lxfr-20200927

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 27, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35370

Luxfer Holdings PLC

(Exact Name of Registrant as Specified in Its Charter)


England and Wales						98-1024030
State or Other Jurisdiction of Incorporation or Organization						I.R.S. Employer Identification No.

Lumns Lane, Manchester, M27 8LN

Address of principal executive offices

Registrant’s telephone number, including area code: +1 414-269-2419

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, nominal value £0.50 each	LXFR	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	o	Accelerated Filer	x
Non-accelerated filer	o	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

The number of shares outstanding of Registrant’s only class of ordinary stock on September 27, 2020, was 27,622,099.


TABLE OF CONTENTS

Page

PART I FINANCIAL INFORMATION

Item 1.

Condensed Financial Statements (unaudited)

Condensed Consolidated Statements of Income (unaudited)

Condensed Consolidated Statements of Comprehensive Income / (Loss) (unaudited)

Condensed Consolidated Balance Sheets (unaudited)

Condensed Consolidated Statements of Cash Flows (unaudited)

Condensed Consolidated Statements of Changes in Equity (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

PART I - FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (unaudited)

LUXFER HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Third Quarter						Year-to-date
In millions, except share and per-share data	2020		2019		2020		2019
Net sales	$	90.4	$	107.1	$	283.7	$	344.0
Cost of goods sold	(72.1)		(81.9)		(222.1)		(257.7)
Gross profit	$	18.3	$	25.2	$	61.6	$	86.3
Selling, general and administrative expenses	(9.8)		(11.8)		(34.4)		(42.6)
Research and development	(1.0)		(1.5)		(2.6)		(4.5)
Restructuring charges	(4.3)		(2.6)		(7.9)		(24.3)
Impairment charges	—		—		—		0.2
Acquisition and disposal related costs	—		—		(0.2)		(1.7)
Other income	2.3		—		2.3		—
Other charges	—		(2.7)		—		(2.7)
Operating income	$	5.5	$	6.6	$	18.8	$	10.7
Interest expense	(1.2)		(1.3)		(3.5)		(3.5)

Defined benefit pension credit	1.1		0.6		3.3		1.7
Income before income taxes and equity in net income / (loss) of affiliates	$	5.4	$	5.9	$	18.6	$	8.9
Provision for income taxes	(2.8)		(0.6)		(5.6)		(4.1)
Income before equity in net income / (loss) of affiliates	$	2.6	$	5.3	$	13.0	$	4.8
Equity in net income / (loss) of affiliates (net of tax)	—		0.5		(0.1)		0.7
Net income	$	2.6	$	5.8	$	12.9	$	5.5

Earnings per share
Basic	$	0.09	$	0.21	$	0.47	$	0.20
Diluted	$	0.09	$	0.21	$	0.46	$	0.20
Weighted average ordinary shares outstanding
Basic	27,619,298		27,393,743		27,532,823		27,243,638
Diluted	28,013,706		27,869,416		27,958,942		27,843,525

See accompanying notes to condensed consolidated financial statements

LUXFER HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)


	Third Quarter						Year-to-date
In millions	2020		2019		2020		2019
Net income	$	2.6	$	5.8	$	12.9	$	5.5

Other comprehensive income / (loss)
Net change in foreign currency translation adjustment	3.0		(2.5)		(3.7)		(4.7)
Pension and post-retirement actuarial gains, net of $0.1, $0.1, $0.3 and $0.3 tax, respectively	0.5		0.5		1.4		1.3

Other comprehensive income / (loss), net of tax	3.5		(2.0)		(2.3)		(3.4)

Total comprehensive income	$	6.1	$	3.8	$	10.6	$	2.1

See accompanying notes to condensed consolidated financial statements

LUXFER HOLDINGS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	September 27,		December 31,
In millions, except share and per-share data	2020		2019
Current assets
Cash and cash equivalents	$	14.2	$	10.2
Restricted cash	0.7		0.1
Accounts and other receivables, net of allowances of $0.6 and $1.3, respectively	55.9		66.3
Inventories	84.7		94.5

Other current assets	4.3		5.0
Total current assets	$	159.8	$	176.1
Non-current assets
Property, plant and equipment, net	$	92.3	$	98.9
Right-of-use assets from operating leases	12.3		14.8
Goodwill	67.5		68.8
Intangibles, net	12.7		13.6
Deferred tax assets	14.6		15.8
Investments and loans to joint ventures and other affiliates	0.4		2.3

Total assets	$	359.6	$	390.3
Current liabilities
Current maturities of long-term debt and short-term borrowings	$	25.0	$	—
Accounts payable	23.6		36.4
Accrued liabilities	27.9		25.2
Taxes on income	2.3		0.1
Other current liabilities	14.3		12.3
Total current liabilities	$	93.1	$	74.0
Non-current liabilities
Long-term debt	$	49.7	$	91.4
Pensions and other retirement benefits	26.7		35.2
Deferred tax liabilities	2.8		2.5
Other non-current liabilities	10.6		12.8
Total liabilities	$	182.9	$	215.9
Shareholders' equity
Ordinary shares of £0.50 par value; authorized 40,000,000 shares for 2020 and 2019; issued and outstanding 29,000,000 shares for 2020 and 2019	$	26.6	$	26.6
Deferred shares of £0.0001 par value; authorized issued and outstanding 761,835,338,444 shares for 2020 and 2019	149.9		149.9
Additional paid-in capital	70.1		68.4
Treasury shares	(4.0)		(4.0)
Own shares held by ESOP	(1.5)		(1.7)
Retained earnings	87.5		84.8
Accumulated other comprehensive loss	(151.9)		(149.6)
Total shareholders' equity	$	176.7	$	174.4
Total liabilities and shareholders' equity	$	359.6	$	390.3

See accompanying notes to condensed consolidated financial statements

LUXFER HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Year-to-date
In millions	2020		2019
Operating activities
Net income	$	12.9	$	5.5
Adjustments to reconcile net income to net cash provided by / (used for) operating activities
Equity in net loss / (income) of affiliates	0.1		(0.7)
Depreciation	10.2		10.4
Amortization of purchased intangible assets	0.6		0.9
Amortization of debt issuance costs	0.4		0.3
Share-based compensation charges	2.1		4.0
Deferred income taxes	0.7		1.5
Gain on disposal of property, plant and equipment	—		(2.9)
Asset impairment charges	—		4.8
Defined benefit pension credit	(3.3)		(1.7)
Defined benefit pension contributions	(2.7)		(5.4)
Changes in assets and liabilities
Accounts and other receivables	9.9		(7.2)
Inventories	8.2		(3.8)
Other current assets	0.7		(1.8)
Accounts payable	(11.9)		(4.8)
Accrued liabilities	3.5		(8.2)
Other current liabilities	4.9		(2.2)
Other non-current assets and liabilities	0.4		(2.3)
Net cash provided by / (used for) operating activities	$	36.7	$	(13.6)
Investing activities
Capital expenditures	$	(6.0)	$	(10.3)
Proceeds from sale of property, plant and equipment	—		1.2
Proceeds from sale of businesses and other	1.3		4.6


Net cash used for investing activities	$	(4.7)	$	(4.5)
Financing activities
Net drawdown of short-term borrowings	$	—	$	(3.5)
Net (repayment) / drawdown of long-term borrowings	(16.5)		31.7

Deferred consideration paid	(0.4)		(0.5)
Proceeds from sale of shares	1.1		3.3
Share-based compensation cash paid	(1.3)		(4.3)
Dividends paid	(10.2)		(10.2)

Net cash (used for) / from financing activities	$	(27.3)	$	16.5
Effect of exchange rate changes on cash and cash equivalents	(0.1)		(0.4)
Net increase / (decrease)	$	4.6	$	(2.0)
Cash, cash equivalents and restricted cash; beginning of year	10.3		14.1
Cash, cash equivalents and restricted cash; end of the Third Quarter	14.9		12.1

Supplemental cash flow information:
Interest payments	$	3.5	$	3.5
Income tax payments	1.6		6.6

See accompanying notes to condensed consolidated financial statements

LUXFER HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)


In millions,	Ordinary shares		Deferred shares		Additional paid-in capital		Treasury shares Number	Treasury shares Amount		Own shares held by ESOP Number	Own shares held by ESOP Amount		Retained earnings		Accumulated other comprehensive loss		Total equity
At January 1, 2020	$	26.6	$	149.9	$	68.4	(0.4)	$	(4.0)	(1.2)	$	(1.7)	$	84.8	$	(149.6)	$	174.4
Net income	—		—		—		—	—		—	—		6.2		—		6.2



Other comprehensive loss, net of tax	—		—		—		—	—		—	—		—		(7.3)		(7.3)
Dividends declared	—		—		—		—	—		—	—		(3.4)		—		(3.4)
Share-based compensation	—		—		0.5		—	—		—	—		—		—		0.5


Utilization of shares from ESOP to satisfy share based compensation	—		—		(0.7)		—	—		0.1	0.1		—		—		(0.6)
At March 29, 2020	$	26.6	$	149.9	$	68.2	(0.4)	$	(4.0)	(1.1)	$	(1.6)	$	87.6	$	(156.9)	$	169.8
Net income	—		—		—		—	—		—	—		4.1		—		4.1
Shares sold from ESOP	—		—		0.9		—	—		—	—		—		—		0.9
Other comprehensive income, net of tax	—		—		—		—	—		—	—		—		1.5		1.5
Dividends declared	—		—		—		—	—		—	—		(3.4)		—		(3.4)
Share based compensation	—		—		0.8		—	—		—	—		—		—		0.8
Utilization of shares from ESOP to satisfy share based compensation	—		—		(0.5)		—	—		0.1	0.1		—		—		(0.4)
At June 28, 2020	$	26.6	$	149.9	$	69.4	(0.4)	$	(4.0)	(1.0)	$	(1.5)	$	88.3	$	(155.4)	$	173.3
Net income	—		—		—		—	—		—	—		2.6		—		2.6

Other comprehensive income, net of tax	—		—		—		—	—		—	—		—		3.5		3.5
Dividends declared	—		—		—		—	—		—	—		(3.4)		—		(3.4)
Share based compensation	—		—		0.8		—	—		—	—		—		—		0.8

Utilization of treasury shares to satisfy share based compensation	—		—		(0.1)		—	—		—	—		—		—		(0.1)
At September 27, 2020	$	26.6	$	149.9	$	70.1	(0.4)	$	(4.0)	(1.0)	$	(1.5)	$	87.5	$	(151.9)	$	176.7

Ordinary share capital represents 29,000,000 shares in the three quarters of 2020.

Deferred share capital represents 761,835,338,444 shares in the three quarters of 2020.


In millions,	Ordinary shares		Deferred shares		Additional paid-in capital		Treasury shares Number	Treasury shares Amount		Own shares held by ESOP Number	Own shares held by ESOP Amount		Retained earnings		Accumulated other comprehensive loss		Total equity
At January 1, 2019	$	26.6	$	149.9	$	65.6	(0.4)	$	(4.3)	(1.6)	$	(2.2)	$	95.3	$	(146.6)	$	184.3
Net loss	—		—		—		—	—		—	—		(3.8)		—		(3.8)
Shares sold from ESOP	—		—		1.3		—	—		0.1	0.1		—		—		1.4
Other comprehensive income, net of tax	—		—		—		—	—		—	—		—		2.1		2.1
Dividends declared	—		—		—		—	—		—	—		(3.4)		—		(3.4)
Share-based compensation	—		—		2.3		—	—		—	—		—		—		2.3



Utilization of treasury shares to satisfy share based compensation	—		—		(3.3)		—	—		0.1	0.2		—		—		(3.1)
At March 31, 2019	$	26.6	$	149.9	$	65.9	(0.4)	$	(4.3)	(1.4)	$	(1.9)	$	88.1	$	(144.5)	$	179.8
Net income	—		—		—		—	—		—	—		3.5		—		3.5
Shares sold from ESOP	—		—		1.8		—	—		0.1	0.1		—		—		1.9
Other comprehensive loss, net of tax	—		—		—		—	—		—	—		—		(3.5)		(3.5)
Dividends declared	—		—		—		—	—		—	—		(3.4)		—		(3.4)
Share based compensation	—		—		0.8		—	—		—	—		—		—		0.8
Utilization of shares from ESOP to satisfy share based compensation	—		—		(1.2)		—	—		0.1	0.1		—		—		(1.1)
At June 30, 2019	$	26.6	$	149.9	$	67.3	(0.4)	$	(4.3)	(1.2)	$	(1.7)	$	88.2	$	(148.0)	$	178.0
Net income	—		—		—		—	—		—	—		5.8		—		5.8
Other comprehensive loss, net of tax	—		—		—		—	—		—	—		—		(2.0)		(2.0)
Dividends declared	—		—		—		—	—		—	—		(3.4)		—		(3.4)
Share based compensation	—		—		0.6		—	—		—	—		—		—		0.6
Utilization of treasury shares to satisfy share based compensation	—		—		(0.1)		—	0.3		—	—		—		—		0.2
At September 29. 2019	$	26.6	$