Q2 2025 Luxfer Holdings PLC Earnings Call
Rachel Smith: Please stand by. Your program is about to begin.
Please stand by your program is about to begin.
Erica: Good morning. My name is Erica, and I will be your conference operator today. Welcome to Luxfer's Q2 2025 earnings conference call. All lines have been placed on mute. After the speakers prepare remarks, we will hold a question and answer session. Now, I will turn the call over to Kevin Grant, Vice President of Investor Relations and Business Development at Luxfer. Kevin, please go ahead.
Good morning. My name is Erica, and I will be your conference operator today. Welcome to the Luxfer second quarter 2025 earnings conference call. All lines have been placed on mute after the speaker's prepared remarks. We will hold a question and answer session. Now, I will turn the call over to Kevin Grant, Vice President of Investor Relations and Business Development at Luxfer. Kevin, please go ahead.
Kevin Grant: Thank you, Erica, and good morning, everyone. Welcome to Luxfer's second quarter 2025 earnings conference call. This morning, we will be reviewing Luxfer's financial results for the second quarter ended June 29, 2025. I am pleased to be joined today by Andy Butcher, our Chief Executive Officer, and Steve Webster, our Chief Financial Officer. Today's webcast is accompanied by a presentation that can be accessed at luxfer.com. Please note any references to non-GAAP financials are reconciled in the appendix of the presentation. Before we begin, a friendly reminder that any forward-looking statements made about the company's expected financial results are subject to future risks and uncertainties. We undertake no obligations to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to the safe harbor statement on slide two of today's presentation for further details.
Thank you, Erica, and good morning, everyone. Welcome to Luxfer's second quarter 2025 earnings conference call.
this morning, we'll be reviewing luxford Financial results for the second quarter end of June 29th, 2025,
I'm pleased to be joined today by Andy butcher, our chief executive officer and Steve Webster. Our Chief Financial Officer.
Today's webcast is accompanied by a presentation, that can be accessed at luxur.com.
Please note any references in non-gaap financials are reconciling the appendix of the presentation?
before we begin a friendly, reminder that, any forward-looking statements made about the company's expected Financial results are subject to Future risks and uncertainties,
We undertake no obligations to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Please refer to the safe, harbor statement on slide 2 of today's presentation for further details.
Kevin Grant: During today's call, we will be providing adjusted second quarter 2025 financial results, excluding the recently sold Luxfer Graphic Arts business and the 2024 legal recoveries. Now, let me turn the call over to Luxfer's CEO. Please turn to slide three. Andy, please go ahead.
During today's call, we'll be providing adjusted second quarter, 2025 Financial results, excluding the recently sold graphic arts business and the 2024 legal recoveries.
Now, let me turn the call over to luxford CEO.
Please turn to slide 3.
Andy Butcher: Thank you, Kevin, and good morning, everyone. Thank you for joining us. Q2 was a very strong quarter for Luxfer Holdings PLC, underscoring the strength of our core businesses, the resilience of our operating model, and our ability to perform well in a dynamic environment. Adjusted earnings per share increased to $0.30, up 25% year over year and 30% sequentially, and adjusted EBITDA rose to $14 million. Sales growth was led by impressive ongoing momentum in our electron segment. Demand for MREs, FLAIRs, and UGRE platforms remained high, supported by defense restocking activity, sustained funding tailwinds, and a buoyant aerospace market. We also saw sequential improvement in Luxfer Gas Cylinders.
Andy, please go ahead.
Thank you, Kevin and good morning everyone. Thank you for joining us.
Q2 was a very strong quarter for the Luxor underscoring, the strength of our core businesses, the resilience of our operating model and our ability to perform well in a dynamic environment.
Adjusted earnings per share, increased to 30 cents up 25% year-over-year from 30% sequentially and adjusted ebit da Ros to 14 million.
Sales growth was led by impressive ongoing momentum in our electron segment.
Demand for MREs flares and Yuji platforms remained High supported by defense restocking activity. Sustained funding tailwind and a buoyant Aerospace Market.
Andy Butcher: While sales were modestly lower year over year, strong performance in space exploration, aerospace, and first response helped offset ongoing softness in clean energy, which, while an important part of our longer-term strategy, remains a little subdued in the near term. These shifts in demand reflect well on the adaptability and diversity of our portfolio, as the business continues to transition towards higher value sectors, where we are well positioned to deliver stronger profitability. We completed the divestiture of our Luxfer Graphic Arts business in early July, a key deliverable stemming from our strategic portfolio review. This transaction allows us to sharpen our focus towards higher margin opportunities within our core markets. We also initiated an important relocation project in our composite cylinders business, announcing the move of production from our Pomona, California, site to our more automated center of excellence in Riverside, California.
We also saw sequential Improvement in gas cylinders.
What sales were modestly? Lower year-over-year. Strong performance in space, exploration Aerospace. And First Response helped offset ongoing softness in clean energy.
Which while an important part of our longer term strategy remains a little subdued in the near-term.
These shifts in demand reflect well on the adaptability and diversity of our portfolio as the business continues to transition towards higher value sectors. Where we are? Well, positioned to deliver stronger profitability.
We completed the divestiture of our graphic, arts business in early July a key deliverable stemming from our strategic portfolio review.
This transaction allows us to sharpen our Focus towards higher margin opportunities within our core markets.
Andy Butcher: This is another key step in optimizing our footprint, generating savings of up to $4 million per annum through enhanced operational alignments. In summary, Q2 demonstrated strong execution, portfolio quality, and the earnings power of our core businesses. With that, I will hand over to Steve, who will take you through the financials and our updated 2025 guidance. Steve.
We also initiated an important relocation project in our composite cylinders business announcing, the move of production from our Pomona, California site to our more automated center of excellence in Riverside, California.
This is another key step in optimizing, our footprint, generating Savings of up to 41%.
In summary.
Q2 demonstrated, strong execution portfolio quality, and the earnings power of our core businesses.
With that, I'll hand over to Steve who will take you through the financials and our updated 2025 guidance.
Steve Webster: Thanks, Andy, and good morning, everyone. Let's turn to slide four for a review of our consolidated financial results. In the second quarter, sales were $97.1 million, up 5.8% year over year, reflecting continued strength across our core defense and aerospace markets. Adjusted EBITDA increased 14.8% to $14 million, delivering a 14.4% margin, up from 12.5% in Q1, resulting in nearly 200 basis points of sequential margin improvement. Adjusted EPS rose to $0.30, up 25% year over year. We generated $1.2 million in cash from operations, and net debt ended at $48.2 million with leverage at 0.9 times. On the right, the sales bridge highlights a $2.2 million contribution from pricing, including targeted price actions in aerospace. Foreign exchange was a $2 million tailwind, and volume and mix added $1.1 million, driven by strong Meals Ready-to-Eat and FLAIR demand and continued elevated aerospace shipments.
Steve.
Thanks, Andy and good morning everyone.
Let's turn to slide 4 for a review of our Consolidated Financial results.
In the second quarter sales. Were 97.1 million up 5.8% year-over-year reflecting continued strength across our core defense and Aerospace markets.
Adjusted ebit da increased 14.8% to 14 million, delivering a 14.4%, margin up from 12.5%. In quarter 1, resulting in nearly 200 basis points of sequential margin improvements.
Cent year-over-year.
We generated $1.2 million in cash from operations, and net debt ended at $48.2 million with leverage at 0.9 times.
On the right, the sales Bridge highlights a 2.2 million contribution from pricing including targeted price actions in Aerospace.
Foreign exchange was a million dollar tailwind and volume and mix added 1.1. Million driven by strong MRE and flare. Demand and continued elevated Aerospace shipments.
Steve Webster: For our adjusted EBITDA walk, the higher pricing was complemented by incremental volume and the higher value mix contribution of $2 million. These gains were partially offset by $2.4 million in headwinds, primarily FX from the continued strengthening of sterling, residual inflation, and elevated operating expenses. The majority of the higher OpEx reflects increased maintenance, utilities, and overhead costs within Electron, driven by improved throughput to support defense programs. For a full breakdown, please see the detailed waterfall in the appendix on slide 12. With that, let's move to slide five for a closer look at Electron's Q2 performance. Electron delivered another strong quarter, with sales increasing 19% year over year to $50.1 million. Adjusted EBITDA rose to $9.1 million, with margins expanding to 18.2%, reflecting favorable mix and disciplined execution, although partially tempered by the higher operating costs.
For our adjusted ebit. Dial walk for higher pricing, was complemented by incremental volume, and the higher value mix contribution of 2 million.
These gains were partially offset by 2.4 million in headwinds. Primarily FX from the continued strengthening of Sterling residual inflation and elevated operating expenses.
The majority of the higher Opex reflects increased maintenance utilities and overhead costs within electron.
Driven by improved throughput to support defense programs.
For a full breakdown. Please see the detailed waterfall in the appendix on, slide 12.
With that, let's move to slide 5 for a closer look at electrons: Q2 performance.
Electron delivered. Another strong quarter with sales, increasing 19% year-over-year to 50.1 million.
Adjusted EBITDA rose to $9.1 million with margins expanding to 18.2%, reflecting a favorable mix and disciplined execution.
although partially tempered by the higher operating costs,
Steve Webster: Defense, first response, and healthcare was a standout performer, up 43% from the prior year, and demand remains well above historical levels. In transportation, trends were mixed. We saw continued recovery in aerospace alloy volumes, auto catalysis improved sequentially but remains below pre-2023 levels, and overall auto activity slowed. Specialty industrial was also up modestly, supported by increased demand for magnesium specialty powders. Overall, Q2 performance in Electron reflected strong demand in our core end markets, ongoing operational execution, and a healthy mix shift supporting top-line growth and margin expansion. With that, let's turn to slide six for our Gas Cylinders results. In Q2, Gas Cylinders delivered a solid sequential rebound with sales of $47 million, up 14% from the first quarter. While sales declined 6% year over year, we're encouraged by improving momentum in key higher margin segments.
Defense. First Response and Healthcare was a standout performer up 43%, from the prior year, and demand remains well above historical levels.
In transportation Trends were mixed.
We saw continued recovery in aerospace alloy volumes.
Auto catalysis improves sequentially but remains below pre 2023 levels.
And overall Auto activity, slowed.
Specialty industrial was also up modestly supported by increased demand for magnesium specialty powders.
Overall Q2 performance in electron reflected strong demand in our core and markets ongoing, operational execution, and a healthy mixed shift supporting Topline growth for margin expansion.
With that, let's turn to slide 6 for our gas cylinders results.
In quarter 2, gas, cylinders delivered, a solid sequential Rebound with sales of 47 million up 14% in the first quarter.
While sales declined 6% year-over-year, we were encouraged by improving momentum in key, higher-margin segments.
Steve Webster: Adjusted EBITDA was $4.9 million, up 23.9% from the first quarter, with margins improving to 10.4%, supported by further pricing execution of $2.5 million and disciplined cost control. Specialty industrial improved 4%, driven by strength in calibration and electronics-related gas cylinders. Transportation also increased 4%, led by solid demand in aerospace and especially space exploration, outpacing the ongoing pressures in the alternative fuel market. Defense, first response, and healthcare sales declined 15% year over year, primarily due to the conclusion of the prior year U.S. Air Force SCBA program and short-term softness in medical cylinder contracts. That said, baseline demand in both areas remains steady. Overall, we view Q2 as a solid transition quarter for the segment. Improved mix and stronger contributions from aerospace, space exploration, and electronics-related applications supported sequential gains and margin expansion. This performance reflects a deliberate shift towards higher quality, higher margin end markets.
Adjusted ebit da was 4.9 million up 23.9% from the first quarter with margins improving to 10.4% supported by further pricing execution of 2.5 million and disciplined cost control.
Specialty industrial improved by 4%, driven by strength in calibration and electronics-related gas cylinders.
Transportation also increased 4% led by solid demand in Aerospace and especially space exploration outpacing the ongoing pressures in the alternative fuel Market.
Defense. First Response and Health Care sales declined. 15% year-over-year primarily due to the conclusion of the prior year US Air Force, s, CBA program.
And short-term softness in medical cylinder contracts.
That said, baseline demand in both areas remains steady.
Overall we view Q2 as a solid transition quarter for the segment improved mix and stronger contributions from Aerospace space, exploration and electronics related applications. Supported sequential gains and margin expansion.
This performance reflects a deliberate shift towards higher quality. Higher margin end markets.
Steve Webster: While clean energy volume draw remains soft, the flexibility of the portfolio has allowed us to adapt and focus on more profitable growth areas. Importantly, the recently announced relocation of composite cylinder production to our Riverside facility is expected to drive meaningful long-term benefits, streamlining our cost structure, enhancing operational efficiency, and improving overall alignment across the business. Let's now move to slide seven for a review of our updated 2025 guidance. We've improved our full-year guidance based on solid performance in the first half and continued strength in our order book. We have narrowed upwards the adjusted EPS range to $0.97 to $1.05, with adjusted EBITDA now between $49 million and $52 million.
While clean energy volumes rule. Remain soft. The flexibility of the portfolio. Has allowed us to adapt and focus on more profitable growth areas.
Importantly, the recently announced relocation of composite cylinder production to our Riverside facility is expected to drive. Meaningful long-term benefits.
Streamlining, our cost structure enhancing operational efficiency, and improving, overall alignment across the business.
Let's now move to slide 7 for a review of our updated 2025 guidance.
We've improved our 4 year guidance based on solid performance in the first half and continued strength in our order book.
Steve Webster: Projected free cash flow of $20 million to $25 million remains unchanged, but now incorporates the proceeds of the Graphic Arts sale, which in turn helps fund the recently announced relocation project in our Gas Cylinder segment. We do now forecast low single-digit year-over-year sales growth versus 2024. Our confidence is supported by good momentum in defense and aerospace, including demand for MREs, UGREs, and FLAIRs, as well as a strong backlog. We are maintaining tight control over costs and driving efficiency through site optimization initiatives. The impact of tariffs on our business has been modest to date. We are, though, seeing early signs of pressure in automotive affecting our electron business. This factor, when modeled with normal seasonality, is reflected in our latest guidance. We are pleased with our progress at the half-year mark and cautiously optimistic about the full-year outlook.
We have narrowed upwards, the adjusted EPS range to 97 cents to a dollar 5 with adjusted ebit da now between 49 and 52 million.
25 million remains unchanged. But now incorporates the proceeds of the graphic arts sale which in turn helps fund the recently announced relocation project in our gas cylinder segment.
We do now. Forecast, low single digits year-over-year. Sales growth versus 2024.
Our confidence is supported by good momentum in defense and Aerospace including demand for MREs Yugi and flares as well as a strong backlog.
We are maintaining tight control over costs and driving efficiency through site optimization initiatives.
The impact of tariffs on our business has been modest to date.
We are though seeing early signs of pressure in automotive affecting our electron business.
This Factor when modeled with normal seasonality is reflected in our latest guidance.
Steve Webster: Now, I'd like to pass the call back to Andy.
We are pleased with our progress at the half year mark and cautiously optimistic about the full year outlook.
now, I'd like to pass the call back to Andy
Andy Butcher: Thank you, Steve. Please turn to slide eight to review the highlights and achievements of the second quarter. We delivered strong earnings performance in Q2, with adjusted earnings per share up 25% year over year and sequential EBITDA margin improvement. This was driven by high revenues, a favorable product mix, disciplined pricing actions, and effective cost control across the business. We completed the divestiture of Luxfer Graphic Arts in early July, delivering on a key milestone from our strategic review. This move sharpens our focus on core high-margin platforms and enhances our portfolio alignment going forward. In our core markets, electron continued to perform well, led by Meals Ready-to-Eat, UGREs, and aerospace alloys. We also saw a solid sequential uplift in Luxfer Gas Cylinders, with gains in specialty and space exploration offsetting clean energy headwinds.
Thank you, Steve.
Please turn to slide 8 to review the highlights and achievements of the second quarter.
We delivered, strong earnings performance in Q2.
With adjusted earnings per share up, 25% year-over-year and sequential eidar margin improvements.
This was driven by high revenues, a favorable product. Mix disciplined pricing actions. An effective cost control across the business.
We completed the divestiture of graphic arts in early, July, delivering on a key Milestone from our strategic review.
This move sharpens. Our focus on core high margin platforms and enhances our portfolio alignment going forward.
In our core markets, electron continues to perform well, led by MREs, Yugi and Aerospace Alloys. We also saw a, a solid sequential uplift in gas cylinders with gains in specialty and space. Exploration of setting clean energy, headwinds.
Andy Butcher: We further advanced our operational footprint strategy with the launch of the Pomona relocation project, moving composite cylinder production to our Riverside center of excellence. This initiative is expected to streamline our footprint, enhance automation, and unlock long-term cost savings. Finally, our ability to pivot toward higher value sectors such as aerospace, space exploration, and defense has improved mix and earnings quality. This agility positions us well to capitalize on the opportunities ahead while enhancing profitability. We are very proud of the progress the team delivered this quarter, and we remain focused on delivering long-term shareholder value. I will now turn the call back to the operator for questions. Erica, please go ahead.
We further Advanced our operational, footprint strategy with the launch of the Pomona relocation project. Moving composite cylinder production to our Riverside center of excellence.
This initiative is expected to streamline. Our footprint enhance Automation and unlock long-term cost savings.
And finally, our ability to Pivot toward higher value, sectors, such as Aerospace space, exploration and defense has improved mix and earnings quality.
This agility positions as well to capitalize on the opportunities ahead while enhancing profitability.
Yeah, hold the value.
Hello, turn. Turn The call back to the operator for questions.
Erica: Thank you. At this time, if you would like to ask a question, please press the star and one on your touch-tone telephone. If at any point you find your question has been answered, you may remove yourself from the queue by pressing star two. Again, that is star and one to ask a question. We will go to Steve Frazoni.
Erica. Please. Go ahead.
Thank you at this time. If you would like to ask a question, please press the star and 1 on your touchtone telephone.
If at any point you find your question has been answered. You may remove yourself from the queue by pressing star 2 again that star in 1 to ask a question. And we'll go to Steve forzani.
Steve Frazoni: I guess the surprise for me on the quarter was the nice bounce back in Gas Cylinders. Can you give a little bit more color on what drove the bounce back, and is that sustainable into the second half?
um,
I guess the surprise for me on the quarter was the nice bounce back and gas cylinders, um can you give a little bit more color on on what drove the drove the bounce back and is that a a a sustainable into the second half?
Andy Butcher: Yes. Thanks, Steve Webster. It was a really good quarter for us. We were very pleased with that and the momentum it takes us into the second half of the year. The key things in Luxfer Gas Cylinders were the sustained demand we saw for the first response product, which, of course, is the foundation for the business, good sales in the specialty gas market for aluminum cylinders, and then especially the further uplift that we saw in space exploration. We are very positive about the developments in the space exploration field. Sales in Q2 were up on what was already a notable Q1. Indeed, Q2 revenues were at a record level. This is a demanding application there, Steve Webster, with operating at high tolerances, good margins. So we are excited about the growth we are delivering in this segment.
Yes, thanks. Uh, thanks, uh, Steve. It's uh, it was a really good quarter for us. We were very pleased with with that and the momentum, it takes us with into the second half of the year, the year, the, uh, the, the key things in, uh, in gas cylinders was, um, the sustained demand. We saw for, uh, for the First Response, uh, product, which of course is the foundation for, uh, for the business. Good sales in the uh, specialty gas market uh, for aluminum cylinders and then especially the further uplift that we saw in space exploration. Um we're very positive about the developments in uh in the space exploration field. Um, so I was in Q2 we're up on what was already in
Notable q1, uh indeed Q2 revenues were at a record level. Um this is a this is a demanding application uh Steve with operation? I'm sure operating
Andy Butcher: Yes, we believe we will see that ongoing bounce back in the Luxfer Gas Cylinders business carry forward into the second half of the year.
Good margins. So we're excited about the growth. We are delivering in this, uh, this segment. So, uh, so yes, we believe, uh, we'll see uh, that ongoing bounce back in the gas cylinder business carry forward into the second half of the year.
Steve Frazoni: So, any reason for why not? I mean, I got to ask, given the strength in the quarter, it certainly was well above our EPS expectations. I do not know whether it beat your internal. Any reason you would not move the high end of the guidance range now?
So any reason for why not? I mean I got to ask given the strength and the quarterly was well above our EPS expectations. I don't know whether it be your internal any reason you wouldn't move to high-end if the guidance range now
Andy Butcher: Yes. Look, as I said, we're very pleased with Q2 performance after a solid Q1 and the progress, not just in space exploration that I mentioned, but particularly defense and aerospace. Look, there's much to be optimistic about looking ahead, although there is still some uncertainty around tariffs, I think. We have seen some softening in auto. As Steve mentioned, we've modeled that in our guidance, as well as some of the normal seasonality that we see. Yes, we are running just a little ahead of our initial expectations. We've acknowledged that with a modest uplift to the bottom end of the range. I think, importantly, our team are, of course, working really hard to deliver numbers that come into the upper end of the guidance range. We would really like to see that at the end of Q2.
Yeah, so as I said, we're very pleased with Q2 performance after after a solid uh q q q1, uh, and the progress not just in space exploration. That I mentioned but uh, but particularly defense and uh, and an aerospace. So look, there's much to be optimistic about looking uh, looking ahead. Um, although there is still some uncertainty around tariffs, I think. Um, and we have seen some softening in uh in Auto. So as Steve mentioned, we've modeled that in our guidance. Um, as well as some of the normal seasonality, that we, uh, that we see so, um, yes we are running. Just a little ahead of our initial expectations. Um, we've acknowledged that with a modest uplift to the bottom Mane end of the, uh, end of the range. And I think, and I think, importantly, our team are, of course, working really hard to deliver numbers that come into the
Friend of the guidance range.
We really like this at the end of Q2.
Steve Frazoni: Very fair. Can I ask about the now with the consolidation into Riverside? We know that this is kind of an off year for the alternative fuels market, and people can look at Class A truck orders. It is very explainable. We think we are still bullish on where that market goes. Now you incorporate in what could be strong growth in space exploration. Do you have the capacity at Riverside to meet what could be strong growth in both of those markets over the next decade?
Andy Butcher: Absolutely. We do have the capacity in place, not just in Riverside, but also in our Canadian facility. Let me talk briefly about the Pomona consolidation because it is very important in terms of value creation. We have been pleased with the Pomona business over the last few years and the performance of the products there. We have this opportunity to further improve the cylinders' business overall by eliminating that duplication we have from two facilities just 30 miles apart. It is at a time the lease is soon to explore, so the timing is good. We can move into a more modern, more automated facility that we own and deliver these benefits in variable and fixed costs approaching $4 million per annum. You also mentioned clean energy. Of course, that is a little subdued at the moment. We are actually quite bullish on the long-term picture for clean energy.
Very fair. Um, can I ask about that? Uh, now, with the consolidation into Riverside, we know that this is kind of an off-year for all for the alternative fuels market, and people can look at Class A truck orders. It's very explainable. We think we're still bullish, on on where that market goes. Now, you incorporate in what could be strong growth in space exploration? Do you have the capacity at Riverside to meet? What could be strong growth in both of those markets over the next decade?
Absolutely. We do have the the capacity in place, not just in Riverside, but also in our, in our Canadian facility. Um, let me talk briefly about the, uh, Pomona consolidation. Because it's very important in terms of, uh, a value value creation. Uh, we have been pleased with the, uh, the poni business over the last few, uh, few years and the performance of the, the products there. But we've, we've got this opportunity to further improve the cylinder's business overall, by limiting eliminating that duplication we have from 2 facilities, just just 30 miles apart and it's at a time the lease is soon to uh, to explore. So uh, so the timing is good, we can move into a more modern, more automated uh, facility that we uh that we own and uh and deliver these um, benefits in variable and fixed costs approaching.
4 million per, uh, per atom.
Andy Butcher: We have continued to pick up a few niche opportunities, particularly around hydrogen and CNG cylinders. Indeed, in the bulk gas space, we have just converted the first tranche of a seven-module opportunity for our hydrosphere trailer. So we are optimistic about that long term. It is a good move, this consolidation, to improve our cost base. We still have ample capacity in Canada and in Riverside to address what I believe will continue to be a strong market in space exploration and growth to come in clean energy.
Actually, the first tranche of a 7 module opportunity for our for our hydrosphere hydrosphere trailer. So we're optimistic about that long term. So, uh, it's a good move this consolidation to improve our our cost base and we still have, uh, ample capacity in Canada and in Riverside to, uh, address what, I believe will continue to be a strong Market in space. Exploration and growth to come in clean energy.
Steve Frazoni: Excellent. That is helpful. You mentioned tariffs a little bit in the commentary. We are starting to get a little more clarity around what it is looking like moving forward. Has that changed how you think it impacts your business, and is that in guidance?
Excellent. That's helpful. Um, you mentioned tariffs, a little bit in the in the commentary we're starting to get a little more clarity around. What what it's looking like moving forward has that changed? How you think it impacts your business and is that in guidance?
Steve Webster: Yeah. I mean, going to Steve, it certainly, I think we have said previously that we do not think it has a significant direct impact on us, and that certainly has not changed. I think we gave some metrics in our 10K last year around about sort of $20 million of sales or so either way between the affected markets. No, I think the main impact, as we have said before, would be on general macro factors. So, particularly the automotive side that we mentioned previously. I mean, we are modeling lower automotive sales, as I said in my prepared remarks. Some of that may well be down to the impact of tariffs. By and large, I think we have been generally unaffected. So we are not seeing any significant change other than potentially what might happen to the macro.
Um, yeah. I mean morning, Steve it, it is, it's certainly, um, I think we've said previously that we don't think it has a significant direct impact on us and, uh, and that's certainly is not changed. Um, I think we, we gave some metrics and our, our 10K last year about around about sort of 20 million dollars of sales or so, either way, um, between the affected markets. But, uh, know, I think the, the main impact as we've said before would be on General macro factors. So, you know, particularly the, uh, the automotive side that we mentioned, uh, previously. I mean, we're modeling lower Automotive Sales as I said, in my prepared remarks, and, and some of that may well be down to the impact of tariffs. But by and large, I think we, we
Steve Frazoni: Got it. That is helpful. Last one for me. Given that a major milestone, in my opinion, closing out the sale of Luxfer Graphic Arts, now as you start looking forward at the two sides of the business, it sounds like the main thrust of cash flow will be the debt reduction. Does that change longer term what you want these two businesses to look like and what cash usage might be 2026, 2027?
Been generally unaffected. Um so we're not seeing uh any significant change other than potentially what might happen to the macro.
Got it, that's helpful. Uh, last 1 for me uh
Given that, that the, a major milestone, in my opinion, get, uh, closing out the sale of graphic arts. Now, as you start looking forward at the 2 sides of the business,
Sounds like the the main thrust of cash flow will be the debt reduction.
Does that change long-term? What do you want these two businesses to look like? And what could Cass's usage be in 2026 or 2027?
Andy Butcher: Thanks, Steve. So we are very pleased to have delivered on the Luxfer Graphic Arts sale, and that project was a key part of our strategic review. With that behind us, it does give us the opportunity to concentrate more on the growth opportunities we see with Luxfer Gas Cylinders and Luxfer MEL Technologies. We would not see any significant change to the investment that is needed in those over that which we have seen previously. We have increased our capital investment this year to fund both growth and automation above the levels we have seen in some of the earlier years. We also have the opportunity within capital deployment to continue to look at not just debt reduction, but also share buyback where that makes sense. Pleased to have cleaned up the portfolio with the sale of Luxfer Graphic Arts.
Thanks. Uh, thanks, Steve. Um, yeah, so we're very pleased to have delivered on the uh, on the on the graphic arts uh, sale and the uh, uh. And that's that project was a key part of us, strategic, strategic, group, uh, review, um, with that behind us. It does give us the opportunity to concentrate on, uh,
Uh, more on the growth opportunities, we see with, uh, with gas cylinders. And, uh, and electron we wouldn't see any significant change to the investment that, uh, that's needed in those over that, which we, we've, we've seen previously, we have, uh, in increased our capital investment this year to fund both growth and, uh, automation above the levels. We've seen in some of the, uh, the the earlier uh, years. So, um, we also have the opportunity within uh, Capital deploy.
Andy Butcher: It does enable us to concentrate on those growth opportunities in Luxfer MEL Technologies and Luxfer Gas Cylinders.
Appointment to continue to look at not just debt reduction but also share buyback where, where that makes sense. So, uh, pleased to have cleaned up the portfolio with the, uh, with the sale of graphic arts does enable us to concentrate on those growth opportunities in electron and gas cylinders.
Steve Frazoni: Great. Thanks, Andy. Thanks, Steve.
Great. Thanks Andy. Thanks, Steve.
Erica: There are no more questions in the queue at this time. I will turn the call over to CEO Andy Butcher for final remarks.
And there are no more questions in the queue. At this time. I'll turn the call over to CEO. Andy butcher for final remarks.
Andy Butcher: Thank you, Erica. Please turn to slide 10. As we wrap up today's call, let me talk specifically about why we believe Luxfer is a compelling long-term investment. We operate in growing mission-critical markets, including defense, aerospace, medical, and first response, where we hold leadership positions and serve blue-chip customers who rely on our technology and performance. Our portfolio is increasingly focused on highly specialized, high-value products, including technologies that enable lightweighting, high performance, and premium pricing across niche applications. We are demonstrating continued consolidation of our footprint with a new project to relocate our Pomona facility to Riverside, which will generate savings up to $4 million per annum. Operationally, the Luxfer business system continues to drive cost discipline and lean execution, and we are reviewing further opportunities for automation or simplifying our processes to strengthen our cost position.
Thank you, Erica. Please turn to slide 10.
As we wrap up today's call.
Let me talk specifically about why we believe, Luxor is a compelling long-term investment.
We operate in growing Mission, critical markets, including defense, Aerospace, medical, and First Response, where we hold leadership positions and serve bluechip customers who rely on our technology and performance.
Our portfolio is increasingly focused on highly. Specialized high-value products including technologies that enable lightweighting high performance and premium pricing across Niche applications
We are demonstrating continued consolidation of our footprints with a new project to relocate our Pomona facility to Riverside, which will generate savings of up to $4 million per annum.
Operationally, the Luxe of business system continues to drive, cost discipline and lean execution. And we are reviewing further opportunities for automation, while simplifying, our processes to strengthen our cost position.
Andy Butcher: Financially, we remain disciplined and resilient. We have maintained leverage below one times and continue to generate solid free cash flow to fund growth, dividends, and buybacks, and with a strong balance sheet and low leverage. Lastly, we retain our strategic optionality. With multiple opportunities across both electron and gas cylinders, we are positioned to deliver profitable growth, as well as maintaining full flexibility to optimize our portfolio and unlock shareholder value. Overall, Luxfer provides an asymmetric value creation opportunity with strong fundamentals and opportunity to create long-term shareholder returns. I would like to close by thanking the entire Luxfer team for their exceptional execution and commitment, and thank you for your continued support. We look forward to updating you next quarter.
Financially we remain disciplined and resilient, we've maintained leverage below, 1 time and continue to generate solid free, cash flow to fund growth. Dividends and BuyBacks
Lastly, we retain our strategic optionality.
With multiple opportunities across both electron and gas. Cylinders, we are positioned to deliver profitable growth as well as maintaining full flexibility to optimize our portfolio and unlock shareholder value.
Overall Luxor provides an asymmetric value creation opportunity with strong, fundamentals, and opportunity to create long-term shareholder returns.
I'd like to close by thanking the entire luxford team for their exceptional execution and commitments and thank you for your continued support.
We look forward to updating you next quarter.
Erica: This concludes Luxfer's Q2 2025 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 Luxfer's website at www.luxfer.com. We thank you for joining, and please disconnect at any time.
This concludes luxford.
Q2 2025 earnings call. A recording of this conference call will be available in about 2 hours. A link to a recording of this webcast will be available on the Luxfer website at www.lux.com.
Thank you for joining and please disconnect at any time.