Luxfer Holdings PLC (LXFR) 2023 Q3 法說會逐字稿

Good morning. My name is Angela, and I will be your conference coordinator today. Welcome to the Luxfer's Third Quarter 2023 Earnings Conference Call. (Operator Instructions)

早安.我叫安琪拉，今天我將擔任你們的會議協調員。歡迎參加 Luxfer 2023 年第三季財報電話會議。 （操作員說明）

Now I will turn the call over to Kevin Grant, Vice President of Investor Relations and Business Development at Luxfer. Kevin, please go ahead.

現在我將把電話轉給 Luxfer 投資者關係和業務發展副總裁 Kevin Grant。凱文，請繼續。

Thank you, Angela, and good morning, everyone. Welcome to Luxfer's Third Quarter 2023 Earnings Conference Call. This morning, we'll be reviewing Luxfer's financial results for the third quarter ended October 1, 2023. I'm pleased to be joined today by Andy Butcher, Executive Officer; and Steve Webster, Chief Financial Officer. Today's webcast is accompanied by a presentation that can be accessed at luxfer.com. Please note any reference to non-GAAP financials are reconciled in the appendix of the presentation.

謝謝你，安琪拉，大家早安。歡迎參加 Luxfer 2023 年第三季財報電話會議。今天早上，我們將回顧 Luxfer 截至 2023 年 10 月 1 日的第三季財務業績。我很高興今天能與執行長 Andy Butcher 一起參加會議；和財務長史蒂夫·韋伯斯特。今天的網路廣播還附有演示文稿，可以在 luxfer.com 上存取。請注意，對非公認會計準則財務數據的任何引用均在簡報的附錄中進行了核對。

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 2 of today's presentation for further details.

在我們開始之前，友善提醒您，任何有關公司預期財務表現的前瞻性陳述都受到未來風險和不確定性的影響。我們不承擔更新任何前瞻性陳述的義務，無論是由於新資訊、未來事件或其他原因。請參閱今天簡報投影片 2 上的安全港聲明，以了解更多詳細資訊。

Now let me introduce Luxfer's CEO, Andy Butcher. Please turn to Slide 3. Andy, please go ahead.

現在讓我介紹一下Luxfer的執行長Andy Butcher。請翻到幻燈片 3。安迪，請繼續。

Thank you, Kevin, and welcome to the Luxfer team. Good morning, everyone. Thank you for joining us. We have a lot to cover on today's call. First, I'll provide a high-level overview of our third quarter financial performance.

謝謝你，Kevin，歡迎加入 Luxfer 團隊。大家，早安。感謝您加入我們。我們今天的電話會議有很多內容要討論。首先，我將概述我們第三季的財務表現。

On October 11, we announced preliminary Q3 results and the shortfall against full year guidance. I will review what drove that shortfall and the ongoing and accelerated initiatives we are executing to address the business conditions we are facing today.

10 月 11 日，我們公佈了第三季初步業績以及與全年指引的差距。我將回顧造成這一短缺的原因，以及我們為解決當前面臨的業務狀況而正在執行的持續和加速的舉措。

Steve will then discuss the quarter in more detail and provide our outlook for the fourth quarter. I'll end by providing color on the accelerated and expanded strategic review we are undertaking, which we referenced in yesterday's release.

然後，史蒂夫將更詳細地討論該季度，並提供我們對第四季度的展望。最後，我將介紹我們正在進行的加速和擴大的策略審查，我們在昨天的新聞稿中提到了這一點。

For the third quarter, we reported sales of $97.4 million and adjusted diluted earnings per share of $0.04, in line with the preliminary results we announced. We noted that specific areas of our business are facing continued challenges with either supply chain issues or weakening demand, which we have shared on our second quarter earnings call in late July.

第三季度，我們公佈的銷售額為 9,740 萬美元，調整後的稀釋每股收益為 0.04 美元，與我們公佈的初步結果一致。我們注意到，我們業務的特定領域正面臨供應鏈問題或需求疲軟的持續挑戰，我們在 7 月底的第二季財報電話會議上分享了這一點。

While we lowered our full year 2023 guidance to reflect these challenges, it was not enough. The headwinds persisted and grew during the quarter, resulting in a disappointing Q3 results.

雖然我們降低了 2023 年全年指引以反映這些挑戰，但這還不夠。不利因素在本季持續存在並加劇，導致第三季業績令人失望。

On today's call, we will discuss the issues we are facing in more detail and the actions we are taking. We are tightly focused on controlling what we can as we navigate the increasingly challenging macro landscape to deliver improved results for Luxfer shareholders.

在今天的電話會議上，我們將更詳細地討論我們面臨的問題以及我們正在採取的行動。在應對日益嚴峻的宏觀情況時，我們緊緊關注控制力，為 Luxfer 股東帶來更好的表現。

Beginning with revenue. The 2.8% year-over-year drop in sales was the net result of growth in the Gas Cylinders segment that was more than offset by a decrease in the Elektron segments. By end market, our business across Defense, First Response and Healthcare, along with Transportation, grew revenues compared to last year, while general industrial saw significant reductions.

從收入開始。銷售額年減 2.8% 是氣瓶部門成長的淨結果，但 Elektron 部門的下降足以抵消這一成長。從終端市場來看，我們的國防、第一反應和醫療保健以及運輸業務的收入與去年相比有所增長，而一般工業的收入則大幅下降。

Adjusted EBITDA of $6 million was down from $16.1 million in the prior year, reflecting competitive pressures and rising costs, especially in Graphic Arts as well as unfavorable exchange rates, adverse volume and mix, some tough comparisons to prior year on pricing and higher legal costs. We did deliver strong cash flow, generating free cash of $8.9 million in the quarter up by $7.6 million from the same period last year.

調整後EBITDA 為600 萬美元，低於上年的1,610 萬美元，反映了競爭壓力和成本上升（尤其是印刷藝術領域）以及不利的匯率、不利的數量和組合、與上年在定價和更高的法律成本方面的一些艱難比較。我們確實實現了強勁的現金流，本季產生了 890 萬美元的自由現金，比去年同期增加了 760 萬美元。

We reduced net debt by $6.1 million to $78.4 million, resulting in a net debt-to-EBITDA ratio of 1.7x. We are pressing forward with cost-cutting initiatives already commenced as well as additional programs to drive margin improvement.

我們將淨負債減少了 610 萬美元，達到 7,840 萬美元，淨負債與 EBITDA 的比率達到 1.7 倍。我們正在推進已經開始的成本削減措施以及其他計劃以推動利潤率提高。

Let's turn to Slide 4 for a deeper dive into the specific challenges we encountered in Q3. At a high level, the challenges we faced fell into 2 main categories. The first category is supply chain issues, primarily, although not exclusively, related to sourcing magnesium. With the disruption of our supply originating from U.S. magnesium force majeure exploration, we and others in North America were forced to find alternative higher-priced magnesium.

讓我們轉向投影片 4，深入探討我們在第三季遇到的具體挑戰。在較高層面上，我們面臨的挑戰分為兩大類。第一類是供應鏈問題，主要但不完全與採購鎂有關。由於美國鎂的不可抗力勘探導致我們的供應中斷，我們和北美的其他人被迫尋找替代的價格更高的鎂。

At this time, we have identified more competitive sources that we are approving for use in some North American products, and we are already cycling through higher-priced inputs. Until this is concluded, we incur an adverse impact on sales volumes in certain end markets, particularly in Graphic Arts, where higher prices have not proved sustainable. And so we work to alleviate this by focusing on products where we deliver the greatest value.

目前，我們已經確定了更具競爭力的來源，我們正在批准在一些北美產品中使用這些來源，並且我們已經在循環中使用價格更高的投入。在這個結論之前，我們會對某些終端市場的銷售產生不利影響，特別是印刷藝術領域，事實證明較高的價格無法持續。因此，我們致力於透過專注於能夠提供最大價值的產品來緩解這一問題。

The second category is a macroeconomic environment that is leading to lower demand in some of our markets. Economic slowdown and uncertainty along with higher interest rates, tight labor conditions and rising geopolitical volatility are impacting demand, primarily in our general industrial end markets, and a weighing on customer buying pay behaviors for these products.

第二類是導致我們一些市場需求下降的宏觀經濟環境。經濟放緩和不確定性以及利率上升、勞動力條件緊張和地緣政治波動加劇正在影響需求（主要是我們的一般工業終端市場），並影響客戶對這些產品的購買支付行為。

This is most evident in markets such as graphic arts, commercial magnesium powders and industrial zirconium applications, those markets which are also susceptible to pressures from lower-cost Asian-based materials. Together, these 3 product categories represented approximately 87% or $10 million of the year-over-year decline in general industrial end market sales.

這在圖形藝術、商業鎂粉和工業鋯應用等市場中最為明顯，這些市場也容易受到低成本亞洲材料的壓力。這 3 個產品類別合計約佔一般工業終端市場銷售額年減的 87%（即 1,000 萬美元）。

Turning to Slide 5, I will walk through the actions we are undertaking to address these challenges. Throughout 2023, we've been driving accelerated cost reduction programs as well as cash flow and supply chain improvements. Regarding cost reductions, we are focused on ongoing structural cost savings, so the benefits are sustainable. And importantly, we continue to invest in the parts of our business where we see long-term profitable growth opportunities, just new products in Elektron and new applications for alternative fuels.

轉向投影片 5，我將介紹我們為應對這些挑戰所採取的行動。 2023 年全年，我們一直在推動加速成本削減計畫以及現金流和供應鏈改進。在降低成本方面，我們專注於持續的結構性成本節約，因此效益是可持續的。重要的是，我們繼續投資於我們看到長期獲利成長機會的業務部分，包括 Elektron 的新產品和替代燃料的新應用。

We have reduced and continued to reduce our headcount to align our costs with the demand environment. In Graphic Arts and Magtech, for example, this includes reducing the number of employees by over 20% year-to-date, up from the 10% reported last quarter with similar reductions in Luxfer Gas Cylinders, Europe. In addition to headcount changes, in Graphic Arts alone, we have identified $750,000 of annualized productivity savings, and we anticipate further reductions in magnesium sourcing costs next year, even before any benefits accruing once U.S. magnesium returns to normal business operations.

我們已經並繼續減少員工人數，以使我們的成本與需求環境保持一致。例如，在 Graphic Arts 和 Magtech 中，這包括今年迄今將員工人數減少 20% 以上，高於上季報告的 10%，歐洲 Luxfer Gas Cylinders 也有類似的裁員。除了人員變動之外，僅在印刷藝術領域，我們就已確定年生產力可節省 75 萬美元，並且我們預計明年鎂採購成本將進一步降低，甚至在美國鎂恢復正常業務運營後產生任何效益之前也是如此。

The consolidation of our Elektron powders manufacturing from 3 to 2 facilities is on track to conclude in the fourth quarter delivering $900,000 of annualized run rate savings and allowing us to sell the vacant property in 2024.

我們的 Elektron 粉末製造工廠從 3 家合併到 2 家的工作預計將在第四季度完成，這將節省 90 萬美元的年化運行費用，並使我們能夠在 2024 年出售空置財產。

In our Gas Cylinders business, we are continuing to take important proactive measures in collaboration with our customers to address high carbon fiber costs. Within alternative fuel, as we shared last quarter, we are simplifying our footprint by transferring production from Pomona to Riverside in Calgary. This is improving productivity while preserving the existing capacity and already delivering $1.1 million of ongoing annual fixed cost reductions. We plan to sublet a portion of the Pomona site in 2024.

在我們的氣瓶業務中，我們將繼續與客戶合作採取重要的積極措施來解決碳纖維成本高的問題。正如我們上季度分享的那樣，在替代燃料方面，我們正在透過將生產從波莫納轉移到卡加利的河濱來簡化我們的足跡。這在提高生產力的同時保留了現有產能，並且已經實現了每年 110 萬美元的持續固定成本削減。我們計劃在 2024 年轉租波莫納場地的一部分。

Our outlook for the alternative fuel market long term remains positive, bolstered by the recent U.S. administration's announcement that 7 regional clean hydrogen hubs have now been selected to receive $7 billion from the infrastructure investments and job sites.

我們對替代燃料市場的長期前景仍然樂觀，美國政府最近宣布，現已選擇7 個區域清潔氫中心，從基礎設施投資和工作場所獲得70 億美元的資金，這增強了我們對替代燃料市場的長期前景。

Finally, in addition to reducing expenses, we are managing working capital, primarily inventory and receivables. We have made good initial progress here and expect to continue driving cash flow as we work through higher-cost magnesium in our inventory.

最後，除了減少開支外，我們還管理營運資金，主要是庫存和應收帳款。我們已經在這方面取得了良好的初步進展，並期望在我們處理庫存中成本較高的鎂時繼續推動現金流。

At this time, I'll turn the call over to Steve to discuss our Q3 results in greater detail and updated full year 2023 outlook, after which I'll provide details on our strategic review. Steve?

此時，我將把電話轉給 Steve，更詳細地討論我們第三季度的業績和更新的 2023 年全年展望，之後我將提供有關我們戰略審查的詳細信息。史蒂夫？

Thanks, Andy. I'll begin on Slide 6 with a summary of our sales performance by end market. Defense, First Response and Healthcare sales grew by a notable 20% in the third quarter, driven by strong demand for our lightweight firefighter SCBA cylinders and continued contributions from chemical kits, flameless rations heaters and pharmaceuticals.

謝謝，安迪。我將從投影片 6 開始，總結我們按終端市場劃分的銷售表現。由於對我們的輕型消防員 SCBA 氣瓶的強勁需求以及化學套件、無焰口糧加熱器和藥品的持續貢獻，第三季度國防、第一反應和醫療保健銷售額顯著增長了 20%。

Transportation sales grew 6% as automotive remains strong on the back of increased auto catalysis shipments and the completion of this year's RotaMag alloy wheel program. Meanwhile, alternative fuels, inflatable cylinders and aerospace alloy sales were flat in the quarter.

由於汽車催化出貨量增加和今年 RotaMag 合金輪圈計畫的完成，汽車產業依然強勁，交通運輸銷售額成長了 6%。同時，替代燃料、充氣氣瓶和航空合金的銷售在本季持平。

General industrial sales decreased 30% being most impacted by the macro headwinds mentioned earlier. The issues we faced in photoengraving plates, commercial magnesium powders and industrial zirconium applications weighed on our performance. One area of strength, though, was an increase in our new green hydrogen product line.

一般工業銷售下降 30%，受到前面提到的宏觀不利因素的影響最大。我們在照相製版、商業鎂粉和工業鋯應用中遇到的問題影響了我們的表現。不過，我們的優勢之一是新的綠氫產品線的增加。

Please turn to Slide 7 for a summary of our consolidated third quarter financial results. Third quarter sales of $97.4 million, decreased $2.8 million or 2.8% from the prior year, impacted by volume declines and unfavorable mix, primarily in industrial markets. We did see favorable pricing in Gas Cylinders, partially offset by Elektron.

請參閱投影片 7，以了解我們第三季綜合財務表現的摘要。第三季銷售額為 9,740 萬美元，比去年同期減少 280 萬美元，或 2.8%，受到銷量下降和不利組合（主要是工業市場）的影響。我們確實看到氣瓶價格優惠，但被 Elektron 部分抵消。

Consolidated adjusted EBITDA of $6 million decreased $10.1 million or 62.7% from the prior year. Proactive price recovery efforts were not sufficient to overcome combined headwinds of inflation, volume and mix.

合併調整後 EBITDA 為 600 萬美元，較上年減少 1,010 萬美元，即 62.7%。積極的價格復甦努力不足以克服通膨、數量和結構的綜合阻力。

In addition, we faced tougher comps in the Elektron business as in the prior year, we were successful in driving price in advance of realizing material cost increases, which now acts as a headwind by comparison. Finally, foreign exchange had a negative impact of $0.9 million, and we incurred increased legal costs.

此外，我們在 Elektron 業務中面臨著更嚴峻的競爭，就像去年一樣，我們在實現材料成本增加之前成功地提高了價格，相比之下，這現在成為了一個阻力。最後，外匯帶來了 90 萬美元的負面影響，而且我們還增加了法律費用。

Turning to Slide 8 and our segment results. Elektron sales of $52.7 million decreased 7% from the prior year, driven by lower demand in the general industrial end market and some lower pricing passed through where input costs have fallen. Elektron's adjusted EBITDA of $3.2 million decreased 75% due to the impact from lower demand, cost and volume pressures in Graphics Arts, the nonrecurrence of the accelerated prior year price increases and the higher legal costs.

轉向幻燈片 8 和我們的分段結果。 Elektron 銷售額為 5,270 萬美元，較上年下降 7%，原因是一般工業終端市場需求下降以及投入成本下降導致定價下降。 Elektron 的調整後 EBITDA 為 320 萬美元，下降了 75%，原因是圖形藝術領域的需求、成本和銷售壓力下降、去年價格加速上漲不再發生以及法律成本上升。

Gas Cylinder sales of $44.7 million increased 3% with momentum building in the quarter as an SCBA sales increase offset lower sales of cylinders for industrial applications. We continue to benefit from improvements in cost pass-through, and this positive trend is being maintained in October.

由於 SCBA 銷售額的成長抵消了工業應用氣瓶銷售額的下降，本季氣瓶銷售額成長了 3%，達到 4,470 萬美元。我們繼續受益於成本轉嫁的改善，並且這種積極趨勢在 10 月仍保持。

Adjusted EBITDA of $2.8 million declined 18% due to the impact from lower volumes of high-margin industrial cylinders and adverse short-term productivity, offsetting higher pricing and fixed cost savings.

由於高利潤工業鋼瓶銷售下降和短期生產力不利的影響，調整後的 EBITDA 為 280 萬美元，下降了 18%，抵消了定價上漲和固定成本節省的影響。

Now let me address our balance sheet and capital allocation priorities on Slide 9. We remain steadfast in maintaining our strong balance sheet and driving strong free cash flow, which provides flexibility to continue to invest in our business for future growth and return cash to shareholders.

現在讓我在投影片9 上談談我們的資產負債表和資本配置優先事項。我們仍然堅定地維持強勁的資產負債表並推動強勁的自由現金流，這為繼續投資我們的業務以實現未來成長並向股東返還現金提供了靈活性。

During Q3, we allocated $2.5 million towards organic growth initiatives, including the recent announcement of a new production facility at Luxfer Gas Cylinders Nottingham U.K. site to assemble bulk gas systems, enabling the transportation of hydrogen and other gases across Europe.

在第三季度，我們撥款 250 萬美元用於有機成長計劃，包括最近宣佈在英國諾丁漢 Luxfer 氣瓶工廠建立一個新生產設施，用於組裝大宗氣體系統，從而實現氫氣和其他氣體在歐洲的運輸。

Year-to-date, CapEx is $7.5 million, and we are still on track to invest up to $11 million this year. As always, we are being thoughtful and selective with our approach to capital spend projects, focusing on growth opportunities and operational efficiency and supporting our efforts to deliver cash flow.

今年迄今，資本支出為 750 萬美元，今年我們仍有望投資高達 1,100 萬美元。一如既往，我們對資本支出項目的方法進行深思熟慮和選擇性，重點關注成長機會和營運效率，並支持我們提供現金流的努力。

During the quarter, we paid $3.5 million in dividends and bought back $0.6 million in shares. We have $12 million remaining on our share repurchase authorization.

本季度，我們支付了 350 萬美元的股息，並回購了 60 萬美元的股票。我們的股票回購授權還剩 1200 萬美元。

Let's turn to Slide 10 for our updated 2023 guidance. Given the increasingly challenging demand environment and increased geopolitical risk impact, we currently expect full year sales will be 5% to 7% lower than the prior year. We anticipate Magtech sales to be soft in Q4 due to timing of orders, which we expect to recover in quarter 1, and we remain positive on the long-term demand profile of that business.

讓我們轉向投影片 10，了解更新後的 2023 年指南。鑑於需求環境日益嚴峻以及地緣政治風險影響加大，我們目前預計全年銷售額將比前一年下降5%至7%。我們預計，由於訂單時間表，Magtech 的銷售將在第四季度疲軟，我們預計第一季將恢復，並且我們對該業務的長期需求狀況保持樂觀。

In the fourth quarter overall, we forecast that increased revenue and profitability in Gas Cylinders is offset by continued weakness in Elektron. We anticipate that resulting adjusted EPS will be in the range of $0 to $0.05. We remain focused on cash generation and inventory levels and expect to achieve our goal of 100% adjusted free cash flow conversion.

總體而言，我們預測第四季度氣瓶業務收入和盈利能力的成長將被 Elektron 業務的持續疲軟所抵消。我們預計調整後每股收益將在 0 至 0.05 美元之間。我們仍然關注現金產生和庫存水平，並期望實現 100% 調整後自由現金流轉換的目標。

We are operating in a dynamic environment with several challenges to navigate. Our team is focused on executing our self-help cost saving and profitability initiatives to set Luxfer up for success in 2024.

我們在一個充滿活力的環境中運營，面臨著許多挑戰。我們的團隊專注於執行自助成本節約和獲利計劃，讓 Luxfer 在 2024 年取得成功。

Now I'd like to turn the call back to Andy. Andy?

現在我想把電話轉回安迪。安迪？

Thanks, Steve. I'm on to Slide 11. As we announced on October 11, we are accelerating and expanding our annual strategic review process. The purpose of this comprehensive and portfolio-wide exercise is to review our business and operations to inform strategy development and evaluate future opportunities.

謝謝，史蒂夫。我正在看幻燈片 11。正如我們在 10 月 11 日宣布的那樣，我們正在加速和擴大我們的年度策略審查流程。這項全面的、涵蓋整個投資組合的活動的目的是審查我們的業務和運營，為策略發展提供資訊並評估未來的機會。

To support our efforts and to ensure a rigorous independent assessment, we've engaged a leading global investment bank that is in the process of evaluating all of our businesses, our capital structure and the range of available opportunities to unlock and maximize value.

為了支持我們的努力並確保進行嚴格的獨立評估，我們聘請了一家全球領先的投資銀行，該銀行正在評估我們的所有業務、資本結構以及釋放和最大化價值的可用機會範圍。

The scope of this activity is comprehensive and we are executing the review with an open mind, considering all possible paths to value maximization. Luxfer offers unique capabilities in materials technology, and we want to make sure we are in the right markets and businesses to best leverage those advantages for our customers, employees and shareholders.

這項活動的範圍是全面性的，我們正在以開放的心態進行審查，考慮實現價值最大化的所有可能途徑。 Luxfer 在材料技術方面提供獨特的能力，我們希望確保我們處於正確的市場和業務中，以便為我們的客戶、員工和股東充分利用這些優勢。

The strategic review has kicked off in earnest and is ongoing. We are committed to transparency and plan to provide an update on or before our fourth quarter and 2023 full year earnings call in February. Given the macroeconomic uncertainty and pending the outcome of the strategic review, we have decided that it is responsible and appropriate to withdraw our previous adjusted EPS goal of $2 in 2025.

戰略審查已正式啟動並正在進行中。我們致力於提高透明度，並計劃在 2 月的第四季和 2023 年全年財報電話會議上或之前提供最新資訊。考慮到宏觀經濟的不確定性以及等待策略審查結果的情況，我們決定撤銷先前調整後的 2025 年 2 美元每股收益目標是負責任且適當的。

We will revisit long-term targets when our strategic review is complete, and we are in a position to provide a more informed outlook. I want to underscore that our Board and leadership team are committed to driving improved performance and taking the necessary actions to transform Luxfer.

當我們的策略審查完成後，我們將重新審視長期目標，並且我們能夠提供更明智的前景。我想強調的是，我們的董事會和領導團隊致力於提高績效並採取必要行動來改造 Luxfer。

And to that end, I want to thank our stakeholders, to our employees around the world who are working hard to ensure we are able to meet the needs of our customers, to our customers, who placed their trust in us to deliver innovative and valuable solutions and to our stakeholders for their interest and support over the long term.

為此，我要感謝我們的利益相關者，感謝我們世界各地的員工，他們正在努力工作，以確保我們能夠滿足客戶的需求，感謝我們的客戶，他們信任我們能夠提供創新和有價值的產品解決方案以及我們的利害關係人的長期興趣和支持。

With that, I'd like to turn the call back to the operator to begin the Q&A session, after which I will provide some final remarks. Angela, please go ahead.

接下來，我想將電話轉回接線員以開始問答環節，之後我將提供一些最後的評論。安琪拉，請繼續。

(Operator Instructions) Our first question comes from Steve Ferazani with Sidoti.

（操作員說明）我們的第一個問題來自 Sidoti 的 Steve Ferazani。

And appreciate the detail on the call. Trying to get a better sense of your outlook on Graphic Arts now with the new competitive pressures. It would seem like that margin pressure won't go away even if U.S. mag comes back. How do you look at that business going forward, given that you've been willing to divest lower-margin business to slower growth businesses in the past?

並欣賞通話中的細節。現在，在新的競爭壓力下，試著更了解您對平面藝術的看法。即使美國雜誌捲土重來，利潤率壓力似乎也不會消失。鑑於您過去一直願意將利潤率較低的業務剝離給成長較慢的業務，您如何看待該業務的未來發展？

Thank you, Steve, and welcome to the call. Let me first of all talk about Graphic Arts demand and then our strategic review process. The trading conditions of Graphic Arts remain very difficult in Europe at the moment, Steve. Currently, that outage of U.S. magnesium means we're working with much higher material costs than our competitors in Europe who are predominantly using Chinese-based material.

謝謝你，史蒂夫，歡迎來電。讓我先談談圖形藝術的需求，然後是我們的策略審查過程。史蒂夫，目前歐洲印刷藝術的交易條件仍然非常困難。目前，美國鎂的供應中斷意味著我們的材料成本比主要使用中國材料的歐洲競爭對手要高得多。

In Q4, we will be introducing an improved photoengraving plant that we expect to deliver a strong value proposition to end users. So that will be helpful. And I do believe that long term, the magnesium raw material market will likely stabilize at lower prices. We may have opportunity to purchase some notably lower cost magnesium in 2024. So those will be significant positives for the future prospects of the business.

在第四季度，我們將推出改良的照相製版廠，我們希望為最終用戶提供強大的價值主張。所以這會有幫助。我確實相信，從長遠來看，鎂原料市場可能會穩定在較低的價格。我們可能有機會在 2024 年購買一些成本明顯較低的鎂。因此，這些對於業務的未來前景將是重大的正面影響。

Turning to your specific question on Graphic Arts and our strategic review. The strategic review includes the comprehensive review of all of our businesses, which does include the Graphic Arts business. Right now, we're very focused internally in Graphic Arts in reducing the costs and improving the profitability.

轉向您關於圖形藝術和我們的策略審查的具體問題。策略審查包括對我們所有業務的全面審查，其中包括印刷藝術業務。目前，我們內部非常關注印刷藝術領域的降低成本和提高獲利能力。

If after the strategic review is complete, it's determined that Luxfer is not the best owner of the Graphic Arts business than we would embark on a process to find what that best owner of the Graphic Arts is. We couldn't commit to a transaction today, of course, and we'd never sell any business if we couldn't get greater value than the value of the business under Luxfer's ownership.

如果策略審查完成後，確定 Luxfer 不是印藝業務的最佳所有者，那麼我們將開始尋找印藝業務的最佳所有者。當然，我們今天無法承諾進行交易，如果我們無法獲得比 Luxfer 擁有的業務價值更大的價值，我們永遠不會出售任何業務。

I think the best takeaway overall on this is that the Board and the management are aligned and committed to unlocking and delivering long-term stakeholder value and open to any and all alternatives to do so.

我認為總體上最好的結論是，董事會和管理層一致致力於釋放和提供長期利益相關者價值，並對任何和所有替代方案持開放態度。

Great. Appreciate the answer. Turning to a couple of the stronger areas for you this quarter. Transportation was up year-over-year. Alternative fuel is still flat. Was this a 1-quarter uptick? It looked like you had some benefits that were going to be one-off this quarter, the conclusion of the wheels sales for the year. Can you give us an outlook on near-term outlook on transportation given maybe an improving regulatory environment for hydrogen?

偉大的。感謝您的回答。本季為您介紹幾個比較強的領域。交通運輸年增。替代燃料仍然持平。這是 1 個季度的成長嗎？看起來你有一些在本季一次性的好處，也就是今年車輪銷售的結論。鑑於氫能監管環境的改善，您能否為我們介紹一下交通運輸的近期前景？

Yes. Thank you. So transportation for the quarter was up. You're right. The -- particularly encouraged by what we see long term from the alternative fuel market. And especially, I would say, at the moment, in the CNG area, some lower natural gas prices, increasing low emissions vehicle requirements have made that the need for CNG vehicles, especially in North America is quite strong.

是的。謝謝。因此，本季的運輸量有所增加。你說得對。我們從替代燃料市場的長期前景中看到的情況尤其令人鼓舞。特別是，我想說，目前在 CNG 領域，一些較低的天然氣價格、不斷增加的低排放汽車需求使得對 CNG 汽車的需求非常強勁，尤其是在北美。

I was saying earlier this week, more details on the new multi-fuel 15-liter engine coming out from Cummins for CNG, rolling out into extended trials. And we're seeing some good benefits from that now, and I hope that will be an additional tailwind for us in 2024. I feel good about our CNG range.

我本週稍早曾說過，有關康明斯推出的 CNG 新型多燃料 15 升引擎的更多細節，正在展開長期試驗。我們現在看到了一些很好的好處，我希望這將成為我們 2024 年的額外推動力。我對我們​​的 CNG 系列感覺很好。

In hydrogen, yes, the outlook is still pretty choppy, I think. The tailwind from some of these government infrastructure investments isn't really being felt yet, although that news on the expenditure in 7 specific hydrogen hubs was very encouraging. Alternative fuels is an important part of our strategy for value creation. We may have to be a little patient on hydrogen. It was good to see that strong development in CNG.

是的，我認為氫能源的前景仍然相當不穩定。儘管有關 7 個特定氫中心支出的消息非常令人鼓舞，但其中一些政府基礎設施投資的推動作用尚未真正體現出來。替代燃料是我們價值創造策略的重要組成部分。我們可能必須對氫有一點耐心。很高興看到壓縮天然氣的強勁發展。

Fantastic. Last one for me, if I could squeeze it in. It looks like you benefit on gas cylinders primarily from pricing and your pricing is more than offsetting inflationary pressures, surprised we didn't see margin improvement. Can you give a little bit of detail on why that didn't result in margin improvement?

極好的。對我來說最後一個，如果我能把它擠進去的話。看來你們主要從定價中受益於氣瓶，你們的定價足以抵消通膨壓力，令我們驚訝的是我們沒有看到利潤率改善。您能否詳細說明為什麼這沒有導致利潤率改善？

Yes. We are pleased with the progress being made on pricing in Luxfer Gas Cylinders. That's been a positive this year, and we believe will be for the future, some of the longer-term contracts that we have are rolling off, and that's giving us opportunity to recover some of those higher costs that we've been seeing from some time, so that's been very helpful for us.

是的。我們對 Luxfer 氣瓶定價方面取得的進展感到高興。今年這是一個積極的結果，我們相信對未來也是如此，我們擁有的一些長期合約正在到期，這使我們有機會收回一些我們從一些公司看到的較高成本。時間，所以這對我們非常有幫助。

In the period, we did see some -- early in the period, we saw some productivity shortfalls in one of the facilities that was associated with a shortage of labor and some equipment difficulties, but that's in the past. Now, September was much stronger. The higher performance has continued into October, and we're projecting in the notes in the script, a better performance, again, out of Gas Cylinders in Q4, which I believe will carry forward into the new year.

在此期間，我們確實看到了一些 - 在此期間的早期，我們看到其中一個設施出現了一些生產力下降，這與勞動力短缺和一些設備困難有關，但那是過去的事了。現在，九月要強得多。更高的表現一直持續到十月，我們在腳本的註釋中預測，第四季度《氣瓶》將再次出現更好的表現，我相信這將延續到新的一年。

Great. That's it for me.

偉大的。對我來說就是這樣。

At this time, I'll turn the call over to CEO, Andy Butcher for any final remarks.

此時，我會將電話轉給執行長安迪‧布徹 (Andy Butcher)，讓其發表最後評論。

Thank you, Angela. Please turn to Slide 12. Thanks for the questions and dialogue today. While this is a difficult period, I want to remind us that Luxfer continues to offer a strong customer value proposition supported by competitive advantage across diverse niche applications.

謝謝你，安吉拉。請參閱投影片 12。感謝今天的提問和對話。雖然這是一個困難時期，但我想提醒我們，Luxfer 將繼續提供強大的客戶價值主張，並得到跨不同利基應用的競爭優勢的支持。

Our materials engineering expertise, broad array of proprietary technologies, technical know-how and manufacturing expertise deliver innovative and superior solutions to our customers. We are continuing to concentrate the product portfolio in segments that create sustainable long-term value.

我們的材料工程專業知識、廣泛的專有技術、技術訣竅和製造專業知識為我們的客戶提供創新和卓越的解決方案。我們將繼續將產品組合集中在能夠創造可持續長期價值的細分領域。

Currently, we are facing supply chain and macroeconomic challenges that are creating headwinds for our business. To combat these factors, we have and continue to take decisive actions, which are gaining traction, executing initiatives focused on pricing, footprint optimization, cost savings and cash flow management. But these actions alone are not sufficient.

目前，我們面臨著供應鏈和宏觀經濟挑戰，這些挑戰為我們的業務帶來了阻力。為了應對這些因素，我們已經並將繼續採取果斷行動，這些行動正在獲得關注，執行側重於定價、足跡優化、成本節約和現金流管理的舉措。但僅靠這些行動還不夠。

Our expanded annual strategic review process will thoroughly explore a comprehensive range of opportunities to fully unlock and maximize value. We look forward to sharing the results of that strategic review with you and outlining the next steps in our value creation journey.

我們擴大的年度策略審查流程將徹底探索全面的機會，以充分釋放和最大化價值。我們期待與您分享策略審查的結果，並概述我們價值創造之旅的後續步驟。

Thank you again for your time today. Operator?

再次感謝您今天抽出時間。操作員？

This concludes Luxfer's Q3 2023 Earnings Call. A recording of this conference will be available in about 2 hours. A link to the recording of this webcast will be available on the Luxfer website at www.luxfer.com.

Luxfer 的 2023 年第三季財報電話會議到此結束。本次會議的錄音將在約 2 小時後提供。 Luxfer 網站 www.luxfer.com 上提供了該網路廣播錄音的連結。