A global materials technology company - Luxfer · A global materials technology company Presented...

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Confidential A global materials technology company Presented at the Jefferies Industrials Conference in New York City on August 15, 2013 and at the KeyBanc Capital Markets Conference in Boston, MA, on September 11, 2013

Transcript of A global materials technology company - Luxfer · A global materials technology company Presented...

Page 1: A global materials technology company - Luxfer · A global materials technology company Presented at the Jefferies Industrials Conference ... indebtedness we have incurred and may

Confidential

A global materials technology company

Presented at the Jefferies Industrials Conference

in New York City on August 15, 2013 and at the

KeyBanc Capital Markets Conferencein Boston, MA, on September 11, 2013

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This presentation contains forward-looking statements. Examples of such forward-looking statements include, but are not limited to: (i) statements regarding the Group’s results of operations and financial condition, (ii) statements of plans, objectives or goals of the Group or its management, including those related to financing, products or services, (iii) statements of future economic performance and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “forecasts” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. The Group cautions that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: (i) future revenues being lower than expected; (ii) increasing competitive pressures in the industry; (iii) general economic conditions or conditions affecting demand for the services offered by us in the markets in which we operate, both domestically and internationally, being less favorable than expected; (iv) the significant amount of indebtedness we have incurred and may incur and the obligations to service such indebtedness and to comply with the covenants imposed thereby; (v) contractual restrictions on the ability of Luxfer Holdings PLC to receive dividends or loans from certain of its subsidiaries; (vi) fluctuations in the price of raw materials and utilities; (vii) currency fluctuations and hedging risks; and (viii) worldwide economic and business conditions and conditions in the industries in which we operate. The Group cautions that the foregoing list of important factors is not exhaustive. These factors are more fully discussed in the sections “Forward-Looking Statements” and “Risk Factors” in our annual report on Form 20-F dated March 29, 2013 filed with the U.S. Securities and Exchange Commission. When relying on forward-looking statements to make decisions with respect to the Group, investors and others should carefully consider the foregoing factors and other uncertainties and events. Such forward-looking statements speak only as of the date on which they are made, and the Group does not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

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HERITAGELuxfer was founded by British inventor James G. Pennycuick in 1897 in Chicago, Illinois USA to produce prismatic glass products to illuminate architectural interiors in North American and Europe. The name Luxfercomes from Latin lux (light) and ferre (to carry), so it literally means“light carrier.”

Luxfer prism tilesare now valuablecollectors’ items.

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● Chief Executive since January 2002

● Group Finance Director from 1996 to 2001

● Prior to 1996, worked 18 years in the UK automotive industry

● Chartered Management Accountant

● BSc in Physics and MSc in Business Studies

● 17 years with Luxfer

● Chief Executive since January 2002

● Group Finance Director from 1996 to 2001

● Prior to 1996, worked 18 years in the UK automotive industry

● Chartered Management Accountant

● BSc in Physics and MSc in Business Studies

● 17 years with Luxfer

● Group Finance Director since June 2011

● Executive Management Board since 2006

● Director of Planning and Finance since 2008 and Group Financial Controller since 2002

● Qualified Chartered Accountant with KPMG

● Financial experience with various FTSE 100 PLCs

● 16 years with Luxfer

● Group Finance Director since June 2011

● Executive Management Board since 2006

● Director of Planning and Finance since 2008 and Group Financial Controller since 2002

● Qualified Chartered Accountant with KPMG

● Financial experience with various FTSE 100 PLCs

● 16 years with Luxfer

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● Magnesium – Magnesium alloys, powders, extrusions and sheet products

● Zirconium – Zirconium chemicals

● Aluminum – High-pressure gas cylinders and liners, precision-manufactured sheet-based components

● Composites – High-pressure aluminum/carbon fiber gas cylinders

● Magnesium – Magnesium alloys, powders, extrusions and sheet products

● Zirconium – Zirconium chemicals

● Aluminum – High-pressure gas cylinders and liners, precision-manufactured sheet-based components

● Composites – High-pressure aluminum/carbon fiber gas cylinders

Leader in advanced versions of these

materials

Leader in advanced versions of these

materials

Key end-markets(% of 2012 revenue)

Key end-markets(% of 2012 revenue)

● 2012 revenue and adj. EBITDA of $512m and $83.5m (16% margin), respectively

● Maintained positive quarterly net income throughout the 2008-2009 financial crisis

● 2012 revenue and adj. EBITDA of $512m and $83.5m (16% margin), respectively

● Maintained positive quarterly net income throughout the 2008-2009 financial crisisKey financialsKey financials

● 19 manufacturing plants in 8 countries, 4 continents

● JVs and/or distribution centers in 4 additional countries

● Over 1,750 employees globally

● 19 manufacturing plants in 8 countries, 4 continents

● JVs and/or distribution centers in 4 additional countries

● Over 1,750 employees globally

Global reachGlobal reach

● Environmental (41%)

● Protection (24%)

● Healthcare (12%)

● Specialty (23%)

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British company, registered in England American Depositary Shares listed on NYSEBritish company, registered in England American Depositary Shares listed on NYSE

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● Alloys

● Ultra-fine powders

● Sheet & plate

● Extrusions

● Superplastically formed aluminum components

● Also forming magnesium and titaniumsheet

Magnesium powders Auto catalyst materials

● Catalytic materials

● Ceramics andelectro-ceramics

● Sorbents

Magnesium Zirconium Aluminum

Elektron Gas Cylinders

Business brands

Products & technologies

Example products

Materials

Automotive body panels

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● Aluminum-lined,carbon fiber-wrapped composite cylinders

● Aluminum cylinders

Composites

CNG composite cylinders

Division

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Materials for thermal barrier coatingsMaterials for thermal barrier coatings

Zirconium

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Emergency escape slide inflation cylindersEmergency escape slide inflation cylinders

Medical oxygen cylindersMedical oxygen cylinders

CO2 fire extinguisher cylindersCO2 fire extinguisher cylinders

77

88

99

Aluminum and composite cylindersAluminum and composite cylinders

Light housingsLight housings

Engine nacellesEngine nacelles

Leading edges of wingsLeading edges of wings

44

55

66

Superformed aluminumSuperformed aluminum

Magnesium alloys for engine and gearbox casingsMagnesium alloys for engine and gearbox casings

Magnesium alloy seawater battery in life jacketsMagnesium alloy seawater battery in life jackets11

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MagnesiumMagnesium

33

7788

99

44

55

66

11

22

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Ceramic oxygen sensorsCeramic oxygen sensors

Zirconium

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Compressed natural gas (CNG) cylinder systemsCompressed natural gas (CNG) cylinder systems

CO2 fire extinguisher cylindersCO2 fire extinguisher cylinders

77

88

Aluminum and composite cylindersAluminum and composite cylinders

Door inner panelsDoor inner panels

Body panelsBody panels

55

66

Superformed aluminumSuperformed aluminum

Commercial magnesium alloys: gearbox casing, steering columnCommercial magnesium alloys: gearbox casing, steering column

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MagnesiumMagnesium

Ceramic parking sensorsCeramic parking sensors33

Catalytic washcoatCatalytic washcoat44

22 885566

1133

44

11

2244

6677

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● Global leader in market for magnesium aerospace alloys.

● Only Western supplier of magnesium photo-engraving plate.MagnesiumMagnesium

● A global leader in the development of specialty zirconium compounds.

● Major player in global market for zirconium-cerium washcoats for automotive catalytic converters.

ZirconiumZirconium

● Global leader in aluminum high-pressure gas cylinders.

● Invented and remain the global leader in the superplastic forming process to manufacture high value-added, complex sheet-based parts.

AluminumAluminum

● Global leader in ultra-lightweight, portable, high-pressure gas cylinders.● Growing presence in growing market for large composite cylinders for

compressed natural gas (CNG).CompositesComposites

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Riverside, CA(2 locations) Graham, NC

Lakehurst, NJ

Tamaqua, PA

Madison, IL

Findlay, OH

Flemington, NJ

Niagara Falls,Canada

Swinton, UK (2 locations)

Manchester, UK

Nottingham, UK

Gerzat, France

Litvinov, Czech Republic

New Delhi, India

Shanghai, China

Shizuoka, Japan

Sydney,Australia

USA Canada UK France Czech Republic China Japan Australia India Germany

1,750employees

Worcester, UK

10

Calgary, Canada

Ratingen, Germany

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Gas CylindersDivision

48%

Elektron Division52%

Americas 48%Asia Pacific

14%Other 1%

U.K. 12%

Rest of Europe 25%

Environmental 41%

Healthcare 12%

Protection 24%

Specialty 23%

Revenue by business Revenue by end-market Revenue by destination

2012 revenue: $512 million

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Environmental 41%

Healthcare 12%Protection 24%

Specialty 23%

Attractive end-markets (2012)

Increasing focus on environmental and healthcare end-markets

● Ever-tightening environmental control and legislation on emissions.

● Light-weighting of aircraft and cars/trucks.

● Alternative Fuel systems.

● Need for improved catalyst performance.

● Rapidly growing healthcare expenditures.

● Aging populations and increased focus on out-patient treatment, portable equipment.

● Opportunities for advanced materials in healthcare applications.

● Increased legislation and societal focus on health and safety.

● Demand for better protection of personnel.

Key drivers

High performance product mix with focus on specialist applications for high growth markets

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Medical gas demand

$0.0

$2.0

$4.0

$6.0

$8.0

1999 2004 2009 2014E 2019E

($bn)

Hea

lthca

reEn

viro

nmen

tal

Source: The Freedonia Group

Population age 65+(people in millions)

Source: United Nations

01020304050607080

0

200

400

600

800

1,000

1,200

1970 1980 1990 2000 2010 2020 2030

U.S.World

World U.S.

E

0

5,000

10,000

15,000

20,000

25,000

30,000

000s

Veh

icle

s

Source: NGV GlobalSource: The International Council on Clean Transportation (ICCT)

153

180 193211

244273

125 130

168 176 178 185

0

50

100

150

200

250

300

Gra

ms

CO

2E

Q /

km

2004 2015E 1998 2012E 2005 2009 2002 2010 2000 2010 2009 2016E

Japan EU China Australia Canada California(U.S.)

14

Emission reduction due to most recent regulation Total natural gas powered vehicles worldwide

E

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15Ultra-lightweight portable cylinders Gas transportation modules

CNG systems for buses

Aerospace alloys of magnesiumSeat components for civil airliners

Helicopter gearboxes

Bio-absorbable alloy

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This modular approach to transporting

CNG is ideal for the collection or delivery of

gas where there is a lack of

pipeline infrastructure.

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Zirconia for automotive catalysts Zirconia-based industrial catalysts

Removal of arsenic from drinking water

Kidney dialysis chemistry

Active componentin respirators

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● Multi-year programs of development, most often with partners.

● Need to obtain certification and approvals.

● Pipeline of new products approaching commercialization 2013-2016.

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• Major expansion of presence in Alternative Fuel market. • Ex Dynetek plants (acquired Sept. 2012 for CAD$14m) now profitable• Additional liner capacity currently being installed (cost $3.5m)

• JV announced with GTM Technologies on gas transportation modules for North America• Close to winning first major ‘virtual pipeline’ orders.

• Resurgence of demand for Self Contained Breathing Apparatus (SCBA) kits in North America• Life cycle of post 9/11 sales?• $7.5m investment in additional capacity recently announced

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• Approval to use magnesium alloys in civil airliner seating.• Minutes of June 2013 FAA Committee: “With the results of the Magnesium Full

Scale Testing and the progress demonstrated in the development of the lab scale test method the FAA would now allow magnesium in aircraft seats, providing the requirements and conditions as set out in the Special Conditions are satisfied.”

• Work with seat manufacturers likely to accelerate• Commercial quantities unlikely to be required until 2015

• Commercial discussions being held over possible first major industrial catalysis contract• Contract award due around end-2013• Supply requirement likely to commence late 2014

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$209$242

$185 $200 $218 $225 $213

$217

$234

$187$199

$223$246

$261$3

$70$41 $15

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

$550

2007 2008 2009 2010 2011 2012 LTM

$403$371

$476

$427

Historical Revenue($m)

Annual

Elektron Gas Cylinders RE Surcharge

$511

21Note: Some figures may not add due to rounding.

$512$490

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Cerium Carbonate AMI index $/Kg: 2008 to current

3 3 3 4 6 6 6 7 10

71

120

170

270240

110

6046

30 27 26 20 140

50

100

150

200

250

300

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Price $/Kg

22

2008 2009 2010 2011 2012 2013

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Historical Trading profit & Adjusted Net Income

$42

$28

$46

$66 $68.5

$63

$15$11

$26

$43 $45$42

$0

$10

$20

$30

$40

$50

$60

$70

$80

2008 2009 2010 2011 2012 LTM

Trading Profit Adj. Net Income

23

($m)

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After-tax return on invested capital

20%

29%28%

22%

0%

5%

10%

15%

20%

25%

30%

35%

2010 2011 2012 HY2013

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Note: Return on invested capital defined as operating profit * (1 – effective tax rate) / (Net debt + total shareholders’ equity).See Appendix for non-GAAP financial measure reconciliation.

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Post-IPO leverage

At 6/30/13Interest

rate MaturityCash and cash equivalents $37Revolving credit facility $110m - Libor + 175–200 2015Private Placement Loan Notes $65 6.19% 2018

Net debt $28

Net debt / EBITDA 0.4x

LTM 12/31/12 credit statistics

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($m)

• Total share capital of 13.5m ordinary shares = 27m ADS

• As at 6/30/13, 8.93m shares converted to 17.86m ADS (66.1%)

• Quarter Two Adjusted EPS 37 cents per ADS

• Quarterly dividend of 9.5 cents* per ADS * 20 cents per ordinary share, 10 cents per ADS less depository charge

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LXFR Share price post IPO

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IPO 10/2/12 @ $10

Market cap: $458m Avg. Daily Volume (3m) 66,997

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• Global leader in targeted advanced materials.

• Product, market and geographic diversification.

• Attractive high-growth end-markets.

• Long-standing blue-chip customers.

• Focus on technology and innovation.

• Robust performer, strong balance sheet.

• Strong new product/market pipeline 2014-2016.

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