Luxfer Expands Gas Cylinder Biz, Buys Vexxel - Analyst Blog

Within a couple of weeks of reporting its fourth-quarter 2013 results, Luxfer Holdings PLC LXFR announced the acquisition of Vexxel Composites, LLC for an undisclosed amount. The acquisition news sent the company's share price spiraling up by 0.52% to $19.39 on Mar 24.

Vexxel Composites, founded in 2012, is a company that specializes in manufacturing high-pressure composite cylinders, particularly Type 4 (polymer-lined), for containing compressed natural gas (CNG). The transaction is believed to compliment Luxfer Holdings' gas cylinders business by powering it with capabilities to design and launch a better range of larger-diameter Type 4 cylinders for CNG.

Luxfer Holdings' Gas Cylinders Division manufactures composite and aluminum cylinders for high-pressure gas storage. Operations are carried out in England, the U.S., France, Germany, Canada and China. The business accounted for 45% of total revenue in 2013. Vexxel Composites, under Luxfer Holdings' banner, will be known as Luxfer Utah.

The acquisition is in sync with Luxfer Holdings' strategy to expand its gas cylinder business. In conjunction with its fourth-quarter results, the company had announced that its German subsidiary, Luxfer Gas Cylinders, has won a contract to supply bulk natural gas transportation modules to Sub 161, a Queensland-based company.

Below is provided a snapshot of Luxfer Holdings' recently announced fourth-quarter 2013 results.
 
Adjusted earnings per American Depositary Shares ADS were 40 cents in fourth-quarter 2013, down from 45 cents earned in the year-ago quarter but above the Zacks Consensus Estimate of 37 cents. Revenues generated were $116.0 million, down 10.8% year over year.

In the last 30 days, the Zacks Consensus Estimate of Luxfer Holdings has decreased by 3.1% to $1.57 for 2014 while remained stable at $1.90 for 2015. Despite weak bottom-line expectations in the near term, earnings over the next 5 years are anticipated to grow 10.0%.

Luxfer Holdings currently has a market capitalization of $520 million and carries a Zacks Rank #4 (Sell). Three better-ranked stocks in the diversified machinery industry include Kadant Inc. KAI, Altra Industrial Motion Corp. AIMC and Broadwind Energy, Inc. BWEN. While Kadant holds a Zacks Rank #1 (Strong Buy), Altra Industrial Motion and Broadwind Energy carry a Zacks Rank #2 (Buy).