Luxfer Holdings PLC

Good morning. My name is Katie, and I will be your conference operator today. Welcome to the Luxfer's third 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 call 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 third 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 third 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. Andy will then provide some concluding remarks 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 third quarter performance, which includes year-over-year growth in both revenues and profit. I want to start, though, by expressing my appreciation to the entire Luxford team, who once again took on a challenging supply chain environment to serve our customers. our team's ongoing focus and dedication has helped to sustain the momentum of our first half results. On this slide, I want to highlight three key messages. Firstly, regarding our quarter three financial performance, we delivered nearly 10% year-over-year sales growth, continuing the gains realized in both quarters one and two. This quarter three revenue growth was primarily driven by our ongoing success in passing through cost inflation, which more than offset foreign exchange headwinds. Our Q3 adjusted diluted earnings per share of 35 cents continues our progress towards achievement of our existing four-year guidance. Electron again led our performance, driven by successful execution in a wide variety of end markets. Gas Cylinders continues to work through inflation-related challenges, passing through current cost increases wherever allowed by contract. Our capital position remains a source of strength, with a net debt to EBITDA ratio of 1.2 times. Secondly, we continue to see solid overall demand in Q3. We realized 30% revenue growth in the general industrial end market and 7% growth in defense, first response, and healthcare. Supply chain remains challenging with continued pressure on both material availability in some areas and higher costs. Although we are seeing some indications of slowing demand in certain European end markets, we still benefit from a healthy overall backlog at the end of Q3, well ahead of prior year. Thirdly, based on a combination of our sound year-to-date results and our assessment of the macroeconomic outlook and supply chain, we now expect to deliver 2022 adjusted diluted EPS of $1.35 to $1.40. compared to our prior range of $1.35 to $1.50, and we remain committed to achieving our longer-term EPS goal of $2 or more. We are also focused on cash flow conversion and mitigating the impact of higher material prices on our working capital levels. Turning to slide four, I would like to provide more details on the current business conditions. During the third quarter, we again realised a solid pace of overall order flow. We've seen early evidence of some modest slowing in certain European sectors, such as industrial gas cylinders and some magnesium rolled products. We are encouraged, though, by medium term demand for alternative fuel cylinders and for flameless ration heaters, among other products. We ended the quarter with a healthy order book upon which to execute through year end and into 2023. At the same time, supply chain challenges persist in certain key areas. I want to first update you on the force majeure status at US Magnesium. Towards the end of the quarter, the supply from US Magnesium for our powders business was halted while they undergo some essential maintenance. There is low impact to our business in Q3 and Q4 due to the strategic stocks we have in place. And with the support of our customers, we've secured some limited supply from an alternative supplier to cover medium-term demand. We're underway with initial work to qualify this material. We're also seeing sustained tight supply conditions for aramid aerospace fibre and zircon sand, although our work on identifying alternatives is gaining momentum. The availability of manufacturing labour has improved somewhat, although still limits our ability in certain areas to capitalise on strong demand conditions. Great bottlenecks have reduced, which is helpful. We continue to work through the latest market developments, including volatility around energy and raw material costs, most notably the higher electricity prices in Europe and the continued increases in the cost of carbon fibre. New activities on further cost pass-through are underway in response to these. While the strong dollar has served as a headwind to our revenue results, It has brought a positive impact to our bottom-line results year-to-date. We are also pleased to acknowledge the incremental long-term positives brought by the passage of the Inflation Reduction Act in August, which will help the development of the domestic hydrogen market. Given this backdrop, we continue to emphasise a tactical focus on successful execution, with close coordination with both customers and suppliers. We also remain ready to respond to any softening macro conditions. As part of this, we've built a recession case scenario into our medium-term planning, which recognises the risk of further weakening in the outlook for the global economy. This brings the possibility of lower demand in 2023 and the need for us to manage discretionary spend, although this would likely be accompanied by an easing of the supply chain constraints, which have provided a headwind to us throughout the year. You will also remember that our balanced portfolio holds many diversification benefits, including supply to resilient industries like defence, first response and healthcare. Our top line also benefits from the recurring replacement cycles associated with a number of our products. From a cost standpoint, we benefit from our simplified manufacturing footprint and the ability to adjust capacity and to pivot our cost profile. Our low leverage and our high liquidity position also bring flexibility. For all these reasons, I remain confident in our business performance, even if macroeconomic conditions slow. Now, let me turn the call over to Steve for details on our third quarter financial performance.