Luxfer Holdings PLC (LXFR) reported disappointing results for third-quarter 2014 with adjusted earnings of 24 cents per American Depositary Shares (ADS), down 27.3% from 33 cents reported in the year-ago quarter. Also, the bottom-line fell short of the Zacks Consensus Estimate of 31 cents.
Revenues
Luxfer’s total revenue of $120.9 million inched up 0.8% year over year. The marginal increase was primarily due to a sales rise in the Elektron business division of the company. The top line missed the Zacks Consensus Estimate of $126 million.
Revenues from the Gas Cylinders division were roughly $61.9 million, down 3.7% year over year and represented 51.1% of total revenue. The Elektron division generated revenues of $59.0 million, up 6.1% and accounted for 48.8% of total revenue.
Costs/Margins
Gross profit in third-quarter 2014 was $28.6 million versus $29.0 million in the year-ago quarter. Gross profit margin slipped to 23.7% from 24.2% in the prior-year quarter. The decline was primarily due to adverse sales mix outcome, as a result of poor composite cylinders’ sales experienced in the Gas Cylinders division of the company. However, despite weaker European business and poor market demand in the quarter, the company’s overall margin did not experience any significant downfall.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $15.9 million versus $18.3 million in the year-ago quarter.
The company’s operating profit declined 27% year over year. Operating profit came in at $10.0 million compared to $13.7 million in the year-ago quarter. Restructuring and other expenses or income level of the company stood at $0.6 million as against $0.3 million in the year-ago quarter. In order to reduce its business expenses, Luxfer has started lowering headcounts of its Gas Cylinders and Elektron business division, from the fourth quarter onwards.
Balance Sheet/ Cash Flow
Exiting third-quarter 2014, Luxfer had cash and short-term deposits of $15.4 million compared with $38.1 million in the year-earlier period. Net debt increased to $110.8 million from $25.6 million in the prior-year quarter.
Luxfer generated net cash worth $10.4 million from its operating activities versus $13.3 million in the year-ago quarter. Capital expenditure of $6.2 million remained flat year over year. Dividend payments aggregated $2.7 million.
Outlook
Luxfer claimed that weak performance in the third quarter was primarily caused by its struggling European market business. However, the company maintains a positive outlook toward its business prospects in the near future. The firm expects to generate better results in the upcoming quarters backed by growth in its North American business. Going ahead, the company intends to de-risk business initiatives through cash settlements and has decided to downsize its European pension liabilities.
With a market capitalization of $419.89 million, Luxfer currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include Blount International Inc. (BLT), The Babcock & Wilcox Company (BWC) and Middleby Corp. (MIDD). While Blount International sports a Zacks Rank #1 (Strong Buy), both The Babcock & Wilcox and Middleby Corp. hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment