Luxfer Holdings PLC

Good morning. My name is Katie, and I will be your conference operator today. Welcome to Luxfer's second quarter 2022 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 conference over to Mike Gaydon, Vice President of Investor Relations and Business Development for Luxfer. Mike, please go ahead.

Thank you, Katie. Welcome, everyone, to Luxfer's second quarter 2022 earnings call. With me today is Andy Butcher, Luxfer's chief executive officer, and Steve Webster, Luxfer's chief financial officer. On today's call, we will provide details of our second quarter and year-to-date 2022 performance, as detailed in the press release issued yesterday. 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 obligation 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. Now, I will turn the call over to Andy for his summary comments on the quarter, after which Steve will provide details of our financial results. Following Steve's remarks, Andy will provide additional details about Luxfer's growth outlook before Q&A. Andy, please go ahead.

Thank you, Mike, and welcome, everyone. Please turn to slide three. I'm pleased to share with you details of our second quarter performance, which resulted in sequentially improved revenues and profits. I want to start, though, by expressing my thanks to the entire Luxor team, who once again worked through a challenging supply chain backdrop to deliver for our customers. Our team's focus and dedication helped build on the momentum seen in our Q1 results. On this slide, I want to highlight three key messages. Firstly, regarding our financial performance, we delivered more than 10% year-over-year sales growth in the second quarter, continuing the double-digit percentage gains also realized in Q1. Our Q2 top-line expansion was driven by our ongoing success in passing through cost inflation as well as increased volumes. Our Q2 adjusted diluted earnings per share of $0.36 steadily advances our progress towards our previously outlined guidance for the full year. Our electron segment led our overall performance with increased profit and sales strength notable in many areas. We are also encouraged by Gascylinder's sequential improvement in sales and profitability, as well as the order inflow for alternative fuel systems. Our capital position remains solid, with a net debt to EBITDA ratio of 1.2 times, helped by a return to free cash flow generation. Secondly, we continue to see healthy levels of demand in Q2. Revenue in a broad range of our major end market categories increased versus prior year. the more than 25% revenue growth in our transportation market and 14% growth in industrial end markets was particularly pleasing. We also continued to implement actions to offset the inflation of our input costs. Although our supply chain has improved from year end, as expected, we are still dealing with some areas of availability and logistics challenges, which continues to inhibit our ability to grow volumes further. Thirdly, Our solid first half performance and sound backlog position us to achieve our 2022 adjusted diluted EPS guidance of $1.35 to $1.50. Moreover, our year-to-date results and broader outlook reinforce our confidence in achieving our longer-term 2025 EPS goal of $2 or more. Turning to slide four, I would like to provide more details on current business conditions. During the second quarter, we sustained a healthy pace of orders, increasing our backlog and reflecting broad-based customer demand across our business units. Performance was strong in both our transportation and industrial end-user segments, although defense and first response was lower due to a slower demand for flameless ration heaters. We were pleased by strength in aerospace and automotive markets, as well as with commercial magnesium revenues. and in alternative fuels, we are encouraged by increasing hydrogen systems orders in Europe, following the success of earlier prototype deliveries. This development further reinforces our positive long-term view of the growth opportunities in hydrogen. Supply chain conditions remain uneven. The rate of raw material price increases has reduced, bringing some improved near-term visibility on cost, which is helpful. At the same time, We continue to grapple with recurring material availability constraints, long supplier lead times, and logistical bottlenecks. These same conditions also continue to impact some of the key industry customers we serve. So, for example, some parts of the automotive industry remain constrained by component shortages, and we see ad hoc delays in other sectors as well. The force majeure condition remains ongoing at U.S. Magnesium, and the labor market remains tight. Given these supply conditions and the backdrop of an evolving macro environment, monitoring market developments and close coordination and communication with customers and suppliers remain top priorities. We continue to review both macroeconomic and local end market indicators amid the sustained demand we see for our portfolio. While our demand remains relatively strong, I want to take a brief moment to discuss how we expect our business to perform if macroeconomic conditions slow. From a revenue perspective, our balanced portfolio holds many diversification benefits. Substantial portions of our business hold reduced direct ties to cyclical economic influences, including defence, first response and healthcare. Further, underlying demand for a number of our products comes from recurring replacement cycles, while other portions of our business, for example alternative fuels, are driven by secular tailwinds, including regulatory, legislative and social mandates. From a cost perspective, we are undoubtedly well positioned today thanks to our simplified footprint with lower operating costs and flexibility to adjust capacity. We also sit well positioned from a balance sheet perspective with low leverage levels and high available liquidity and ability to adjust capital in expenditure levels as warranted. Overall, we believe we are appropriately positioned to deal with evolving macro conditions. Given the current strong demand though, we remain highly focused on successful execution. Having a customer first discipline alongside our highly engineered product lines provides us a competitive advantage and allows us to offer responsive lead times while passing through material inflation costs. Our manufacturing plants are flexible and our footprint allows us to balance supply from different facilities. and our ability to execute has been assisted by our long-term relationships with many of our suppliers and the targeted inventory that we put in place earlier in the year. All of these factors give us optimism in Luxfors' ability to meet the needs of our customers and advance towards our financial objectives. Now, let me turn the call over to Steve for details on our second quarter financial performance.