LUXFER HOLDINGS PLC

Previous wording

This Interim Report on Form 10-Q contains certain statements, statistics and projections that are, or may be, forward-looking. These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. The accuracy and completeness of all such statements, including, without limitation, statements regarding our future financial position, strategy, plans and objectives for the management of future operations, is not warranted or guaranteed. These statements typically contain words such as "believes," "intends," "expects," "anticipates," "estimates," "may," "will," "should" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors identified in "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," or elsewhere in this Interim Report, as well as:

Current wording

This Interim Report on Form 10-Q contains certain statements, statistics and projections that are, or may be, forward-looking. These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. The accuracy and completeness of all such statements, including, without limitation, statements regarding our future financial position, strategy, plans and objectives for the management of future operations, is not warranted or guaranteed. These statements typically contain words such as "believes," "intends," "expects," "anticipates," "estimates," "may," "will," "should" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors identified in "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," or elsewhere in this Annual Report, as well as:

Previous wording

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

Current wording

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

Previous wording

•the amount of indebtedness we have incurred and may incur, and the obligations to service such indebtedness and to comply with the covenants contained therein;

Current wording

•the amount of indebtedness we have incurred and may incur, and the obligations to service such indebtedness and to comply with the covenants contained therein; • relationships with our customers and suppliers;

Previous wording

Please read the sections "Business" and "Risk factors" included within the 2023 Annual Report on Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk factors" of this Interim Report on Form 10-Q for a more complete discussion of the factors that could affect our performance and the industries in which we operate, as well as those discussed in other documents we file or furnish with the SEC.

Current wording

Please read the sections "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," on Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk factors" of this Interim Report on Form 10-Q for a more complete discussion of the factors that could affect our performance and the industries in which we operate, as well as those discussed in other documents we file or furnish with the SEC.

Previous wording

Macro-economic conditions have continued to impact our general industrial end-market with demand softening for our products across all segments. We have also experienced variability of demand for certain products in our defense, first response & healthcare end-market, particularly defense applications, including countermeasure flares and flameless ration heaters, although we have seen the former improve in the third quarter. We have been able to navigate these challenges through productivity and cost management initiatives resulting in improved margins. Legal recoveries and inventory management contributed to solid cash conversion and reduced net debt levels.

Current wording

Macro-economic conditions have continued to impact our specialty industrial end-market and have experienced variability of demand for certain products. In the First Quarter of 2025, we delivered strong sales driven by robust demand in Defense and Aerospace. We have continued to navigate macro-economic challenges through productivity and cost management initiatives resulting in improved margins alongside effective working capital management contributing to maintaining net debt levels.

Previous wording

•Addressing continuing general macro uncertainty and building resilience into the outlook;

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•Addressing continuing general macro uncertainty and continuing to build resilience into the outlook;

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•Ongoing focus on cost control, new product launches and productivity improvements across the business, driving margin improvement;

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•Ongoing focus on cost control and productivity improvements across the business to drive margin improvement, as well as new product launches to stimulate top line growth;

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•Execution of actions identified upon completion of the previously announced expanded and accelerated strategic review, including the divestiture of Graphic Arts;

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•Execution of actions identified upon completion of the previously announced expanded and accelerated strategic review, including the divestiture of Graphic Arts and Superform U.S.;

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•Execution of selected capital investment projects, especially those related to clean energy, to support our strategy of profitable growth while maintaining our infrastructure;

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•Execution of selected capital investment projects to support our strategy of profitable growth while maintaining our infrastructure;

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

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•Ongoing priority in ESG standing through focus on sustainability; and

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•Focus on recruiting, developing and maintaining talent, including our new leadership development programs, while driving a high-performance culture.

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•Focus on recruiting, developing, maintaining talent, and driving a high-performance culture.

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

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The consolidated results of operations for the First Quarter of 2025 and 2024 of Luxfer were as follows:

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•Increased sales of MRE and chemical response kits in our Magtech division; and

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•Increased sales of MREs and Group Rations (UGR-E) in our Magtech division;

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•Elevated sales of magnesium powders, especially those used in military applications, including countermeasure flares;

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•Elevated sales of magnesium powders, especially those used in defense applications, including countermeasure flares;

Previous wording

The 7.5 and 2.4 percentage point increase in gross profit as a percentage of sales in the third quarter and first nine months of 2024 from 2023 was primarily the result of contract renegotiation and manufacturing efficiencies having a positive impact on margins within the Gas Cylinders and Elektron Divisions respectively. This has been partially offset by adverse volume and mix.

Current wording

The 1.5 percentage point increase in gross profit as a percentage of sales in the First Quarter of 2025 from 2024 was primarily the result of the positive sales mix and contract resets, partially offset by raw material re-pricing in our Elektron division.

Previous wording

The $0.5 million and $2.3 million restructuring charge in the third quarter and first nine months respectively of 2024 predominantly relates to the execution of cost savings initiatives affecting our North American Gas Cylinders business. This amounted to $0.4 million and $1.4 million in the third quarter and first nine months of the year respectively. There was a further $0.1 million and $0.7 million in the third quarter and first nine months of the year primarily relating to site clean-up costs associated with the closure of Luxfer Gas Cylinders France, which ceased operations in 2019. Additionally, there were clean-up costs of $0.2 million in the first nine months of the year within our Elektron Division relating to the consolidation of production facilities in the Magnesium Powders operations.

Current 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.

Previous wording

The movement in the year to date statutory effective tax rate from negative 39.3% in 2023, to positive 34.2% in 2024, was primarily due to non-deductible expenses and deferred tax credit, predominantly in relation to the previously mentioned pension buy-out and impairment charges. When stripping out the impact of this, as well as other less significant adjusting items, the adjusted effective tax rate has increased to 23.4% in 2024 from 21.9% in 2023, largely as a result of the statutory tax rate increase in the U.K. from 19% to 25%, which came into effect in April 2023.

Current wording

The movement in the statutory effective tax rate from 26.3% in 2024, to 25.7% in 2025, was primarily due to non-deductible expenses and deferred tax credit. When stripping out the impact of adjusting items, the adjusted effective tax rate has increased to 23.8% in 2025 from 23.1% in 2024.

Previous wording

The following tables of non-GAAP summary financial data presents a reconciliation of net income from continuing operations and diluted earnings per ordinary share from continuing operations to adjusted net income from continuing operations, adjusted EBITA from continuing operations, adjusted income from continuing operations before income taxes, adjusted EBITDA from continuing operations, adjusted earnings per ordinary share from continuing operations, adjusted provision for income taxes and adjusted effective tax rate from continuing operations, for the periods presented, being the most comparable GAAP measures. Management believes that adjusted net income, adjusted earnings per share, adjusted EBITA and adjusted EBITDA are key performance indicators ("KPIs") used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results. In addition, Luxfer's CEO and other senior management use these KPIs, among others, to evaluate business performance. However, investors should not consider adjusted net income from continuing operations, adjusted earnings per share from continuing operations, adjusted EBITA from continuing operations and adjusted EBITDA from continuing operations in isolation as an alternative to net income and earnings per share when evaluating Luxfer's operating performance or measuring Luxfer's profitability. In 2024, the Company initiated a process to divest the Graphic Arts business. While Graphic Arts does not meet the 'strategic shift' criteria outlined in ASC 205-20 for it to be classified as a discontinued operation, we believe that given the expectation that divestiture will be completed in the current year, it is appropriate in the the tables below to separate out the results of Graphic Arts in order to provide a more complete financial summary for the period.

Current wording

The following tables of non-GAAP summary financial data presents a reconciliation of net income from continuing operations and diluted earnings per ordinary share from continuing operations to adjusted net income from continuing operations, adjusted EBITA from continuing operations, adjusted income from continuing operations before income taxes, adjusted EBITDA from continuing operations, adjusted EBITDA excluding legal cost recovery, adjusted earnings per ordinary share from continuing operations, adjusted provision for income taxes and adjusted effective tax rate from continuing operations, for the periods presented, being the most comparable GAAP measures. Management believes that adjusted net income excluding legal cost recovery, adjusted earnings per share, adjusted EBITA and adjusted EBITDA excluding legal cost recovery are key performance indicators ("KPIs") used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results. In addition, Luxfer's CEO and other senior management use these KPIs, among others, to evaluate business performance. However, investors should not consider adjusted net income from continuing operations, adjusted earnings per share from continuing operations, adjusted EBITA from continuing operations and adjusted EBITDA excluding legal cost (recovery) from continuing operations in isolation as an alternative to net income and earnings per share when evaluating Luxfer's operating performance or measuring Luxfer's profitability. In 2024, the Company initiated a process to divest the Graphic Arts business. While Graphic Arts does not meet the 'strategic shift' criteria outlined in ASC 205-20 for it to be classified as a discontinued operation, we believe that given the expectation that divestiture will be completed in the current year, it is appropriate in the tables below to separate out the results of Graphic Arts in order to provide a more complete financial summary for the period. Similarly for other Income of $0.2 million in the First Quarter of 2024 relates to the recovery of legal costs from our insurer related to the previously disclosed US Ecology case, historically the legal costs relating to this case were in selling, general and administrative expenses, however the other income in the First Quarter of 2024 is separated due to its one-off nature and the recovery relating to several years. We believe separating the income and costs relating to this is also appropriate to provide a more complete financial summary for the period.

Previous wording

Adjusted EBITDA represents operating income adjusted for share based compensation charges; restructuring charges; acquisition and disposal related gains and costs; depreciation and amortization. A reconciliation to net income and taxes can be found in Note 15 to the condensed consolidated financial statements.

Current wording

Adjusted EBITA, which is our segment income metric, represents net income from continuing operations adjusted for share-based compensation charges, restructuring charges, impairment charges, other charges, acquisitions and disposals costs, net interest expenses, defined benefits pension credit, provision for taxes and amortization. A reconciliation to pre-tax income can be found in Note 15 to the condensed consolidated financial statements. Adjusted EBITDA, as shown below, represents adjusted EBITA less depreciation. Management believes that adjusted EBITA and adjusted EBITDA are key performance indicators ("KPIs") used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results. Adjusted EBITDA is reconciled to adjusted EBITA above.

Previous wording

The net sales and adjusted EBITDA for Gas Cylinders were as follows:

Current wording

The net sales, adjusted EBITA and adjusted EBITDA for Gas Cylinders were as follows:

Previous wording

The 4.7% decrease in Gas Cylinders sales in the third quarter of 2024 from 2023 was primarily the result of reduced sales of SCBA and alternative fuel cylinders, these reductions have been partially offset by increases in cylinders sold to our medical and industrial end markets.

Current wording

The 9.5% decrease in Gas Cylinders sales in the First Quarter of 2025 from 2024 was primarily the result of:

Previous wording

•Improved sales of both medical and industrial gas cylinders.

Current wording

•Positive sales of both medical and emergency response gas cylinders.

Previous wording

The 4.5 and 2.3 percentage point increase in adjusted EBITDA for Gas Cylinders as a percentage of net sales in the third quarter and first nine months of 2024 relative to 2023 is predominantly the result of pricing improvements from new sales contracts partially offset by adverse sales mix and volume.

Current wording

The 2.7 percentage point decrease in adjusted EBITDA for Gas Cylinders as a percentage of net sales in the First Quarter of 2025 relative to 2024 is the result of the decrease in adjusted EBITA as a percentage of net sales.

Previous wording

The net sales and adjusted EBITDA for Elektron were as follows:

Current wording

The net sales, adjusted EBITA and adjusted EBITDA for Elektron were as follows:

Previous wording

The 7.0% increase in Elektron sales in the third quarter of 2024 from 2023 was primarily the result of:

Current wording

The 31.0% increase in Elektron sales in the First Quarter of 2025 from 2024 was primarily the result of:

Previous wording

•Increased sales of MRE and chemical response kits in our Magtech division;

Current wording

•Increased sales of MREs and chemical response kits in our Magtech division;

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•Significant decrease in demand for zirconium products, particularly those used in auto-catalyst products, as well as those used by our industrial end-markets; and

Current wording

•Decrease in demand for zirconium products used in auto-catalyst products, and

Previous wording

The net sales and adjusted EBITDA for Graphic Arts were as follows:

Current wording

The net sales, adjusted EBITA and adjusted EBITDA for Graphic Arts were as follows:

Previous wording

The 12.7% increase and 5.1% decrease in Graphic Arts sales in the third quarter and first nine months of 2024 from 2023 respectively was primarily the result of fluctuating demand for photo-engraving plates, particularly outside the North American market.

Current wording

The 3.2% increase in Graphic Arts sales in the First Quarter of 2025 from 2024 was primarily the result of increased demand for photo-engraving plates.

Previous wording

Cash generated by continuing operating activities was $25.4 million inflow and $10.2 million inflow for the first nine months in 2024 and 2023 respectively. It was primarily related to net income from operating activities, net of the following non-cash items: depreciation and amortization; share-based compensation charges; pension credit / (charge); gain on disposal of held for sale assets; loss on held-for-sale asset group and net changes to assets and liabilities. Cash flow was impacted by the $5.3 million receipt arising from the reimbursement of legal costs in relation to the previously disclosed US Ecology case, the first nine months in 2023 had an equivalent outflow of $4.5 million. Also impacting the 2023 cash flow was the $2.1 million contribution the Company made in relation to the sale of the U.S. pension plan to an insurer.

Current wording

Cash provided by continuing operating activities was $5.2 million for the First Quarter of 2025 compared to $3.6 million in the First Quarter of 2024. 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 credit and net changes to assets and liabilities.

Previous wording

Net cash used by continuing investing activities was $7.7 million for the first nine months of 2024, compared to net cash used by investing activities of $7.5 million in 2023, comparable quarter on quarter.

Current wording

Net cash used by continuing investing activities was $1.2 million for the First Quarter of 2025, compared to $1.4 million in 2024, as a result of reduced capital expenditure in the quarter.

Previous wording

In the first nine months of 2024, net cash used by financing activities was $16.3 million, (2023: $15.5 million used by financing activities). We made a net repayment on our banking facilities of $3.8 million, having repaid $2.9 million on our revolving credit facility and paid back $0.9 million of short term debt (2023: $2.5 million net repayment). Dividend payments of $10.5 million (2022: $10.5 million), equating to $0.390 per ordinary share. We paid out $0.4 million, (2023: $0.3 million) in settling share based compensation and $1.6 million, (2023: $2.2 million) in repurchasing our own shares as part of the share buyback program which equates to approximately 150,000 shares (2023: 150,000 shares).

Current wording

In the First Quarter of 2025, net cash used by continuing financing activities was $4.2 million, compared to $2.3 million provided by financing activities in 2024. We made net repayment of our overdraft facility of $2.0 million (2024: $4.3), net drawdown on our banking facilities of $2.2 million (2024: $10.6 million) and dividend payments of $3.5 million (2024: $3.5 million), equating to $0.13 per ordinary share respectively. In addition, we paid out $0.4 million (2024: $0.1 million) in settling share based compensation and $0.5 million (2024: $0.4 million) in repurchasing our own shares as part of the share buyback program, which equates to 40,000 shares (2024: 20,000 shares).

Previous wording

We paid year-to-date dividends in 2024 of $10.5 million and declared an additional $3.5 million in the fourth quarter of 2024 (2023: $14.0 million declared year-to-date and $10.5 million paid year-to-date), or $0.390 per ordinary share (2023: $0.390).

Current wording

We paid year-to-date dividends in 2025 of $3.5 million (2024: $3.5 million), or $0.13 per ordinary share (2024: $0.13).

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 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.

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 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.

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 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.

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 2024 Annual Report on Form 10-K, filed with the SEC on February 25, 2025, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements.