Luxfer Holdings PLC (LXFR) Bundle
Understanding Luxfer Holdings PLC (LXFR) Revenue Streams
Understanding Luxfer Holdings PLC’s Revenue Streams
Net sales for 2024: $288.5 million, a decrease of 6.7% from $309.1 million in 2023.
Revenue Breakdown by Segment
| Segment | Q3 2024 Net Sales ($M) | Q3 2023 Net Sales ($M) | Year-to-Date 2024 Net Sales ($M) | Year-to-Date 2023 Net Sales ($M) | Q3 2024 % Change | Year-to-Date 2024 % Change |
|---|---|---|---|---|---|---|
| Gas Cylinders | $42.6 | $44.7 | $137.8 | $134.7 | -4.7% | +2.3% |
| Elektron | $48.8 | $45.6 | $128.5 | $151.0 | +7.0% | -14.9% |
| Graphic Arts | $8.0 | $7.1 | $22.2 | $23.4 | +12.7% | -5.1% |
| Total | $99.4 | $97.4 | $288.5 | $309.1 | +2.1% | -6.7% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for the first nine months of 2024 shows a significant decrease of 6.7% compared to the same period in 2023. This decline is primarily attributed to changes in demand across different segments.
Contribution of Different Business Segments to Overall Revenue
In the first nine months of 2024, the contributions to overall revenue by segment are as follows:
- Gas Cylinders: $137.8 million (47.8% of total revenue)
- Elektron: $128.5 million (44.5% of total revenue)
- Graphic Arts: $22.2 million (7.7% of total revenue)
Analysis of Significant Changes in Revenue Streams
The increase in the Gas Cylinders segment in Q3 2024 was impacted by strong sales in medical and industrial applications, despite a 4.7% decline from Q3 2023. The Elektron segment saw a 7.0% increase in Q3 2024 driven by elevated sales of magnesium powders, although it suffered a 14.9% decline year-to-date due to reduced demand in the first half. The Graphic Arts segment showed resilience with a 12.7% increase in Q3 2024.
Overall, the company is seeing fluctuating demand across its segments, with specific product lines either performing strongly or facing significant declines in sales.
| Revenue Streams | Q3 2024 Revenue ($M) | Q3 2023 Revenue ($M) | Change (%) |
|---|---|---|---|
| Magnesium Powders | $15.0 | $12.0 | +25.0% |
| Medical Gas Cylinders | $12.0 | $10.0 | +20.0% |
| Zirconium Products | $5.0 | $8.0 | -37.5% |
| SCBA Cylinders | $10.0 | $15.0 | -33.3% |
A Deep Dive into Luxfer Holdings PLC (LXFR) Profitability
A Deep Dive into Luxfer Holdings PLC's Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit was $22.4 million on net sales of $99.4 million, resulting in a gross profit margin of 22.5%. This is an increase of 7.5 percentage points from the previous year when the gross profit margin was 15.0%.
Operating Profit Margin: The operating income for the third quarter of 2024 was $17.4 million, leading to an operating profit margin of 17.5%, compared to just 0.5% in the same quarter of 2023.
Net Profit Margin: The net income from continuing operations for the third quarter of 2024 was $12.6 million, which translates to a net profit margin of 12.7%. This is a significant improvement from a net loss of $1.5 million in the third quarter of 2023.
Trends in Profitability Over Time
In the first nine months of 2024, net sales totaled $288.5 million, down 6.7% from $309.1 million in the same period of 2023. However, the gross profit increased to $62.8 million, up 4.8% from $59.9 million, resulting in a gross profit margin of 21.8%, which is an increase of 2.4 percentage points year-over-year.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Sales | $99.4 million | $97.4 million | $288.5 million | $309.1 million |
| Gross Profit | $22.4 million | $14.6 million | $62.8 million | $59.9 million |
| Operating Income | $17.4 million | $0.5 million | $26.1 million | $15.5 million |
| Net Income | $12.6 million | ($1.5 million) | $15.0 million | $3.9 million |
Comparison of Profitability Ratios with Industry Averages
The current gross profit margin of 22.5% exceeds the industry average of approximately 20%. The operating profit margin of 17.5% also surpasses the industry average of 10%.
Analysis of Operational Efficiency
The selling, general and administrative expenses (SG&A) for the first nine months of 2024 were $34.9 million, representing 12.1% of net sales, compared to 11.8% in 2023. This slight increase is attributed to variable management compensation adjustments.
Research and development costs remained stable at 1.1% of net sales for both 2024 and 2023, amounting to $3.3 million.
Restructuring charges decreased significantly to $2.3 million from $4.4 million, resulting in a reduction from 1.4% to 0.8% of net sales.
Debt vs. Equity: How Luxfer Holdings PLC (LXFR) Finances Its Growth
Debt vs. Equity: How Luxfer Holdings PLC Finances Its Growth
Debt Levels
As of September 29, 2024, Luxfer Holdings PLC reported a total debt of $69.5 million, which is a slight decrease from $72.2 million at the end of 2023. The breakdown includes:
| Debt Type | Amount (in millions) |
|---|---|
| Total Debt | $69.5 |
| Less Current Portion | $3.7 |
| Non-Current Debt | $65.8 |
| Revolving Credit Facility | $41.1 |
| Bank Overdraft | $3.7 |
| Loan Notes due 2026 | $25.0 |
Debt-to-Equity Ratio
The debt-to-equity ratio for Luxfer Holdings PLC is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Using total equity of $225.1 million as of September 29, 2024, the ratio stands at:
Debt-to-Equity Ratio = $69.5 million / $225.1 million = 0.31
This ratio is below the industry average of approximately 0.5, indicating a relatively conservative approach to leveraging debt for financing growth.
Recent Debt Issuances and Refinancing Activity
During the first nine months of 2024, the company repaid net $2.9 million on its Revolving Credit Facility, with an outstanding balance of $41.1 million as of September 29, 2024. The weighted-average interest rate on this facility was 7.80% for the first nine months of the year.
The company has consistently maintained compliance with the covenants under its Note Purchase Agreement and Private Shelf Agreement, which require a minimum interest coverage ratio and leverage ratio. These covenants have been upheld since September 30, 2014.
Balancing Debt Financing and Equity Funding
Luxfer Holdings PLC employs a balanced strategy between debt and equity funding. The company utilizes debt primarily for working capital and operational needs while maintaining a strong equity base. The total equity as of September 29, 2024, was $225.1 million, reflecting a solid capital structure that supports its growth initiatives.
Overall, the company's approach to financing showcases a strategic mix of debt and equity, enabling it to pursue growth opportunities while maintaining financial health.
Assessing Luxfer Holdings PLC (LXFR) Liquidity
Assessing Luxfer Holdings PLC's Liquidity
Current and Quick Ratios
The current ratio for Luxfer Holdings PLC as of September 29, 2024, stands at 1.5, indicating a healthy liquidity position. The quick ratio, which excludes inventory from current assets, is reported at 1.2. These ratios suggest the company is well-positioned to cover its short-term liabilities.
Analysis of Working Capital Trends
As of September 29, 2024, the working capital is calculated as follows:
| Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|
| $135.3 | $90.3 | $45.0 |
This working capital of $45.0 million reflects a positive trend compared to the previous year, where working capital was $38.0 million, showing an increase of 18.4%.
Cash Flow Statements Overview
In the first nine months of 2024, the cash flow from operating activities was $25.6 million, compared to $10.3 million in the same period of 2023. This substantial increase indicates improved operational efficiency and profitability.
Investing Activities
Net cash used by investing activities in 2024 was $7.9 million, slightly higher than $7.6 million in 2023, reflecting ongoing capital expenditures.
Financing Activities
Financing activities resulted in a net cash outflow of $16.3 million for the first nine months of 2024, compared to $15.5 million in 2023. This included dividend payments of $10.5 million and share repurchases totaling $1.6 million.
Potential Liquidity Concerns or Strengths
The company's liquidity is supported by a revolving credit facility with $83.9 million undrawn as of September 29, 2024. This indicates that the company has sufficient access to liquidity to meet any short-term fluctuations in cash flow. However, ongoing monitoring of cash flows is essential, especially given the 34.2% effective tax rate that could impact net income and cash generation in the future.
Summary of Cash Flow Activities
| Cash Flow Activities | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $25.6 | $10.3 |
| Investing Activities | ($7.9) | ($7.6) |
| Financing Activities | ($16.3) | ($15.5) |
Is Luxfer Holdings PLC (LXFR) Overvalued or Undervalued?
Valuation Analysis
In evaluating whether Luxfer Holdings PLC (LXFR) is overvalued or undervalued, several key financial ratios and metrics are analyzed, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio of Luxfer Holdings is calculated as follows:
- Current Stock Price: $9.90
- Trailing Twelve Months (TTM) Earnings per Share (EPS): $0.56
- P/E Ratio: $9.90 / $0.56 = 17.68
Price-to-Book (P/B) Ratio
The P/B ratio provides insight into the market's valuation relative to the company's book value:
- Book Value per Share: $5.57
- P/B Ratio: $9.90 / $5.57 = 1.78
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
This ratio helps assess the valuation relative to earnings before interest, taxes, depreciation, and amortization:
- Market Capitalization: $265 million
- Total Debt: $69.5 million
- Cash and Cash Equivalents: $15.6 million
- EBITDA (Last Twelve Months): $34 million
- Enterprise Value: $265 million + $69.5 million - $15.6 million = $319.9 million
- EV/EBITDA Ratio: $319.9 million / $34 million = 9.41
Stock Price Trends
Over the past 12 months, the stock price of Luxfer Holdings has exhibited the following trends:
- 12-Month High: $12.50
- 12-Month Low: $8.00
- Current Price: $9.90
- Percentage Change from 12-Month Low: 23.75%
Dividend Yield and Payout Ratios
Luxfer Holdings has been consistent in its dividend payments:
- Annual Dividend per Share: $0.39
- Dividend Yield: (Annual Dividend / Current Stock Price) = $0.39 / $9.90 = 3.93%
- Payout Ratio: (Dividends / Net Income) = $10.5 million / $14.9 million = 70.5%
Analyst Consensus on Stock Valuation
As of 2024, the consensus among analysts regarding Luxfer Holdings is as follows:
- Buy: 5 analysts
- Hold: 2 analysts
- Sell: 1 analyst
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 17.68 |
| P/B Ratio | 1.78 |
| EV/EBITDA Ratio | 9.41 |
| 12-Month High | $12.50 |
| 12-Month Low | $8.00 |
| Current Stock Price | $9.90 |
| Dividend Yield | 3.93% |
| Payout Ratio | 70.5% |
| Analyst Consensus (Buy) | 5 |
| Analyst Consensus (Hold) | 2 |
| Analyst Consensus (Sell) | 1 |
Key Risks Facing Luxfer Holdings PLC (LXFR)
Key Risks Facing Luxfer Holdings PLC
The financial health of Luxfer Holdings PLC (LXFR) is influenced by several internal and external risk factors that can significantly impact its performance.
Industry Competition
Luxfer operates in highly competitive markets, particularly within the gas cylinders and advanced materials sectors. The company faces competition from both established players and new entrants, which can lead to pricing pressures and reduced market share. In the third quarter of 2024, net sales decreased by 6.7% compared to the same period in 2023, reflecting the competitive landscape's impact.
Regulatory Changes
Regulatory compliance is a critical risk factor. Changes in environmental regulations or trade policies can affect operational costs and market access. The recent increase in the statutory tax rate in the U.K. from 19% to 25% in April 2023 has already influenced the effective tax rate, which rose to 34.2% in 2024 compared to -39.3% in 2023.
Market Conditions
Fluctuating market conditions, such as demand shifts in key segments, can adversely affect sales. For instance, demand for zirconium products has significantly decreased, impacting overall revenue. In the first nine months of 2024, net sales for the Elektron segment dropped by 14.9% year-over-year.
Operational Risks
Operational risks include challenges in production efficiency and supply chain disruptions. The company reported a 2.4% increase in gross profit as a percentage of sales due to manufacturing efficiencies; however, these gains were partially offset by adverse volume and mix. Additionally, restructuring charges of $2.3 million in 2024 highlight ongoing operational adjustments.
Financial Risks
Financial risks encompass liquidity constraints and debt management. As of September 29, 2024, total debt stood at $69.5 million, with a weighted-average interest rate of 7.80% for the year. The company's ability to service this debt is critical, especially with net interest expenses of $4.1 million recorded in the first nine months of 2024.
Strategic Risks
Strategic risks include the potential impact of divestitures and acquisitions. The company incurred $9.5 million in acquisition and disposal-related costs as part of its strategy to divest the Graphic Arts segment. Such strategic shifts can affect the company's focus and resource allocation.
Mitigation Strategies
To address these risks, Luxfer has implemented several mitigation strategies, including cost-saving initiatives and debt management plans. The company aims to improve operational efficiency and maintain compliance with financial covenants under its loan agreements.
| Risk Factor | Details | Impact (2024) |
|---|---|---|
| Industry Competition | Intense competition in gas cylinders and materials sectors | Net sales down 6.7% |
| Regulatory Changes | Increased U.K. tax rate from 19% to 25% | Effective tax rate 34.2% |
| Market Conditions | Decreased demand for zirconium products | Elektron sales down 14.9% |
| Operational Risks | Production efficiency and supply chain challenges | Restructuring charges of $2.3 million |
| Financial Risks | Total debt of $69.5 million; interest rate 7.80% | Net interest expenses $4.1 million |
| Strategic Risks | Costs related to divestiture of Graphic Arts segment | Acquisition costs of $9.5 million |
Future Growth Prospects for Luxfer Holdings PLC (LXFR)
Future Growth Prospects for Luxfer Holdings PLC
Key Growth Drivers
Luxfer Holdings PLC is positioned for growth through several key drivers including product innovations, market expansions, and strategic acquisitions.
- Product Innovations: The company has seen increased demand for magnesium powders, particularly in military applications, which has positively impacted sales.
- Market Expansions: The expansion into medical and industrial gas cylinders has supported revenue growth despite fluctuations in other segments.
- Acquisitions: The divestiture of the Graphic Arts segment in 2024 is expected to streamline operations and refocus resources on core business areas.
Future Revenue Growth Projections and Earnings Estimates
For the first nine months of 2024, net sales were reported at $288.5 million, a decrease of 6.7% from $309.1 million in 2023. Adjusted EBITDA for this period increased to $41.5 million, reflecting a growth of 30.4% compared to $31.7 million in 2023.
Strategic Initiatives or Partnerships
Strategic initiatives include:
- Cost Reduction Programs: Restructuring charges decreased by 47.7% year-over-year, indicating improved efficiency.
- New Sales Contracts: The company has renegotiated contracts that enhance pricing power and improve margins, particularly within the Gas Cylinders and Elektron Divisions.
Competitive Advantages
Luxfer Holdings PLC benefits from several competitive advantages that position it for sustained growth:
- Strong Market Presence: The company has established itself in defense, healthcare, and transportation markets, generating significant revenue.
- Innovative Product Lines: The introduction of advanced materials and technologies in magnesium alloys and gas cylinders enhances product offerings.
- Operational Efficiency: A focus on manufacturing efficiencies has resulted in better margins, with gross profit as a percentage of sales increasing to 21.8% from 19.4% year-over-year.
| Segment | 2024 Q3 Net Sales (in millions) | 2023 Q3 Net Sales (in millions) | Year-to-Date Net Sales 2024 (in millions) | Year-to-Date Net Sales 2023 (in millions) |
|---|---|---|---|---|
| Gas Cylinders | $42.6 | $44.7 | $137.8 | $134.7 |
| Elektron | $48.8 | $45.6 | $128.5 | $151.0 |
| Graphic Arts | $8.0 | $7.1 | $22.2 | $23.4 |
| Total | $99.4 | $97.4 | $288.5 | $309.1 |
The company’s ability to capitalize on these growth opportunities will significantly depend on its strategic execution and market conditions. Continued investment in R&D and a focus on operational efficiency are expected to drive future profitability.
Luxfer Holdings PLC (LXFR) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Luxfer Holdings PLC (LXFR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Luxfer Holdings PLC (LXFR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Luxfer Holdings PLC (LXFR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.