Luxfer Holdings plc (LXFR) Tops Q1 EPS by 4c, Revenues Beat; Withdraws FY20 Guidance

Luxfer Holdings plc (NYSE: LXFR) reported Q1 EPS of $0.30, $0.04 better than the analyst estimate of $0.26. Revenue for the quarter came in at $103.8 million versus the consensus estimate of $101.7 million.

First Quarter 2020 Summary

(based on year-over-year comparisons unless otherwise noted)

• Net sales of $103.8 million decreased 13.8%, including a 1.1% unfavorable impact from currency and a 3.7% decrease due to the divestiture of the Czech recycling operations
• GAAP net income of $6.2 million, including $2.8 million in restructuring and exceptional expenses, improved from a net loss of ($3.8) million; adjusted net income of $8.4 million decreased 25.0%
• GAAP EPS of $0.22, improved from ($0.14); adjusted EPS of $0.30 decreased 25%
• Adjusted EBITDA of $15.1 million decreased 18.4%; adjusted EBITDA margin of 14.5% decreased 90 basis points
• Withdrawing 2020 financial guidance given uncertainty related to COVID-19
• Strong balance sheet with ample liquidity; Q1 ending net Debt to EBITDA ratio of 1.4; no debt maturity until September 2021

“During this unprecedented time, our priority is safeguarding our employees and serving our customers to ensure business continuity,” stated Luxfer’s Chief Executive Officer, Alok Maskara. “Luxfer’s first quarter results reflect the global macro environment of the COVID-19 pandemic. Our business saw pockets of growth, but they were offset by broad-based market weakness. While the macro environment remains challenging, we continue to make strong progress on our transformation plan, including the $1 million of first quarter net cost reductions. We remain focused on achieving our cost savings initiatives and are in constant communication with our customers, to prepare for a return to growth and higher profitability when conditions improve.”

Impact of COVID-19 on Operations and 2020 Full-Year Guidance

In response to the COVID-19 outbreak, we implemented numerous protocols and procedures to protect the health and wellbeing of our employees, our operations and the communities in which we operate. We are monitoring the current situation closely and have taken the following steps to ensure the safety of our employees and the continuity of our business:

• Prohibited all domestic and international non-essential travel for all employees
• Increased frequency of disinfecting high-touch areas and high-traffic common areas
• Reinforced hand washing and infection control training
• Implemented safe distancing procedures in all facilities
• Provided additional personal protective equipment and cleaning supplies
• Shifted to remote work strategies, where possible

At this time, Luxfer is continuing to run the majority of its operations, as permitted by local authorities. However, due to uncertain economic conditions resulting in weaker demand, potential supply constraints and the continued spread of COVID-19, the Company has temporarily suspended operations at certain facilities and has reduced capacity at others. We will continue to monitor the situation and may reduce or suspend operations at additional facilities as warranted.

The magnitude of the COVID-19 pandemic, including the extent of any impact on Luxfer’s business, financial position, results of operations or liquidity, which could be material, cannot be reasonably estimated at this time due to the rapid development and fluidity of the situation. As a result, Luxfer has taken incremental actions to minimize the financial impacts by reducing expenses and conserving cash:

• Reduction in cash contribution towards pension deficit
• Freeze on non-essential expenses, hiring, and other discretionary spending
• Reduction and re-prioritizing of capital expenditures
• Additional actions may be taken in certain locations in response to lower customer demand, including temporary reductions in work hours, furloughs and layoffs, as necessary

2020 Guidance

Due to the economic uncertainty related to the COVID-19 pandemic, Luxfer is withdrawing its financial guidance for 2020 provided on March 5.

“Given the extreme uncertain and volatile market conditions, Luxfer has decided to withdraw full year guidance. We will continue to focus on controllable business measures, such as cost reductions and cash generation,” stated Mr. Maskara. “We expect the current market conditions to have a significant near-term impact on our business and have implemented various counter measures to position Luxfer for success when our markets improve. We have a strong balance sheet and also a large existing credit facility which will enable us to emerge stronger at the end of this economic downturn.”

Given the evolving impact of the COVID-19 pandemic, we are not providing any new full-year earnings guidance. We anticipate resuming our practice of providing full-year earnings guidance once the degree of economic uncertainty driven by the COVID-19 pandemic subsides.

For earnings history and earnings-related data on Luxfer Holdings plc (LXFR) click here.

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