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What changed in LUXFER HOLDINGS PLC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LUXFER HOLDINGS PLC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+213 added−508 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in LUXFER HOLDINGS PLC's 2024 10-K

213 paragraphs added · 508 removed · 182 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeArea of Focus Product End-market drivers Alternative fuels • AF cylinders and systems • Bulk gas storage transportation cylinders and systems • Clean energy initiatives • Availability and pricing of natural gas and hydrogen • Increasing adoption of hydrogen as fuel source for public transport, particularly in Europe • Growing availability of CNG filling infrastructure Environmental catalysis (cleaning of exhaust emissions) • Zirconium compounds used in automotive catalytic converters • Legislation and regulation aimed at reducing emissions from internal combustion engines, including gasoline particulate filtration • Pricing of zirconium compounds compared to the use of precious metals • Increasing demand for gasoline-electric hybrid vehicles Civil and military aerospace • Elektron® aerospace alloys in cast, extruded, and sheet form • Growth in the global aircraft market • Emphasis on reducing the weight of aircraft components to increase fuel efficiency 4 Defense, First Response & Healthcare (41% of 2023 sales): Luxfer offers many products that help to protect people, equipment and property in hazardous conditions, conflicts and emergencies.
Biggest changeArea of Focus Product End-market drivers Alternative fuels • AF cylinders and systems • Bulk gas storage transportation cylinders and systems • Clean energy initiatives • Availability and pricing of natural gas and hydrogen • Increasing adoption of hydrogen as a fuel source for public transport, particularly in Europe • Growing availability of CNG filling infrastructure Environmental catalysis (cleaning of exhaust emissions) • Zirconium compounds used in automotive catalytic converters • Legislation and regulation aimed at reducing emissions from internal combustion engines, including gasoline particulate filtration • Pricing of zirconium compounds compared to the use of precious metals • Increasing demand for gasoline-electric hybrid vehicles, though partially offset by demand for battery electric vehicles Civil and military aerospace • Elektron® aerospace alloys in cast, extruded, and sheet form • Cylinders for deployment of aircraft escape slides and delivery of cabin oxygen • Growth in the global aircraft market • Emphasis on reducing the weight of aircraft components to increase fuel efficiency Lightweighting in performance automotive • Magnesium alloys used for wheels in high-performance vehicles • Desire for light-weighting in high-performance vehicles 5 General industrial (27% of 2024 sales): Our core technologies serve various industrial markets and applications.
With continued focus on diversity and equity, Luxfer’s diversity initiatives include, but are not limited to, practices and policies on recruitment and selection, including targeted sourcing of personnel from diverse backgrounds; compensation and benefits; professional development and training; advancement opportunities; and the ongoing development of a diverse and inclusive work environment.
With continued focus on diversity and equity, Luxfer’s diversity initiatives include, but are not limited to, practices and policies on recruitment and selection, including sourcing of personnel from diverse backgrounds; compensation and benefits; professional development and training; advancement opportunities; and the ongoing development of a diverse and inclusive work environment.
We have well-defined health and safety policies and procedures that are reinforced by ongoing employee training. We conduct annual on-site audits to identify and mitigate environmental health and safety risks, as well as evaluate for compliance with all regulatory requirements and Luxfer policies.
We have well-defined health and safety policies and procedures that are reinforced by ongoing employee training. We conduct annual site audits to identify and mitigate environmental health and safety risks, as well as evaluate for compliance with all regulatory requirements and Luxfer policies.
Consistent with our Elektron segment, magnesium used in U.S. production was previously purchased exclusively from the U.S. but since the force majeure declared by our U.S. supplier, purchases have been sourced from a number of non-U.S. sources.
Consistent with our Elektron segment, magnesium used in U.S. production was previously purchased exclusively from the U.S. but since the previous force majeure declared by our U.S. supplier, purchases have been sourced from a number of non-U.S. sources.
Key product lines include: • Advanced lightweight, corrosion-resistant and heat- and flame-resistant magnesium alloys for use in aerospace, healthcare and oil and gas applications. • Magnesium powders used in countermeasure flares that protect aircraft from heat-seeking missiles and also for heating pads for self-heating meals used by the military and emergency-relief agencies. • High-performance zirconium-based materials and oxides used as catalysts and in the manufacture of advanced ceramics, fiber-optic fuel cells, pharmaceuticals and many other performance products.
Key product lines include: • Advanced lightweight, corrosion-resistant and heat- and flame-resistant magnesium alloys for use in aerospace, automotive and oil and gas applications. • Magnesium powders used in countermeasure flares that protect aircraft from heat-seeking missiles and also for the manufacture of heating pads for self-heating meals used by the military and emergency-relief agencies. • High-performance zirconium-based materials and oxides used as catalysts and in the manufacture of advanced ceramics, fiber-optic fuel cells, pharmaceuticals and many other performance products.
Luxfer's high-performance materials, components and high-pressure gas containment devices are used in defense, first response and healthcare, transportation and general industrial applications. We focus primarily on product lines related to magnesium alloys, zirconium chemicals and carbon composites.
Luxfer's high-performance materials, components and high-pressure gas containment devices are used in defense, first response and healthcare, transportation and general industrial applications. We focus primarily on product lines related to magnesium alloys, zirconium chemicals, aluminum cylinders and carbon composites.
The system places emphasis on serving the customer and profitable growth, consisting of the following key themes: • Commercial Excellence • Lean Operations • Innovation • Sustainability • People Excellence • Strategy Deployment 6 Seasonality Historically, we have shutdown periods at most of our manufacturing sites, during which we carry out maintenance work.
The system places emphasis on serving the customer, enabling sustainable profitable growth and value creation, consisting of the following key themes: • Commercial Excellence • Lean Operations • Innovation • Sustainability • People Excellence • Strategy Deployment 6 Seasonality Historically, we have shutdown periods at most of our manufacturing sites, during which we carry out maintenance work.
We have a global presence, operating 12 manufacturing plants in the U.S., the U.K., Canada and China, one of which relates to discontinued operations, and we also have a joint venture in Japan. We employ approximately 1,400 people, including temporary staff, of which fewer than 50 support our discontinued operations.
We have a global presence, operating 13 manufacturing plants in the U.S., the U.K., Canada and China, one of which relates to discontinued operations, and we also have a joint venture in Japan. We employ approximately 1,500 people, including temporary staff, of which fewer than 50 support our discontinued operations.
We generally enter into non-disclosure and invention assignment agreements with our employees and subcontractors, as well as our customers and vendors. Human Capital Management The Company employed approximately 1,400 people as of December 31, 2023, fewer than 50 of whom relate to discontinued operations.
We generally enter into non-disclosure and invention assignment agreements with our employees and subcontractors, as well as our customers and vendors. Human Capital Management The Company employed approximately 1,500 people as of December 31, 2024, fewer than 50 of whom relate to discontinued operations.
Thanks to the ingenuity of our own research and development teams, Luxfer has developed a steady stream of new products, most recently including: • Soluble magnesium alloys, branded SoluMag ® , for down-well oil and gas applications; • Ultra-lightweight large composite cylinders, branded G-Stor TM , for containment of CNG, hydrogen, helium and other gases; • AF systems solutions for buses, trucks and bulk gas transportation; • Zirconium catalysts for automotive end-use, including advances in gasoline particulate filtration used in hybrid vehicles; • L7X ® high-strength aluminum alloy and carbon composite gas cylinders; • Luxfer ECLIPSE, a new carbon composite cylinders for firefighter self-contained breathing apparatus (SCBA); • Unitized Group Ration - Express (UGR-E) heater meals developed to deliver hot meals to multiple soldiers in a combat or training environment; and • Improved performance magnesium photoengraving plates including the recently-launched OptiMag ® We believe that our commitment to research and new product development, through dedicated resources and significant use of management's time, forms the core of Luxfer's growth potential.
Thanks to the ingenuity of our own research and development teams, Luxfer has developed a steady stream of new products, most recently including: • Soluble magnesium alloys, branded SoluMag ® , for down-well oil and gas applications; • Wrought magnesium base alloys, branded RotaMag ® , for high strength part applications; • Ultra-lightweight large composite cylinders, branded G-Stor ® , for containment of CNG, hydrogen, helium and other gases; • AF systems solutions for buses, trucks and bulk gas transportation, including the new G-Stor ® Hydrosphere multiple element gas container; • Zirconium catalysts for automotive end-use, including advances in gasoline particulate filtration used in hybrid vehicles; • L7X ® high-strength aluminum alloy and carbon composite gas cylinders; • Unitized Group Ration - Express (UGR-E) heater meals developed to deliver hot meals to multiple soldiers in a combat or training environment; and • Improved performance magnesium photoengraving plates including the recently-launched OptiMag ® We believe that our commitment to research and new product development, through dedicated resources and significant use of management's time, forms the core of Luxfer's growth potential.
All functional business units report a mixture of leading and lagging metrics to assess health and safety performance, which are reviewed regularly by executive leadership and management. In fiscal year 2023, the Company had 4 Lost Time Accidents and an Incident Frequency Rate of 2.46 with no work-related fatalities.
All functional business units report a mixture of leading and lagging metrics to assess health and safety performance, which are reviewed regularly by executive leadership and management. In fiscal year 2024, the Company had 8 Lost Time Accidents and an Incident Frequency Rate of 2.44 per year with no work-related fatalities.
The price of aluminum, and carbon fiber, has been volatile in the past and increased substantially in 2022 and continued through 2023.
The price of aluminum, and carbon fiber, has been volatile in the past and increased substantially in 2022, continued through 2023 and has remained throughout 2024.
Elektron Segment Our Elektron Segment focuses on specialty materials based primarily on magnesium and zirconium. In 2023, sales from our Elektron Segment represented approximately 46% (2022: 47%, 2021: 42%) of our consolidated net sales from continuing operations. Our top ten customers represented 50% of segment sales. No singular customer represented 10% or more of our Elektron Segment sales.
Elektron Segment Our Elektron Segment focuses on specialty materials based primarily on magnesium and zirconium. In 2024, sales from our Elektron Segment represented approximately 45% (2023: 46%, 2022: 48%) of our consolidated net sales from continuing operations. Our top ten customers represented 50% of segment sales. No singular customer represented 10% or more of our Elektron Segment sales.
Our products are also used by scuba divers and personnel in potentially hazardous environments, such as mines. • Carbon fiber composite cylinders for compressed natural gas (CNG) and hydrogen containment in alternative fuel (AF) vehicles. • Cylinders used for the containment of oxygen and other medical gases used by patients, healthcare facilities and laboratories. 1 Our U.S. aluminum gas cylinder business was sold in March 2021, our Superform U.K. business was sold in September 2021, and we expect our Superform U.S. business to be sold within the next twelve months.
Our products are also used by scuba divers and personnel in potentially hazardous environments, such as mines. • Carbon fiber composite cylinders for compressed natural gas (CNG) and hydrogen containment and transportation, ultimately used to power alternative fuel (AF) vehicles. • Cylinders used for the containment of oxygen and other medical gases used by patients, healthcare facilities and laboratories. 1 Our Superform U.S. business, is expected to be sold within the next twelve months.
Magnesium prices for U.S. production peaked in 2022 at approximately four times the historical price before falling back to around one-and-a-half times in recent months.
Magnesium prices for U.S. production peaked in 2022 at approximately four times the historical price before falling back to around one-and-a-half times in 2023 and has continued to fall in 2024.
In 2023, our net sales from continuing operations were $405.0 million (2022: $423.4 million, 2021: $374.1 million), and our net loss from continuing operations was $2.6 million (2022: $32.0 million income, 2021: $30.0 million income). Luxfer operates in three business segments - Elektron, Gas Cylinders and Graphic Arts.
In 2024, our net sales from continuing operations were $391.9 million (2023: $405.0 million, 2022: $423.4 million), and our net income from continuing operations was $18.3 million (2023: $2.6 million loss, 2022: $32.0 income). Luxfer operates in three business segments - Elektron, Gas Cylinders and Graphic Arts.
Three customers represented 16%, 15% and 11% respectively, of our Gas Cylinders Segment sales. No other singular customer represented greater th an 10% of Ga s Cylinders Segment sales. Key product lines include: • Carbon fiber composite cylinders for self-contained breathing apparatus (SCBA), used by firefighters and other emergency-responders.
Three customers represented 18%, 14% and 10% respectively, of our Gas Cylinders Segment sales. No other singular customer represented greater than 10% of Gas Cylinders Segment sales. Key product lines include: • Carbon fiber composite cylinders for self-contained breathing apparatus (SCBA), used by firefighters and other emergency-responders.
Magnesium purchases in the last two years have been impacted by a sharp rise in prices, as detailed above, which has contributed to the loss in market share outside of the U.S. and reduced performance of the segment.
Magnesium purchases have been impacted by the volatility in its prices, as detailed above, which has contributed to the loss in market share outside of the U.S. and reduced performance of the segment.
National Institute for Occupational Safety and Health (NIOSH) standards and natural replacement cycles • Asian and European fire services looking to adopt more modern SCBA equipment Military countermeasure flares • Ultra-fine magnesium powders for flares used to protect aircraft from attack by heat-seeking missiles • Military combat and training exercises • Maintenance of countermeasures reserves (shelf-life restrictions) Support of personnel in hazardous conditons • Self-heating meals used by military personnel and emergency-relief agencies • Chemical detection and chemical decontamination kits • Ensuring protection and well-being for military personnel and victims of natural disasters • Military combat and training Medical gases • Portable aluminum and composite cylinders • Demand for lightweight products to upgrade from heavy all-metal cylinders • Growing trend to provide oxygen therapy in the home and to keep patients mobile Orthopedics • Magnesium sheets • Improved mobility through use of easy-to-wear, lightweight braces and trusses Pharmaceuticals • MELsorb® material used in dialysis equipment and enterosorbents • Zirconium compounds as a base material for pharmaceutical applications • New technologies to remove noxious elements from the body 5 General industrial (29% of 2023 sales): Our core technologies serve various industrial markets and applications.
National Institute for Occupational Safety and Health (NIOSH) standards and natural replacement cycles • Asian and European fire services looking to adopt more modern SCBA equipment Military countermeasure flares • Ultra-fine magnesium powders for flares used to protect aircraft from attack by heat-seeking missiles • Military combat and training exercises • Maintenance of countermeasures reserves (shelf-life restrictions) Support of personnel in hazardous conditons • Self-heating meals used by military personnel and emergency-relief agencies • Chemical detection and chemical decontamination kits • Ensuring protection and well-being for military personnel and victims of natural disasters • Military combat and training Medical gases • Portable aluminum and composite cylinders • Demand for lightweight products to upgrade from heavy all-metal cylinders • Growing trend to provide oxygen therapy in the home and to keep patients mobile Orthopedics • Magnesium sheets • Improved mobility through use of easy-to-wear, lightweight braces and trusses Pharmaceuticals • MELsorb® material used in dialysis equipment and enterosorbents • Zirconium compounds as a base material for pharmaceutical applications • New technologies to remove noxious elements from the body 4 Transportation (29% of 2024 sales): Many Luxfer products serve a growing need to improve and safeguard the environment in the field of transportation, including our (i) lightweight, high-pressure carbon composite cylinders that contain compressed natural gas and hydrogen; (ii) zirconium-based products that reduce automotive and other emissions; and (iii) lightweight magnesium alloys used in fuel-efficient aerospace and automotive designs.
Gas Cylinders Segment Our Gas Cylinders Segment manufactures and markets specialized, highly-engineered cylinders using carbon composites and aluminum alloys. In 2023, sales from our Gas Cylinders Segment represented approximately 46% (2022: 43%, 2021: 48%) of our consolidated net sales. Our top ten customers represente d 59% of s egment sales.
Gas Cylinders Segment Our Gas Cylinders Segment manufactures and markets specialized, highly-engineered cylinders using carbon composites and aluminum alloys. In 2024, sales from our Gas Cylinders Segment represented approximately 47% (2023: 46%, 2022: 43%) of our consolidated net sales. Our top ten customers represented 62% of segment sales.
Gas Cylinders Segment Key raw materials used in the Gas Cylinders Segment include high-strength carbon fiber and aluminum. Our main carbon fiber suppliers include Toray and Mitsubishi. In recent years, the carbon fiber has experienced periods of tight supply conditions due to increased demand for commercial aerospace, military and clean energy applications.
Our main carbon fiber suppliers include Toray, Hyosung and Mitsubishi. In recent years, the carbon fiber has experienced periods of tight supply conditions due to increased demand for commercial aerospace, military and clean energy applications.
Over time, we have built relationships with our suppliers, providing them predictable requirements and annual contracts that help to ensure procurement of our required volume of carbon fiber. In 2023, we purchased approximately 45% of our aluminum from Rio Tinto Alcan and its associated companies. Aluminum represented approximately 30% of Gas Cylinders Segment's raw material costs in 2023.
Over time, we have built relationships with our suppliers, providing them predictable requirements and annual contracts that help to ensure procurement of our required volume of carbon fiber. In 2024, aluminum represented approximately 25% of Gas Cylinders Segment's raw material costs in 2024.
Other products include lightweight gas cylinders for containment of medical and laboratory gases, zirconium powders for pharmaceutical products, magnesium materials for lightweight orthopedic devices, specialized magnesium alloys for the automotive industry, and zirconium materials for biomedical applications and dental implants.
Other products include lightweight gas cylinders for containment of medical and laboratory gases, zirconium powders for pharmaceutical products, and zirconium materials for biomedical applications and dental implants.
All Luxfer personnel are required to complete a variety of anti-harassment, non-discrimination, diversity, and unconscious bias trainings annually. Luxfer’s talent acquisition teams and hiring managers undergo additional training to ensure that a diverse slate of candidates is considered for all job openings. Further, Luxfer monitors the composition of its current workforce for diversity, age, and gender demographics.
To ensure effective teamwork and achievement of common business goals, all Luxfer personnel are required to complete a variety of anti-harassment, non-discrimination, diversity, and unconscious bias trainings annually. Luxfer’s talent acquisition teams and hiring managers undergo additional training to ensure that a diverse slate of candidates is considered for job openings.
All information included within this section relates to continuing operations, unless otherwise stated. Financial Information about Segments and Geographic Areas See Note 17 ("Segment Information") to our consolidated financial statements for further information regarding our operating segments and our geographic areas.
All information included within this section relates to continuing operations, unless otherwise stated. Financial Information about Segments and Geographic Areas See Note 18 ("Segment Information") to our consolidated financial statements for further information regarding our operating segments and our geographic areas. 2 Elektron Segment Key raw materials used by our Elektron Segment are magnesium, zircon sand and rare earths.
As a result, only our Superform U.S. business remains on the balance sheet as held-for-sale at December 31, 2023 and December 31, 2022. Results from the three operations were disclosed as discontinued in the income statement for the corresponding years' of ownership.
As a result, the business remains on the balance sheet as held-for-sale at December 31, 2024 and December 31, 2023. Results from Superform U.S. are disclosed as discontinued in the income statement for the corresponding years' of ownership. Graphic Arts Segment Our Graphic Arts Segment focuses on magnesium photo-engraving plates, engraving metals and etching chemicals.
While we generally have passed through changes in input costs to our customers, some of our Gas Cylinders Segment contracts contain look-back provisions that result in a lag to our ability to adjust pricing for changes in input costs. Graphic Arts Segment The key raw material used in the Graphic Arts segment is magnesium.
We generally have passed through changes in input costs to our customers, however, due to some of our Gas Cylinders Segment contracts containing look-back provisions, and other customers ordering from quarterly price lists, it can result in a lag versus input costs. Graphic Arts Segment The key raw material used in the Graphic Arts segment is magnesium.
No singular customer represented 10% or more of our Graphic Arts Segment sales. Key product lines include: • Magnesium, copper, and zinc photo-engraving plates for graphic arts and luxury packaging. • Developer solutions to aide the engraving process. • Solid wrought magnesium slab and sheet.
Key product lines include: • Magnesium, copper, and zinc photo-engraving plates for graphic arts and luxury packaging. • Developer solutions to aide the engraving process. • Solid wrought magnesium slab and sheet used in various industrial and aerospace applications.
This data is used to enhance employment and recruitment practices and is continually improved to ensure that a diverse and talented workforce is maintained. Financial, Physical, and Emotional Well-Being Fair Wages and Competitive Benefits: Luxfer offers competitive base pay and, depending on position, variable incentive pay associated with both individual and Company performance.
Financial, Physical, and Emotional Well-Being Fair Wages and Competitive Benefits: Luxfer offers competitive base pay and, depending on position, variable incentive pay associated with both individual and Company performance.
We are currently in the process of executing an accelerated and expanded strategic review process, the initial conclusions of which have determined that the Graphic Arts business no longer aligns with Luxfer's value proposition, hence we are initiating a sales process with the intention of divesting this business in 2024.
A conclusion of the strategic review announced in October 2023 determined that the Graphic Arts business no longer aligns with Luxfer's value proposition, hence we are executing a sales process with the intention of divesting this business in 2025. It is therefore classified as held-for-sale as at December 31,2024.
Usually mixed together with other mineral deposits, these rare earths exhibit magnetic and light-emitting properties that make them invaluable to high-technology manufacturers. These rare earth metals are used as ingredients in our zirconium chemical and magnesium alloy products. Our largest rare earth requirement is cerium, which we use in automotive catalysis compounds because of its unique oxygen-storage capabilities.
These rare earth metals are used as ingredients in our zirconium chemical and magnesium alloy products. Our largest rare earth requirement is cerium, which we use in automotive catalysis compounds because of its unique oxygen-storage capabilities. Gas Cylinders Segment Key raw materials used in the Gas Cylinders Segment include high-strength carbon fiber and aluminum.
Of the approximately 1,300 employees associated with continuing operations, approximately 700 are employed in the United States and 600 are employed internationally. Attracting and retaining talent remains a challenge in the post-COVID landscape.
Of the approximately 1,450 employees associated with continuing operations, approximately 900 are employed in the United States and 550 are employed internationally. Attracting and retaining talent is key to Luxfer's business system.
Graphic Arts Segment Our Graphic Arts Segment is a global leader in magnesium photo-engraving plates, engraving metals and etching chemicals. In 2023, sales from our Graphic Arts Segment represented approximately 8% (2022: 9%, 2021: 11%) of our consolidated net sales. Our top ten customers represented 38% of segment sales.
In 2024, sales from our Graphic Arts Segment represented approximately 8% (2023: 8%, 2022: 9%) of our consolidated net sales. Our top ten customers represented 38% of segment sales. No singular customer represented 10% or more of our Graphic Arts Segment sales.
We source premium-grade zircon sand from suppliers in South Africa, Senegal, Indonesia and Australia. We also purchase intermediate zirconium chemicals from suppliers in China. The level of these purchases is based on a number of factors, including required properties and relative market prices. There are 17 rare earth metals that are commonly found in nature.
The level of these purchases is based on a number of factors, including required properties and relative market prices. There are 17 rare earth metals that are commonly found in nature. Usually mixed together with other mineral deposits, these rare earths exhibit magnetic and light-emitting properties that make them invaluable to high-technology manufacturers.
Due to the nature of the production process, the purchase price of magnesium can take up to 12 months to be fully recognized in the income statement and the business is expected to benefit from these lower costs throughout 2024. 3 Our end-markets Key end-markets for Luxfer products fall into three categories: Transportation (29% of 2023 sales): Many Luxfer products serve a growing need to improve and safeguard the environment in the field of transportation, including our (i) lightweight, high-pressure carbon composite cylinders that contain compressed natural gas and hydrogen; (ii) zirconium-based products that reduce automotive and other emissions; and (iii) lightweight magnesium alloys used in fuel-efficient aerospace and automotive designs.
Due to the nature of the production process, the purchase price of magnesium can take up to 12 months to be fully recognized in the income statement and the business has benefited from these lower costs throughout 2024. 3 Our end-markets Key end-markets for Luxfer products fall into three categories: Defense, First Response & Healthcare (44% of 2024 sales): Luxfer offers many products that help to protect people, equipment and property in hazardous conditions, conflicts and emergencies.
Production outside of China, however, is significant, including, Dead Sea Magnesium in Israel, RIMA Industrial in Brazil, and smaller producers in Turkey and Russia. We historically used only U.S.-sourced materials for our products sold to the U.S. military, for which U.S. sourcing is mandatory.
The world demand for magnesium is around between 1,000,000 and 1,500,000 metric tons per year. China provides about 85% of the world supply. Production outside of China, however, is significant, including, Dead Sea Magnesium in Israel, RIMA Industrial in Brazil, and smaller producers in Turkey and Russia.
We generally purchase raw materials from suppliers on a spot basis under previously contracted terms and conditions and have been able to source magnesium from alternate suppliers. We purchase and process zircon sand, which is found in heavy-minerals sand, titanium dioxide and other products. Global production of zircon sand is estimated at approximately 1.5 million metric tons.
We purchase and process zircon sand, which is found in heavy-minerals sand, titanium dioxide and other products. Global production of zircon sand is estimated between 1,000,000 and 1,500,000 metric tons per year. We source premium-grade zircon sand from suppliers in South Africa, Senegal, Indonesia and Australia. We also purchase intermediate zirconium chemicals from suppliers in China.
However, given the current force majeure declared by our U.S. supplier of magnesium, we have qualified non-U.S.-sourced material for sale to the U.S. military. Given the current force majeure declared by U.S. Magnesium LLC, we do not know when or if we will be able to recommence the magnesium ingot purchases with this supplier.
Magnesium LLC, and the current idling of the plant, we do not know when or if we will be able to recommence the magnesium ingot purchases with this supplier. We generally purchase raw materials from suppliers on a spot basis under previously contracted terms and conditions and have been able to source magnesium from alternate suppliers.
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Suppliers and raw materials Margin pressure resulting from supply chain challenges easing We have been experiencing supply chain challenges, which has resulted in higher cost of certain raw materials. In our supply chain, previously described challenges caused by the disruption in our U.S. domestic magnesium supply continued, and overall competitive cost pressures persisted.
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We historically used only U.S.-sourced materials for our products sold to the U.S. military, for which U.S. sourcing is mandatory. However, in recent years we have qualified non-U.S.-sourced material for sale to the U.S. military. Given the force majeure previously declared by U.S.
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These issues have been particularly acute in our Graphic Arts segment, where the ability to pass through higher costs to our customers has proved to be constrained. In recent months however, the purchase price of Magnesium has been falling, which will result in lower input cost in 2024.
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We have implemented elements of our strategic review in Graphic Arts to reduce costs, including a headcount reduction program. We are also pursuing further actions to improve margins and maintain strong cash flow across the business.
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In the majority of cases we are able to pass through inflationary costs to our customers, although we are still constrained by a small number of contracts, particularly in the Gas Cylinders segment, the longest running of which is not subject to renewal until mid-2024.
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Currently, our expectation is that the adverse impact of material availability / inflation, energy cost inflation and labor and transport constraints will lessen in 2024 and when costs fall we will in some cases need to reduce prices to customers.
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However the outlook remains highly uncertain with both the size and timing of future costs difficult to predict. 2 Elektron Segment Key raw materials used by our Elektron Segment are magnesium, zircon sand and rare earths. The world demand for magnesium is around one and a half million metric tons per year. China provides about 80% of the world supply.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Paris Agreement set a goal of holding the increase in global average temperature to below 2 degrees Celsius and pursuing efforts to limit the increase to 1.5 degrees Celsius, to be achieved by commitments by the participating countries to set emissions reduction targets, referred to as "nationally determined contributions." The Paris Agreement came into effect on November 4, 2016, after it was ratified the previous month, with implementation efforts beginning from 2018 with reassessment every five years.
Biggest changeThe Paris Agreement set a goal of holding the increase in global average temperature to below 2 degrees Celsius and pursuing efforts to limit the increase to 1.5 degrees Celsius, to be achieved by commitments by the participating countries to set emissions reduction targets, referred to as "nationally determined contributions." The Paris Agreement came into effect on November 4, 2016, after it was ratified the previous month, with implementation efforts beginning from 2018 with reassessment every five years. 14 In November 2024, the 29th United Nations Climate Change Conference (COP29) convened in Baku, Azerbaijan, resulting in significant developments: • Climate Finance Commitment: Developed nations agreed to mobilize $300 billion annually by 2035 to assist developing countries in mitigating climate change impacts and transitioning to sustainable energy sources. • Carbon Trading Mechanism: COP29 finalized rules under Article 6 of the Paris Agreement, establishing a UN-backed body to regulate international carbon credit trading.
If we do not have sufficient cash flows to service our debt, we may be required to refinance all or part of our existing debt, sell assets, incur further indebtedness or sell securities, none of which we can guarantee we will be able to do. 21 In addition, the agreements that govern the terms of our indebtedness contain, and any future indebtedness would likely contain, a number of restrictive covenants imposing significant operating and financial restrictions on us, including restrictions that may limit our ability to engage in acts that may be in our long-term best interests, including: • incurring or guaranteeing additional indebtedness; • capital expenditures; • paying dividends (including to fund cash interest payments at different entity levels) or making redemptions, repurchases or distributions with respect to ordinary shares or capital stock; • creating or incurring certain security interests; • making certain loans or investments; • engaging in mergers, acquisitions, investment in joint ventures, amalgamations, asset sales and sale and leaseback transactions; and • engaging in transactions with affiliates.
If we do not have sufficient cash flows to service our debt, we may be required to refinance all or part of our existing debt, sell assets, incur further indebtedness or sell securities, none of which we can guarantee we will be able to do. 20 In addition, the agreements that govern the terms of our indebtedness contain, and any future indebtedness would likely contain, a number of restrictive covenants imposing significant operating and financial restrictions on us, including restrictions that may limit our ability to engage in acts that may be in our long-term best interests, including: • incurring or guaranteeing additional indebtedness; • capital expenditures; • paying dividends (including to fund cash interest payments at different entity levels) or making redemptions, repurchases or distributions with respect to ordinary shares or capital stock; • creating or incurring certain security interests; • making certain loans or investments; • engaging in mergers, acquisitions, investment in joint ventures, amalgamations, asset sales and sale and leaseback transactions; and • engaging in transactions with affiliates.
Like other global companies, we have experienced, and expect to continue to be subject to, cybersecurity threats and incidents, ranging from employee error or misuse, individual attempts to gain unauthorized access to information technology systems, and to sophisticated and targeted measures known as advanced persistent threats, none of which have been material to the Company to date.
Like other global companies, we have experienced, and expect to continue to be subject to, cybersecurity threats and incidents, ranging from employee error or misuse, individual attempts to gain unauthorized access to information 15 technology systems, and to sophisticated and targeted measures known as advanced persistent threats, none of which have been material to the Company to date.
Any such claims could also be expensive and time consuming to defend and could divert management's attention and resources. In addition, if we have omitted to enter into a valid non-disclosure or assignment agreement for any reason, we may not own the invention or our intellectual property and may not be adequately protected.
Any such claims could also be expensive and time consuming to defend and could divert management's attention and resources. 17 In addition, if we have omitted to enter into a valid non-disclosure or assignment agreement for any reason, we may not own the invention or our intellectual property and may not be adequately protected.
In addition, we are required to comply with U.S. and other export regulations with respect to certain products and materials. The E.U. has also passed legislation 14 governing the registration, evaluation and authorization of chemicals, known as REACH, pursuant to which we are required to register chemicals and gain authorization for the use of certain substances.
In addition, we are required to comply with U.S. and other export regulations with respect to certain products and materials. The E.U. has also passed legislation governing the registration, evaluation and authorization of chemicals, known as REACH, pursuant to which we are required to register chemicals and gain authorization for the use of certain substances.
In addition, we could experience a reduction in sales if any of our 10 customers fail to perform or default on any payment pursuant to our contracts with them. Long-term relationships with customers are especially important for suppliers of intermediate materials and components such as ourselves.
In addition, we could experience a reduction in sales if any of our customers fail to perform or default on any payment pursuant to our contracts with them. Long-term relationships with customers are especially important for suppliers of intermediate materials and components such as ourselves.
With respect to our unpatented proprietary technology, it is possible that others will independently develop the same or similar technology or obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements.
With respect to our unpatented proprietary technology, it is possible that others will independently develop the same or similar technology or obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, 16 consultants, advisors and collaborators to enter into confidentiality agreements.
It is difficult to monitor and enforce such non-commercial academic and research uses, and we cannot predict whether the third party licensees would comply 18 with the use restrictions of these licenses. We could incur substantial expenses to enforce our rights against such licensees.
It is difficult to monitor and enforce such non-commercial academic and research uses, and we cannot predict whether the third party licensees would comply with the use restrictions of these licenses. We could incur substantial expenses to enforce our rights against such licensees.
While climate change regulation presents opportunities for Luxfer to develop new product lines and increase sales of climate-friendly products such as alternative fuel hydrogen cylinders and lightweight magnesium alloys, the impact on our existing product portfolio could have a material adverse effect on our results of operations, financial position and cash flows. 19 Operational Risks We may not be able to consummate, finance or successfully integrate future acquisitions into our business, which could hinder our strategy or result in unanticipated expenses, losses or charges.
While climate change regulation presents opportunities for Luxfer to develop new product lines and increase sales of climate-friendly products such as alternative fuel hydrogen cylinders and lightweight magnesium alloys, the impact on our existing product portfolio could have a material adverse effect on our results of operations, financial position and cash flows. 18 Operational Risks We may not be able to consummate, finance or successfully integrate future acquisitions into our business, which could hinder our strategy or result in unanticipated expenses, losses or charges.
As these cybersecurity threats, and government and regulatory oversight of associated risks, 16 continue to evolve, we may be required to expend additional resources to remediate, enhance or expand upon the cybersecurity protection and security measures we currently maintain.
As these cybersecurity threats, and government and regulatory oversight of associated risks, continue to evolve, we may be required to expend additional resources to remediate, enhance or expand upon the cybersecurity protection and security measures we currently maintain.
While our key employees are generally subject to non-competition agreements for a limited period of time following the end of their employment, if we were to lose the services of key executives or employees, it could adversely impact our ability to maintain our technological position, and / or have a material adverse effect on our results of operations, financial position and cash flows. 20 We could suffer a material interruption in our operations as a result of unforeseen events or operating hazards, including severe weather events linked to climate change.
While our key employees are generally subject to non-competition agreements for a limited period of time following the end of their employment, if we were to lose the services of key executives or employees, it could adversely impact our ability to maintain our technological position, and / or have a material adverse effect on our results of operations, financial position and cash flows. 19 We could suffer a material interruption in our operations as a result of unforeseen events or operating hazards, including severe weather events linked to climate change.
Any of these factors could have a material adverse impact on our results of operations, financial position and cash flows. 22 General risks Our ability to pay regular dividends on our ordinary shares is subject to the discretion of our Board of Directors and will depend on many factors, including our results of operations, cash requirements, financial position, contractual restrictions, applicable laws and other factors, and may be limited by our structure and statutory restrictions and restrictions imposed by the Revolving Credit Facility and the Loan Notes, as well as any future debt facilities.
Any of these factors could have a material adverse impact on our results of operations, financial position and cash flows. 21 General risks Our ability to pay regular dividends on our ordinary shares is subject to the discretion of our Board of Directors and will depend on many factors, including our results of operations, cash requirements, financial position, contractual restrictions, applicable laws and other factors, and may be limited by our structure and statutory restrictions and restrictions imposed by the Revolving Credit Facility and the Loan Notes, as well as any future debt facilities.
Changes in the relative values of currencies can decrease the profits of our subsidiaries when they incur costs in currencies that are different from the currencies in which they generate all or part of their revenue.
Changes in the relative values of currencies can decrease the profits of 11 our subsidiaries when they incur costs in currencies that are different from the currencies in which they generate all or part of their revenue.
We often work closely with customers to develop products that meet particular specifications as part of the design of a product intended for an end-user market. The bespoke nature of many of our products could make it difficult to replace lost customers. Our top 10 customers accounted for approximately 39% of our net sales in 2023.
We often work closely with customers to develop products that meet particular specifications as part of the design of a product intended for an end-user market. The bespoke nature of many of our products 10 could make it difficult to replace lost customers. Our top 10 customers accounted for approximately 39% of our net sales in 2024.
There is doubt as to the enforceability in England and Wales, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities solely based on the U.S. federal securities laws. 24 Item 1B. Unresolved Staff Comments None.
There is doubt as to the enforceability in England and Wales, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities solely based on the U.S. federal securities laws. 22 Item 1B. Unresolved Staff Comments None.
These transaction risks principally arise as a result of purchases of raw materials in U.S. dollars, coupled with sales of products to customers in euros. This impact is most pronounced in our exports to continental Europe from the U.K. In 2023, our U.K. operations sold approximately €50 million of goods into the Eurozone.
These transaction risks principally arise as a result of purchases of raw materials in U.S. dollars, coupled with sales of products to customers in euros. This impact is most pronounced in our exports to continental Europe from the U.K. In 2024, our U.K. operations sold approximately €47 million of goods into the Eurozone.
In addition to benefiting from our research collaboration with universities, we spent $4.6 million, $4.9 million and $3.9 million in 2023, 2022 and 2021, respectively, on our own research and development activities.
In addition to benefiting from our research collaboration with universities, we spent $4.4 million, $4.6 million and $4.9 million in 2024, 2023 and 2022, respectively, on our own research and development activities.
Fluctuations in exchange rates, particularly between the U.S. dollar and GBP sterling (which has been subject to significant fluctuations, as described above), can have a material effect on our consolidated income statement and consolidated balance sheet. In 2023, movements in the average U.S. dollar exchange rate had a positive impact impact on net sales of $2.8 million.
Fluctuations in exchange rates, particularly between the U.S. dollar and GBP sterling (which has been subject to significant fluctuations, as described above), can have a material effect on our consolidated income statement and consolidated balance sheet. In 2024, movements in the average U.S. dollar exchange rate had a positive impact impact on net sales of $3.7 million.
The health and safety of our employees and the safe operation of our business is subject to various health and safety regulations in each of the jurisdictions in which we operate. These regulations impose various obligations on us, including the provision of safe working environments and employee training on health and safety matters. Complying with these regulations involves recurring costs.
The health and safety of our employees and the safe operation of our business is subject to various health and safety regulations in each of the jurisdictions in which we operate. These regulations impose various obligations on us, including the provision of safe working environments and employee training on health and safety matters.
For additional information on these risks, and the historical impact on our results, see ITEM 7A. 12 Our defined benefit pension plans have historically fluctuated between funding deficits and surpluses and are exposed to market forces that could require us to make increased ongoing cash contributions in response to changes in market conditions, actuarial assumptions and investment decisions These market forces could expose us to significant short-term liabilities if a wind-up trigger occurred in relation to such plans, each of which could have a material adverse impact on our results of operations and financial position.
Our defined benefit pension plans have historically fluctuated between funding deficits and surpluses and are exposed to market forces that could require us to make increased ongoing cash contributions in response to changes in market conditions, actuarial assumptions and investment decisions These market forces could expose us to significant short-term liabilities if a wind-up trigger occurred in relation to such plans, each of which could have a material adverse impact on our results of operations and financial position.
The Luxfer Group Pension Plan is funded according to the regulations in effect in the U.K. and, as of December 31, 2023, and December 31, 2022, had an accounting surplus of $40.3 million and $27.0 million, respectively.
The Luxfer Group Pension Plan is funded according to the regulations in effect in the U.K. and, as of December 31, 2024, and December 31, 2023, had an accounting surplus of $49.3 million and $40.3 million, respectively.
As of December 31, 2023, we had $25.0 million of indebtedness under our senior notes (the "Loan Notes") due in 2026. There was also a $43.1 million and $4.6 million balance on the revolving credit facility ("RCF") and bank overdraft, respectively, as of December 31, 2023. Our indebtedness could have important consequences.
As of December 31, 2024, we had $25.0 million of indebtedness under our senior notes (the "Loan Notes") due in 2026. There was also a $17.2 million and $3.1 million balance on the revolving credit facility ("RCF") and bank overdraft, respectively, as of December 31, 2024. Our indebtedness could have important consequences.
We are exposed to various risks related to our defined benefit plans, including the risk of loss of market value of the plan assets, the risk of actual investment returns being less than assumed rates of return, the Trustees of the Luxfer Group Pension Plan switching investment strategy (which requires consultation with the employer), and the risk of actual experience deviating from actuarial assumptions for such things as mortality of plan participants.
As a result, a final premium totaling $29.3 million was paid to settle the liabilities. 12 We are exposed to various risks related to our defined benefit plans, including the risk of loss of market value of the plan assets, the risk of actual investment returns being less than assumed rates of return, the Trustees of the Luxfer Group Pension Plan switching investment strategy (which requires consultation with the employer), and the risk of actual experience deviating from actuarial assumptions for such things as mortality of plan participants.
Certain aspects of our operations are highly regulated by different agencies that require products to comply with their rules and procedures and can subject our operations to penalties or adversely affect production.
Complying with these regulations involves recurring costs. 13 Certain aspects of our operations are highly regulated by different agencies that require products to comply with their rules and procedures and can subject our operations to penalties or adversely affect production.
Doing business in different countries has risks, including the potential for adverse changes in the local, social, political, financial or regulatory climate, difficulty in staffing and managing geographically diverse operations, and the costs of complying with a variety of laws and regulations.
Doing business in different countries has risks, including the potential for adverse changes in the local, social, political, financial or regulatory climate, difficulty in staffing and managing geographically diverse operations, and the costs of complying with a variety of laws and regulations. For example, the potential implementation of tariffs on imports suggested by U.S.
We have defined benefit pension arrangements in the U.K. and in the U.S., see ITEM 8, Note 14. Our largest defined benefit plan, the Luxfer Group Pension Plan, ('the Plan') which closed to new members in 1998, remained open for accrual of future benefits based on career-average salary until April 5, 2016.
Our largest defined benefit plan, the Luxfer Group Pension Plan, ('the Plan') which closed to new members in 1998, remained open for accrual of future benefits based on career-average salary until April 5, 2016.
For example, in March 2021, the U.K. government announced an increase in the statutory rate of Corporation tax from the current 19% to 25%, which became effective in April 2023, and is expected to increase the future tax burden on earnings from our U.K. operations.
Changes in these tax regulations may increase our tax burden, or otherwise affect our accounting for taxes. For example, in March 2021, the U.K. government announced an increase in the statutory rate of Corporation tax from the current 19% to 25%, which became effective in April 2023, and increased the tax burden on earnings from our U.K. operations.
We are subject to reporting obligations under U.S. securities laws. Our reporting obligations as a public company place a significant strain on our management, operational and financial resources and systems for the foreseeable future.
Our reporting obligations as a public company place a significant strain on our management, operational and financial resources and systems for the foreseeable future.
In 2022 movements in the average U.S. dollar exchange rate had a negative impact on net sales of $15.6 million. Changes in translation exchange rates increased net assets by $7.3 million in 2023, compared to a decrease of $13.2 million in 2022.
In 2023 movements in the average U.S. dollar exchange rate had a positive impact on net sales of $2.8 million. Changes in translation exchange rates decreased net assets by $4.6 million in 2024, compared to an increase of $7.3 million in 2023.
These foreign exchange risks could have a material adverse effect on our results of operations, financial position and cash flows.
These foreign exchange risks could have a material adverse effect on our results of operations, financial position and cash flows. For additional information on these risks, and the historical impact on our results, see ITEM 7A.
According to the latest triennial actuarial valuation of the Luxfer Group Pension Plan as of April 5, 2021, the Luxfer Group Pension Plan had a deficit of £12.2 million on a plan-specific basis (reduced from £26.5 million at the previous valuation in April 2018).
According to the latest triennial actuarial valuation of the Luxfer Group Pension Plan as of March 31, 2024, the Luxfer Group Pension Plan had a surplus of £20.8 million (reduced from £12.2 million deficit at the previous valuation in April 2021).
The Trustee has the power to wind-up the Luxfer Group Pension Plan if it determines that in the best interests of members, there is no reasonable purpose in continuing the Luxfer Group Pension Plan.
The Trustee has the power to wind-up the Luxfer Group Pension Plan if it determines that in the best interests of members, there is no reasonable purpose in continuing the Luxfer Group Pension Plan. No contributions were made to the plan during 2024 and 2023. The Trustee can request additional contributions, and the U.K.
Some of our directors and officers reside outside of the U.S., principally in the U.K. A substantial portion of our assets, and the assets of such persons, are located outside of the U.S.
A substantial portion of our assets, and the assets of such persons, are located outside of the U.S.
The largest risk is from our operations in the U.K., which, in 2023, generated an operating profit of $8.4 million and sales of $158.9 million.
The largest risk is from our operations in the U.K., which, in 2024, generated an operating profit of $10.7 million and sales of $126.7 million.
We are not dependent on any one supplier for our primary raw materials, but the business could be impacted by supply constraints. If, in the future, we are unable to obtain sufficient amounts of material on a timely basis, we may not be able to obtain raw materials from alternate sources at competitive prices.
If, in the future, we are unable to obtain sufficient amounts of material on a timely basis, we may not be able to obtain raw materials from alternate sources at competitive prices.
For example, improperly manufactured gas cylinders could explode at high pressure, which can cause substantial personal and property damage. This risk may be increased through the use of new technologies, materials and innovations. We also supply many components into aerospace applications in which the potential for significant liability exposures necessitates additional insurance costs.
This risk may be increased through the use of new technologies, materials and innovations. We also supply many components into aerospace applications in which the potential for significant liability exposures necessitates additional insurance costs.
We have sold or closed a number of businesses over the years, but the products or services provided when the businesses were open and under our ownership could still result in potential liabilities, which could have a material adverse effect on our operations, financial position and cash flows. 17 Risks associated to new and existing products Our ability to remain profitable depends on our ability to protect and enforce our intellectual property, and any failure to protect and enforce such intellectual property could have a material adverse impact on our results of operations and financial position.
We have sold or closed a number of businesses over the years, but the products or services provided when the businesses were open and under our ownership could still result in potential liabilities, which could have a material adverse effect on our operations, financial position and cash flows.
Any of these risks could have a material adverse impact on our results of operations, financial position and cash flows. 13 Environmental and regulatory risks The Pensions Regulator in the U.K. has the power in certain circumstances to issue contribution notices or financial support directions that, if issued, could result in significant liabilities arising for us.
Environmental and regulatory risks The Pensions Regulator in the U.K. has the power in certain circumstances to issue contribution notices or financial support directions that, if issued, could result in significant liabilities arising for us.
We may also lose assets if we do not maintain adequate internal controls. 23 It may be difficult to effect service of U.S. process and enforce U.S. legal processes against the directors of Luxfer. Luxfer is a public limited company incorporated under the laws of England and Wales.
It may be difficult to effect service of U.S. process and enforce U.S. legal processes against the directors of Luxfer. Luxfer is a public limited company incorporated under the laws of England and Wales. Some of our directors and officers reside outside of the U.S., principally in the U.K.
We have been successful in securing alternative sources of supply for key material inputs affected by force majeure, although typically at an increased cost. 11 We are exposed to fluctuations in the costs of the raw materials that are used to manufacture our products, and such fluctuations could lead us to incur unexpected costs and could affect our margins and / or working capital requirements.
We are exposed to fluctuations in the costs of the raw materials that are used to manufacture our products, and such fluctuations could lead us to incur unexpected costs and could affect our margins and / or working capital requirements.
Increased costs of compliance with climate change regulations and the potential impact on energy costs could have a material adverse effect on our results of operations, financial position and cash flows. 15 Due to the nature and use of the products that we manufacture, we may in the future face large liability claims.
These outcomes underscore a global commitment to intensify efforts in combating climate change, increased costs of compliance with climate change regulations and the potential impact on energy costs could have a material adverse effect on our results of operations, financial position and cash flows.
We are subject to litigation in the ordinary course of our business, which could be costly to us and which may arise in the future. We are exposed to possible claims for personal injury, death or property damage, which could result from a failure of a product manufactured by us or of a product integrating one of our products.
We are exposed to possible claims for personal injury, death or property damage, which could result from a failure of a product manufactured by us or of a product integrating one of our products. For example, improperly manufactured gas cylinders could explode at high pressure, which can cause substantial personal and property damage.
In addition, fluctuations in interest rates cause changes in the annual cost and benefit obligations, and increasingly stringent regulation can further increase the financial burden.
In addition, fluctuations in interest rates cause changes in the annual cost and benefit obligations, and increasingly stringent regulation can further increase the financial burden. Any of these risks could have a material adverse impact on our results of operations, financial position and cash flows.
In addition, we have supply contracts in place with U.S. Magnesium for raw material purchases of magnesium ingot for both military and commercial applications, although since entering force majeure in 2021, deliveries reduced up until late 2022, when they ceased completely. The current expectation is that they will not recommence until the end of 2024.
In addition, we have supply contracts in place with U.S. Magnesium for raw material purchases of magnesium ingot for both military and commercial applications, although given the force majeure previously declared by U.S.
This valuation was carried out prior to a one-off deficit reduction contribution of £9.6 million made in December 2021. Should a wind-up trigger occur in relation to the Luxfer Group Pension Plan, the buy-out deficit of that plan will become due and payable by the employers.
Should a wind-up trigger occur in relation to the Luxfer Group Pension Plan, the buy-out surplus of that plan will become due and payable or receivable by the employers. The aggregate surplus of the Luxfer Group Pension Plan on a buy-out basis was estimated at £8.0 million as of March 31, 2024 (reduced from £86.0 million deficit in April 2021).
We remain legally responsible and committed to ensuring that the Luxfer Group Pension Plan has the funding required to meet its liabilities as they fall due. Future funding requirements will likely be reassessed and revised following the next triennial actuarial valuation in April 2024.
We remain legally responsible and committed to ensuring that the Luxfer Group Pension Plan has the funding required to meet its liabilities as they fall due. In 2021, the Company decided to terminate its U.S. Pension Plan. The Company completed the buyout of the U.S. plan in the first quarter of 2023.
If, for example, the cost of aluminum or carbon fiber were to rise, we may not be able pass those cost increases on to our customers or manage the exposure effectively through hedging instruments. From time to time we use derivative financial instruments to hedge our exposures to fluctuations in aluminum costs.
If, for example, the cost of aluminum or carbon fiber were to rise, we may not be able pass those cost increases on to our customers. We are not dependent on any one supplier for our primary raw materials, but the business could be impacted by supply constraints.
We identified a material weakness in our internal control over financial reporting which, if not remediated appropriately or timely, we may be unable to accurately report our financial results or prevent fraud, and could result in the loss of investor confidence and adversely impact our business operations and our stock price.
If our internal controls over financial reporting are not considered adequate, this may adversely affect our ability to report our financial results on a timely and accurate basis, which may result in a loss of public confidence or have an adverse effect on the market price of our ordinary shares, which could then adversely impact our ability to access equity markets and have a material adverse impact on our results of operations, financial position and cash flows.
Our tax burden depends on the interpretation of local tax regulations, bilateral or multilateral international tax treaties and the administrative doctrines in each jurisdiction. Changes in these tax regulations may increase our tax burden, or otherwise affect our accounting for taxes.
The total exposure across the group is therefore a combined $47.7 or 12.2% of sales. Due to the fact we have operations in many countries, we are also liable to pay taxes in many fiscal jurisdictions. Our tax burden depends on the interpretation of local tax regulations, bilateral or multilateral international tax treaties and the administrative doctrines in each jurisdiction.
We successfully secured and qualified magnesium from alternative sources to meet requirements for both military and commercial applications for 2023 and into 2024.
Magnesium LLC, and the current idling of the plant, we do not know when or if we will be able to recommence the magnesium ingot purchases with this supplier. However, we were able to successfully secure magnesium from alternative sources to meet requirements for both military and commercial applications for 2024 and into 2025.
Removed
For example, the Russian invasion of Ukraine and ongoing military conflict which commenced on February 24, 2022, has resulted in massive displacement of the Ukrainian population and huge disruption to its economy.
Added
President Donald Trump on Canadian, Mexican, Chinese and European products would mean that our results could be affected through a rise in costs. There is the potential for tariffs to expand further, e.g. between the U.S. and the U.K. and Europe, which could impact movement of goods.
Removed
Wide ranging sanctions have been imposed on the Russian Federation by the international community, targeting individuals, banks, businesses, funds transfers and imports and exports and are having a significant impact on Russia's economy as well as on international businesses active in the region.
Added
In 2024, for third party revenue, we made a combined $22.9 million of sales from Canada and the U.K. to the U.S., with no sales from China to the U.S.. The U.S. in return made combined sales of $24.8 million to Europe (EU countries), U.K., Canada, and China.
Removed
The impact on Luxfer in 2022 and 2023 was not significant as we have no direct operations in the region, and our sales to Russia and Ukraine combined typically represent less than one percent of total revenue by destination.
Added
We have defined benefit pension arrangements in the U.K. and in the U.S.. In 2023, the Company completed a buyout of the U.S. BA Holdings, Inc. Pension Plan with our remaining U.S. plan being immaterial, see ITEM 8, Note 15.
Removed
Furthermore, neither country is a critical supplier of our raw material needs, and whilst we continue to source magnesium from Russia, a major global exporter, we are also able to source the metal from various alternative locations, including China, Israel, Turkey and the United States.
Added
Due to the nature and use of the products that we manufacture, we may in the future face large liability claims. We are subject to litigation in the ordinary course of our business, which could be costly to us and which may arise in the future.
Removed
This is also evident in the current war in the Middle East that is causing macro-economic disruption which could affect the Company and/or our supply chain, business partners or customers. Due to the fact we have operations in many countries, we are also liable to pay taxes in many fiscal jurisdictions.
Added
Risks associated to new and existing products Our ability to remain profitable depends on our ability to protect and enforce our intellectual property, and any failure to protect and enforce such intellectual property could have a material adverse impact on our results of operations and financial position.
Removed
In 2021 we were faced with two critical suppliers of magnesium and zirconium respectively declaring force majeure, of which the former remains in place.
Added
If we fail to establish or maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ordinary shares may, therefore, be adversely impacted. We are subject to reporting obligations under U.S. securities laws.
Removed
Although it is our treasury policy to enter into these transactions only for hedging and not for speculative purposes, we are exposed to market risk and credit risk with respect to the use of these derivative financial instruments, see ITEM 7A.
Added
Over time we may identify and correct deficiencies or weaknesses in our internal controls and, where and when appropriate, report on the identification and correction of these deficiencies or weaknesses. However, the internal control procedures can provide only reasonable, and not absolute, assurance that deficiencies or weaknesses are identified.
Removed
The aggregate deficit of the Luxfer Group Pension Plan on a buy-out basis was estimated at £86 million as of April 5, 2021 (reduced from £145 million in April 2018).
Added
Deficiencies or weaknesses that have not been identified by us could emerge, and the identification and correction of these deficiencies or weaknesses could have a material adverse impact on our results of operations.
Removed
Following the actuarial valuation as of April 5, 2021, we agreed with the Trustee to make a one-off cash contribution in December 2021 of £9.6 million in addition to the £4.1 million annual payment agreed as a result of the previous valuation.
Removed
While there is an expectation that no further contributions will be required until at least after the next valuation in 2024, there is no guarantee that this will be the case; and no contributions were made during 2023 and 2022. The Trustee can request additional contributions, and the U.K.
Removed
Regulatory burdens have also proved to be a significant risk, such as the U.K.'s Pension Protection Fund Levy, which was £0.2 million in 2023. The Company completed a buyout of the U.S. BA Holdings, Inc. Pension Plan in the first quarter of 2023.
Removed
The Company's other arrangements are less significant than the Plan and, as of December 31, 2023, and December 31, 2022, had aggregate accounting deficits of $0.1 million and $4.5 million, respectively.
Removed
In November 2021, 197 countries joined together at the 26th Conference "COP26" in Glasgow, U.K., resulting in the Glasgow Climate Pact, which contains all necessary guidelines for fully implementing the Paris Agreement.
Removed
The package of decisions within the Pact consists of a range of agreed items, including strengthened efforts to build resilience to climate change, to curb greenhouse gas emissions and to provide the necessary finance for both.
Removed
Nations collectively agreed to work to reduce the gap between existing emission reduction plans and what is required to reduce emissions, so that the rise in the global average temperature can be limited to 1.5 degrees Celsius.
Removed
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. As disclosed in ltem 9A, "Controls and Procedures" of this 2023 Annual Report on Form 10-K, management identified a material weakness in our internal control over financial reporting.
Removed
Management identified a lack of controls related to the Company’s accounting for inventory in transit. As a result, management concluded it did not properly design or maintain effective risk assessment control activities to allow for timely reassessment of the risks of financial reporting.
Removed
This material weakness could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. However, this material weakness did not result in a misstatement to the annual or interim consolidated financial statements previously filed or included in this Annual Report on Form 10-K.
Removed
We are actively engaged in remediation activities designed to address the material weakness, but our remediation efforts are not complete and are ongoing. lf our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, it may materially adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner. lf we are unable to report our results in a timely and accurate manner, we may not be able to comply with the applicable covenants in our financing arrangements, and may be required to seek additional waivers or repay amounts under these financing arrangements earlier than anticipated, which could adversely impact our liquidity and financial condition.
Removed
Although we continually review and evaluate internal control systems to allow management to report on the sufficiency of our internal controls, we cannot assure you that we will not discover additional weaknesses in our internal control over financial reporting.
Removed
The next time we evaluate our internal control over financial reporting, if we identify one or more new material weaknesses or are unable to timely remediate our existing weakness, we may be unable to assert that our internal controls are effective. lf we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on the price of our common stock and possibly impact our ability to obtain future financing on acceptable terms.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−0 removed18 unchanged
Biggest changeAlthough there have been no cybersecurity incidents have been material to the Company to date, cyber-attacks are continually becoming more sophisticated, and our IT network is still potentially vulnerable to threats and incidents in the future. To assure long-term success, Luxfer is committed to discovering and preparing for all potential cybersecurity threats.
Biggest changeAlthough there have been no cybersecurity incidents that have been material to the Company to date, cyber-attacks are continually becoming more sophisticated, and our IT network is still potentially vulnerable to threats and incidents in the future.
As of the date of the filing of this Form 10-K, we are not aware of attempts by third parties to gain access to our systems and networks and do not believe that any such attempts have had a material effect, or are reasonably likely to have a material effect, on our business, operations, or financial condition.
As of the date of the filing of this Form 10-K, we are not aware of any successful attempts by third parties to gain access to our systems and networks and do not believe that any such attempts have had a material effect, or are reasonably likely to have a material effect, on our business, operations, or financial condition.
Data collection allows us to pinpoint trouble spots and target additional trainings to specific teams or locations. This information is also reported once quarterly to Luxfer’s Senior Leadership Team and is an important supplement to our overall IT security training program. Security audits and assessments - We perform periodic security audits and assessments to test our cybersecurity program.
Data collection allows us to pinpoint trouble spots and target additional trainings to specific teams or locations. This information is also reported once to Luxfer’s Senior Leadership Team and is an important supplement to our overall IT security training program. Security audits and assessments - We perform periodic security audits and assessments to test our cybersecurity program.
IT personnel within the Company are qualified within their respective roles and are provided with the resource to carry out their responsibilities effectively. 25 Cybersecurity risk management - We devote significant resources to network security, data encryption, employee training, monitoring of networks and systems, patching, maintenance and backup of systems and data.
IT personnel within the Company are qualified within their respective roles and are provided with the resource to carry out their responsibilities effectively. 23 Cybersecurity risk management - We devote significant resources to network security, data encryption, employee training, monitoring of networks and systems, patching, maintenance and backup of systems and data.
These efforts span across our cybersecurity program, including but not limited to audits, assessments, and penetration tests. We regularly engage third parties to assess our cybersecurity program, including cybersecurity maturity assessments, penetration testing, and independent review of our security control environment and operating effectiveness. 26
These efforts span across our cybersecurity program, including but not limited to audits, and assessments. We regularly engage appropriately qualified independent third parties to assess our cybersecurity program, including cybersecurity maturity assessments, and independent review of our security control environment and operating effectiveness. 24
We set out below certain mitigating actions that we believe help us manage our principal cybersecurity risks. Risk Risk Description Management of Risk Network and Systems Luxfer’s operations are increasingly dependent on IT systems and management of information, and a cyber-attack could inhibit our business operations including disruption to sales, production and cash flows.
Risk Risk Description Management of Risk Network and Systems Luxfer’s operations are increasingly dependent on IT systems and management of information, and a cyber-attack could inhibit our business operations including disruption to sales, production and cash flows.
Added
As part of our cybersecurity risk management processes, we maintain an incident response plan that establishes a set of procedures for reporting and handling cybersecurity events To assure long-term success, Luxfer is committed to discovering and preparing for all potential cybersecurity threats. We set out below certain mitigating actions that we believe help us manage our principal cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe carry out Graphic Arts manufacturing operations at one plant in the United States and one plant in the United Kingdom. We have a further plant in the United States which is classified as discontinued operations. Our manufacturing plants comprise both owned and leased properties.
Biggest changeIn 2024 we agreed a sublease at our Pomona site for an unused portion of the plant. We carry out Graphic Arts manufacturing operations at one plant in the United States and one plant in the United Kingdom. We have a further plant in the United States, Superform U.S., which is classified as discontinued operations.
We carry out Elektron manufacturing operations at four plants in the United States and one plant in the United Kingdom. We carry out Gas Cylinders manufacturing operations at two plants in the United States and single plants in each of the United Kingdom, Canada and China. Gas Cylinders also has a sales and distribution office in both Australia and Italy.
We carry out Elektron manufacturing operations at four plants in the United States and one plant in the United Kingdom. We carry out Gas Cylinders manufacturing operations at two plants in the United States and single plants in each of the United Kingdom, Canada and China. Gas Cylinders also has a sales and distribution office in Australia.
Division Property / Plant Principal products manufactured Ownership Approximate area (square feet) Elektron Manchester, England Magnesium alloys / zirconium chemicals Split Lease / Own 520,000 Tamaqua, PA Magnesium powders Own 65,000 Flemington, NJ Zirconium chemicals Own 65,000 Cincinnati, OH Magnesium heating pads Lease 150,000 Saxonburg, PA Magnesium powders Own 70,000 Gas Cylinders Nottingham, England Composite and aluminum cylinders Lease 145,000 Calgary, Canada Composite cylinders Lease 65,000 Pomona, CA Composite cylinders Lease 175,000 Riverside, CA Composite cylinders Lease / Own 125,000 Shanghai, China Composite cylinders Lease 15,000 Graphic Arts Madison, IL Magnesium Sheet Lease 805,000 Manchester, England Magnesium Sheet Own* 40,000 Discontinued operations Riverside, CA Aluminum panels Lease 70,000 *With the separate disclosure of Graphic Arts reporting segment in 2023, a portion of the Manchester site, owned and previously disclosed within Elektron, has been reclassified as Graphic Arts.
Division Property / Plant Principal products manufactured Ownership Approximate area (square feet) Elektron Manchester, England Magnesium alloys / zirconium chemicals Split Lease / Own 520,000 Tamaqua, PA Magnesium powders Own 65,000 Flemington, NJ Zirconium chemicals Own 65,000 Cincinnati, OH Magnesium heating pads Lease 175,000 Saxonburg, PA Magnesium powders Own 70,000 Gas Cylinders Nottingham, England Composite and aluminum cylinders Lease 145,000 Calgary, Canada Composite cylinders Lease 65,000 Pomona, CA Composite cylinders Lease 100,000 Riverside, CA Composite cylinders Lease / Own 125,000 Shanghai, China Composite cylinders Lease 15,000 Graphic Arts Madison, IL Magnesium Sheet Lease 800,000 Manchester, England Magnesium Sheet Own* 40,000 Discontinued operations Riverside, CA Aluminum panels Lease 50,000 *With the separate disclosure of Graphic Arts reporting segment in 2023 and 2024, a portion of the Manchester site, owned and previously disclosed within Elektron, has been reclassified as Graphic Arts.
We believe that our production facilities are suitable for their purpose and are adequate to support our businesses.
Our manufacturing plants comprise both owned and leased properties. We believe that our production facilities are suitable for their purpose and are adequate to support our businesses.
Graphic Arts lease the site from Luxfer MEL Technologies.
Graphic Arts occupy the site owned by Luxfer MEL Technologies.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The Company is a defendant in various lawsuits and is subject to various claims that arise in the normal course of business, the most significant of which are summarized in Note 19 (commitments and contingencies) to the consolidated financial statements in ITEM 8.
Biggest changeItem 3. Legal Proceedings The Company is a defendant in various lawsuits and is subject to various claims that arise in the normal course of business, the most significant of which are summarized in Note 22 (subsequent events) to the consolidated financial statements in ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal number of shares purchased Average price paid per share January 1 - April 2 48,000 $ 16.15 April 3 - July 2 52,000 15.48 July 3 - October 1 52,000 12.69 October 2 - December 31 58,000 9.47 Total 210,000 In January 2024, the Board of Directors authorized the repurchase of 50,000 of our ordinary shares in the first quarter of 2024.
Biggest changeTotal number of shares purchased Average price paid per share January 1 - March 31 50,000 $ 8.98 April 1 - June 30 50,000 11.19 July 1 - September 29 50,000 11.54 September 30 - December 31 50,000 13.89 Total 200,000 In December 2024, the Board of Directors authorized the repurchase of 40,000 of our ordinary shares in the first quarter of 2025.
Any such U.K. stamp duty or SDRT will generally be payable by the transferee and must be paid (and any relevant transfer document stamped by HMRC) before the transfer can be registered in the books of Luxfer Holdings PLC. 28 In the event that ordinary shares which have left the DTC clearance service, other than into another clearance service or depository receipt system, are subsequently transferred back into a clearance service or depository receipt system, such transfer, or agreement to transfer, may, subject to any available exemption or relief, be subject to U.K. stamp duty or SDRT at a rate of 1.5% of the consideration for such transfer (or, where there is no such consideration, 1.5% of the value of such ordinary shares).
Any such U.K. stamp duty or SDRT will generally be payable by the transferee and must be paid (and any relevant transfer document stamped by HMRC) before the transfer can be registered in the books of Luxfer Holdings PLC. 26 In the event that ordinary shares which have left the DTC clearance service, other than into another clearance service or depository receipt system, are subsequently transferred back into a clearance service or depository receipt system, such transfer, or agreement to transfer, may, subject to any available exemption or relief, be subject to U.K. stamp duty or SDRT at a rate of 1.5% of the consideration for such transfer (or, where there is no such consideration, 1.5% of the value of such ordinary shares).
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the New York Stock Exchange and is traded under the symbol "LXFR." As of December 31, 2023, the Company had 17 shareholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the New York Stock Exchange and is traded under the symbol "LXFR." As of December 31, 2024, the Company had 17 shareholders of record.
The following graph sets forth the cumulative total shareholder return on our ordinary shares for the last five years, assuming an investment of $100 on December 31, 2018, and the reinvestment of all dividends since that date to December 31, 2023.
The following graph sets forth the cumulative total shareholder return on our ordinary shares for the last five years, assuming an investment of $100 on December 31, 2019, and the reinvestment of all dividends since that date to December 31, 2024.
A further dividend of $3.5 million was declared and paid in the first quarter of 2024.
A further dividend of $3.5 million was declared and paid in the first quarter of 2025.
Purchase of Equity Securities As part of a weekly share buyback program, in 2023, the Company purchased 210,000 ordinary shares in open-market transactions for a total cost of $2.7 million. The following table shows this by quarter.
Purchase of Equity Securities As part of a weekly share buyback program, in 2024, the Company purchased 200,000 ordinary shares in open-market transactions for a total cost of $2.3 million. The following table shows this by quarter.
Dividends During the years ended December 31, 2021, and in February 2022, the Company paid quarterly dividends of $0.125 per ordinary share. In the final three quarters of 2022 and throughout 2023, the Company paid quarterly dividends of $0.13 per ordinary share. This equated to $14.0 million paid in 2023, $14.2 million in 2022 and $13.6 million in 2021 respectively.
Dividends During the first quarter of 2022, the Company paid quarterly dividends of $0.125 per ordinary share. In the final three quarters of 2022 and throughout 2023 and 2024, the Company paid quarterly dividends of $0.130 per ordinary share. This equated to $14.0 million paid in 2024, $14.0 million in 2023 and $14.2 million in 2022 respectively.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears ended December 31, In millions except per share data 2023 2022 2021 Net (loss) / income from continuing operations (2.6) 32.0 30.0 Accounting charges relating to acquisitions and disposals of businesses: Amortization on acquired intangibles 0.8 0.7 0.9 Acquisitions and disposals cost — 0.3 1.5 Defined benefit pension credit 7.6 (0.1) (2.3) Restructuring charges 6.4 1.9 6.2 Impairment charges 12.7 — — Other charges — — 1.1 Share-based compensation charges 2.8 2.5 2.8 Tax impact of defined benefit pension settlement (4.9) — — Other non-recurring tax items — — (1.9) Income tax on adjusted items (6.4) 0.1 (2.1) Adjusted net income from continuing operations 16.4 37.4 36.2 Adjusted earnings per ordinary share from continuing operations Diluted earnings per ordinary share (0.10) 1.16 1.07 Impact of adjusted items 0.70 0.20 0.22 Adjusted diluted earnings per ordinary share (1) 0.61 1.36 1.29 (1) For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares outstanding during the financial year has been adjusted for the dilutive effects of all potential ordinary shares and share options granted to employees.
Biggest changeYear-to-date In millions except per share data 2024 2023 Continuing operations Graphic Arts Adjusted Total Continuing operations Graphic Arts Adjusted Total Net income / (loss) $ 18.3 $ (13.9) $ 32.2 $ (2.6) (14.9) $ 12.3 Accounting charges relating to acquisitions and disposals of businesses: Amortization on acquired intangibles 0.8 — 0.8 0.8 — 0.8 Acquisition and disposal related charge 12.2 12.2 — — — — Defined benefit pension (credit) / charge (1.6) — (1.6) 7.6 — 7.6 Restructuring charge 4.7 — 4.7 6.4 — 6.4 Gain on disposal of assets held-for-sale (6.1) — (6.1) — — — Impairment charge — — — 12.7 12.7 — Share-based compensation charge 3.5 0.5 3.0 2.8 — 2.8 Tax impact of defined benefit settlement — — — (4.9) — (4.9) Income tax on adjusted items (0.9) (0.6) (0.3) (6.4) (3.0) (3.4) Adjusted net income / (loss) 30.9 (1.8) 32.7 16.4 (5.2) 21.6 Less: Legal cost (recovery) / expense (7.7) — (7.7) 5.9 — 5.9 Tax on legal cost recovery / (expense) 1.8 — 1.8 (1.2) — (1.2) Adjusted net income / (loss) excluding legal cost (recovery) / expense $ 25.0 $ (1.8) $ 26.8 $ 21.1 $ (5.2) $ 26.3 Adjusted earnings / (loss) per ordinary share (1) Diluted earnings / (loss) per ordinary share $ 0.68 $ (0.51) $ 1.19 $ (0.10) $ (0.55) $ 0.45 Impact of adjusted items 0.46 0.44 0.02 0.71 0.36 0.35 Adjusted diluted earnings / (loss) per ordinary share $ 1.14 $ (0.07) $ 1.21 $ 0.61 $ (0.19) $ 0.80 Impact of legal cost (recovery) / expense (0.22) — (0.22) 0.17 — 0.17 Adjusted diluted earnings / (loss) per ordinary share excluding legal cost recovery / expense $ 0.92 $ (0.07) $ 0.99 $ 0.78 $ (0.19) $ 0.97 (1) For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares outstanding during the financial year has been adjusted for the dilutive effects of all potential ordinary shares and share options granted to employees. 33 Year-to-date In millions except per share data 2024 2023 Continuing operations Graphic Arts Adjusted Total Continuing operations Graphic Arts Adjusted Total Adjusted net income from continuing operations $ 30.9 $ (1.8) $ 32.7 $ 16.4 $ (5.2) $ 21.6 Add back: Income tax on adjusted items 0.9 0.6 0.3 6.4 3.0 3.4 Income tax expense 8.2 (1.3) 9.5 (7.1) (4.1) (3.0) Tax impact of defined benefit pension settlement — — — 4.9 — 4.9 Net finance costs 5.2 (0.4) 5.6 6.3 (0.2) 6.5 Adjusted EBITA 45.2 (2.9) 48.1 26.9 (6.5) 33.4 Loss on disposal of property, plant and equipment 0.1 — 0.1 — — — Depreciation 9.3 — 9.3 11.9 2.0 9.9 Adjusted EBITDA 54.6 (2.9) 57.5 38.8 (4.5) 43.3 Less: Legal cost (recovery) / expense (7.7) — (7.7) 5.9 — 5.9 Adjusted EBITDA excluding legal cost (recovery) / expense $ 46.9 $ (2.9) $ 49.8 $ 44.7 $ (4.5) $ 49.2 Year-to-date In millions except per share data 2024 2023 Continuing operations Graphic Arts Adjusted Total Continuing operations Graphic Arts Adjusted Total Adjusted net income / (loss) from continuing operations $ 30.9 $ (1.8) $ 32.7 $ 16.4 $ (5.2) $ 21.6 Add back: Income tax on adjusted items 0.9 0.6 0.3 6.4 3.0 3.4 Tax impact of defined benefit pension settlement — — — 4.9 — 4.9 Provision / (credit) for income taxes 8.2 (1.3) 9.5 (7.1) (4.1) (3.0) Adjusted income / (loss) from continuing operations before income taxes 40.0 (2.5) 42.5 20.6 (6.3) 26.9 Adjusted provision (credit) for income taxes 9.1 (0.7) 9.8 4.2 (1.1) 5.3 Adjusted effective tax rate from continuing operations 22.8 % 28.0 % 23.1 % 20.4 % 17.5 % 19.7 % 2024 In millions Gas Cylinders Elektron Graphic Arts Total Segment adjusted EBITA $ 14.6 $ 33.5 $ (2.9) $ 45.2 Depreciation 3.4 5.9 — 9.3 Loss on disposal of property, plant and equipment — 0.1 — 0.1 Segment adjusted EBITDA $ 18.0 $ 39.5 $ (2.9) $ 54.6 2023 In millions Gas Cylinders Elektron Graphic Arts Total Segment adjusted EBITA $ 12.6 $ 20.8 $ (6.5) $ 26.9 Depreciation 4.1 5.8 2.0 $ 11.9 Segment adjusted EBITDA $ 16.7 $ 26.6 $ (4.5) $ 38.8 2022 In millions Gas Cylinders Elektron Graphic Arts Total Segment adjusted EBITA $ 8.0 $ 36.6 $ 5.6 $ 50.2 Depreciation 4.8 5.9 2.2 12.9 Segment adjusted EBITDA $ 12.8 $ 42.5 $ 7.8 $ 63.1 34 SEGMENT RESULTS OF OPERATIONS The summary that follows provides a discussion of the results of operations of each of our three reportable segments (Gas Cylinders, Elektron and Graphic Arts).
Our significant accounting policies are more fully described in ITEM 8, Note 1 of the Notes to Consolidated Financial Statements. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty.
Our significant accounting policies are more fully described in ITEM 8, Note 1 of the Notes to Consolidated Financial Statements. Certain accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty.
NEW ACCOUNTING STANDARDS See ITEM 8, Note 1 of the notes to the Consolidated Financial Statements, included in this Form 10-K, for information pertaining to recently adopted accounting standards or accounting standards to be adopted in the future. CRITICAL ACCOUNTING ESTIMATES We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP.
NEW ACCOUNTING STANDARDS See ITEM 8, Note 1 of the notes to the Consolidated Financial Statements, included in this Form 10-K, for information pertaining to recently adopted accounting standards or accounting standards to be adopted in the future. 40 CRITICAL ACCOUNTING ESTIMATES We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP.
Please read the sections "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Annual Report on Form 10-K for a more complete discussion of the factors that could affect our performance and the industries in which we operate, as well as those discussed in other documents we file or furnish with the SEC. 30 About Luxfer Luxfer Holdings PLC ("Luxfer," "the Company," "we," "our") is a global industrial company innovating niche applications in materials engineering.
Please read the sections "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Annual Report on Form 10-K for a more complete discussion of the factors that could affect our performance and the industries in which we operate, as well as those discussed in other documents we file or furnish with the SEC. 28 About Luxfer Luxfer Holdings PLC ("Luxfer," "the Company," "we," "our") is a global industrial company innovating niche applications in materials engineering.
Our critical accounting estimates include the following: Impairment of goodwill and identifiable intangible assets Goodwill Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable net assets purchased and liabilities assumed.
Our critical accounting estimates include the following: Impairment of goodwill Goodwill Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable net assets purchased and liabilities assumed.
To indicate the sensitivity of results to the CPI assumption, a 0.1% per annum decrease in all CPI-linked assumptions, (including pension increases) for our U.K. plan, would reduce the value of the liabilities and therefore increase the pension surplus at December 31, 2022 by approximately $1.0 million and increase the projected 2024 income statement credit by approximately $0.1 million.
To indicate the sensitivity of results to the CPI assumption, a 0.1% per annum decrease in all CPI-linked assumptions, (including pension increases) for our U.K. plan, would reduce the value of the liabilities and therefore increase the pension surplus at December 31, 2024 by approximately $1.3 million and increase the projected 2024 income statement credit by approximately $0.1 million.
These factors include, but are not limited to, factors identified in "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," or elsewhere in this Annual Report, as well as: • general economic conditions, or conditions affecting demand for the services offered by us in the markets in which we operate, both domestically and internationally, being less favorable than expected; • worldwide economic and business conditions and conditions in the industries in which we operate; • our ability to execute our strategic review, including our Graphic Arts business, to safeguard margins and reduce costs; • post-pandemic impact of COVID-19 and future pandemics; • fluctuations in the cost and / or availability of raw materials, labor and energy, as well as our ability to pass on cost increases to customers; • currency fluctuations and other financial risks; • our ability to protect our intellectual property; • the amount of indebtedness we have incurred and may incur, and the obligations to service such indebtedness and to comply with the covenants contained therein; • relationships with our customers and suppliers; • increased competition from other companies in the industries in which we operate; • changing technology; • our ability to execute and integrate new acquisitions; • claims for personal injury, death or property damage arising from the use of products produced by us; • the occurrence of accidents or other interruptions to our production processes; • changes in our business strategy or development plans, and our expected level of capital expenditure; • our ability to attract and retain qualified personnel; • restrictions on the ability of Luxfer Holdings PLC to receive dividends or loans from certain of its subsidiaries; • climate change regulations and the potential impact on energy costs; • regulatory, environmental, legislative and judicial developments; and • our intention to pay dividends.
These factors include, but are not limited to, factors identified in "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," or elsewhere in this Annual Report, as well as: • general economic conditions, or conditions affecting demand for the services offered by us in the markets in which we operate, both domestically and internationally, being less favorable than expected; • worldwide economic and business conditions and conditions in the industries in which we operate; • potential or actual tariffs, and other political risks worldwide; • our ability to execute our strategic review, including our Graphic Arts business, to safeguard margins and reduce costs; • future pandemics; • fluctuations in the cost and / or availability of raw materials, labor and energy, as well as our ability to pass on cost increases to customers; • currency fluctuations and other financial risks; • our ability to protect our intellectual property; • the amount of indebtedness we have incurred and may incur, and the obligations to service such indebtedness and to comply with the covenants contained therein; • relationships with our customers and suppliers; • increased competition from other companies in the industries in which we operate; • changing technology; • our ability to execute and integrate new acquisitions; • claims for personal injury, death or property damage arising from the use of products produced by us; • the occurrence of accidents or other interruptions to our production processes; • changes in our business strategy or development plans, and our expected level of capital expenditure; • our ability to attract and retain qualified personnel; • restrictions on the ability of Luxfer Holdings PLC to receive dividends or loans from certain of its subsidiaries; • climate change regulations and the potential impact on energy costs; • regulatory, environmental, legislative and judicial developments; and • our intention to pay dividends.
Defined benefit pension credit The defined benefit pension charge of $7.6 million in 2023 was predominantly the result of the sale of the U.S. pension plan liability to an insurer.
The defined benefit pension charge of $7.6 million in 2023, was predominantly the result of the sale of the U.S. pension plan liability to an insurer.
The last month in which we may draw funds from the RCF is September 2026. The Company also had a separate (uncommitted) bonding facility for bank guarantees; denominated in GBP sterling totaling £0.5 million ($0.6 million) and £0.1 million ($0.2 million) was utilized at December 31, 2023. Interest rates and fees.
The last month in which we may draw funds from the RCF is September 2026. The Company also had a separate (uncommitted) bonding facility for bank guarantees; denominated in GBP sterling totaling £0.5 million ($0.6 million) and £0.1 million ($0.2 million) was utilized at December 31, 2024. Interest rates and fees.
We have been in compliance with the covenants under the Note Purchase Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2023. The Loan Note due 2026 and the Note Purchase Agreement are governed by the law of the State of New York.
We have been in compliance with the covenants under the Note Purchase Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2024. The Loan Note due 2026 and the Note Purchase Agreement are governed by the law of the State of New York.
At December 31, 2023 the Senior Facilities Agreement provided $125 million of committed debt facilities in the form of a multi-currency (GBP sterling, U.S. dollars or euros) RCF and an additional $25 million of uncommitted facilities through an accordion clause. The facilities mature in October 2026.
At December 31, 2024 the Senior Facilities Agreement provided $125 million of committed debt facilities in the form of a multi-currency (GBP sterling, U.S. dollars or euros) RCF and an additional $25 million of uncommitted facilities through an accordion clause. The facilities mature in October 2026.
This section is incorporated by reference into this Annual Report on Form 10-K for the year ended December 31, 2023. Off-balance sheet measures At December 31, 2023, we had no off-balance sheet arrangements other than the three bonding facilities as described above.
This section is incorporated by reference into this Annual Report on Form 10-K for the year ended December 31, 2024. Off-balance sheet measures At December 31, 2024, we had no off-balance sheet arrangements other than the three bonding facilities as described above.
We meet these requirements primarily through cash flows from operating activities, cash deposits and borrowings under the Revolving Credit Facility ("RCF") and accompanying ancillary hedging facilities and the Loan Note due 2026.
We meet these requirements primarily through cash flows from operating activities, cash deposits and borrowings under the Revolving Credit Facility and accompanying ancillary hedging facilities and the Loan Note due in 2026.
Amounts unutilized under the RCF (or, if the case, under the revolving portion of the accordion) are allocated to ancillary facilities available under the Senior Facilities Agreement in connection with overdraft facilities, bilateral loan facilities and letter of credit facilities. As of December 31, 2023, we had drawn down $2.2 million under the ancillary facilities (December 31, 2022: $1.8 million).
Amounts unutilized under the RCF (or, if the case, under the revolving portion of the accordion) are allocated to ancillary facilities available under the Senior Facilities Agreement in connection with overdraft facilities, bilateral loan facilities and letter of credit facilities. As of December 31, 2024, we had drawn down $2.8 million under the ancillary facilities (December 31, 2023: $2.2 million).
We have been in compliance with the covenants under the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2023. The Senior Facilities Agreement is governed by English law. For more information see ITEM 8, Note 11.
We have been in compliance with the covenants under the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2024. The Senior Facilities Agreement is governed by English law. For more information see ITEM 8, Note 12.
Leverage Margin (% per annum) Greater than 2.5:1 2.75 Less than or equal to 2.5:1, but greater than 2.0:1 2.50 Less than or equal to 2.0:1, but greater than 1.5:1 2.25 Less than or equal to 1.5:1, but greater than 1.0:1 2.00 Less than or equal to 1.0:1 1.75 As of December 31, 2023, we had drawn down $43.1 million under the RCF (December 31, 2022: $31.9 million).
Leverage Margin (% per annum) Greater than 2.5:1 2.75 Less than or equal to 2.5:1, but greater than 2.0:1 2.50 Less than or equal to 2.0:1, but greater than 1.5:1 2.25 Less than or equal to 1.5:1, but greater than 1.0:1 2.00 Less than or equal to 1.0:1 1.75 As of December 31, 2024, we had drawn down $17.2 million under the RCF (December 31, 2023: $43.1 million).
At December 31, 2023 the Company had committed banking facilities of $125.0 million with an additional $25.0 million of uncommitted facilities through an accordion provision. Of these committed facilities, $43.1 million was drawn at December 31, 2023. The banking facilities expire in October 2026.
Committed banking facilities At December 31, 2024 and December 31, 2023 the Company had committed banking facilities of $125.0 million with an additional $25.0 million of uncommitted facilities through an accordion provision. Of these committed facilities, $17.2 million was drawn at December 31, 2024 ($43.1 million December 31, 2023). The banking facilities expire in October 2026.
Discount rate The discount rate used represents the annualized yield based on a cash flow matched methodology with reference to an AA corporate bond spot curve and having regard to the duration of the Plan’s liabilities. This yield produced a weighted-average discount rate for our U.K. plans of 4.50% in 2023, 4.80% in 2022 and 1.90% in 2021.
Discount rate The discount rate used represents the annualized yield based on a cash flow matched methodology with reference to an AA corporate bond spot curve and having regard to the duration of the Plan’s liabilities. This yield produced a weighted-average discount rate for our U.K. plans of 5.40% in 2024, 4.50% in 2023 and 4.80% in 2022.
Our principal liquidity needs are: • funding acquisitions; • capital expenditure requirements; • payment of shareholder dividends; • servicing interest on the Loan Notes, which is payable at each quarter end, in addition to interest and / or commitment fees on the RCF; • working capital requirements, particularly in the short term as we aim to achieve organic sales growth; and • hedging facilities used to manage our foreign exchange and aluminum purchase price risks.
Our principal liquidity needs are: • funding acquisitions, including deferred contingent consideration payments; • capital expenditure requirements; • payment of shareholder dividends; • servicing interest on the Loan Notes, which is payable at each quarter end, in addition to interest and / or commitment fees on the Senior Facilities Agreement; • working capital requirements, particularly in the short term as we aim to achieve organic sales growth; and • hedging facilities used to manage our foreign exchange risks and aluminum purchase price risks.
This section is incorporated by reference into this Annual Report on Form 10-K for the year ended December 31, 2023. 34 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES The following tables of non-GAAP summary financial data presents a reconciliation of net income from continuing operations and diluted earnings per ordinary share from continuing operations to adjusted net income from continuing operations, adjusted EBITA from continuing operations, adjusted income from continuing operations before income taxes, adjusted EBITDA from continuing operations, adjusted earnings per ordinary share from continuing operations, adjusted provision for income taxes and adjusted effective tax rate from continuing operations, for the periods presented, being the most comparable GAAP measures.
This section is incorporated by reference into this Annual Report on Form 10-K for the year ended December 31, 2024. 32 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES The following tables of non-GAAP summary financial data presents a reconciliation of net income from continuing operations and diluted earnings per ordinary share from continuing operations to adjusted net income from continuing operations, adjusted EBITA from continuing operations, adjusted income from continuing operations before income taxes, adjusted EBITDA from continuing operations, adjusted EBITDA excluding legal cost (recovery) / expense, adjusted earnings per ordinary share from continuing operations, adjusted provision for income taxes and adjusted effective tax rate from continuing operations, for the periods presented, being the most comparable GAAP measures.
However, investors should not consider adjusted net income from continuing operations, adjusted earnings per share from continuing operations, adjusted EBITA from continuing operations and adjusted EBITDA from continuing operations in isolation as an alternative to net income and earnings per share when evaluating Luxfer's operating performance or measuring Luxfer's profitability.
However, investors should not consider adjusted net income from continuing operations, adjusted earnings per share from continuing operations, adjusted EBITA from continuing operations and adjusted EBITDA excluding legal cost (recovery) / expense from continuing operations in isolation as an alternative to net income and earnings per share when evaluating Luxfer's operating performance or measuring Luxfer's profitability.
The three segments comprise various product offerings that serve multiple end-markets. During 2023, the Graphic Arts reporting segment has been disaggregated from the Elektron segment and is being reported separately as the Graphic Arts segment. The Elektron segment's results for 2022 and 2021 have been adjusted to strip out Graphic Arts' results.
The three segments comprise various product offerings that serve multiple end-markets. In 2023, the Graphic Arts reporting segment was disaggregated from the Elektron segment and in 2024 and 2023 is being reported separately as the Graphic Arts segment. The Elektron segment's results for 2022 have been adjusted to strip out Graphic Arts' results.
Adjusted EBITDA, which is our segment income metric, represents net income from continuing operations adjusted for share-based compensation charges, restructuring charges, impairment charges, other charges, acquisitions and disposals costs, net interest expenses, defined benefits pension credit, provision for taxes and depreciation and amortization.. A reconciliation to net income can be found in ITEM 8, Note 17.
Adjusted EBITA, which is our segment income metric, represents net income from continuing operations adjusted for share-based compensation charges, restructuring charges, impairment charges, other charges, acquisitions and disposals costs, net interest expenses, defined benefits pension credit, provision for taxes and amortization. A reconciliation to pre-tax income can be found in ITEM 8, Note 18.
Dividends We paid dividends in 2023 of $14.0 million (2022: $14.2 million), or $0.52 (2022: $0.515) per ordinary share. Any payment of dividends is also subject to the provisions of the U.K.
Dividends We paid dividends in 2024 of $14.0 million (2023: $14.0 million), or $0.52 (2023: $0.52) per ordinary share. Any payment of dividends is also subject to the provisions of the U.K.
Management's Discussion and Analysis of Financial Condition and Results of Operation - Discussion and Analysis - Consolidated Operating Results in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the U.S. Securities and Exchange Commission on March 01, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operation - Discussion and Analysis - Consolidated Operating Results in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission on February 27, 2024.
Management's Discussion and Analysis of Financial Condition and Results of Operation - Discussion and Analysis - Consolidated Operating Results in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the U.S. Securities and Exchange Commission on March 01, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operation - Discussion and Analysis - Consolidated Operating Results in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission on February 27, 2024.
Senior Facilities Agreement A new Senior Facilities Agreement was signed in October 2021, for more information see ITEM 8 Note 11. Structure.
Senior Facilities Agreement A Senior Facilities Agreement was signed in October 2021, for more information see ITEM 8 Note 12. Structure.
Inflation rate In September 2019, the UK Statistics Authority announced plans to reform the RPI inflation index. On November 25, 2020, the government and UK Statistics Authority confirmed these plans to reform the RPI index to bring it into line with the CPIH index from 2030, with no compensation for the holders of index-linked gilts.
On November 25, 2020, the government and UK Statistics Authority confirmed these plans to reform the RPI index to bring it into line with the CPIH index from 2030, with no compensation for the holders of index-linked gilts.
Authorized shares Our authorized share capital consists of 40.0 million ordinary shares with a par value of £0.50 per share. 40 Contractual obligations The following summarizes our significant contractual obligations that impact our liquidity: Payments Due by Period In millions Total Less than 1 year 1 – 3 years 3 – 5 years After 5 years Contractual cash obligations Loan Notes due 2026 25.0 — 25.0 — — Revolving Credit Facility 43.1 — 43.1 — — Bank overdraft 4.6 4.6 — — — Obligations under operating leases 26.0 5.4 9.2 2.7 8.7 Capital commitments 2.3 2.3 — — — Interest payments 11.1 4.2 6.9 — — Total contractual cash obligations $ 112.1 $ 16.5 $ 84.2 $ 2.7 $ 8.7 2022 compared with 2021 For a discussion comparing our net cash activities (operating, investing and financing) for the year ended December 31, 2022, with the year ended December 31, 2021, refer to Part II, Item 7.
Authorized shares Our authorized share capital consists of 40.0 million ordinary shares with a par value of £0.50 per share. 39 Contractual obligations The following summarizes our significant contractual obligations that impact our liquidity: Payments Due by Period In millions Total Less than 1 year 1 – 3 years 3 – 5 years After 5 years Contractual cash obligations Loan Notes due 2026 $ 25.0 $ — $ 25.0 $ — $ — Revolving Credit Facility due October 2026 17.2 — 17.2 — — Bank overdraft 3.1 3.1 — — — Obligations under operating leases 20.2 4.6 5.7 2.2 7.7 Capital commitments 0.5 0.5 — — — Interest payments 3.7 2.3 1.4 — — Total contractual cash obligations $ 69.7 $ 10.5 $ 49.3 $ 2.2 $ 7.7 2023 compared with 2022 For a discussion comparing our net cash activities (operating, investing and financing) for the year ended December 31, 2023, with the year ended December 31, 2022, refer to Part II, Item 7.
This charge was partially offset by a $1.7 million credit on the U.K. plan as expected return on assets outweighed the interest cost and net actuarial loss.
The 2023 charge was partially offset by a $1.7 million credit on the U.K. plan as expected return on assets outweighed the interest cost and net actuarial loss. This is consistent with the current year.
While sales in our General Industrial and Transportation end markets have decreased by 23.9% and 10.2% respectively, our sales in our Defense, First Response and Healthcare end market has increased by 23.9%.
While sales in our General Industrial and Transportation end markets have decreased by 9.2% and 5.7% respectively, our sales in our Defense, First Response and Healthcare end market have increased by 2.7%.
The discount rate on our U.S. plans was 5.10% in 2022 and 2.70% in 2021. There are no known or anticipated changes in our discount rate assumption that will impact our pension expense in 2024.
The discount rate on our U.S. plans was n/a in 2024 and 2023, and 5.10% in 2022. There are no known or anticipated changes in our discount rate assumption that will impact our pension expense in 2025.
Cash Flows from Continuing Operations Operating activities Cash provided by operating activities was $26.2 million and $15.8 million in 2023 and 2022 respectively, which includes approximately $3.6 million and $10.0 million of cash spent on restructuring activities in those years.
Cash Flows from Continuing Operations Operating activities Cash provided by operating activities was $51.1 million and $26.2 million in 2024 and 2023 respectively, which includes approximately $5.0 million and $3.6 million of cash spent on restructuring activities in those years.
As of December 31, 2023, we had drawn down $43.1 million under the Revolving Credit Facility (December 31, 2022: $31.9 million). 39 Availability. The facility is used for loans and overdrafts.
As of December 31, 2024, we had drawn down $17.2 million under the Revolving Credit Facility (December 31, 2023: $43.1 million). 38 Availability. The facility is used for loans and overdrafts.
We may use amounts drawn under the RCF for our general corporate purposes and certain capital expenditures, as well as for the financing of permitted acquisitions and reorganizations. As of December 31, 2023, $81.9 million (net of $43.1 million drawn down) was available under the RCF.
We may use amounts drawn under the RCF for our general corporate purposes and certain capital expenditures, as well as for the financing of permitted acquisitions and reorganizations. As of December 31, 2024, $107.8 million (net of $17.2 million drawn down) was available under the RCF.
The interest coverage ratio measures our EBITDA (as defined in the Note Purchase Agreement) to Net Finance Charges (as defined in the Note Purchase Agreement). We are required to maintain an interest coverage ratio of 4.0:1.
In addition, the Note Purchase Agreement requires us to maintain compliance with a minimum interest coverage ratio and a leverage ratio. The interest coverage ratio measures our EBITDA (as defined in the Note Purchase Agreement) to Net Finance Charges (as defined in the Note Purchase Agreement). We are required to maintain an interest coverage ratio of 4.0:1.
To indicate the sensitivity of results to this assumption, a 0.1% per annum increase in the discount rate for our U.K. plans would reduce the value of the liabilities and therefore increase the pension surplus by approximately $2.0 million and increase the projected 2023 income statement credit by approximately $0.2 million.
To indicate the sensitivity of results to this assumption, a 0.1% per annum increase in the discount rate for our U.K. plans would reduce the value of the liabilities and therefore increase the pension surplus by approximately $2.5 million and increase the projected 2025 income statement credit by approximately $0.1 million. 41 Inflation rate In September 2019, the UK Statistics Authority announced plans to reform the RPI inflation index.
Research and development costs Research and development costs as a percentage of sales declined marginally in 2023 when compared to 2022 although overall spend of $4.6 million continues to show our commitment to new product development.
Research and development costs Research and development costs as a percentage of sales remained flat in 2024 when compared to 2023 the overall spend of $4.4 million continues to show our commitment to new product development.
In the first quarter of 2023, there was a $9.2 million charge in relation to the sale, which included $2.3 million cash and $6.9 million in relation to the derecognition of the U.S. pension liability and reallocation of accumulated actuarial losses from other comprehensive income.
There was a $9.0 million charge in relation to the sale, which included $2.1 million cash and $6.9 million in relation to the derecognition of the U.S. pension liability and reallocation of accumulated actuarial losses from other comprehensive income. An additional $0.3 million of interest cost was recognized in relation to the U.S. plan in the year.
Operating objectives and trends In 2024, we expect the following operating objectives and trends to impact our business: • Addressing general macro uncertainty and building resilience into the outlook, especially in our General Industrial end-market; • Execution of actions identified upon completion of the recently-announced expanded and accelerated strategic review, including the divestiture of Graphic Arts; • Completion of long-term agreement renewals in Gas Cylinders enabling pass through of inflationary costs; • Ongoing focus on cost control, new product launches and productivity improvements across the business; • Execution of selected capital investment projects to support our strategy of profitable growth while maintaining our infrastructure; • Continued emphasis on operating cash generation and maintaining strong working capital performance; • Further improvements in ESG standing through focus on sustainability and on our values of teamworking and accountability; and • Focus on recruiting, developing and maintaining talent, including our new leadership development programs, while driving a high-performance culture. 31 CONSOLIDATED RESULTS OF OPERATIONS The consolidated results of operations from continuing operations of Luxfer were as follows: Years ended December 31, % / point change In millions 2023 2022 2021 2023 v 2022 2022 v 2021 Net sales $ 405.0 $ 423.4 $ 374.1 (4.3) % 13.2 % Cost of sales (328.4) (328.4) (278.1) — % 18.1 % Gross profit 76.6 95.0 96.0 (19.4) % (1.0) % % of net sales 18.9 % 22.4 % 25.7 % (3.5) (3.3) Selling, general and administrative expenses (48.7) (43.1) (47.3) 13.0 % (8.9) % % of net sales 12.0 % 10.2 % 12.6 % 1.8 (2.4) Research and development (4.6) (4.9) (3.9) (6.1) % 25.6 % % of net sales 1.1 % 1.2 % 1.0 % (0.1) 0.2 Restructuring charges (6.4) (1.9) (6.2) 236.8 % (69.4) % % of net sales 1.6 % 0.4 % 1.7 % 1.2 (1.3) Impairment charges (12.7) — — n/a n/a % of net sales 3.1 % — % — % 3.1 — Acquisition and disposals costs — (0.3) (1.5) (100.0) % (80.0) % % of net sales — % 0.1 % 0.4 % (0.1) (0.3) Other income — — 0.2 n/a (100.0) % % of net sales — % — % 0.1 % — (0.1) Other charges — — (1.1) n/a (100.0) % % of net sales — % — % 0.3 % — (0.3) Operating income 4.2 44.8 36.2 (90.6) % 23.8 % % of net sales 1.0 % 10.6 % 9.7 % (9.6) 0.9 Net interest expense (6.3) (3.9) (3.1) 61.5 % 25.8 % % of net sales 1.6 % 0.9 % 0.8 % 0.7 0.1 Defined benefit pension (charge) / credit (7.6) 0.1 2.3 n/a (95.7) % % of net sales (1.9) % — % 0.6 % (1.9) (0.6) (Loss) / income before income taxes (9.7) 41.0 35.4 n/a 15.8 % % of net sales (2.4) % 9.7 % 9.5 % (12.1) 0.2 Credit / (provision) for income taxes 7.1 (9.0) (5.4) n/a 66.7 % Effective tax rate 73.2 % 22.0 % 15.3 % 51.2 6.7 Net (loss) / income from continuing operations $ (2.6) $ 32.0 $ 30.0 n/a 6.7 % % of net sales (0.6) % 7.6 % 8.0 % (8.2) (0.4) 32 Net sales Adjusting for foreign exchange headwinds of $0.3 million, consolidated net sales have decreased by 4.3% in 2023 from 2022.
Operating objectives and trends In 2025, we expect the following operating objectives and trends to impact our business: • Addressing continuing general macro uncertainty and building resilience into the outlook; • Ongoing focus on cost control and productivity improvements across the business to drive margin improvement, as well as new product launches to stimulate top line growth; • Execution of actions identified upon completion of the previously announced expanded and accelerated strategic review, including the divestiture of Graphic Arts and Superform U.S.; • Execution of selected capital investment projects to support our strategy of profitable growth while maintaining our infrastructure; • Continued emphasis on operating cash generation and maintaining strong working capital performance; • Further improvements in ESG standing through focus on sustainability and on our values of teamworking and accountability; and • Focus on recruiting, developing and maintaining talent, while driving a high-performance culture. 29 CONSOLIDATED RESULTS OF OPERATIONS The consolidated results of operations from continuing operations of Luxfer were as follows: Years ended December 31, % / point change In millions 2024 2023 2022 2024 v 2023 2023 v 2022 Net sales $ 391.9 $ 405.0 $ 423.4 (3.2) % (4.3) % Cost of sales (306.2) (328.4) (328.4) (6.8) % — % Gross profit 85.7 76.6 95.0 11.9 % (19.4) % % of net sales 21.9 % 18.9 % 22.4 % 3.0 (3.5) Selling, general and administrative expenses (48.1) (48.7) (43.1) (1.2) % 13.0 % % of net sales 12.3 % 12.0 % 10.2 % 0.3 1.8 Research and development (4.4) (4.6) (4.9) (4.3) % (6.1) % % of net sales 1.1 % 1.1 % 1.2 % — (0.1) Restructuring charges (4.7) (6.4) (1.9) (26.6) % 236.8 % % of net sales 1.2 % 1.6 % 0.4 % (0.4) 1.2 Impairment charges — (12.7) — (100.0) % n/a % of net sales — % 3.1 % — % (3.1) 3.1 Acquisition and disposals costs (12.2) — (0.3) n/a (100.0) % % of net sales 3.1 % — % 0.1 % 3.1 (0.1) Other income 7.7 — — n/a n/a % of net sales 2.0 % — % — % 2.0 — Gain on disposal of assets held-for-sale 6.1 — — n/a n/a % of net sales (1.6) % — % — % (1.6) — Operating income 30.1 4.2 44.8 616.7 % (90.6) % % of net sales 7.7 % 1.0 % 10.6 % 6.7 (9.6) Net interest expense (5.2) (6.3) (3.9) (17.5) % 61.5 % % of net sales 1.3 % 1.6 % 0.9 % (0.3) 0.7 Defined benefit pension credit / (charge) 1.6 (7.6) 0.1 (121.1) % (7,700.0) % % of net sales 0.4 % (1.9) % — % 2.3 (1.9) Income / (loss) before income taxes 26.5 (9.7) 41.0 (373.2) % (123.7) % % of net sales 6.8 % (2.4) % 9.7 % 9.2 (12.1) (Provision) / credit for income taxes (8.2) 7.1 (9.0) (215.5) % (178.9) % Effective tax rate 30.9 % 73.2 % 22.0 % (42.3) 51.2 Net income / (loss) from continuing operations $ 18.3 $ (2.6) $ 32.0 (803.8) % (108.1) % % of net sales 4.7 % (0.6) % 7.6 % 5.3 (8.2) 30 Net sales Adjusting for foreign exchange tailwinds of $1.7 million (2023: $0.3 million), consolidated net sales have decreased by 3.6% in 2024 from 2023.
Life expectancy The life expectancies of male and female members aged 65 on 31 December 2023 are assumed to be 21.2 and 23.1 years, respectively, with the life expectancies of male and female members aged 65 on 31 December 2043 assumed to be 22.5 and 24.6 years, respectively.
Life expectancy The life expectancies of male and female members aged 65 on 31 December 2024 are assumed to be 20.1 and 22.7 years, respectively, with the life expectancies of male and female members aged 65 on 31 December 2044 assumed to be 21.3 and 24.1 years, respectively.
Management believes that adjusted net income, adjusted earnings per share, adjusted EBITA and adjusted EBITDA are key performance indicators ("KPIs") used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results. In addition, Luxfer's CEO and other senior management use these KPIs, among others, to evaluate business performance.
Management believes that adjusted net income excluding legal cost (recovery) / expense, adjusted earnings per share, adjusted EBITA and adjusted EBITDA excluding legal cost (recovery) / expense are key performance indicators ("KPIs") used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results.
COMMITMENTS AND CONTINGENCIES Capital commitments At December 31, 2023, the Company had capital expenditure commitments of $2.3 million (2022: $1.4 million and 2021: $1.5 million) for the purchase of new plant and equipment. Committed banking facilities The Company refinanced in October 2021, see Note 11 for details of the refinance.
COMMITMENTS AND CONTINGENCIES Capital commitments At December 31, 2024, the Company had capital expenditure commitments of $0.5 million (2023: $2.3 million and 2022: $1.4 million) for the purchase of new plant and equipment.
GRAPHIC ARTS The net sales and adjusted EBITDA for Graphic Arts were as follows: Years ended December 31, % / point change In millions 2023 2022 2021 2023 v 2022 2022 v 2021 Net sales $ 31.5 $ 38.7 $ 40.1 (18.6) % (3.5) % Adjusted EBITDA (4.5) 7.8 6.6 n/a 18.2 % % of net sales (14.3) % 20.2 % 16.5 % n/a 3.7 Net sales The 18.6% decrease in Graphic Arts sales in 2023 from 2022 was a result of decreased demand for photo-engraving plates, particularly outside the North American market as competition has increased as a result of recent inflation, especially the high cost of magnesium.
GRAPHIC ARTS The net sales, adjusted EBITA and adjusted EBITDA for Graphic Arts were as follows: Years ended December 31, % / point change In millions 2024 2023 2022 2024 v 2023 2023 v 2022 Net sales $ 29.6 $ 31.5 $ 38.7 (6.0) % (18.6) % Adjusted EBITA (2.9) (6.5) 5.6 (55.4) % (216.1) % Adjusted EBITDA (2.9) (4.5) 7.8 (35.6) % (157.7) % Adjusted EBITA % of net sales (9.8) % (20.6) % 14.5 % 10.8 (35.1) Adjusted EBITDA % of net sales (9.8) % (14.3) % 20.2 % 4.5 (34.5) Net sales The 6.0% decrease in Graphic Arts sales in 2024 from 2023 was primarily the result of fluctuating demand for photo-engraving plates, particularly outside the North American market.
To indicate the sensitivity of results to the life expectancy assumption, a one year increase in assumed life expectancy on the U.K. plan could increase the value of the liabilities and therefore decrease the pension surplus at December 31, 2023 by approximately $8.0 million. 43 Expected rate of return Our expected rate of return on plan assets for our U.K. plans was 4.80% in 2023, 5.60% in 2022 and 3.30% in 2021.
To indicate the sensitivity of results to the life expectancy assumption, a one year increase in assumed life expectancy on the U.K. plan could increase the value of the liabilities and therefore decrease the pension surplus at December 31, 2024 by approximately $6.3 million.
The adverse impact of volume and mix has accounted for a $43.1 million reduction in sales, while the passing through of material cost inflation, where not constrained by contract, has partially offset this decrease by $25.0 million.
The adverse impact of volume and mix has accounted for a $16.0 million reduction in sales, while the passing through of price increases has slightly offset this decrease by $1.2 million.
Management carried out its qualitative review on the last day of the third quarter in 2023 and 2022. Our qualitative review showed no indicators of impairment in segments carrying goodwill.
Management carried out its qualitative review on the last day of the third quarter in 2024 and 2023. Our qualitative review showed no indicators of impairment in segments carrying goodwill. As a result, the Company concluded its review and was not required to perform a quantitative review. U.K.
Cash was primarily related to the net loss / net income from operating activities, net of the following non-cash items: (i) depreciation and amortization; (ii) share-based compensation charges; (iii) pension adjustments (iv) impairment charges and (v) net changes to assets and liabilities.
Cash was primarily related to the net income / loss from operating activities, net of the following non-cash items: depreciation and amortization; share-based compensation charges; pension credit / (charge); gain on disposal of held for sale assets; loss on held-for-sale asset group and net changes to assets and liabilities.
These assumptions are updated annually and are disclosed in ITEM 8, Note 14 to the Notes to Consolidated Financial Statements. Differences in actual experience or changes in assumptions can have a material impact on the pension and other post-retirement obligations and future expense.
Differences in actual experience or changes in assumptions can have a material impact on the pension and other post-retirement obligations and future expense.
The net sales and adjusted EBITDA for Gas Cylinders were as follows: Years ended December 31, % / point change In millions 2023 2022 2021 2023 v 2022 2022 v 2021 Net sales $ 186.4 $ 183.7 $ 178.3 1.5 % 3.0 % Adjusted EBITDA 16.7 12.8 22.7 30.5 % (43.6) % % of net sales 9.0 % 7.0 % 12.7 % 2.0 (5.7) Net sales The 1.5% increase in Gas Cylinders sales in 2023 from 2022 was primarily the result of: • Higher sales of SCBA cylinders; • Increased volume of our medical cylinders; and • Price increases throughout the segment as contracts are renegotiated.
The net sales, adjusted EBITA and adjusted EBITDA for Gas Cylinders were as follows: Years ended December 31, % / point change In millions 2024 2023 2022 2024 v 2023 2023 v 2022 Net sales $ 186.3 $ 186.4 $ 183.7 (0.1) % 1.5 % Adjusted EBITA 14.6 12.6 8.0 15.9 % 57.5 % Adjusted EBITDA 18.0 16.7 12.8 7.8 % 30.5 % Adjusted EBITA % of net sales 7.8 % 6.8 % 4.4 % 1.0 2.4 Adjusted EBITDA % of net sales 9.7 % 9.0 % 7.0 % 0.7 2.0 Net sales The 0.1% decrease in Gas Cylinders sales in 2024 from 2023 was primarily the result of: • Lower sales of Alternative Fuels cylinders; • Industrial cylinders' sales being weaker in the year.
Selling, general and administrative expenses ("SG&A") SG&A costs as a percentage of sales have increased by 1.8 percentage points in 2023 from 2022, largely due to the $5.9 million of legal costs expensed in the Elektron Division. These predominantly relate to the case described in Note 19 and are not expected to recur in 2024.
Selling, general and administrative expenses ("SG&A") SG&A costs as a percentage of sales are relatively flat, having increased by 0.3 percentage points in 2024 from 2023. SG&A costs in 2023 included $5.9 million of legal costs in the Elektron Division. This activity relates to the legal case described in Note 22.
The amounts recognized in our consolidated financial statements related to our defined-benefit pension and other post-retirement plans are determined from actuarial valuations. Inherent in these valuations are assumptions, including: (i) discount rates; (ii) inflation rates; (iii) pension increases; and (iv) life expectancy.
Inherent in these valuations are assumptions, including: (i) discount rates; (ii) inflation rates; (iii) pension increases; and (iv) life expectancy. These assumptions are updated annually and are disclosed in ITEM 8, Note 15 to the Notes to Consolidated Financial Statements.
The following investing activities impacted our cash flow: Capital expenditures Capital expenditures in 2023 was $9.4 million compared to $8.3 million in 2022. We anticipate capital expenditures for 2024 to be between $11 million and $14 million as we increase investment in order to grow the business.
Investing activities Net cash used for investing activities was $3.4 million in 2024, compared to $9.4 million in 2023. The following investing activities impacted our cash flow: Capital expenditures 37 Capital expenditures in 2024 was $10.3 million compared to $9.4 million in 2023.
Provision for income taxes The 51.2 percentage point increase in the effective tax rate in 2023 from 2022 was primarily due to the impact of increase tax credits in relation to U.K. incentives and the U.K. rate change from 19% to 25%, partially offset by the jurisdictional mix of income. 2022 compared with 2021 For a discussion comparing our consolidated operating results for the year ended December 31, 2022, with the year ended December 31, 2021, refer to Part II, Item 7.
Provision for income taxes The 42.3 percentage point decrease in the effective tax rate in 2024 from 2023 was primarily due to non-deductible expenses and deferred tax credit, predominantly in relation to the previously mentioned pension buy-out and impairment charges. 2023 compared with 2022 For a discussion comparing our consolidated operating results for the year ended December 31, 2023, with the year ended December 31, 2022, refer to Part II, Item 7.
These decreases were partially offset by: • Increased sales of our SCBA and medical cylinders; • Increase in demand for zirconium products, particularly those used in pharmaceutical applications; • Significant increase in sales of chemical response kits; and • Strong demand for our new unitized ration product ("UGR-E") in quarter two.
These decreases were partially offset by: • Increased sales of flameless ration heaters for meals ready to eat (MRE) and of our new unitized ration product ("UGR-E") ; • Strong sales of magnesium alloys, particularly those used in automotive applications; and • Stronger demand for SCBA cylinders as well as cylinders used in aerospace applications.
In developing the expected long-term rate of return, we considered our historical returns, with consideration given to forecast economic conditions, our asset allocations, input from external consultants and broader longer-term market indices. See ITEM 8, Note 14 of the Notes to Consolidated Financial Statements for further information regarding pension and other post-retirement plans.
The expected rate of return is designed to be a long-term assumption that may be subject to considerable year-to-year variance from actual returns. In developing the expected long-term rate of return, we considered our historical returns, with consideration given to forecast economic conditions, our asset allocations, input from external consultants and broader longer-term market indices.
We have been in compliance with the covenants under the Loan Notes and the RCF throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2023. In January 2023, the Company increased the capacity of its existing RCF to $125.0 million, an increase of $25.0 million.
We have been in compliance with the covenants under the Loan Notes and the RCF throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2024. Luxfer conducts all of its operations through its subsidiaries, joint ventures and affiliates. Accordingly, Luxfer's main cash source is dividends from its subsidiaries.
In December 2023, it was established that any potential liability arising from the lawsuits and reasonable defense costs related thereto are covered by insurance. Negotiations as to recovery of historic defense costs are ongoing, and therefore the Company has not recognized any asset with respect to said recovery as of December 31, 2023.
Contingencies In December 2023, it was established that any potential liability arising from the lawsuits and reasonable defense costs related to the US Ecology case (see Note 22) are covered by insurance.
We made net drawdowns on our borrowing facilities of $10.2 million (2022: net drawdowns of $24.8 million) and dividend payments of $14.0 million (2022: $14.2 million), equating to $0.52 per ordinary share (2022: $0.515 per ordinary share). In 2023, the Company spent $2.7 million repurchasing approximately 200,000 shares, (2022: $11.1 million repurchasing approximately 700,000 shares).
Financing activities In 2024, net cash used for financing activities was $44.0 million, (2023: $27.5 million). We repaid $1.5 million of bank overdraft, made net repayments on our borrowing facilities of $25.7 million (2023: net drawdowns of $10.2 million) and dividend payments of $14.0 million (2023: $14.0 million), equating to $0.52 per ordinary share (2023: $0.52 per ordinary share).
Loan Note 2026 The Note Purchase Agreement contains customary covenants and events of default, in each case with customary and appropriate grace periods and thresholds. In addition, the Note Purchase Agreement requires us to maintain compliance with a minimum interest coverage ratio and a leverage ratio.
In 2024, the Company spent $2.3 million repurchasing approximately 200,000 shares, (2023: $2.7 million repurchasing approximately 200,000 shares). Loan Note 2026 The Note Purchase Agreement contains customary covenants and events of default, in each case with customary and appropriate grace periods and thresholds.
Restructuring charges The $6.4 million restructuring charges in 2023 includes: • $3.0 million of asset impairments and $2.3 million asset relocation, restructuring and other costs in relation to the rationalization of our North American Gas Cylinders businesses to reduce our fixed cost base; • An additional $0.4 million in relation to the closure of Luxfer Gas Cylinders France; • $0.2 million of further redundancies within our Gas Cylinders division; • $0.5 million of waste clean up costs and $0.2 million of asset impairments in the Elektron division in relation to the consolidation of production facilities in the Magnesium Powders operations; and • $0.2 million credit in relation to the closure of our Elektron Division's Canadian facility. 33 Acquisition and disposals costs There were no acquisition or disposals costs in 2023.
Restructuring charges The $4.7 million restructuring charges in 2024 includes: • $1.9 million of asset impairments and $1.8 million asset relocation, restructuring and other costs in relation to the rationalization of our North American Gas Cylinders businesses to reduce our fixed cost base; • $0.1 million gain on disposal of Luxfer Gas Cylinders France site, offset by $0.9 million of costs incurred in relation to its closure; and • $0.2 million of waste clean up costs in the Elektron division in relation to the consolidation of production facilities in the Magnesium Powders operations. 31 Impairment charges The $12.7 million impairment charges incurred in 2023 arose from fully writing down property, plant and equipment and right of use assets from operating leases within our Graphic Arts division as a result of our annual impairment and strategic review.
High fixed costs and the lowering of pricing to slow sales decline had a negative impact on margins. 37 LIQUIDITY AND CAPITAL RESOURCES Our liquidity requirements arise primarily from obligations under our indebtedness, capital expenditures, acquisitions, the funding of working capital and the funding of hedging facilities to manage foreign exchange and commodity purchase price risks.
Adjusted EBITDA The loss in 2024 for Graphic Arts was a result of the factors above, in accordance with ASC 360, depreciation did not impact 2024 as no depreciation is charged on assets held for sale. 36 LIQUIDITY AND CAPITAL RESOURCES Our liquidity requirements arise primarily from obligations under our indebtedness, capital expenditures, acquisitions, the funding of working capital and the funding of hedging facilities to manage foreign exchange and commodity purchase price risks.
Net interest expense Net interest expense of $6.3 million in 2023 increased from $3.9 million in 2022 due to the continued combination of increased interest rates and higher drawings on the revolving credit facility.
Net interest expense Net interest expense of $5.2 million in 2024 decreasing from $6.3 million in 2023 primarily due to the lower average drawings on the revolving credit facility. Defined benefit pension credit The defined benefit pension credit of $1.6 million in 2024, is in relation to the U.K. plan.
Proceeds from sale of property, plant and equipment In May 2022, the Company sold a previously held-for-sale building in the Elektron segment for $3.7 million. Consideration was paid in full upon sale. Settlements from sale of business In October 2022, the Company agreed a final settlement of $1.0 million to the purchasers of the previously disposed aluminum gas cylinder business.
We anticipate capital expenditures for 2025 to be between $12 million and $15 million as we increase investment in order to grow the business. Proceeds from assets held for sale In September 2024, the Company sold a previously held-for-sale building in the Elektron segment for $7.3 million. Consideration was paid in full in October 2024.
ELEKTRON The net sales and adjusted EBITDA for Elektron were as follows: Years ended December 31, % / point change In millions 2023 2022 2021 2023 v 2022 2022 v 2021 Net sales $ 187.1 $ 201.0 $ 155.7 (6.9) % 29.1 % Adjusted EBITDA 26.6 42.5 34.1 (37.4) % 24.6 % % of net sales 14.2 % 21.1 % 21.9 % (6.9) (0.8) Net sales The 6.9% decrease in Elektron sales in 2023 from 2022 was negatively impacted by adverse volume and mix, while price increase contributed an additional $9.6 million.
Adjusted EBITDA The 0.7 percentage point increase in adjusted EBITDA for Gas Cylinders as a percentage of net sales in 2024 from 2023 is predominantly the result of the increase in adjusted EBITA as a percentage of net sales. 35 ELEKTRON The net sales, adjusted EBITA and adjusted EBITDA for Elektron were as follows: Years ended December 31, % / point change In millions 2024 2023 2022 2024 v 2023 2023 v 2022 Net sales $ 176.0 $ 187.1 $ 201.0 (5.9) % (6.9) % Adjusted EBITA 33.5 20.8 36.6 61.1 % (43.2) % Adjusted EBITDA 39.5 26.6 42.5 48.5 % (37.4) % Adjusted EBITA % of net sales 19.0 % 11.1 % 18.2 % 7.9 (7.1) Adjusted EBITDA % of net sales 22.4 % 14.2 % 21.1 % 8.2 (6.9) Net sales The 5.9% decrease in Elektron sales in 2024 from 2023 was primarily the result of: • Significant decrease in demand for zirconium products, particularly those used in automotive catalysis products; • Lower sales of both commercial and defense aerospace alloys; and • Reductions in chemical response kit and commercial magnesium powder sales.
Primary movements were: • Lower sales of SoluMag ® in the Oil and Gas industry; and • Reduction in sales of magnesium powders for commercial use. These decreases were partially offset by increased sales of chemical response kits and flameless ration heaters.
These decreases were partially offset by: • Increased sales of flameless ration heaters for meals ready to eat (MRE) and of our new unitized ration product ("UGR-E") ; • Strong sales of magnesium alloys, particularly those used in automotive applications; • Increased magnesium alloy sales to the Oil and Gas industry.
Adjusted EBITDA The loss in 2023 for Graphic Arts was a result of lower volumes coupled with the increased cost of magnesium filtering through.
Adjusted EBITA The loss in 2024 for Graphic Arts was a result of relatively high magnesium raw material cost amid increased competition. 2023 was significantly impacted by significant material cost inflation resulting in competitive constraints.
The expected rate of return on our U.S. plans was 4.70% in 2022 and 2.50% in 2021. The expected rate of return is designed to be a long-term assumption that may be subject to considerable year-to-year variance from actual returns.
Expected rate of return Our expected rate of return on plan assets for our U.K. plans was 5.80% in 2024, 4.80% in 2023 and 5.60% in 2022. The expected rate of return on our U.S. plans was n/a in 2024 and 2023, and 4.70% in 2022.
Net sales in Gas Cylinders continued to be impacted throughout the year by the fixed-price contracts in place across the segment, although we have been able to renegotiate some of our fixed-price contracts to offset inflation. 36 Adjusted EBITDA The 2.0 percentage point increase in adjusted EBITDA for Gas Cylinders as a percentage of net sales in 2023 from 2022 is the result of the renegotiation of fixed price contracts, as price more than offset inflation during the year.
Adjusted EBITA The 1.0 percentage point increase in adjusted EBITA for Gas Cylinders as a percentage of net sales in 2024 from 2023 is predominantly the result of pricing improvements from new sales contracts partially offset by adverse sales mix and volume.
Gross profit The 3.5 percentage point decrease in gross profit as a percentage of sales in 2023 from 2022 was primarily the result of adverse sales mix and higher materials costs relative to price increases.
Gross profit The 3.0 percentage point increase in gross profit as a percentage of sales in 2024 from 2023 was primarily the result of contract renegotiation and manufacturing efficiencies having a positive impact on margins within the Gas Cylinders and Elektron Divisions respectively. This has been partially offset by adverse volume and mix.
Removed
Key trends and uncertainties regarding our existing business Margin pressure resulting from supply chain challenges easing We have recently experienced supply chain challenges, which resulted in higher cost of certain raw materials. In our supply chain, previously described challenges caused by the disruption in our U.S. domestic magnesium supply continued, and overall competitive cost pressures persisted.
Added
Key trends and uncertainties regarding our existing business Uncertainty of demand in certain end-markets Macro-economic conditions have continued to impact our general industrial end-market with demand remaining soft for products across all segments.
Removed
These issues have been particularly acute in our Graphic Arts segment, where the ability to pass through higher costs to our customers has proved to be constrained. In recent months however, the purchase price of Magnesium has been falling, which will result in lower input cost in 2024.
Added
We have also experienced variability of demand for certain products in our defense, first response & healthcare end-market, particularly defense applications, including countermeasure flares and flameless ration heaters, although we have seen this improve in the second half of the year. We have been able to navigate these challenges through productivity and cost management initiatives resulting in improved margins.
Removed
We have implemented elements of our strategic review in Graphic Arts to reduce costs, including a headcount reduction program. We are also pursuing further actions to improve margins and maintain strong cash flow across the business.
Added
Legal recoveries and effective working capital management contributed to excellent cash conversion and significantly reduced net debt levels. While the outlook remains uncertain there are some signs of recovery within the industrial and defense end markets within our Elektron segment, which we are well-placed to capitalize on.
Removed
In the majority of cases we are able to pass through inflationary costs to our customers, although we are still constrained by a small number of contracts, particularly in the Gas Cylinders segment, the longest running of which is not subject to renewal until mid-2024.
Added
Overall sales have been negatively impacted by: • Significant decrease in demand for zirconium products, particularly those used in automotive catalysis products; • Lower sales of both commercial and defense aerospace alloys; • Reductions in sales of chemical response kits following increased activity in the prior year clearing order backlogs; • Lower sales for Alternative Fuel cylinders following lower demand in North America; and • Decreased demand for photo-engraving plates.
Removed
However, our expectation is that the adverse impact of material availability / inflation, energy cost inflation and labor and transport constraints will lessen in 2024 and when costs fall we will look to share cost savings with customers through lower pricing. However the outlook remains highly uncertain with both the size and timing of future cost increases difficult to predict.
Added
Acquisition and disposals costs In 2024 acquisition and disposal related costs of $12.2 million were incurred in relation to the divestiture of our Graphic Arts segment. $9.8 million represents a loss on held-for-sale asset group to reflect its fair value and $2.4 million represents professional fees. No acquisition and disposal related costs were incurred during 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−274 removed13 unchanged
Biggest changeDecember 31, 2023 Sales hedges U.S. dollars Euros Canadian Dollars Japanese Yen Contract totals/£m 23.5 3.4 0.3 0.2 Maturity dates 01/24 to 02/24 01/24 to 03/24 01/24 to 02/24 01/24 to 02/24 Exchange rates $1.2159 to $1.2760 €1.1432 to €1.1494 $1.6843 ¥179.3673 to ¥185.6455 Purchase hedges U.S. dollars Euros Canadian dollars Australian dollars Chinese yuan Contract totals/£m 0.4 0.8 11.0 0.9 1.4 Maturity dates 02/24 to 03/24 01/24 01/24 to 02/24 01/24 01/24 Exchange rates $1.2155 to $1.2614 €1.1577 to €1.1535 $1.7199 to $1.6840 $1.8719 ¥9.0433 to ¥9.0440 December 31, 2022 Sales hedges U.S. dollars Euros Canadian Dollars Contract totals/£m 13.4 12.8 0.1 Maturity dates 01/23 to 03/23 01/23 to 03/23 01/24 Exchange rates $1.1207 to $1.2083 €1.1234 to €1.1468 $1.632 Purchase hedges U.S. dollars Euros Canadian dollars Australian dollars Chinese yuan Contract totals/£m 9.2 2.6 9.5 1.0 1.6 Maturity dates 01/23 to 04/23 01/23 to 04/23 01/23 01/23 01/23 to 03/23 Exchange rates $1.1040 to $1.2084 €1.1437 to €1.2240 $1.6796 to $1.6239 $1.7787 ¥8.3906 to ¥8.4126 45 Commodity price risk We are exposed to commodity price risks in relation to the purchases of our raw materials.
Biggest changeDecember 31, 2024 Sales hedges U.S. dollars Canadian Dollars Contract totals/£m 36.5 0.2 Maturity dates 01/25 to 03/25 01/25 Exchange rates $1.2511 to $1.2999 $1.7969 Purchase hedges U.S. dollars Euros Canadian dollars Australian dollars Contract totals/£m 1.2 0.8 15.6 1.0 Maturity dates 01/25 02/25 01/25 to 03/25 01/25 Exchange rates $1.2507 €1.2104 $1.7451 to $1.8137 $2.0073 to $2.0177 December 31, 2023 Sales hedges U.S. dollars Euros Canadian Dollars Japanese Yen Contract totals/£m 23.5 3.4 0.3 0.2 Maturity dates 01/24 to 02/24 01/24 to 03/24 01/24 to 02/24 01/24 to 02/24 Exchange rates $1.2159 to $1.2760 €1.1432 to €1.1494 $1.6843 ¥179.3673 to ¥185.6455 Purchase hedges U.S. dollars Euros Canadian dollars Australian dollars Chinese yuan Contract totals/£m 0.4 0.8 11.0 0.9 1.4 Maturity dates 02/24 to 03/24 01/24 01/24 to 02/24 01/24 01/24 Exchange rates $1.2155 to $1.2614 €1.1577 to €1.1535 $1.7199 to $1.6840 $1.8719 ¥9.0433 to ¥9.0440 43 Commodity price risk We are exposed to commodity price risks in relation to the purchases of our raw materials.
As a result of this exposure, we have in the past hedged interest payable under our floating rate indebtedness based on a combination of forward rate agreements, interest rate caps and swaps. There were no fixed or variable rate interest hedge agreements in place as of December 31, 2023, and December 31, 2022.
As a result of this exposure, we have in the past hedged interest payable under our floating rate indebtedness based on a combination of forward rate agreements, interest rate caps and swaps. There were no fixed or variable rate interest hedge agreements in place as of December 31, 2024, and December 31, 2023.
The price of high-grade aluminum, which is actively traded on the LME, has fluctuated significantly in recent years. Interest rate risk As of December 31, 2023, we had both fixed rate and variable rate debt outstanding on our consolidated balance sheet.
The price of high-grade aluminum, which is actively traded on the LME, has fluctuated significantly in recent years. Interest rate risk As of December 31, 2024, we had both fixed rate and variable rate debt outstanding on our consolidated balance sheet.
It has also used fixed rate debt within its financing structure to mitigate volatility in interest rate movements as disclosed in Notes 11 and 12 in the Notes to the Consolidated Financial Statements. 46 /Item 8.
It has also used fixed rate debt within its financing structure to mitigate volatility in interest rate movements as disclosed in Notes 12 and 13 in the Notes to the Consolidated Financial Statements. 44
There is no financial market to hedge magnesium, zirconium raw materials or carbon fiber, and prices for these raw materials have been volatile in recent years, with substantial increases in the second half of 2021 and throughout 2022, with price fluctuations throughout 2023.
There is no financial market to hedge magnesium, zirconium raw materials or carbon fiber, and prices for these raw materials have been volatile in recent years, with substantial increases throughout 2022, price fluctuations throughout 2023 and a slow decline in 2024.
Removed
Financial Statements and Supplementary Data Luxfer Holdings PLC Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 876) 48 Consolidated Statements of Income 50 Consolidated Statements of Comprehensive Income 51 Consolidated Balance Sheets 52 Consolidated Statements of Cash Flows 53 Consolidated Statements of Changes in Equity 54 Notes to Consolidated Financial Statements 55 47 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Luxfer Holdings PLC Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Luxfer Holdings PLC and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows, for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).
Removed
We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Removed
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Removed
Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date, as the Company’s management did not properly design or maintain effective risk assessment control activities to allow for timely reassessment of the material risks of misstatement in financial reporting due to a lack of controls related to the accounting for inventory in-transit.
Removed
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Removed
The material weakness referred to above is described in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 9A.
Removed
We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Removed
Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above.
Removed
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.
Removed
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Removed
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Removed
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Removed
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
Removed
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
Removed
We believe that our audits provide a reasonable basis for our opinions. 48 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Removed
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Removed
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Removed
Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
Removed
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Removed
Valuation of Pension Benefit Obligations As described in Notes 1 and 14 to the consolidated financial statements, the Company had pension benefit obligations of $234.0 million as of December 31, 2023. As disclosed by management, the amounts in the consolidated financial statements related to the pension benefit obligations are determined from actuarial valuations.
Removed
The valuation of the pension benefit obligations requires estimation in determining appropriate assumptions including: (i) discount rates; (ii) inflation rates; (iii) pension increases; and (iv) life expectancy. Differences in actual experience or changes in these assumptions can have a material impact on the determination of the liabilities in the Company’s pension schemes.
Removed
The principal considerations for our determination that performing procedures relating to the valuation of the pension benefit obligations is a critical audit matter are (i) the significant judgment and assumptions made by management, including the use of management’s specialists, when determining the pension benefit obligations; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's significant assumptions related to discount rates, inflation rates, pension increases, and life expectancy; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Removed
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of the pension benefit obligations.
Removed
These procedures also included, among others, testing the completeness, accuracy and relevance of the underlying data used in the valuation of the pension benefit obligations.
Removed
Professionals with specialized skill and knowledge were used to assist in (i) testing management’s process for estimating the pension benefit obligations, (ii) evaluating the reasonableness of the assumptions used in calculating the pension benefit obligations, including the discount rates, inflation rates, pension increases, and life expectancy assumptions; and (iii) assessing the appropriateness of management’s methodology in line with the requirements of ASC 715 Compensation — Retirement Benefits. /s/ PricewaterhouseCoopers LLP Manchester, United Kingdom February 27, 2024 We have served as the Company’s auditor since 2015. 49 LUXFER HOLDINGS PLC CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, In millions, except share and per-share data 2023 2022 2021 Net sales $ 405.0 $ 423.4 $ 374.1 Cost of sales (328.4) (328.4) (278.1) Gross profit 76.6 95.0 96.0 Selling, general and administrative expenses (48.7) (43.1) (47.3) Research and development (4.6) (4.9) (3.9) Restructuring charges (6.4) (1.9) (6.2) Impairment charges (12.7) — — Acquisitions and disposals costs — (0.3) (1.5) Other income — — 0.2 Other charges — — (1.1) Operating income 4.2 44.8 36.2 Net interest expense (6.3) (3.9) (3.1) Defined benefit pension (charge) / credit (7.6) 0.1 2.3 (Loss) / income before income taxes (9.7) 41.0 35.4 Credit / (provision) for income taxes 7.1 (9.0) (5.4) Net (loss) / income from continuing operations (2.6) 32.0 30.0 Net gain on disposition of discontinued operations — — 6.6 Income / (loss) from discontinued operations, net of tax 0.7 (5.1) (6.7) Net (loss) / income $ (1.9) $ 26.9 $ 29.9 (Loss) / earnings per share (1) Basic from continuing operations (0.10) 1.17 1.08 Basic from discontinued operations 0.03 (0.19) — Basic $ (0.07) $ 0.99 $ 1.08 Diluted from continuing operations (0.10) 1.16 1.07 Diluted from discontinued operations 0.03 (0.19) — Diluted $ (0.07) $ 0.98 $ 1.07 Weighted average ordinary shares outstanding Basic 26,897,556 27,304,847 27,698,691 Diluted 27,020,959 27,541,202 28,032,506 (1) Th e calculation of earnings per share is performed separately for continuing and discontinued operations.
Removed
As a result, the sum of the two in any particular year may not equal the earnings-per-share amount in total.
Removed
See accompanying notes to consolidated financial statements 50 LUXFER HOLDINGS PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31, In millions 2023 2022 2021 Net (loss) / income $ (1.9) $ 26.9 $ 29.9 Other comprehensive income / (loss) Net change in foreign currency translation adjustment 7.3 (13.2) (0.8) Pension and post-retirement gains, net of $7.5, $3.1 and $10.6 of tax, respectively 14.2 8.8 31.6 Other comprehensive income / (loss) net of tax 21.5 (4.4) 30.8 Total comprehensive income $ 19.6 $ 22.5 $ 60.7 See accompanying notes to consolidated financial statements 51 LUXFER HOLDINGS PLC CONSOLIDATED BALANCE SHEETS December 31, In millions, except share and per-share data 2023 2022 Current assets Cash and cash equivalents $ 2.3 $ 12.6 Restricted cash 0.3 0.3 Accounts and other receivables, net of allowances of $0.7 and $0.4, respectively 59.9 67.8 Inventories 95.9 111.1 Current assets held-for-sale 8.9 9.3 Other current assets 1.5 — Total current assets 168.8 201.1 Non-current assets Property, plant and equipment, net 63.8 77.7 Right-of-use assets from operating leases 15.4 19.8 Goodwill 67.5 65.6 Intangibles, net 12.0 12.5 Deferred tax assets 3.9 3.0 Pensions and other retirement benefits 40.3 27.0 Investments and loans to joint ventures and other affiliates 0.4 0.4 Total assets $ 372.1 $ 407.1 Current liabilities Current maturities of long-term debt and short-term borrowings $ 4.6 $ 25.0 Accounts payable 26.5 37.8 Accrued liabilities 20.9 29.4 Taxes on income — 1.8 Current liabilities held-for-sale 3.9 5.0 Other current liabilities 8.9 11.2 Total current liabilities 64.8 110.2 Non-current liabilities Long-term debt 67.6 56.2 Pensions and other retirement benefits 0.1 4.5 Deferred tax liabilities 10.2 9.9 Other non-current liabilities 16.8 19.0 Total liabilities $ 159.5 $ 199.8 Commitments and contingencies (Note 19) Shareholders' equity Ordinary shares of £0.50 par value; authorized 40,000,000 shares for 2023 and 2022; issued and outstanding 28,944,000 shares for 2023 and 2022 $ 26.5 $ 26.5 Additional paid-in capital 223.5 221.4 Treasury shares (22.9) (20.4) Company shares held by ESOP (0.9) (1.0) Retained earnings 104.3 120.2 Accumulated other comprehensive loss (117.9) (139.4) Total shareholders' equity $ 212.6 $ 207.3 Total liabilities and shareholders' equity $ 372.1 $ 407.1 See accompanying notes to consolidated financial statements 52 LUXFER HOLDINGS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, In millions 2023 2022 2021 Operating activities Net (loss) / income $ (1.9) $ 26.9 $ 29.9 Net (income) / loss from discontinued operations (0.7) 5.1 0.1 Net (loss) / income from continuing operations (2.6) 32.0 30.0 Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities Depreciation 11.9 12.9 14.7 Amortization of purchased intangible assets 0.8 0.7 0.9 Amortization of debt issuance costs 0.4 0.5 0.5 Share-based compensation charge 2.8 2.5 2.8 Deferred income taxes (0.6) 8.7 (1.6) Loss on disposal of business — 1.0 — Asset impairment charges and non-cash restructuring charges 15.9 — — Defined benefit pension expense / (credit) 7.9 0.1 (1.9) Defined benefit pension contributions (2.3) (0.4) (18.2) Changes in assets and liabilities, net of effects of business acquisitions Accounts and notes receivable 16.6 (27.2) (9.8) Inventories 16.6 (25.0) (15.3) Current assets held-for-sale 1.0 (3.3) (2.9) Other current assets (1.5) — 1.3 Accounts payable (19.0) 21.3 11.4 Accrued liabilities (9.2) 2.4 7.5 Current liabilities held-for-sale 0.5 0.9 (1.8) Other current liabilities (4.3) (8.8) 8.4 Other non-current assets and liabilities (8.7) (2.5) — Net cash provided by operating activities - continuing 26.2 15.8 26.0 Net cash provided by operating activities - discontinued 0.1 0.1 0.1 Net cash provided by operating activities 26.3 15.9 26.1 Investing activities Capital expenditures (9.4) (8.3) (9.1) Proceeds from sale of property, plant and equipment — 3.7 — Proceeds from sale of businesses — — 23.4 Settlements from sale of businesses — (1.0) — Acquisitions, net of cash acquired — — (19.3) Net cash used for investing activities - continuing (9.4) (5.6) (5.0) Net cash used for investing activities - discontinued (0.1) (0.1) (0.1) Net cash used for investing activities (9.5) (5.7) (5.1) Financing activities Repayment of loan notes (25.0) — — Drawdown of bank overdraft 4.6 — — Net drawdown of of long-term borrowings 10.2 24.8 6.4 Debt issuance costs (0.2) — (1.0) Dividends paid (14.0) (14.2) (13.6) Share-based compensation cash paid (0.4) (1.4) (1.5) Repurchase of deferred shares — (0.1) — Repurchase of ordinary shares (2.7) (11.1) (6.4) Net cash used for financing activities (27.5) (2.0) (16.1) Effect of exchange rate changes on cash and cash equivalents 0.4 (1.7) — Net (decrease) / increase (10.3) 6.5 4.9 Cash, cash equivalents and restricted cash; beginning of year 12.9 6.4 1.5 Cash, cash equivalents and restricted cash; end of year $ 2.6 $ 12.9 $ 6.4 Supplemental cash flow information: Interest payments $ 6.1 $ 4.0 $ 3.2 Income tax payments 3.3 0.6 5.3 See accompanying notes to consolidated financial statements 53 LUXFER HOLDINGS PLC CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY In millions, Ordinary shares Deferred shares Additional paid-in capital Treasury shares Number Treasury shares Amount Company shares held by ESOP Number Company shares held by ESOP Amount Retained earnings Accumulated other comprehensive loss Total shareholders' equity At January 1, 2021 $ 26.6 $ 149.9 $ 70.6 (0.4) $ (4.0) (1.0) $ (1.4) $ 91.2 $ (165.8) $ 167.1 Net income for the year — — — — — — — 29.9 — 29.9 Other comprehensive income, net of tax — — — — — — — — 30.8 30.8 Dividends declared and paid — — — — — — — (13.6) — (13.6) Share-based compensation — — 2.8 — — — — — — 2.8 Utilization of treasury shares to satisfy share-based compensation — — (0.1) — 0.1 — — — — Utilization of shares from ESOP to satisfy share-based compensation — — (1.8) — — 0.2 0.3 — — (1.5) Repurchase of ordinary shares — — — (0.3) (6.4) — — — — (6.4) Cancellation of ordinary shares (0.1) — (0.6) 0.1 0.7 — — — — — At December 31, 2021 $ 26.5 $ 149.9 $ 70.9 (0.6) $ (9.6) (0.8) $ (1.1) $ 107.5 $ (135.0) $ 209.1 Net income for the year — — — — — — — 26.9 — 26.9 Other comprehensive loss, net of tax — — — — — — — — (4.4) (4.4) Dividends declared and paid — — — — — — — (14.2) — (14.2) Share-based compensation — — 2.5 — — — — — — 2.5 Utilization of treasury shares to satisfy share-based compensation — — (0.7) — 0.3 — — — — (0.4) Utilization of shares from ESOP to satisfy share-based compensation — — (1.1) — — 0.1 0.1 — — (1.0) Repurchase of ordinary shares — — — (0.7) (11.1) — — — — (11.1) Cancellation of ordinary shares — (149.9) 149.8 — — — — — — (0.1) At December 31, 2022 $ 26.5 $ — $ 221.4 (1.3) $ (20.4) (0.7) $ (1.0) $ 120.2 $ (139.4) $ 207.3 Net loss for the year — — — — — — — (1.9) — (1.9) Other comprehensive income, net of tax — — — — — — — — 21.5 21.5 Dividends declared and paid — — — — — — — (14.0) — (14.0) Share-based compensation charges — — 2.8 — — — — — — 2.8 Utilization of treasury shares to satisfy share-based compensation — — (0.3) — 0.2 — — — — (0.1) Utilization of shares from ESOP to satisfy share-based compensation — — (0.4) — — 0.1 0.1 — — (0.3) Repurchase of ordinary shares — — — (0.2) (2.7) — — — — (2.7) At December 31, 2023 $ 26.5 $ — $ 223.5 (1.5) $ (22.9) (0.6) $ (0.9) $ 104.3 $ (117.9) $ 212.6 See accompanying notes to consolidated financial statements 54 LUXFER HOLDINGS PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
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Summary of Significant Accounting Policies Business description Luxfer Holdings PLC is a global industrial company innovating niche applications in materials engineering. Luxfer focuses on value creation by using its broad array of technical know-how and proprietary technologies to help create a safe, clean and energy-efficient world.
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Luxfer's high-performance materials, components and high-pressure gas containment devices are used in defense, first response and healthcare, transportation and general industrial applications. It comprises three reportable segments being Gas Cylinders, Elektron and Graphic Arts.
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Principles of consolidation The consolidated financial statements comprise the financial statements of Luxfer Holdings PLC and its subsidiaries (collectively "we," "our," "Luxfer" or "the Company" ) that we control. Investments in unconsolidated affiliates, where we have the ability to exercise significant influence over the operating and financial policies, are accounted for using the equity method.
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All inter-company balances and transactions, including unrealized profits arising from intra-company transactions, have been eliminated in full. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and are presented in U.S. dollars ("USD").
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The books of the Company's non-U.S. entities are converted to USD at each reporting period date in accordance with the accounting policy below. The functional currency of the holding company, Luxfer Holdings PLC, is USD and that of its U.K. subsidiaries is GBP, being the most appropriate currency for those particular operations.
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Discontinued operations Certain amounts relating to our discontinued businesses are recorded within assets or liabilities held-for-sale on the consolidated balance sheets and within net income / loss from discontinued operations on the consolidated statements of income. Fiscal year Our fiscal year ends on December 31.
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Use of estimates The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes, disclosures of contingent assets and liabilities at the date of the financial statements and in the reported amounts of revenues and expenses during the reporting period.
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Significant estimates include our assessment of property, plant and equipment, right of use asset valuations and impairment, goodwill for impairment, loss contingencies, estimated realizable value on excess and obsolete inventory, assets acquired and liabilities assumed in acquisitions, estimated selling proceeds from assets held for sale, contingent liabilities, income taxes and pension benefits.
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Actual results could differ from our estimates. 55 1. Summary of Significant Accounting Policies (continued) Goodwill and other identifiable intangible assets Business combinations are accounted for using the purchase method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value, and the amount of any non-controlling interest in the acquiree.
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The measurement of non-controlling interest is at fair value and is determined on a transaction by transaction basis. Acquisition costs are expensed as incurred. Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible net assets, identifiable intangible assets purchased, and liabilities assumed.
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Goodwill is tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment by performing a qualitative evaluation which could then lead to a quantitative assessment.
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The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We may elect not to perform the qualitative assessment for some or all reporting units and only perform a quantitative impairment test.
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On the last day of the third quarter in 2023, management carried out the qualitative review on all reporting units with a goodwill balance. No indicators of impairment were identified in these reporting units, therefore the Company concluded its review at this point and was not required to perform a quantitative review.
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Other intangible assets are measured initially at cost, or, where acquired in a business combination, at fair value, and are amortized on a straight-line basis over their estimated useful lives, as shown in the table below.
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Customer relationships 15 - 25 years Technology and trading related 5 - 25 years The carrying values are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Reviews are made annually of the estimated remaining lives and residual values of the patents and trademarks.
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Investments in affiliates The company owns interest in the following affiliate: Name of company Country of incorporation Holding Proportion of voting rights and shares held Classification Consolidation method Nikkei-MEL Co. Limited Japan Ordinary shares 50% Joint venture Equity method 56 1.
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Summary of Significant Accounting Policies (continued) Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the particular asset. The depreciation expense during 2023, 2022 and 2021 was $11.9 million, $12.9 million and $14.7 million, respectively.
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The estimated useful lives are summarized as follows: Freehold buildings 10 - 33 years Leasehold land and buildings The lesser of life of lease or freehold rate Machinery and equipment 3 - 25 years Including: Heavy production equipment (including casting, rolling, extrusion and press equipment) 20 - 25 years Chemical production plant and robotics 7 - 10 years Other production machinery 5 - 10 years Furniture, fittings, storage and equipment 3 - 10 years Computer equipment 5 years Freehold land is not depreciated.
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Reviews are made annually of the estimated remaining lives and residual values of individual productive assets, taking account of commercial and technological obsolescence, as well as normal wear and tear. We review the carrying value for any individual asset or asset group for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
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If any such indication exists, and where the carrying value exceeds the estimated recoverable amount, the asset is written-down to its estimated recoverable amount.
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The assessment of possible impairment is based on our ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations.
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If these cash flows are less than the carrying value of such asset or asset group, an impairment loss is recognized for the difference between estimated fair value and carrying value.
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Impairment losses on long-lived assets held for sale are determined in a similar manner, except that fair values are reduced for the cost to dispose of the assets.The measurement of impairment requires us to estimate future cash flows and the fair value of long-lived assets.
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Impairments The Company will recognize impairments in relation to property, plant and equipment, investments, goodwill, other identifiable intangible assets and other long-lived assets in accordance with the above policies. Impairments relating to restructuring activities, incurred to exit an activity or location, will be recorded within the restructuring line on the Statements of Income.
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Other impairments will be recorded within the impairment charges line on the Statements of Income. Impairments related to discontinued operations will be recorded within the net loss from discontinued operations line on the Statements of Income.
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During the Company's recently commenced strategic review, in December 2023, the Company determined that the Graphic Arts business no longer aligns with the overall Luxfer strategy and have initiated a process to divest the Graphic Arts business in 2024.
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As a result of such decision and its impact on the Company's hold period, a $12.7 million impairment charge has been recognized in 2023, disclosed as impairment charges in the consolidated statement of income, relating to right of use assets,$1.6 million and property, plant and equipment, $11.1 million, in our Graphic Arts segment.
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There was also $3.2 million of asset impairments recognized within restructuring charges predominantly relating to rationalization of our North American Gas Cylinders businesses.
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Within discontinued operations in 2022, there was a $2.6 million impairment charge relating to the right of use asset previously held as a sublet to Neos International Limited, the right of use asset being building leases retained on sale of Superform U.K.
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Also within discontinued operations in 2021, there was a $1.5 million impairment charge relating to plant and equipment held in our Superform U.S. business, reflecting updated expectations of fair market value. 57 1. Summary of Significant Accounting Policies (continued) Revenue recognition A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.
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The majority of the Company’s contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. There is no variable consideration or obligations for returns, refunds, or other related obligations in the Company’s contracts.
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Payment terms and conditions vary by contract type and may include a requirement of payment in advance. In general, our payment terms are 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a significant financing component.
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The Company’s revenue is primarily derived from the following sources and are recognized when or as the Company satisfies a performance obligation by transferring a good or service to a customer: Product revenues We recognize revenue when it is realized or realizable and has been earned.
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Revenue is recognized when the following are met: (i) persuasive evidence of an arrangement exists; (ii) shipment or delivery has occurred (depending on the terms of the sale), which is when the transfer of product or control occurs; (iii) our price to the buyer is fixed or determinable; and (iv) the ability to collect is reasonably assured.
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Royalties Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreements, provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably.
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Practical Expedients The Company applies the practical expedient and does not disclose information about remaining performance obligations for contracts that have original expected durations of one year or less. Cash, Cash Equivalents and Restricted Cash We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
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Restricted cash is recognized separately in the Consolidated Balance Sheets. Restricted cash balances were $0.3 million at December 31, 2023, and $0.3 million at December 31, 2022. The amounts held in escrow were held in relation to a payment received for a historic doubtful debt in our Elektron division and workers' compensation insurance.
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Inventories Inventories are stated at the lower of cost or net realizable value. Raw materials are valued on a first-in, first-out basis. Strategic purchases of inventories in order to secure supply and reduce the impact of price volatility on the cost of inventories are valued on a weighted-average cost basis.
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Work in progress and finished goods costs comprise direct materials including, where applicable, direct labor costs, an apportionment of production overheads and any other costs that have been incurred in bringing the inventories to their present location and condition.
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Inventories are reviewed on a regular basis, and we make allowance for excess or obsolete inventories and write-down to net realizable value based primarily on committed sales prices and our estimates of expected and future product demand and related pricing.
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Research and Development Included within research and development costs are directly attributable salaries, materials and consumables, as well as third-party contractor fees and research costs. These costs are expensed as incurred. 58 1.
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Summary of Significant Accounting Policies (continued) Foreign currencies Transactions in currencies other than an operation's functional currency are initially recorded in the functional currency at the rate of exchange prevailing on the dates of transactions.
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At each balance sheet date, the foreign currency monetary assets and liabilities of each operation are translated into the functional currency of that operation at the rates prevailing on the balance sheet date.
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All differences are taken to the consolidated statement of income, with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity.
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These differences on foreign currency borrowings are taken directly to equity until the disposal of the net investment, at which time they are recognized in the consolidated statement of income. Tax charges and credits attributable to exchange differences on those borrowings are also included in equity.
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On consolidation, the assets and liabilities of the Company's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences that arise, if any, are included in Accumulated other comprehensive income (“AOCI”), a separate component of equity.
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Such translation differences are recognized in the consolidated statements of income in the period in which the Company either loses control of the operation or liquidation occurs. During 2023, the average USD/GBP sterling exchange rate was £0.8032 compared to the 2022 average of £0.8108.
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This change resulted in a positive impact of $2.8 million on revenue and $0.7 million on operating income.

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