Luxfer Holdings PLC

Good morning. My name is Melinda. I'll be your conference operator today. Welcome to Luxfer's first quarter 2023 earnings conference call. All lines have been placed on mute. After the speaker's prepared remarks, we'll hold a question and answer session. Now I will turn the call over to Mike Gaydon, Vice President of Investor Relations and Business Development from Luxfer. Mike, please go ahead.

Thank you, Melinda. Welcome everyone to Luxfor's first quarter 2023 earnings call. With me today is Andy Butcher, Luxfor's chief executive officer, and Steve Webster, Luxfor's chief financial officer. On today's call, we will provide details of our first quarter performance as reported in the press release issued yesterday. Today's webcast is accompanied by a presentation that can be accessed at Luxfor.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 and our outlook, after which Steve will provide details of our financial results in 2023 guidance. Andy will then offer some additional comments 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 first quarter performance. Our team at Luxfer continues to drive hard for our customers and to execute effectively in a challenging environment. These efforts helped us to deliver adjusted EPS of 20 cents, in line with our earlier outlined expectations. Sales increased 4.4%, with both business segments posting constant currency sales growth. Transportation and general industrial sectors weighed on our sales volumes and profit performance. We are seeing increasing signs of macroeconomic softness in these areas, with our order books lower year over year, impacted by destocking, as well as project delays in alternative fuels. We are enacting additional pass-through initiatives to offset higher input costs. We demonstrated important progress at gas cylinders on this front. Though we see incremental weakness in select portions of our business, we remain confident in achieving sequentially higher EPS. I would now like to turn to slide four to provide an update on our business segment outlook. We expect a softer outlook for certain of our end markets over the balance of the year, although this is offset by helpful secular tailwinds in other areas. The multi-year recovery ongoing in aerospace and automotive continues to bring positives, especially with commercial and military aircraft products. The demand for SCBA cylinders for firefighters and medical oxygen cylinders for healthcare remains firm for gas cylinders. We are also taking advantage of opportunities for growth in our chemical kit and our new UGRE group ration offerings, as well as stronger demand for new zirconium products within Electron. At the same time, we are seeing a greater number of challenges in other areas. After a volatile supply chain backdrop of the last few years, we now see customer destocking as a growing headwind across our business, particularly in oil and gas.