail on and I think what you noticed with some strength in the North American P&G market.

Andrew William John Butcher: Yes, yes, great. First of all, hydrogen, of course, and bulk gas. The hydrogen economy needs infrastructure to move hydrogen from where it's produced, maybe a remote wind farm, to where it's used in a city or industrial center. And containers of multi-element gas containers are the preferred solution. So with our lightweight cylinder technology, we've developed this range of containers.

Speaker Change: Yes, yes, great first of all on <unk>.

Speaker Change: Hydrogen of course, and bulk gas of course, the hydrogen economy, indeed infrastructure to move hydrogen from from where it's produced may be remote wind farm to where it's used in a city or industrial center.

Speaker Change: And containers of multi element gaskin containers are the preferred solution, so with or without lightweight cylinder technology. We develop these range of containers.

Andrew William John Butcher: The development of the facility is going well, and we do expect that we'll make the first sales from our Nottingham UK facility later this year, with the opportunity then for rapid growth in 2025. On the CNG side, compressed natural gas, North American demand remains high. Sales of our lightweight, high-capacity type four-cylinder have doubled to almost $8 million in the quarter compared to the prior year. It's been a pretty exciting start to the year there, and we expect that to continue.

Speaker Change: Development of the facility is going it is going well and we do expect that will make the first sales from our Nottingham UK facility. Later this year with the opportunity then for rapid growth in 2025.

Speaker Change: On the on the CMG side compressed natural gas.

Speaker Change: <unk> North American demand remains high.

Speaker Change: <unk> of our lightweight high capacity type four cylinders doubled.

Speaker Change: So almost $8 million in the quarter compared to the prior year.

Speaker Change: It's been a pretty exciting start to the year.

Andrew William John Butcher: I'd particularly highlight the upcoming tailwind from the new X15 CNG engine that's being introduced throughout the summer and should give us some additional momentum there as we move toward the end of the year and into 2025. So, yes, quite excited, Steve, about both bulk gas and CNG.

Speaker Change: That to continue.

Speaker Change: Securely highlights.

Speaker Change: Upcoming tailwind from the Nu X 15, Cummins <unk> engine.

Speaker Change: It's being introduced throughout the summer and should give us some additional momentum there as we move towards the end of the year and into 2025, So yes quite excited Steve about.

Speaker Change: Both both both gas and CMG.

Speaker Change: Alright, Thanks, Andy Thanks, Steve.

Stephen Michael Ferazani: Great. Thanks, Andy. Thanks, Steve.

Speaker Change: Thanks, Steve.

Operator: There are no more questions in the queue. At this time, I'll turn the call over to CEO Andy Butcher for final remarks.

Speaker Change: There are no more questions in the queue at this time I will turn the call over to CEO, Andy <unk> for final remarks.

Andy: Thank you for your question, Steve and thanks to everyone for joining deluxe recall.

Andrew William John Butcher: Thank you for your question, Steve, and thanks to everyone for joining the Luxfer Call. Today we've covered vital areas. Our strategic commercial developments are setting a strong pace, and we're seeing an initial recovery in market demand. Our operational consolidations are enhancing efficiencies. We've successfully started to recover historic legal fees, and our financial help continues to strengthen. Each of these points is testament to our resilience and our determined approach to improving our business.

Andy: Today, we've covered vital areas, our strategic commercial developments are setting a strong pace, we're seeing an initial recovery in market demands.

Andy: Our operational consolidations are enhancing efficiencies.

Andy: We successfully started to recover historic legal fees and our financial health continues to strengthen.

Andy: Each of these points is a testament to our resilience and a determined approach to improving our business.

Speaker Change: As always thank you for your interest and support in Luxor, We look forward to updating you on our progress next quarter.

Andrew William John Butcher: As always, thank you for your interest and support in Luxfer. We look forward to updating you on our progress next quarter. This concludes Luxfer's Q1 2024 earnings call. A recording of this conference call will be available in about two hours. A link to a recording of this webcast will be available on the Luxfer website at www.luxfer.com.

Operator: ............ [inaudible]. [inaudible]

Speaker Change: This concludes slack since Q1 2024 earnings call a recording of this conference call will be available in about two hours.

Speaker Change: A link to a recording of this webcast will be available on <unk> website at www Dot <unk> Dot com.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].