Good morning. My name is Crystal, and I will be your conference operator today. Welcome to Luxfer's First Quarter 2018 Earnings Conference Call. [Operator Instructions] Now I will turn the conference over to Doug Fox, Luxfer's Director of Investor Relations. Doug, please go ahead.

Thanks, Crystal. And welcome to Luxfer's 2018 First Quarter Conference Call. With me today are Alok Maskara, our CEO; and Heather Harding, Luxfer's CFO. First, Alok will provide a brief overview, followed by Heather's review of the financial performance. Alok will then return to provide an update on Luxfer's strategy. Today's webcast is accompanied by a slide presentation, which can be found in the investors section of Luxfer's website. We'll refer to these slides throughout our prepared remarks. Any references to non-GAAP financials are reconciled in the appendix of the presentation. Before we begin, let me remind you that any forward-looking statements made about the company's expected financial results are subject to future risks and uncertainties. Please refer to Slide 2 of today's presentation for further details. After our prepared remarks, we have reserve time for questions and answers. Now let me turn the call over to Alok Maskara. Alok, please go ahead.

Thanks, Doug. Good morning, everyone. Thank you for joining us today. Please turn to Slide 3 for the summary of our first quarter performance. Luxfer is pleased to report a strong start to 2018. For the first quarter, revenues increased 16% to $119.7 million, on strength in both our Elektron and Gas Cylinders segments. For the first quarter, revenues increased and the growth was broad based with most business units contributing to the strength. Adjusted fully diluted earnings per share for the quarter were $0.38, up 41% over the earnings of $0.27 last year. Adjusted EBITDA, advanced 26% to $19 million. This strong performance is early evidence of our success in focusing on growth, productivity and simplification. These efforts led to the generation of a net cash inflow before financing of $7.8 million an increase of 26% from the prior year. While still in its early days, our Luxfer transformation strategy to deliver more sustainable growth, improving profitability and delivering higher returns on invested capital is definitely gaining momentum. Given the first quarter results and the improved outlook for the remainder of the year, our new earnings guidance range is $1.20 to $1.30 per adjusted fully diluted share for 2018. Now let me turn the call over to Heather for a closer look at Luxfer's financial performance, beginning on Slide 4.

Thanks, Alok. As you can see on Slide 4, consolidated revenue for the first quarter was $119.7 million, which is 16% higher than the $103.4 million for the first quarter of 2017. Higher volumes accounted for better than 60% of the change, contributing $9.7 million to the growth principally from our Elektron segment. FX accounted for $5.5 million of the increase. Pricing, primarily to recover from raw material inflation, accounted for $1.1 million of the revenue growth. Adjusted EBITDA for the first quarter was $19.3 million with 26% higher than a year ago. The improved volume, along with favorable FX, better pricing and higher productivity, more than offset higher cost, principally, for raw materials such as aluminum and zirconium. Now please turn to Slide 5 for an overview of our Elektron segment performance. Elektron revenue advanced to strong $11.4 million for the first quarter for 23% year-over-year growth. Excluding FX, segment revenue increased 16%. Shipments of disaster-relief and military products contributed to the growth as well as increased sales of magnesium alloys and zirconium products. We were very pleased for continued growing demand for our innovative magnesium-based SoluMag products for the oil and gas industry. Higher volume largely drove adjusted EBITDA for Elektron, up 33% for the quarter. Productivity enhancements also contributed to the operating leverage experienced in the segment to more than offset material cost inflation, primarily for zirconium. We have actions underway to recover material inflation with price increases in the coming quarters. Now please turn to Slide 6, for an overview of performance in our Gas Cylinders segment. Quarterly revenue for cylinders increased 9%, with growth in sales of cylinders and Superform, partially offset by lower shipments of alternative fuel products. FX had the biggest impact on the $4.9 million increase, followed by volume and price. First…

Thank you, Heather. Please turn to Slide 9 for a summary of the first quarter results. Luxfer is delivering better performance from improved execution. The increased organizational focus on customers is driving growth as each Luxfer sales person is expected to reach out to at least two new customers every week. Similarly, our innovation projects are benefiting from early customer input. At the same time, we are maintaining better discipline over cost and have begun the process of facilities consolidation to improve manufacturing capacity utilization. We remain on track with these plans, which will deliver net $20 million in annual cost savings by 2021. For 2018, our initiatives to drive business improvement, is supporting our higher earnings range of $1.20 to $1.30 per share on an adjusted fully diluted basis. Now please turn to Slide 10 for an update on Luxfer's strategy. At Luxfer, we strongly believe that our best days are still ahead of us. We are focusing on building a company around our core strength, as a global leader in the development and production of highly engineered advanced materials. We serve customers in end markets with attractive growth rate and our expertise in advanced material delivers high profitability and attractive returns on invested capital. We are committed to customer driven innovation and continuous improvement to increase long-term shareholder value. Currently, we are in the early stages of a comprehensive company transformation to increase growth and profitability. At the same time, we are committed to improving cash generation and pursuing a disciplined approach to capital allocation. Overall, we see significant opportunities to enhance shareholder value. Now please turn to Slide 12 for an overview of Luxfer's transformation plan. The key elements of our transformation plan are simplifying our company, building a high-performance culture and talent, accelerating productivity, growth recovery,…

[Operator Instructions] Our first question comes from the line of Phil Gibbs with KeyBanc Capital Markets.

The question is on the timing of these net savings that you're outlining cumulatively around 20 million. How are we supposed to envision that flowing through in '18 beyond '19 and '20? And how much cash spending is going to be associated with achieving these net savings?

Yes, Phil, I would say the vast majority of these savings are likely to be in '19 and '20 and with '21 achieving the full run rate of $20 million in net savings. I think this year, I would probably expect maybe only 20% of the or less than 20% of the $20 million. So let's say $3 million to $4 million in net savings. From a cost, it's kind of a similar story where majority of the 40 million cost, so if we expect a two year payback is likely to fall in 2019, maybe some in '20, because that's where the bulk of the spend is going to be.

And what's the pure spend that you are going to make to achieve this? Is it what you call...

We will look at a total cash spend. It is going to be $40 million, so it gives us roughly a two year payback to get to the $20 million in net savings. It will be little bit this year but a large majority of it's going to be in '19.

And what's the split between OpEx and CapEx there?

The savings, which we talked about was $12 million in gross margin and $8 million in G&A. From OpEx, CapEx perspective, it is hard to kind of break it out fully right now, but I would expect probably we're going to look at $8 million to $9 million in CapEx and the remaining in OpEx. But that's a very rough number at this stage.

I appreciate that and on the zirconium business, just been seeing some follow-through from one of your competitors in Europe in terms of what it looks like some product patent success wins against the Chinese, curious if that's something that you are seeing? And something that you maybe benefiting from in the future? And just looking for some thoughts around that.

Yes, there was a press please from Solvay where Solvay has won the patent and we have cross licensing agreement with Solvay against the Chinese manufacturers. We do expect that to be a positive for us in the long-term, Phil. In the short term, there is -- I guess some of these changes take time. But zirconium business we are getting more optimistic and for the first time, we are starting to see growth there as well. But with the latest battle that Solvay won against the Chinese competition, we do feel much better our own intellectual property position and accessibility to market with existing products. And as you know we also have new products, which are likely going to help us kickstart growth later in 2019 and '20. So both the short-term and long-term are turning more positive there.

And my last question and I'll jump back in the queue here. It is on the new product pipeline, I think you talked about pretty strong growth year-on-year in Q1 for SoluMag, can you give us any ideas in terms of what that contribution may have been or what the growth rate is this year?

SoluMag from a growth rate perspective is quite good, but it's still very small. Last year, we ended the year where SoluMag was still less than $10 million. This year, we're expecting it to double again and we do expect it to become double-digit millions this year. But we really don't break individual products out from -- just to keep -- not give too much information to competition.

Yes, I mean, is there anything else from the new product standpoint that is exciting here for you in the pipeline?

There is, I mean, I think, our medical series of products quite of which are delayed, especially, as we look at our joint product with BIOTRONIK [indiscernible] magnesium dissolvable stent portions, I mean that's pretty exciting. ECLIPSE that I highlighted, is also quite exciting for us, which is the lightweight SCBA cylinders and finally, we continue to work even in other areas to look at new applications for the soluble magnesium technology beyond SoluMag. So just new application of the same technology. So pretty excited about some of those. At the same time, we are very early in the process, Phil. We have just eliminated some of the older new product that we were working on. So I do believe a large majority of the benefit would come out closer to 2020 and beyond, because these are 18 to 24 months cycle before new products can be launched and got revenues out of.

At this time, there are no further questions in queue.

Okay. You can close the call, operator.

An on-call recording of this conference call will be available in about two hours. Telephone numbers to access the recording will be available on the Luxfer website at www.luxfer.com. Thank you for joining us today. This ends the Luxfer conference call.