A global materials technology company - Luxfer · A global materials technology company Presented...
Transcript of A global materials technology company - Luxfer · A global materials technology company Presented...
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.
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.
● 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
● 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
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
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88
99
Aluminum and composite cylindersAluminum and composite cylinders
Light housingsLight housings
Engine nacellesEngine nacelles
Leading edges of wingsLeading edges of wings
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55
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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
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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
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Aluminum and composite cylindersAluminum and composite cylinders
Door inner panelsDoor inner panels
Body panelsBody panels
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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
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Calgary, Canada
Ratingen, Germany
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.)
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Emission reduction due to most recent regulation Total natural gas powered vehicles worldwide
E
15Ultra-lightweight portable cylinders Gas transportation modules
CNG systems for buses
Aerospace alloys of magnesiumSeat components for civil airliners
Helicopter gearboxes
Bio-absorbable alloy
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
● 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
$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
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
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2008 2009 2010 2011 2012 2013
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
$80
2008 2009 2010 2011 2012 LTM
Trading Profit Adj. Net Income
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($m)
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.
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
LXFR Share price post IPO
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IPO 10/2/12 @ $10
Market cap: $458m Avg. Daily Volume (3m) 66,997
• 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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