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Operator: Good morning. My name is Nikki, and I will be your conference operator today. Welcome to Luxfer’s First Quarter 2026 Conference Call. [Operator Instructions] Now I will turn the call over to Kevin Grant, Vice President of Investor Relations and Business Development at Luxfer. Kevin, please go ahead.

Kevin Grant: Thank you, Nikki, and good morning, everyone. Welcome to Luxfer’s first quarter conference call. This morning, we’ll be reviewing Luxfer’s financial results for the first quarter ended March 29, 2026. I’m pleased to be joined today by Andy Butcher, our Chief Executive Officer; and Steve Webster, our Chief Financial Officer. Today’s webcast is accompanied by a presentation that can be accessed at luxfer.com. Please note, any references to non-GAAP financials are reconciled in the appendix of the presentation. 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 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. During today’s call, we’ll be providing adjusted first quarter 2026 financial results, excluding the Graphics Arts business, which was divested in 2025. Now let me introduce Luxfer’s CEO, Andy Butcher. Please turn to Slide 3. Andy, please go ahead.

Andrew William Butcher: Thank you, Kevin, and good morning, everyone. Thank you for joining us. We delivered a strong start to 2026 with performance in the quarter demonstrating disciplined execution across the business and financial results a little ahead of the expectations we outlined coming into the year. As we indicated previously, 2026 includes variability across certain end markets. Although that dynamic was evident in the first quarter, we delivered adjusted earnings per share of $0.27, up 17% year-over-year, along with adjusted EBITDA of $12.3 million and margins of 14.7%. This signifies the strengthened earnings power of the portfolio and the ability to sustain profitability at current volume levels. Within Elektron, although timing dynamics drove lower volumes, demand across core areas remains intact with continued momentum in aerospace and defense.

We also continue to advance our optimization initiatives, including the Powder Saxonburg Center of Excellence, enabling us to maintain strong margins. In Gas Cylinders, pricing and continued advancement of operational execution drove stronger year-over-year results. Our optimization program announced last year remains on track with key milestones progressing as planned, and we expect to realize increasing benefits from these actions. Through the performance we have seen and improved visibility through the remainder of the year, we have the confidence to raise our full year 2026 earnings guidance, increasing our adjusted diluted earnings per share to a midpoint of $1.17. As we look beyond 2026, we are increasingly confident in the momentum of the business and the drivers supporting a step-up in performance in 2027.

Improving visibility across our end markets and the progress we are making on our operational initiatives position us well for a meaningful acceleration in earnings. We remain mindful of the broader geopolitical environment, but we see clear reasons for confidence based on specific drivers building across the business, including continued strength in aerospace and defense, the expected uplift in the SCBA replacement cycle and the expansion into higher-value applications such as space, supported by new product introductions. With that, I’ll ask Steve to walk through the first quarter financial results and our updated outlook in more detail. Thanks, Andy, and good morning, everyone.

Stephen M. Webster: Let’s turn to Slide 4 for a review of our first quarter 2026 consolidated financial results. Turning to our top line. Adjusted sales were $83.9 million, down 7.3%, consistent with the trends outlined earlier. Despite the lower sales level, adjusted EBITDA increased to $12.3 million, up 8.8% year-over-year with adjusted EBITDA margin of 14.7%, an improvement of 220 basis points. As shown on the bridge, lower volumes created a headwind in the quarter due to timing dynamics discussed earlier. This was partially offset by pricing actions across the business, which outpaced inflation and supported strong margin performance. Importantly, we benefited from lower operating costs, along with early savings from our Riverside consolidation initiative within Gas Cylinders.

Adjusted earnings per share was $0.27, up 17% year-over-year, demonstrating strong operating performance. From a cash flow perspective, cash from operations was an outflow of $4.1 million in the quarter, primarily driven by working capital, including inventory levels supporting our footprint optimization programs and the timing of receivables. Net debt at quarter end was $42.9 million, resulting in leverage of approximately 0.8x, maintaining balance sheet strength and financial flexibility. Overall, the quarter reinforces the resilience of the business and robust execution. With that, let’s turn to Slide 5 for a closer look at Electron’s first quarter 2026 results. Sales for the quarter were $42.1 million, down 14.8% year-over-year, attributable to lower volumes across certain end markets.

This was largely driven by zirconium applications within industrial markets with some customer overstocking, along with the timing of high-end automotive wheels, consistent with the off-cycle dynamics we outlined previously, partially offset by continued strength in aerospace and improvements in certain defense-related applications. Despite the lower sales, gross profit year-over-year was $14.7 million, with gross margin increasing to 34.9%, up more than 500 basis points. Adjusted EBITDA was $8.5 million with an adjusted EBITDA margin in excess of 20% Pricing actions in the period exceeded higher input costs, which along with continued operational discipline across the segment, resulted in significant productivity improvements compared to the prior year.

Overall, Elektron delivered strong margin performance despite lower volumes, driven by pricing and operational execution, and we expect stronger revenues as well as continued progress across the segment’s operational initiatives as we move through the remainder of the year. With that, let’s turn to Slide 6 for our Gas Cylinders first quarter 2026 results. Sales for the quarter were $41.8 million, up 1.7% year-over-year. Performance was driven by broadly stable volumes across the segment, continued strength in higher-margin specialty industrial applications and modest improvement in alternative fuels. This was partially offset by lower volumes in aerospace related to our branch relocation and seasonally slower SCBA demand, including the impact of the partial federal shutdown.

Despite the relatively stable sales level, gross profit increased to $7.2 million, with gross margins improving to 17.2%, up 360 basis points year-over-year. Adjusted EBITDA was $3.8 million, representing strong growth with EBITDA margins of 9.1%, an improvement of 280 basis points. This performance was driven by pricing discipline across the business, which exceeded higher input costs, along with continued operational execution, including some early benefit from the relocation of the Pilbara operation. Overall, Gas Cylinders delivered margin expansion despite modest volume headwinds in the first quarter, and we expect continued margin enhancement throughout the year. Looking further ahead, we see multiple growth levers for Gas Cylinders, including the SCBA replacement cycle as well as space exploration as an emerging opportunity with activity developing across a range of customers and programs.

Let’s now move to Slide 7 for an overview of our 2026 guidance update. We have raised our full year earnings guidance based on the strong start to the year and improved visibility across the business. For the full year, we are now projecting our revenue in the range of $355 million to $370 million, while increasing our adjusted EBITDA to $52 million to $56 million and adjusted earnings per share to $1.12 to $1.22. The first quarter came in modestly ahead of our internal expectations and together with improving demand trends and visibility for the remainder of the year supports the updated guidance, including an implied midpoint of $1.17 while continuing to reflect a measured view of the broader macroeconomic environment. From a revenue perspective, the outlook continues to include timing dynamics in certain end markets, particularly within Elektron, which we expect to improve through the year.

At the same time, we continue to see strength in aerospace and defense, supporting margin resilience and earnings progression. Within Gas Cylinders, demand trend remains constructive with continued strength in specialty industrial applications and emerging opportunities in areas such as space exploration, supporting longer-term growth. We are making good progress on our productivity and optimization initiatives, which remain on track with benefits expected to build through the second half of the year. Free cash flow guidance remains unchanged at $20 million to $25 million, reflecting ongoing investment in CapEx improvement programs and elevated inventory levels supporting our footprint consolidation initiatives. Given current geopolitical uncertainty, we are proactively monitoring global events as well as domestic tariff activity.

To date, we have observed no impact on demand, and we have been successful in passing through increased costs. Overall, our updated guidance reflects a strong start to the year, improved visibility and a balanced view of the operating environment. With that, I will turn the call back to Andy to provide additional perspective on the outlook beyond 2026.

Andrew William Butcher: Thank you, Steve. Please turn to Slide 8. As we look beyond 2026, it is helpful to start with where we are today. At the midpoint of our updated guidance, we are operating at approximately $1.17 of adjusted earnings per share with improved margins and a portfolio that continues to perform well despite near-term timing dynamics in certain markets. From that base, we see a clear and credible path to a meaningful step-up in earnings in 2027, supported by a number of drivers already underway. Starting with Elektron, the business will continue to benefit from strong and growing aerospace and defense demand, driven by the increasing use of precisely engineered magnesium alloys where lightweighting remains a key priority.

Recent wins, including a new European aerospace defense application, reinforce our confidence in this trajectory. We are also seeing increasing momentum in the adoption of both of our Magtech heater solutions with interest building across a broader set of international markets as well as continued expectation for domestic flameless Russian heater add-on order in 2027. This is complemented by the expected recovery in high-end automotive applications as prior off-cycle dynamics normalize. This reflects timing within the end customer portfolio and configuration options that incorporate our high-performance magnesium components. In addition, we continue to make progress with a number of new product development applications and specialty platforms, including areas such as passive chemical detection and medical field emergency solutions, where we are seeing growing customer interest.

Taken together, we expect Elektron to deliver steady mid- to high single-digit sales growth year-on-year, supporting a meaningful uplift in contribution to overall 2027 earnings. Turning to gas cylinders. We expect the return of the SCBA replacement cycle, including next-generation cylinders and larger municipal upgrades as a significant portion of the installed base moves into a more active replacement phase. This represents a multiyear incremental opportunity for the segment. Within aerospace, demand continues to be supported by commercial build rates and program outlooks from large OEMs, providing a clear and visible growth profile as aircraft production levels increase. We are also seeing new momentum in space exploration applications, where our products are being specified across an expanding range of programs and platforms.

Along with hydrogen bulk gas, this is an area of higher growth within the portfolio with activity expanding across multiple customers as the market continues to scale. Taken together, we expect Gas Cylinders to deliver a stronger rate of sales growth, contributing to the overall step-up in earnings. Finally, across operations, we are progressing the productivity and optimization initiatives announced at the end of 2025, including footprint actions and our Center of Excellence programs. These initiatives are expected to be largely completed by the end of 2026 with the benefits carrying into 2027. We expect these actions to contribute significant incremental EBITDA, supporting improved efficiency and margin expansion, as previously noted. Given the strength of these underlying drivers and the visibility we are building across the business, we see a clear and credible path to robust double-digit earnings growth in 2027.

This significant uplift reflects the progression from our 2026 base, supported by volume recovery, specific growth in higher-value applications and the full realization of our operational initiatives. Overall, we feel good about the momentum in the business and the opportunities ahead. Please turn to Slide 9. Before we take questions, let me briefly summarize the key highlights from the quarter. We delivered a strong start to 2026 with solid earnings growth and margin expansion driven by disciplined execution across the business. We have raised full year earnings guidance based on clearer visibility with stronger revenues in the quarters ahead and improvement supported by operational enhancements and pricing. We see a clear and credible path to a meaningful step-up in earnings in 2027, supported by specific multiple drivers already underway.

And we remain focused on executing our strategic review process with the objective of maximizing shareholder value. Overall, we are encouraged by the direction of the business and the opportunities ahead as we move through 2026 and position for a step-up in performance in 2027. I will now turn the call back to the operator for questions. Nikki, please go ahead.

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Operator: [Operator Instructions] We’ll take our first question from Steve Ferazani with Sidoti.

Steve Ferazani: I appreciate the detail on the call. Certainly, very appreciative of the very early outlook on 2027. That’s exceptionally helpful. I guess, Andy, the 2 big surprises to me are the strength in the Electron margins and the fact that you’re able to grow gas cylinders year-over-year given the issues that you had outlined previously that were going to impact you in Q1. So I just want to walk through those 2 specifically. Very rare to see that kind of margin improvement segment-wise that we saw in Elektron when revenue is declining. Can you walk us through the pieces on that? What drove such significant margin improvement? It looks like the highest quarterly margin you’ve had in that segment since I have to go back to it looks like 2022.

Andrew William Butcher: Yes. Thank you, Steve. We are very pleased with our Q1 and the performance in both the units. In our assessment also, it was a very nice result in Elektron. So we saw strong demand coming through in aerospace and defense. a nice mix of higher-value products. We saw strong operational performance in — across most of the facilities. And that led to margins pushing above 20% despite the low values. So much to be pleased about there, especially overcoming that impact of the temporary softness in automotive high-performance wheels. We should see higher revenues now coming through in upcoming quarters, and that helped us raise our guidance. So another nice result for Elektron. And then in cylinders, yes, revenues held up nicely, in fact, slightly higher.

So Cylinders Q1 profitability significantly ahead of the prior year quarter run rates. Some of the positives to highlight on the revenue line were around specialty products, demand for the specialty gas cylinder range, for example, some incremental profit coming through from space. And then continued pricing improvements versus inflation were helpful on the margin line, along with the relocation of the Pilbara to Riverside operations. So a nice result for cylinders also.

Steve Ferazani: What was the surprise to you coming into — that you saw in the quarter in terms of volume? You pointed out a couple of times specialty gas cylinders. How much of that semiconductor, which we think is going to have a really nice couple of years here? Is that the key driver there? Or was it mixed?

Andrew William Butcher: Yes. So 2 key elements to the gas cylinders success on the specialty range. That is indeed related to semiconductors. Our larger cylinders are used to store expensive premium gases for the semiconductor market. And then we also have a range of smaller cylinders that gets used in the calibration market for testing cylinders and for monitoring testing sensors and for monitoring the performance of them. So yes, it was a nice period for specialty gas. We also saw a little uptick in the CNG market, which was a slight surprise. I don’t necessarily think I can yet point to a long-term trend of improvements in clean energy, but that will come through at some point, and it was nice to see those slightly higher volumes there.

Steve Ferazani: Got it. Update on the Saxonburg facility. Where are you with that?

Andrew William Butcher: Yes. So in terms of the move to Saxonburg, that’s the second of our relocation activities. So all of the atomization of powders and preparation of powders that was been done in Saxonburg [Indiscernible] has now moved across to our Saxonburg facilities. We do continue to run down our stock [Indiscernible], and that will continue for at least another couple of months as we ramp up in Saxonburg. So that project is on track and will be completed by the end of the year. We’re more advanced with the first of our moves. That’s in our cylinders business from Pomona to Riverside. The operations have now ceased in Pilbara. And since the start of the year, we’ve been ramping up production in Riverside. And all of those lines are now operational, albeit that we’re still waiting for some product approvals to be completed. So we don’t see the full benefits from that move until later in the year.

Steve Ferazani: Got it. I guess for Steve, I think you noted the higher working capital part of that was the relocation. Should we see inventory levels coming down and be more of a benefit as the year goes on?

Stephen M. Webster: Yes. I think that’s a fair comment. So first of all, I mean, in terms of the cash being a modest outflow in the quarter, I mean, that’s not unusual for quarter 1. That often happens. But yes, inventories ticked up to $100 million, which is up about $8 million higher than it was at year-end. That is linked to holding higher levels for the 2 projects. I’d also say there’s some pricing coming through in terms of certain materials, which in turn has an upward pressure on the inventory value. Very confident we’ll be able to pass those on ultimately through price. So no concern there. But yes, it should come down. Our OWC is around about 30% of revenue at the end of last year. I think it was at 25%, 26%. And I would expect to get close to that as we get towards the end of the year. This year.

Steve Ferazani: Excellent. That’s helpful. Turning to the 2027 outlook. This is very helpful to us. Can you walk through sort of what — because the earnings growth this year is pretty much predicated on margin improvement, but it sounds like in 2027, you see a real top line contributor. Andy, this early on, what gives you that confidence to put this out there? And any particular areas you want to point out?

Andrew William Butcher: Yes. Thank you. I’m glad that was helpful because we have heard from a number of shareholders over the last 2 months that they want to hear more clearly from us about the medium-term growth and earnings drivers. And the improved visibility in 2026 is also now giving us clearer insight into 2027. So if we to refer back to Slide 8, we can see some of those laid outs and why overall, we anticipate at least high single-digit sales growth in 2027. So I want to emphasize first the strong outlook for our overall Defense and Aerospace segment, whether it’s for alloys, flares, heaters, chemical kits or commercial aviation, demand is robust, and we’ll see growth overall in 2027. And then perhaps to provide extra color on 3 areas where we strongly expect there will be tailwinds in 2027.

Firstly, Steve, there’s this multiyear replacement cycle coming for SCBA that begins to impact in 2027. The major players in the industry are planning for this now, the cylinders and set age out and need replacing. Some of the largest municipalities in the country are looking to replace and upgrade One of them we know is in open discussions on this already for up to 10,000 sets. Secondly, I’d like to talk to flameless Ration heaters, which we are increasingly confident will grow in 2027 internationally and domestically. There are positive buying signals that suggest an add-on order will lift domestic demand early next year, and we’re currently quoting on 4 pieces of international business, an unprecedented level. And thirdly, normalized demand for magnesium alloy for those high-performance automotive wheels is scheduled to return around quarter 4 of this year as model years roll over.

We’ve recently learned that the uptake rate on the magnesium special option has increased in 2026. So we’re actually seeing some recovery here coming in already. And of course, we have new product development and space as part of the picture as well. Now there will always be some surprises and headwinds. But suffice to say there’s a good understanding we have of all of this and you combine it with the benefits of our operational excellence work. And that enables us to say we expect robust double-digit earnings growth in 2027.

Steve Ferazani: Extremely helpful. And talking about the surprises or uncertainties, and you know you’re watching geopolitical developments as we all are. But when I look at your end markets, not a lot of them should be impacted by elevated oil prices. Am I thinking about that right, at least from a demand standpoint?

Andrew William Butcher: Yes, you are. We’re, of course, like everyone, conscious of the geopolitical situation and any wider macroeconomic consequences, and we’ll continue to monitor this closely. But right now, we’re not seeing anything concerning from a demand perspective. Indeed, we are seeing some indications of a future uplift related to certain defense products. Now as Steve mentioned, we are seeing some inflationary costs come through on some materials. We see that on both metals and chemicals. But where we have customer contracts, we have quarterly pass-through adjusters, and we’re seeing good acceptance of price changes both within those and on our spot order basis. And as you suggest, our product portfolio in general is biased away from consumer products tends to be rather resilient in the face of uncertainties. So overall, not a big factor for us right now.

Steve Ferazani: Great. If I could just squeeze one last one in. On your final slide, you noted an active strategic review. Active might have been newly added or maybe I’m misreading it in terms of where this — can you give any comments around the strategic review?

Andrew William Butcher: I’ll just remind people that there were 3 conclusions associated with our strategic review in 2024. The sale of the Graphic Arts business, which is now complete, enhancing the performance of Gas Cylinders and Elektron and maintaining all strategic optionality. So with respect to the third strategic optionality, we do maintain our view that Gas Cylinders and Elektron have no material strategic synergies, and we’re continuously assessing performance and market conditions to maximize shareholder value. Over recent months, we have continued our readiness preparations. That’s including work with various third parties, including investment banking and strategic growth advisers. But turning back to enhancing C cylinders and Electron, we’ve made strong progress over the last quarters, and I’ve talked in detail in my prepared remarks about how we are executing opportunities for both profitable growth and cost reductions as we move forward.

Operator: There are no more questions in the queue. At this time, I will turn the call over to CEO, Andy Butcher for final remarks.

Andrew William Butcher: Thank you, Nikki. Luxfer is well positioned with a resilient earnings profile and the trajectory for growth in 2027. We are executing with discipline and building momentum across the business, supported by improving end market demand and continued operational progress. The actions we have taken over the past several quarters are gaining traction and positioning the business for a meaningful step-up in performance. I want to thank our associates for their continued performance and commitment, and thank you for your continued support.

Operator: Thank you. This concludes Luxfer’s First Quarter 2026 Earnings Call. A recording of this conference call will be available in about 2 hours. A link to a recording of this webcast will be available on the Luxfer website at www.luxfer.com. Thank you all for your participation. You may now disconnect.

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