Luxfer Holdings' (LXFR) CEO Brian Purves on Q2 2016 Results - Earnings Call Transcript

| About: Luxfer Holdings (LXFR)

Luxfer Holdings PLC (NYSE:LXFR)

Q2 2016 Earnings Conference Call

August 10, 2016 08:30 AM ET

Executives

Brian Purves - CEO

Andy Beaden - Group Finance Director

Analysts

Lee Sandquist - Credit Suisse

Phil Gibbs - KeyBanc Capital Management

Jonathan Sacks - Stonehill Capital

Operator

Welcome to the Luxfer Group’s Second Quarter Conference Call. We will first hear from Luxfer Chief Executive, Brian Purves, who will provide an overview, followed by Group Financial Director, Andy Beaden, who will review the financial performance for the quarter and year-to-date. Brian will then return to sum up and offer an outlook. After that, Brian and Andy will be glad to take your questions. We request that you initially ask only one question, after you’ve heard the answer we will give you the opportunity for a follow-up question. [Operator Instructions] Thank you for your cooperation.

We will now turn the call over to Brian Purves.

Brian Purves

Thank you. Good morning, ladies and gentlemen and welcome to the Luxfer conference call on the second quarter of 2016. We've introduced a summary slide on Page 04, the headlines for the quarter are, the result was as expected with continued progress with cylinders. We've successfully rescheduled our term debt, the Brexit the volt is mainly affecting exchange rates which is a positive for us in the medium-term. Our overall guidance on EPS is maintained to 5% to 10% up on prior year, with some business however having been moved from Q3 into Q4.

So, looking at the quarter in more detail on Slide 05, as previously forecast, once we adjust for exchange rates, Q2 was only slightly down on what was our best quarter last year. And we remain well up at the half year. Adjusted fully diluted EPS of $0.29 was $0.01 above quarter two last year. Cylinders continues to perform well ahead of prior year, but our product transition efforts in Elektron, while progressing have not yet is towards sustainable growth. Please note rather Elektron’s 2Q results well in line with our expectations from the prior earnings call. Quarter two revenue remained compressed but as we saw in quarter one the mix of sales is stronger. Through our product development activities we continued to focus on developing more and more proprietary products.

Turning to Slide 06, the North American SCBA sector remains strong with to the best of our knowledge all market participants now having kits on sale that comply with the latest NIOSH regulations. Although some only recently having achieved that status. Our right sized alternative fuel business remains profitable with overall trading profit for gas cylinders again roughly doubled last year’s level. Sales of aluminum cylinders were up due to improved demand from the medical and industrial sectors.

Our Superform business where the long lead times on new contracts always make capacity planning difficult, plus one significant new business with high-end automotive customers including Ferrari, but is suffering a temporary shortfall volume in sales due to a gap between all contracts finishing and new contract commencing. We expect the sales to be back on track from quarter four onwards and rising into 2017. We saw a slight improvement in demand for our high performance magnesium alloys, mainly coming European customers.

In quarter one, the lower sales of automotive catalysts that we are experiencing were largely offset by shipments of industrial catalysts. There were fewer shipments of industrial catalysts in quarter two. So the weakness in automotive is more exposed. We do have partner shipments of industrial catalysts scheduled for later this year. Our intellectual property infringement action taken to address the lower automotive sales continues in the UK courts. As around half of the revenue was up from year-on-year again came from reduced activity in the lower margin areas of magnesium recycling and commercial alloys. The stronger mix of sales again resulted in an improved operating margin over prior year.

On Slide 07 an updating on our few strategic growth projects. Shortly after our last conference call BIOTRONIK obtained the CE approval for their magnesium scaffold product which is now branded Magmaris. They have sent based on our SynerMag bioresorbable alloy is now in the process of being launched. This is an important landmark, we’ve been working on this project for approximately 7 years and finally, we should see commercial sales starting in 2017. We are of course entirely dependent on the level of success that BIOTRONIK have with the device, but this is a very large market and from the evidence that we have seen the magnesium-based device is superior to the alternative polymer based bioresorbable technology.

On Luxfer Magtech, when we bought the business called Luxfer Magtech two years ago. We said one of our objectives would be to expand its geographic presence. Last year, we established new sales positions outside the U.S. and in quarter two of this year we purchased a small European competitor in the flameless heaters and Ready-to-Eat meals largely for their customer list. We have now quoted for several million dollars worth of business to a number of new non-U.S. customers and feel that we're very close to finalizing on two of those.

Andy Beaden will now take you through some of the detail on the Q2 results.

Andy Beaden

Thank you, Brian and welcome everyone to the call. Our first set of slides will cover the sales analysis for the quarter. Total revenue for Q2 2016 was $111 million compared to $122.8 million for Q2 2015 and 108.8 for Q1 2016. FX translation was a negative $2.7 million with the underlying group revenue reduced by 9.1 million when compared to Q2 2015, though improved by 2.2 million on Q1 2016, gas cylinders’ underlying revenue reduced by 1.3% and Elektron by 14.1%.

Slide 10 covers gas cylinders. Revenues in our main cylinder businesses were reasonably stable, demanding composite cylinder markets such as the U.S. self-contained breathing apparatus and AF remained strong while they improved in our aluminum cylinder markets. Shipments from Superform remained temporarily subdued due to several current customer project timeline slippages, mainly in high performance automotive with the run off of historic business and the new contract work scheduled for later in the year.

Now onto Slide 11, as expected Elektron's underlying revenue was down 14% in the quarter and remains impacted by the continued weakness in lower margin automotive recycling along with the reduced sales for zirconium auto catalysis. There was some modest improvement in European aerospace demand with U.S. demand still compressed. There was also some further issues in the U.S. defense market similar to powders with the customer outage which is expected to be resolved by Q4.

And this constrained shipments falls into the magnesium decoy flare market. Our photoengraving sales remained solid due to ongoing success with the investments in broadening our international distribution resources with its proprietary products, looks a nice tick seeing demand in the domestic U.S. markets also compressed with U.S. defense order intake at the lower end of contracted minimum levels. Though its focus is now on widening its customer base with non-U.S. opportunities as Brian highlighted.

Slide 12 shows the trend in sales for Q2 2016 by geographic region. The largest fall is in the UK with the key suppressed markets being magnesium recycling, traditional aluminum cylinder sales and auto catalysis. The rest of the European market was more stable, though attained lower sales in auto catalysis and magnesium recycling or improvements in the high performance aerospace alloys. The U.S. was stronger in AF and self-contained breathing apparatus but weaker in defense.

Turning to trading profits and adjusted EBITDA results on Slide 13. Overall at group level, positive mix changes combined with cost savings lifted margins. We've return on sales of 9.9% ahead of 9.5% for Q2 2015. The adjusted EBITDA margin was similarly up at 14.7% for the group. Adjusted EBITDA was $16.3 million against 16.7 for Q2 2015, 0.3 and 0.44 was related to FX translation differences.

For Q2 2016 group trading profits was $11 million, compared to 11.7 million for Q2 2015. Gas cylinders division increased its trading profit to $3.3 million from 1.7 for Q2 2015. FX differences were negative $0.3 million. The division achieved a very significant underlying improvement through higher composite cylinder sales mainly in North America and the realization of cost saving actions taken last year in the AF business.

There was a small drag on profits from the phasing of old to new Superform contracts as I mentioned before. Elektron result of $7.7 million was weaker than last year’s Q2 of 10 million. FX exchanges were positive $0.5 million the sales changes impact the short-term profit position. Costs are being slightly controlled, and new business is at favorable margins. Short-term profits are impacted by the constrained U.S. defense spending and auto catalysis sales position. However resources are focused and invested on restoring a stronger mix of proprieties bidding catalyst sales and broadening end-markets for our magnesium products.

Slide 14 covers net income and EPS. Below trading profit, we have a very little restructuring and similar items in Q2 2016, unlike the lot charges in 2015, for AF restructuring. This meant the operating profit was up at $10.9 million again it is 8.8 million for Q2 2015. Net interest costs were lower also benefiting from some FX gains on loan investments with JVs in U.S. dollars.

Statutory net income for Q2 2016 was a net profit of $6.7 million, compared to $3.1 million for Q2 2015. Again well up as a result of the near absence for the large restructuring costs. Adjusted for exceptional items and excluding IAS 19 pension plans cost. Q2 2016 was an underlying net profit of $7.9 million, compared to 7.6 for Q2 2015. Here we benefited from the lower tax and finance costs. The affected tax rates on adjusted net income most reduced 24.8% again 26.9% for Q2 2015. Adjusted diluted EPS was therefore $0.29 for Q2 2016, compared to $0.28 for Q2 2015.

The next Slide 15 is on liquidity and capital resources. Detailed slides on the balance sheet and cash flow can be found in the appendences. Key points are as follows, net debt, debt minus cash was $101.9 million, this has increased since the start of the year to the position of 94.7, but includes the funding of the share buyback to $6 million. The net debt to EBITDA ratio remains reasonable at 1.6 times. Return on invested capital was 13% after-tax. This being slightly improved on the 12% achieved last year.

Our operating cash flows in Q2 2016 were a positive $9.6 million and therefore 12.6 year-to-date. This well is lower than in 2015, because of the working capital movements, which was an outflow of $1.9 million in this Q2 and 12.1 year-to-date. During 2016 working capital was $96.4 million compared to December '15 of 88.6. Most of the year-to-date increase is in receivables relating to larger customers whether it's been a mixed change. Also working capital is now $14.7 million lower than it was at the same point in Q2 2015. Invested capital in our operations was $248.8 million, reduced from the $273 million in Q2 2015 and a $264.4 million at the end of 2015. Year-to-date for 2016, we have returned $12.7 million to shareholders in cash with the upsized dividend and the share buyback and $25.4 million over the last 18 months.

Finally moving to Slide 16, in Q2 2016 we agreed an extension to maturities of 50 million of the 65 million of loan notes due 2018. The maturity has been $25 million extended to 2023 and $25 million has been extended to 2026, 10 years at reduced fixed interest rates of 4.88% and 4.94% though the debt is guaranteed by the UK and U.S. operations it is not subject to any formal after its securitization. This agreement enhances the group's capital structure by extended maturities, reduced costs and also removes any main to debt maturities to be refinanced for the next three years. The deal was with PRICOA, Prudential Insurance Company of America and its Blue Chip investment clients. I see this is a major vote of confidence by PRICOA's investors in the future opportunities that we can all see in the medium and long-term Luxfer.

Thank you and now I'll hand you back to Brian to sum up.

Brian Purves

Thank you, Andy. Just looking at Slide 18 then, summarizing quarter two, the profitability of our cylinder business remains markedly improved, underpinned by growth in the North American SCBA market, our rightsizing program and new business won in the alternative fuel sector. In quarter two we also saw solid improvement in European alternative fuel with a higher level of robust system sales than we've seen for some time. Elektron division continues to have a few key sectors still running below par, but there was an improvement in sales of high performance alloys. Sales of our auto cat products remain compressed and while the outlook for industrial catalysis remains strong there were fewer shipments scheduled in quarter two.

Work continues on the next generation of auto cat products and we remain optimistic that our development activity will result in a step change improvement in our product offering to this sector. Although sales revenue was down, the sales mix is stronger and costs have been reduced, so our operating margin remains higher than prior year. With the defense market in the U.S. remaining compressed we are working hard to expand the geographic presence of our U.S. defense space businesses, marketing both to military and civilian customers and we feel that we're making good progress. Our adjusted Q2 EPS is $0.01 above prior year and in line with consensus.

Turning to the outlook on Slide 19, we are reaffirming our EPS outlook for 5% to 10% improvement over 2015. The UK referendum vote to leave EU was a surprise, although the polls have suggested that it would be close. Most observers expected a swing towards the status quo in the last few days. This did not happen and then aftermarket of the result we did see some short-term volatility from our UK and EU customers. Mostly this appears to be past markets have recovered strongly and what we are left with is weaker sterling.

As we report in U.S. dollars, this does hurt our reported figures by reducing the translated dollar value of non-U.S. earnings. But in the medium-term, a weaker sterling against the euro is potentially very beneficial to the profitability of our exports into Midland Europe. We expect to net this benefit in the balance of 2016, because of our near-term ForEx hedges, but we would see a significant net benefit in 2017 and beyond, if the exchange rates stay roughly where they are today. Andy and his team have reduced our interest bills with the rescheduling of our current debt and we continue to make gains on marginal tax rates. EPS is also being helped by the buying of shares earlier this year.

Looking at the balance of the year by quarter. We expect quarter four to be stronger than quarter three. Some Elektron contract business that have previously being scheduled for quarter three has been moved as customer request into the fourth quarter. Although they are not likely to make much impact on the 2016 financials, we are delighted that both the major milestone of the new SynerMag based bioresorbable stent achieving commercial launch.

Thank you and we will now take questions.

Question-and-Answer Session

Operator

The floor is now open for your questions. [Operator Instructions] Your first question comes from Julian Mitchell of Credit Suisse.

Lee Sandquist

Hi. This is Lee Sandquist on for Julian Mitchell. With another quarter of significant weakness in auto cat sales, when should we think about a trough in this segment, it seems like the industrial catalysis offset maybe pretty volatile in nature?

Brian Purves

Yes. I wouldn’t say the industrial catalysis is volatile in the sense that we’re working with the benefits of a larger customer base, a large contract base now. But the requirements for the material are certainly more lumpy if you like than the auto cat, which is much more dispersed over a wide range of products under wider range of high volume customers. So I think the industrial catalysis is still a little bit chunky, and will become less so as we grow it. But nonetheless we have a high degree of certainty or a higher degree of certainty at the level of business, we just can’t be precise about which quarter-by-quarter it comes in.

On the auto cat side, the real pain that we’ve suffered there, it is through the course of last year. So in the fourth quarter, well certainly the fourth quarter, probably the third quarter last year sales of automotive catalysis were already quite badly hit. So, I'm not conscious that we have dropped much since then, we just haven't picked anything up yet. And there're two efforts as you know where we're looking to achieve that. The first one is the court action, because we do believe there's a lot of the volume that we have lost is because of the people selling infringing product against us and we've been able to track exports out of China to be able to give ourselves confidence on that front.

Unfortunately as you'll be aware the court processes are, very longwinded and we can't really expect a positive outcome from that until certainly well into 2017. But at least we have made public our concerns and the customer base is aware of that and has to make their purchasing decisions in the lights of our stated belief. The second effort which I did allude to is that we have been putting a lot of effort into developing a new generation of automotive products and if we're right and we're still awaiting on feedback from our customers on their engine testing of the new material, if we're right then the new material will be a marked improvement over the previous generation of material. And that's the surest way for us to win back market share. Again though nothing happens overnight in this market and it would really be the second half of 2017 before we would realistically start to sell that new product in any large commercial volumes.

Lee Sandquist

And then in Q1 you alluded to a recovery in the medium-term for defense and commercial helicopters, could you just please update us on your thoughts on that end market?

Brian Purves

On defense?

Andy Beaden

No, it's more helicopters I think.

Brian Purves

Helicopters yes. Well, I think on that one we did say at the last call that we felt it had bottomed out and we were roughly I think about 14% or 15% down on the high performance alloys, most of which we ascribe to the weakened helicopter industry with reduced demand from both defense and oil and gas sector. We haven't really seen any change on that in North America. But the slight pickup really we're reporting for quarter two for those alloys as compared to the European sector. So, that might be the first sign of some start of a recovery. But the oil and gas sector remains depressed and defense spending remains depressed. So, I don't think we can currently on near-term bonus from those existing markets. And in the meantime we're doing as much as we can to identify alternatives for their customers. We'll found the sectors for the same products. But I do think that we're getting more confident that said that has bottomed out and is starting to pick up again.

Operator

[Operator Instructions] Your next question comes from Phil Gibbs of KeyBanc Capital Markets.

Phil Gibbs

In terms of the deferrals into Q4 and some of the orders in Elektron how should we think about the magnitude there in terms of profitability moving from one quarter to the next or anything that you could help us frame up there?

Brian Purves

Well, there're quite chunky bits of business, so they will have a material impact. Obviously we'll be doing whatever we can to compensate. But certainly in terms of the errands that have moved, you’re looking at maybe certainly $0.03 worth of earnings shifting out of other Q3 and into Q4. And those are firm reschedules so it is not as though we’re again making our own gas at the times all the new times that the customers have given us. So as long as we stick with that then we should see not much of a ship, out of quarter three but into quarter four. And obviously in quarter four, we get a bit more nervous about it because of last leeway for slippage that was our firm reschedules, I would say it’s probably about $0.03 down Q3 and on Q4.

Phil Gibbs

And in terms of the UK translation back in the U.S. earnings, you said that is a $1 million to $2 million headwind for the second half. How much of that is in Elektron versus cylinders?

Brian Purves

More of it would be in Elektron than cylinders amendment. So Elektron is because simply Elektron more profitable. And so you will portion that on the profit ratio of the two divisions.

Andy Beaden

The euro benefit going forward however is more equitably split between cylinders and Elektron.

Brian Purves

Yes. The benefits of that the UK production cylinders does have a big production base in the UK. So the euro upside for 2017 is probably more even but the translation impact working with a portion on the profit apportionment that you see at a group level for those divisions.

Phil Gibbs

Okay. And then that’s a good, that’s kind of the good lead into just a currency discussion in general. So if you’ve got a call it 1.5 million headwind for the second half, you talked about some hedges rolling off into next year, which may give you up to a $4 million benefit. You obviously, you’re also in a more competitive cost position in general with the weaker sterling. So how do you think about all else equal? How you think about the currency headwinds to the trading profit this year with competitiveness baked in as well. And then how you’re thinking about it for next year for just the weakened you think about how the business could be positioned?

Brian Purves

Well, the transactional impact of currency is something that we’ve been living with for some time. So the hedges that we have in place at the moment are on the euro, which is what is locking us out of the short-term gain from the weakness of sterling. That is at levels where we’ve not done business and we know the level of profitability that’s baked in. So there is an opportunity there to get better profitability from those exports on the amount that is not hedged and that amount will increases as we go forward, because we don’t really take long-term hedges on foreign currency. So the short term impact is purely the translation of non-U.S. earnings back into U.S. dollars. And that’s not with affecting our competitiveness at all.

Going forward, if we can access euro exchange rates at today’s levels then the profitability of exports into Europe is certainly much healthier than has been recently. The euro sterling exchange rate howsoever being at this level within the last three years, it’s just in the last 18 to 24 months that we’ve seen the sterling euro rate get quite painful for us so we've been suffering compressed margins for that period but nonetheless been willing to do business up that level. But if the exchange rate falls the way it is today initially the profitability of those exports will be considerably benefitted. Obviously, that does open up the possibility of attempting to win more business. That's something that we would only do once we were pretty confident that the exchange rate have stabilized at that level. It is not something we've seen for several years, so, it's more of an impact on profitability that on volume opportunity, although there certainly would be some volume opportunity in the medium-term if we get confident that the exchange rate has in fact stayed stable at these levels.

Andy Beaden

And of course we can now hedge at the new rates. So, what they are doing is looking to try and lock in at the new rates for 2017, potentially 2018, currency flows. But definitely we do hedge 12 to 18 months out, so simply the balance of this year is ruled out as an advantage but certainly 2017 and even 2018, we can see the advantage coming through.

Phil Gibbs

In terms of raw material side, are the raw materials in the second half of this year more of a headwind, more of a tailwind, more -- or the same versus the first half and then how are you thinking about raw materials in 2017 relative to 2016? Thanks.

Andy Beaden

I think at the moment fairly it's pretty stable on raw materials. If we look at where aluminum has been and then you find that the other metals that we work with obviously track back or a similar that that will touchwood very stable and year-on-year probably now steady stable, we saw some benefit last year which helps us but as we look forward it isn't seen as a major headwind or any real movements at the moment.

Brian Purves

The only issue where we're buying in dollars, then the…

Andy Beaden

FX.

Brian Purves

The FX impact.

Andy Beaden

Yes.

Brian Purves

Makes it slightly more expensive in sterling but we don't really mention that much because we're pretty well balanced on the dollar between sales and purchases so that the two wash through together. It's only the euro where we have a large net sales exposure where we buy very little in euros. Dollars are fairly well covered.

Andy Beaden

Yes.

Brian Purves

But the dollar prices of our raw materials as Andy says look pretty stable at the moment. We can't at the moment see much in a way of any macroeconomic factors that would change that.

Operator

[Operator Instructions] Your next question comes from Jonathan Sacks of Stonehill Capital.

Jonathan Sacks

Just a few mostly cleanup type questions, on the Elektron division revenues, when you cite the drop in revenues versus prior year and the magnesium recycling which is a low margin business was a significant part of that. Can you give us a sense of the magnitude of how much of the sales profit is from that magnesium recycling?

Brian Purves

Well, Jonathan about half the sales for was in either the recycling or related lower margin magnesium alloy sales, which automated alloys. So about half, the fall was in lower margin and half the fall was in the more normal Elektron margin.

Andy Beaden

The actual recycling drop was about $8 million in other half year, year-on-year.

Brian Purves

Yes.

Andy Beaden

Jonathan. So the business has dropped, the recycling business would have been $30 million business, it’s now about half that and that is all falling through into our overall sales revenue. But as we’ve said before, the recycling business operates on very low cost, low margins. So its impact on profitability is not very higher, but those are factory issues.

Jonathan Sacks

Yes. And the strip exchange out, which we did in the release Elektron’s sales fell in Q2 by 8.3 million and obviously you can work out from what Brian is saying about half of that is the recycling?

Brian Purves

It is a structural issue really the recycling in Europe is others are too much capacity. But the main issue at the moment is the price differential between U.S. magnesium and Chinese magnesium, because of the import barriers in the U.S., against the implication of Chinese magnesium there is a very-very wide delta today which means the cost for the U.S. produced magnesium on Chinese produced. And that import barrier does not apply to magnesium scrap. So people are exporting scrap over Europe and into the states and all together on the import duty and there is no demand or less demand on the recycling industry in Europe.

Jonathan Sacks

And then…

Brian Purves

Yes.

Jonathan Sacks

Can you just touch on its expectations for CapEx and pension payments in the coming year as well as sort of current view of normalized rates for both?

Brian Purves

Well, we certainly touching back a little bit on the capital expenditure in the current year from our earlier indications. And that’s quite normal we tend to understand in the first half of the year and then review the situation. So I think our full year number for this year is now rather below $20 million. We have a good budget for 2017 together yet that is something that the Board will be looking at in the next couple of months. But I would be surprised that it was much different from the 20ish million type level. And on pensions, those payments are fairly stable being that is a remediation payment. So we assume on our forward planning roughly $10 million.

Andy Beaden

Yes. For those exchange, of course it’s slightly lower now Brian the -- so it’s probably, I think it’s going to be between $8 million to $9 million unless we put any additional one-off amounts in for the special project.

Brian Purves

Yes. Because we think the sale of a topic is the sterling payment into the UK on it so $8 million or $9 million and that is fairly stable. We have an agreed position with the UK trustees, which is for a three year period of which we have only had one year. So actually it would be stable for the next couple of years.

Jonathan Sacks

Great, thank you. And I know that there had been some changes to the pension plan, which is why I asked for an update. And then just the last question and you’ve talked about Brexit a fair amount and then most of the impact is on FX, which you've elaborated which is very helpful. But is there a risk that there're export restrictions put in place or import duties or other barriers to trade in terms of product that you produce in the UK and sell into Europe?

Brian Purves

Well, there certainly is inferior risk most people are discounting it because the UK imports are lot more from Mainland Europe, than exports to Mainland Europe. So, if there was an imposition of trade barriers it was the Mainland Europeans that would suffer the most. And so, for example the German car markers, I think would be well being heavily against there being like these on manufactured goods. However that's not going to become clear for at least two years and probably more likely longer than that. We have looked at it just I mean what the exposure is, I mean at the moment if we take the cylinder business that is in the UK, we import aluminum log from North America and we pay import duty on importing into Mainland Europe or but I think it's 6%. And we export obviously duty free into Mainland Europe today the standard of that tyre for non-EU companies is between 4% and 8%. And that's a sort of range so you could end up with as not paying any import duty on the log but paying something to export into Europe of that sort of magnitude. However you then look at our major competitor in Mainland Europe for aluminum cylinders it was actually a Turkish company and Turkey has free trade arrangement with the EU, so, they import free of charge, so, it would seem inequitable if we ended up paying. So, at the moment our backing is that there won't be any such changes, but they won't become clear for two or three years I am afraid.

Jonathan Sacks

Great, thank you very much.

Brian Purves

Even if…

Jonathan Sacks

Yes.

Brian Purves

Even if there are changes we will cope with it. They're not of a larger magnitude that would cause us to be, become uneconomic because of it.

Andy Beaden

They're not as significant to the FX changes and they are certainly not as significant to some of the headwinds we faced in the past in material cost changes. So, you're talking of net duty input-output changes of a few percent.

Operator

Your next question comes from Phil Gibbs of KeyBanc Capital Markets.

Phil Gibbs

Thanks for taking my follow-up I think for the time being gents I am all set I think you hit on most of my follow-ups. I appreciate it.

Brian Purves

Thanks Phil.

Andy Beaden

Okay. Are there any more people on the list?

Operator

This concludes the question-and-answer session of today's call.

Andy Beaden

Okay, well thank you very much everyone and we'll speak to you again with the quarter three results in early November. Thank you, good day.

Brian Purves

Yes.

Operator

Thank you. An Encore recording of this conference call will be available in about two hours. Telephone numbers to access the recording will be available on the Luxfer Group Web site at www.luxfer.com. Thank you for your participation in today's conference. You may now disconnect.

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