Welcome to the Luxfer Group First Quarter Conference Call. We will first hear from Chief Executive, Brian Purves, who will provide a market overview for the quarter, followed by Group Financial Director, Andy Beaden, who will review the financial performance for the quarter. Brian will then return to sum up and offer an outlook. After that, Brian and Andy will be glad to take your questions. We request that you initially ask only one question. After you have heard the answer, we will give you the opportunity for a follow-up question. If you would like to ask additional questions, our operator will be glad to place you back in line. We will now turn the call over to Brian Purves.

Thank you. Good morning, ladies and gentlemen. And welcome to the Luxfer conference call on first quarter of 2015. Unusually, we are speaking to you from the U.S. being here on one of the frequent visits to our North American plants. So please forgive us if there is a time lag on the slides which also are being run from U.K. On to Slide 4, there was much to be pleased about in trading performance during the first quarter with our 2014 problem areas not only in balancing on fuel being the main area of continuing concern, but with corrective actions already started in Nigeria. The other sectors which caused us particular problems in 2014 are recovering with the important North American SCBA sector once again growing and the demand from U.S. Military powders improved. Unfortunately the large movement in exchange rates over the last few year between the U.S. dollar, Pound Sterling and Euro are now a big factor in understanding the year-on-year tracking. Our new acquisition continues to perform well with $7.1 million in sales in the quarter and our adjusted fully diluted EPS of $0.25 was slightly ahead of expectations albeit still $0.03 below quarter one 2014. We continue to walk through reduced working capital on quarter one cash generation was again improved. Turn to Slide 5, the North American market for SCBA gets set for a good year with improved trading in quarter one, but with our customers to our perception still ramping up to meet deferred demand. When comparing with quarter one 2014, it is important to note that certain industrial catalyst orders fell into the first quarter last year. All those from non-development market are still intermittent. On this year, we expect our main orders to come in quarter two and quarter three. We…

Thank you, Brian and welcome everyone to the call. Brian covered the divisional sales analysis and my first slide, Slide 14 shows how that consolidates into the Group revenue changes for Q1 2015. Total revenue for Q1 2015 was $116.9 million with no separate rare earth chemical surcharge now required after further pulls in rare earth prices and this compares to $122.4 million net revenue for Q1 2014. FX translation was a negative $8.6 million. So adjusted for this underlying group revenue was in fact up $3.1 million. Luxfer Magtech which was only acquired at the end of July added $7.1 million in the quarter but our AF revenues were also down in gas cylinders by exactly the same amount, $7.1 million when adjusted for FX. Therefore sales revenue in our non-AF businesses were up $3.1 million. Slide 15 shows the trend in sales for Q1 2015 by geographic region, while sales in North America are well up with stronger certain say operated sales and the additional Luxfer Magtech sales. Asia- Pacific was unusually strong last year with large AF full gas transportation sales. The current level is more normalized. U.K. was slightly stronger in Q1 2015, but the rest of Europe was weaker. Turning to the trading profits and adjusted EBITDA results on Slide 16, the Q1 2015 group trading profit was $10.5 million, being consistent with the last few quarters whist the AF business has been so weak and this compares to $12.3 for Q1 2014. Elektron results of $9.2 million was down on last year's Q1 of $10.7 million. The levels of chromium sales did impact profits with different timings in the industrial catalyst sales from last year. FX changes also had a negative impact, in total, reducing profit by $0.9 million. In magnesium, profits held better…

Thank you, Andy. Summarizing quarter one then, very different exchange rates from this time last year are complicating the reconciliation, but the underlying performance of our cylinder business is improving with North American SCBA returning to growth last but for the moment by continuing difficulties in our AF business, but decisive action has been taken to resolve that situation. Especially the material side, the Group reported lower results from this time last year, but was mainly the entertaining issues on the important U.S. military market is looking stronger this year. Within the division, our new acquisition continues to perform as expected and overall our quarter one adjusted result was slightly ahead of expectations. The outlook for 2015, Elektron remains highly profitable and once the tiny issues of the comparison in quarter one are behind us, we are currently on a full year of Luxfer Magtech results and an improved U.S. Military demand to improve results year-on-year. A significant opportunity but once nearer term exists for our Zirconium based decontamination products. The weakness of the Euro is halting the profitability of our European cylinder business and is a challenge on top of our continuing lackluster Eurozone economy, with the North American side of the business, it’s visibly strengthening. Alternative fuel losses are unlikely to be completely eliminated until later of this year, but building on the fact that non-AF revenues were strongly up in quarter one, we still expect to improve on the 2014 cylinder's trading results. Turning to Slide 23, the principal headwinds of 2014 being the regulatory problems in the North American SCBA market and the customer difficulties in the military flair market have receded. We continue to focus on working capital and remain confident of improving our capital efficiency ratios over the course of the year. The weakness of the alternative fuel market and some particular customer issues mean that we will be little slower to generate cash than previously indicated, but we also working towards a good operating cash flow performance this year. With some key market pricing, we believe that we can drive an improvement in the profitability of most divisions over 2014 albeit by cylinders division by business from a lower starting point. We will be helped in this objective by cost reduction programs particularly in our alternative fuel business fleet. Although unlikely to contribute much in the way of sales in 2015, we do expect to achieve further milestones on a number of our strategic growth projects. While the economic and business environment continues to be challenging, it is good to see two of our long-term key markets at last signs of an upturn. Our actions to reduce the breakeven point of our alternative fuel manufacturing facilities, our plans to correct the economics of that business stream even in current market conditions and give us a relatively clean position on which to plan further improvements in 2016 and beyond. Thank you and we will now take questions.

[Operator Instructions] Your first question comes from the line of Martin Englert of Jeffries.

Hi good morning, everyone.

Good morning.

Can you talk about the degree of FX headwinds that you would expect in coming quarters here on the top line relative to how it was in 1Q here?

Well, we indicated that we were fairly well hedged for 2015. So the goods exposure for 2016 are something that we will have to consider when the budgeting for 2016 as to the extent to which we have to put pricing into the marketplace to recover the situation, but Andy, do you want to…

Yes so you actually asked top line which is more distorted I guess the profitability because you got the translation impact, which you can see in the first quarter was $8.6 million maybe $9 million. So looking at, that's caused by the movement in the dollar to primary the Sterling but also the Euro and if you look at the Sterling dollar rates, this quarter to a year ago, the average was about $1.50 million, I think it was $1.51 million and last year it was $1.66 million. So $0.15 movement and that caused nearly $9 million impact to the top line. In terms of profitability, as Brian said the other exposures we got is actually making products in the U.K. and exporting it to Europe where the Sterling has strengthened to the Euro and that could easily cost us a $1 million a quarter and even more than that. It’s 45 million Euros of sales a year, but at the moment we're about 60% to 65% hedged for this year and obviously we do have the ability to seek for prices up given it’s a transaction risk. Does that clear up enough for you.

Yes I think so. It’s fair to assume though that it would be a continued headwind though in the subsequent quarters here relative to having -- how we saw it in Q1?

I think it means that for example our revenue number is lower than I think the consensus where the profitability was up -- was online with the consensus and I think I explains some of the delta in the top line. So probably a bit of movement to R&D, the last time I tracked the Dollar Sterling rate was back in $1.56, $1.57…

Yes it’s touched $1.57.

Where the average is as Andy said for the first call was $1.51 or thereabout.

Okay. And if I could one more within your guidance, I know last quarter you had spoke to improvement in the second half of the year and that sounds like you’re expecting an improved 2Q quarter-over-quarter, would it be fair to assume that you are expecting sequential improvement for the remaining quarters of the year here?

Yes certainly we do expect the remaining three quarters of the year to be a good step up from Q1 and recent quarters. So we're looking really to meet the consensus and looking for some $0.29 to $0.30 a quarter on average. I think it’s fair to say that we would expect the average in the second half to be high over in the second quarter, but we expect a good improvement in quarter two.

Okay. Thank you much.

Okay.

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

Good morning.

Hi Phil.

Hi Phil.

As far as the FX hit to the operating profit was that number over a $1 million year-on-year? I think you did a good job talking about what it was in the top line, but what was it in the bottom line?

It was $1.1 million.

Okay. Do those comparisons get easier as the year goes on or those comparisons get tougher in terms of the profit comparisons FX?

It will get tougher to do with the exporting of goods which you make in the U.K. to Europe because the hedge is higher at the start of the year and lower at the end of the year. But as Brian just pointed out, helping it the other way is that Sterling does seem to be strengthening to the U.S. dollar. So in this first quarter, Sterling was very weak to the U.S. quarter, I mean averaging $1.51 in some months, some areas below $1.50. So whereas if you assume the Euro, Sterling is $1.40 then that would get tougher for us as we go through the year because of the hedging. But you also got to look for the dynamic of the Dollar Sterling. So I would expect it to get tougher, but at the same time as Brian has said, we would be putting cost savings through and expecting those to come through to help on the other side.

Yes the main exposures as Andy said is to our U.K. operations which make in Sterling, buy in Dollars and export in Euros. We buy very little in Euros. So we’re hedged about 60% this year, Andy.

Yes.

And only about 25% in 2016 at the moment.

Right, yes.

So our task really is to make sure the time went 2016 that we covered that to the extent that we can in pricing and in the meantime had to cut cost where we can in the U.K. operations to hold margins, but it is quite significant hit but has been factored into the guidance.

Yes.

Okay. And then on the alternative fuel side, fair to say that you lost maybe about a $1 million in the quarter given though year-on-year profit change that you talked about?

Yes maybe a little bit more, it was a fairly small profit quarter one last year.

Okay. So you’ll be coming out of that as the year progresses. In terms of Elektron we should be expecting the chemical piece to pick up nicely as well as the aerospace on the magnesium front as…

Yes, we think aerospace should be back to normal quarter two onwards. The chemical we are certainly expecting to get good orders in quarter two which we hope they're already in the system really. The quarter three which I mentioned earlier that could end up in quarter four but expiring quarter three, quarter four but certainly quarter two looks strong and the bounce in the Euro that's in quarter one. It’s just that, that business at the moment is driven by occasional quite large orders and it happens in 2014. We did lot of orders in quarter one and this year we're certainly going to get some in quarter two and we expect orders in quarter three and four.

Okay. Terrific, thanks so much.

Okay.

[Operator Instructions] Your next question comes from the line of [Ron] [ph] of Credit Suisse.

Good morning, guys.

Good morning.

Hi.

Just want to touch on European demand weak in Q1, just wondering currently, current trends kind of showing the same thing as Q1 or are you seeing any pick-up in any particular areas there just any color on that would be helpful, thanks.

Our European market has been pretty flat for quite some time. There is some commentary in the local press I got the Eurozone as starting to show signs of activity, but really from our perspective, we’re not seeing that at the moment. It’s still pretty flat. I would say it’s relatively stable and flat but not we’ve seen much signs of an upturn.

Okay. And then just one more, just on the rationalization efforts, have you guys ever quantified the benefits that will come from that and just the timing on when you guys could see those possible benefits?

Well the rough indication Andy gave on the way through was that basically on the cash cost, we expect that to pay back in a little over a year, approximately 15 months. So if we're paying $3 million in cash expenses, we would expect to generate getting towards $3 million per annum of savings, once those are fully implemented. So we do get some of that payback right away because of the expenditure made in quarter one and the planned reduction in the workforce in Germany will be progressive, but some of it will expand going the way through to the end of the year. So the full benefit will be achieved until we enter 2016, but we should get some benefit -- we certainly get benefit in North America Q2 onwards and we should progress the benefit in Euro, but with the big benefit coming when we actually manage to shut internal manufacturing facility at the end of the year and moving to 2016. We could in theory do it a little faster but it does take time to transfer approvals or get new approvals for customer designs and for the regulatory designs and wanted to that we don’t lose the market and lose customers just by doing the fractionalization is not the intention to withdraw from the market. We want to retain as much as we can in the customer base and so we’re taking our time to make sure we do it properly and don’t disrupt the customers.

Okay. Thanks for the color.

Okay.

Thank you. I’ll now turn the call to Brian Purves for any other additional or closing remarks.

Is it worth just seeing if there is any other questions?

[Operator Instructions] I’m showing no further questions at this time.

Okay. Well thank you, ladies and gentlemen and we look forward to talking to you to sometime in early August on the quarter two results.

An encore recording of this conference call will be available in about two hours. Telephone numbers to access the recording will be available on the Luxfer Group’s website at www.luxfer.com. Thank you. You may now disconnect your lines and have a wonderful day.