LUXFER HOLDINGS PLC

Previous wording

•our ability to execute our strategic review, including our Graphic Arts business, to safeguard margins and reduce costs;

Current wording

•our ability to execute a turnaround plan in our Graphic Arts business to safeguard revenues and reduce costs;

Previous wording

•Further improvements in ESG standing through focus on sustainability and on our values of team-working and accountability; and

Current wording

•Further improvements in ESG standing through focus on sustainability and on our values of teamworking and accountability; and

Previous wording

The consolidated results of operations for the First Quarter of 2024 and 2023 of Luxfer were as follows:

Current wording

The consolidated results of operations for the second quarter of 2024 and 2023 of Luxfer were as follows:

Previous wording

Adjusting for foreign exchange tailwinds of $0.7 million, net sales have decreased by 12.4% in the first quarter of 2024. The passing through of material cost inflation, where not constrained by contract, increased net sales in first quarter of 2024 from 2023 by $1.7 million. Sales were negatively impacted in the quarter from:

Current wording

Revenue was negatively impacted in the quarter from:

Previous wording

•Higher sales in the Oil and Gas industry; and

Current wording

•Improved sales of SoluMag® in the Oil and Gas industry;

Previous wording

The 0.2 percentage point decrease in gross profit as a percentage of sales in the first quarter of 2024 from 2023 was primarily the result of the continued increased material and labor costs, particularly in our Graphic Arts Division, while contract renegotiations and manufacturing efficiencies have had a positive impact on margins within the Gas Cylinders and Elektron Divisions respectively.

Current wording

The 0.2 percentage point increase in gross profit as a percentage of sales in the second quarter of 2024 from 2023 was primarily the result of contract renegotiation and manufacturing efficiencies having a positive impact on margins within the Gas Cylinders and Elektron Divisions respectively. This has been partially offset by adverse volume and mix. Gross profit as a percentage of sales for the first half of 2024 remained flat against the first half of 2023 with contract renegotiations and manufacturing efficiencies being offset by adverse volume and mix..

Previous wording

Research and development costs remained flat, with a slight increase as a percentage of sales in the first quarter of 2024 relative to 2023 respectively, attributable to the reduction in sales.

Current wording

Research and development costs as a percentage of sales increased by 0.2 percentage points in the second quarter and first six months of 2024 respectively. The slight increase is a result of the reduction in sales as absolute expenditures remained relatively flat.

Previous wording

The $0.7 million restructuring charge in the first quarter of 2024, predominantly relates to costs incurred in respect of cost savings initiatives affecting our North American Gas Cylinders business ($0.4 million) and clean up costs of $0.2 million in relation to the consolidation of production facilities in the Magnesium Powders operations. There was a further $0.1 million relating to costs associated with the closure of Luxfer Gas Cylinders France, which ceased operations in 2019.

Current wording

The $1.1 million and $1.8 million restructuring charge in the second quarter and first six months respectively of 2024 predominantly relates to the execution of cost savings initiatives affecting our North American Gas Cylinders business. This amounted to $0.6 million and $1.0 million in the second quarter and first six months of the year respectively. There was a further $0.5 million and $0.6 million in the second quarter and first six months of the year primarily relating to site clean-up costs associated with the closure of Luxfer Gas Cylinders France, which ceased operations in 2019. Additionally, there were clean-up costs of $0.2 million in the first six months of the year within our Elektron Division relating to the consolidation of production facilities in the Magnesium Powders operations.

Previous wording

In 2024 there was a defined benefit credit of $0.3 million for the U.K. plan, consistent with 2023. 2023 was also impacted by the sale of the U.S. pension plan liability to an insurer, which included $2.3 million cash and $6.9 million in relation to the derecognition of the U.S. pension liability and reallocation of accumulated actuarial losses from other comprehensive income.

Current wording

There was a defined benefit credit of $0.2 million and $0.5 million in the second quarter and first six months respectively for the U.K. plan, consistent with 2023. 2023 was also impacted by the sale of the U.S. pension plan liability to an insurer, which included $2.3 million cash and $6.9 million in relation to the derecognition of the U.S. pension liability and reallocation of accumulated actuarial losses from other comprehensive income. In the second quarter of 2023, we received a $0.2 million contribution refund, resulting in a net cash outflow of $2.1 million and a half year charge of $9.0 million.

Previous wording

The movement in the statutory effective tax rate from 116.1% in 2023, to 26.3% in 2024, was primarily due to non-deductible expenses and deferred tax credit in 2023, predominantly in relation to the previously mentioned pension buyout. When stripping out the impact of this, as well as other less significant adjusting items, the adjusted effective tax rate has increased to 23.1% in 2024 from 21.7% in 2023, largely as a result of the statutory tax rate increase in the U.K. from 19% to 25%, which came into effect in April 2023.

Current wording

The movement in the year to date statutory effective tax rate from negative 50.0% in 2023, to 63.1% in 2024, was primarily due to non-deductible expenses and deferred tax credit, predominantly in relation to the previously mentioned pension buy-out and impairment charges. When stripping out the impact of this, as well as other less significant adjusting items, the adjusted effective tax rate has increased to 23.7% in 2024 from 22.0% in 2023, largely as a result of the statutory tax rate increase in the U.K. from 19% to 25%, which came into effect in April 2023.

Previous wording

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.

Current wording

The following table presents a reconciliation for the adjusted effective tax rate, adjusted income before income taxes and adjusted provision for income taxes all of which are non-GAAP measures that management believes are KPIs used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results.

Previous wording

The 9.4% increase in Gas Cylinders sales in the first quarter of 2024 from 2023 was primarily the result of:

Current wording

The 2.7% increase in Gas Cylinders sales in the second quarter of 2024 from 2023 was primarily the result of increased sales of SCBA cylinders which benefited from pricing agreed through contract renegotiation. These increases have been partially offset by reduced sales of industrial and alternative fuel cylinders.

Previous wording

These increases have been partially offset by reduced sales of aluminum cylinders used in our general industrial end market.

Current wording

The 5.8% increase in sales for the first six months of the year was primarily the benefit from renegotiated contracts, which previously constrained inflationary cost pass through in the first six months of 2023. These increases have been partially offset by reduced sales of aluminum cylinders used in our general industrial end market.

Previous wording

There was a 3.0 percentage point increase in adjusted EBITDA for Gas Cylinders as a percentage of net sales in the first quarter of 2024 relative to 2023. This was primarily due to the impact of new sales contracts, partially offset by adverse volume and mix reductions.

Current wording

The 0.3 percentage point decrease in adjusted EBITDA for Gas Cylinders as a percentage of net sales in the second quarter of 2024 relative to 2023 is predominantly the result of adverse sales mix and productivity partially offset by pricing improvements from new sales contracts . For the first six months there has been a 1.3 percentage point increase in adjusted EBITDA primarily due to the impact of new sales contracts, partially offset by adverse productivity, volume and mix.

Previous wording

The 28.1% decrease in Elektron sales in the first quarter of 2024 from 2023 was primarily the result of:

Current wording

The 20.8% and 24.4% decrease in Elektron sales in the second quarter and first six months of 2024 from 2023 was primarily the result of:

Previous wording

The 1.1 percentage point decrease in adjusted EBITDA for Elektron as a percentage of net sales in the first quarter of 2024 from 2023 was impacted by adverse movement in volume and mix and $0.6 million unfavorable FX. This was partially offset by the reduction in legal costs of $1.0 million from those incurred in the first quarter of 2023.

Current wording

The 11.6 and 5.6 percentage point increase in adjusted EBITDA for Elektron as a percentage of net sales in the second quarter and first six months respectively of 2024 from 2023 was a result of the net recovery from the previously disclosed US Ecology case in 2024 of $5.1 million and $5.3 million, compared to the net cost of $1.2 million and $2.3 million in 2023.This was partially offset by adverse movement in volume and mix and $0.8m unfavorable FX in the first six months of 2024.

Previous wording

The 14.9% decrease in Graphic Arts sales in the first quarter of 2024 from 2023 was primarily the result of decreased demand for photo-engraving plates, particularly outside the North American market..

Current wording

The 11.2% decrease in Graphic Arts sales in the second quarter of 2024 from 2023 was primarily the result of decreased demand for photo-engraving plates, particularly outside the North American market.

Previous wording

The increased loss in Graphic Arts during the first quarter of 2024 from 2023 was the result of lower volumes coupled with the continued elevated cost of magnesium, linked to historic purchases. Given recent reductions in the magnesium purchase price, material cost is expected to reduce as we progress through the current year.

Current wording

Graphic Arts made a small, positive EBITDA of $0.1 million for the second quarter of 2024, compared to breaking even in the second quarter of 2023. For the first six months of 2024 there was an increased EBITDA loss of $1.6 million, compared to a $0.7 million loss in the first six months of 2023, the reason being the result of lower volumes coupled with elevated cost of magnesium, linked to historic purchases. Given recent reductions in the magnesium purchase price, material cost is expected to reduce as we progress through the current year, consistent with the sequential improvement in adjusted EBITDA in the second quarter of 2024.

Previous wording

•hedging facilities used to manage our foreign exchange and aluminum purchase price risks.

Current wording

•hedging facilities used to manage our foreign exchange risks and aluminum purchase price risks.

Previous wording

Cash provided by operating activities was $3.6 million for the first quarter of 2024 compared to $14.4 million outflow in the first quarter of 2023. It was primarily related to net income from operating activities offset by movements in working capital, and net of the following non-cash items: depreciation and amortization; share-based compensation charges; pension charge / (credit) and net changes to assets and liabilities. In 2023, cash flow was impacted by the significant increase in working capital related to inventory build to protect supply chain and the $2.3 million contribution the Company made in relation to the sale of the U.S. pension plan to an insurer.

Current wording

Cash generated by operating activities was $12.5 million inflow and $1.3 million outflow for the first six months in 2024 and 2023 respectively. It was primarily related to net income from operating activities, net decreases in working capital, and net of the following non-cash items: depreciation and amortization; share-based compensation charges; pension credit; loss on held-for-sale asset group and net changes to assets and liabilities. Cash flow was impacted by the $4.5 million receipt arising from the reimbursement of legal costs in relation to the previously disclosed US Ecology case, the first six months in 2023 had an equivalent outflow of $2.3 million. Also impacting the 2023 cash flow was the $2.1 million contribution the Company made in relation to the sale of the U.S. pension plan to an insurer.

Previous wording

Net cash used by investing activities was $1.4 million for the first quarter of 2024, compared to net cash used for investing activities of $2.0 million in 2023, as a result of reduced capital expenditure in the quarter.

Current wording

Net cash used by investing activities was $4.1 million for the first six months of 2024, compared to net cash used by investing activities of $4.9 million in 2023, as a result of reduced capital expenditure in the quarter.

Previous wording

In the first quarter of 2024, net cash provided by financing activities was $2.3 million, compared to $5.3 million inflow in 2023. We made net repayment of our overdraft facility of $4.3 million (2023: nil), net drawdown on our banking facilities of $10.6 million (2023: $9.9 million) and dividend payments of $3.5 million (2023: $3.5 million), equating to $0.13 per ordinary share respectively. In addition, we paid out $0.1 million (2023: $0.3 million) in settling share based compensation and $0.4 million (2023: $0.8 million) in repurchasing our own shares as part of the share buyback program which equates to 20,000 shares (2023: 48,000 shares).

Current wording

In the first six months of 2024, net cash used by financing activities was $6.3 million, (2023: $1.2 million provided by financing activities). We made a net drawdown on our banking facilities of $2.0 million, having drawn $6.4 million on our revolving credit facility and paid back $4.4 million of short term debt (2023: $10.1 million drawdown). Dividend payments of $7.0 million (2022: $7.0 million), equating to $0.260 per ordinary share respectively and we paid out $0.3 million, (2023: $0.3 million) in settling share based compensation and $1.0 million, (2023: $1.6 million) in repurchasing our own shares as part of the share buyback program which equates to approximately 100,000 shares (2023: 100,000 shares).

Previous wording

We paid year-to-date dividends in 2024 of $3.5 million (2023: $3.5 million year-to-date), or $0.13 per ordinary share (2023: $0.13).

Current wording

We paid year-to-date dividends in 2024 of $7.0 million and declared an additional $3.5 million (2023: $10.5 million declared year-to-date and $7.0 million paid year-to-date), or $0.260 per ordinary share (2023: $0.260).

Previous wording

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 U.K.-adopted International Accounting Standards, 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.

Current wording

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.

Previous wording

At March 31, 2024, we had no off-balance sheet arrangements other than the two bonding facilities disclosed in Note 16.

Current wording

At June 30, 2024, we had no off-balance sheet arrangements other than the bonding facilities disclosed in Note 16.

Previous wording

We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. In our 2023 Annual Report on Form 10-K, filed with the SEC on February 27, 2024, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements.

Current wording

We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. In our 2023 Annual Report on Form 10K, filed with the SEC on February 27, 2024, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements.