Good morning. My name is Ashley, and I'll be your conference operator today. Welcome to Luxfer 2021 Fourth Quarter and Full Year Earnings Conference Call. All lines have been placed on mute. After the speakers' remarks, there will be a question-and-answer session. Now, I'll turn the call over to Heather from Luxfer. Heather, please go ahead..

Thank you, Ashley. And welcome to Luxfer’s fourth quarter and full year 2021 earnings call. I'm Heather Harding, Luxfer’s Chief Financial Officer. With me today is Alok Maskara, Luxfer's Chief Executive Officer; and Steve Webster, Luxfer's Incoming Chief Financial Officer.

On today's call, we will provide details of our fourth quarter and full year 2021 performance as outlined in the press release issued yesterday. Today's webcast is accompanied by a presentation that can be accessed at luxfer.com. Please note any references to non-GAAP financials are reconciled in the appendix of this presentation.

Now before we begin, a friendly reminder that any forward-looking statements made about the Company's expected financial results are subject to future risks and uncertainties. Please refer to the Safe Harbor statement on Slide 2 of today's presentation for further details.

Now, let me turn the call over to Alok for his summary comments, after which I will provide details of our fourth quarter and full year financial results. After my remarks, Steve will provide guidance for 2022 and share our longer-term financial goals before closing. So Alok, please go ahead..

Thanks, Heather, and welcome everyone. Before I dive into the results, I want to thank Heather Harding for being Luxfer CFO and my business partner for the past four years. We wish her all the best in her retirement while we welcome Steve Webster as our new CFO starting March 1.

As a result of our talent management and succession planning processes, we are more than confident that Steve has the knowledge and experience necessary to be successful in this role.

I also want to express my gratitude to the entire Luxfer team, who continue to put our customers first, while facing an unprecedented supply crisis driven by two of our primary suppliers, declaring force majeure.

I want to thank our customers for their patience and support through these difficult times as the Luxfer team races to overcome the challenges impacting our supply chain. Now, please turn to Slide 3 or highlights from a fourth quarter and full year results. I want to highlight four key messages on this page.

First, we delivered 20% year-over-year sales growth in the fourth quarter despite ongoing supply challenges, and we are pleased to report that our sales are higher than pre-pandemic levels on a comparable basis. Strong demand across our end markets was aided by solid revenue contributions from our SCI acquisition.

Excluding the SCI acquisition, we achieved 10.7% organic growth and ended the year with record backlog as we were unable to fully convert strong demand into sales. For the full year, sales increased 15.2% while EBITDA increased 17.6% despite manufacturing inefficiencies at SCI.

Second, our full year cash flow was strong even after we made a total of $18.2 million in payments to achieve zero pension deficit based on our 2021 triennial valuation. In addition, we returned about $20 million to shareholders to dividends and share buyback in 2021.

We continue to maintain a strong balance sheet with a net debt to EBITDA ratio of 0.8 times. Third, we expect to deliver revenue, EBITDA and EPS growth in 2022 despite the supply uncertainties clouding the current outlook. EPS is anticipated to be in the range of $1.30 to $1.50 for the full year 2022.

Finally, we are also introducing our 2025 EPS goal of $2 or more per share, driven by aerospace macro recovery, elimination of SCI inefficiencies, supply chain normalization and continued growth and productivity. Now, please turn to Slide 4 for an overview of the manufacturing and supply chain recovery status.

We continue to experience strong end market demand, but our ability to fully convert demand into sales remains constrained by manufacturing challenges including the evolving impact of COVID-19 on our workforce. In addition, we are experiencing unprecedented shortages of magnesium, zirconium and carbon fiber three of our primary raw materials.

Currently, two of our primary suppliers are in force majeure while many others are facing their own labor and material challenges. As an example, our recent performance and the 2022 outlook are being negatively impacted by magnesium supply constraints. As Luxfer's primary supplier, US Magnesium LLC declared force majeure.

To meet the needs of our customers, we are ramping up alternate overseas suppliers, but many of them are overwhelmed by global magnesium shortages, driven by new power and environmental restrictions in China. While we were optimistic that each issue would be resolved by now, the shortage continues and is clouding our 2022 outlook.

We look forward to continuing our long-term business relationships with our magnesium suppliers, including US Magnesium LLC and returning to regular supply levels after the anticipated and the force majeure, and magnesium shortages.

In addition, we continue to face force majeure at Richards Bay mine in South Africa, which is our primary supplier of zirconium sand. We are ramping up alternate supply options, but are still unable to fully satisfy our current demand levels as we were forced to adjust production rates to match material availability.

In addition to material availability issues, we are facing higher input cost with significant volatility for critical raw materials such as carbon fiber, aluminum, magnesium and zirconium.

We have implemented multiple adjustments in response to significant inflation and remain confident in our ability to fully pass-through cost inflation over the long-term.

In the current volatile high inflationary environment, the time lag to fully pass-through cost inflation may be six to nine months, as compared to our typical timeline of three to six months.

The cornerstone of Luxfer's response is our supply chain presence, expertise, our local manufacturing presence and our long-term relationships with our suppliers. We remain confident in our ability to successfully navigate the supply crisis and improve our customer service levels.

We are optimistic that the supplier force majeure and uncertain inflation will be behind us soon, so that we can begin accepting new customers and orders for impacted products in the second half of this year.

Overall, we are confident that our established supply chain and localized manufacturing provides us with a sustainable advantage versus our competitors during this unprecedented time. Now, please turn to Slide 5 for an update on the key growth drivers for the coming year.

We continue investing in new products to capitalize on macro trends in our attractive end user markets such as alternative fuel, healthcare, aerospace, defense and first response.

Specifically, we expect magnesium growth in 2022 to be driven by continued recovery in the aerospace and user market and from our recently introduced UGRE flameless ration heater products. In the zirconium line, we anticipate continued growth from a new product in the medical and electronics end user market.

In addition, growth from continued penetration of our gasoline particulate filtration product in automotive applications is likely to accelerate as the auto industry reverts to growth post-COVID and post-chip shortages.

In the composite cylinder product line, we expect alternative fuel to continue growing double-digits fueled by hydrogen storage and SCI acquisition benefits. Our revenues in 2022 are going to increase faster than volume as we will be passing on material and labor inflation to our customers.

Steve will provide additional color on this when he discusses the 2022 outlook. Please turn to Slide 6 for an update on SCI integration progress. We are pleased with SCI's performance and continued progress our team has made on cost synergy and integration activities.

For the year 2021, SCI's financial performance was better-than-expected with double-digit year-over-year organic growth and positive operating cash. The EBITDA losses were the low end of our expectations due to progress on driving cost synergies even though some of the cost synergies were offset by inflation.

We have driven cost synergies by successfully migrating the business to Luxfer's ERP system and spreading overhead cost through shared Luxfer sources. We have now improved efficiencies during the consolidations of operations into a single building in Pomona.

We remain focused on improving SCI's output and on-time delivery through implementation of Luxfer business excellence standard tool kit. I would like to thank all our Gas Cylinders employees who have made this transition as seamless as possible for our customers.

I look forward to offering our customers expanded technological capabilities, additional product offerings, and improved service. Now, let me turn the call over to Heather for details of our fourth quarter and full year financials..

Thanks, Alok. Now I'll start on Slide 7 with the summary of our performance by end user markets. As a reminder, our sales can be classified into three key end user markets. Defense, first response and healthcare, transportation, which is a combination of alternative fuel aerospace and automotive and general industrial.

On Slide 7 we include numbers for Q4 and for the full year and the commentary on this slide references full year numbers only. In the defense, first response and healthcare end-user market, sales increased by 5.8% of the year.

We saw strong demand for SCBA and magnesium products, which will partially temper of the lower replenishment of military and disaster relief products. Annual sales in transportation grew 27% while the SCI acquisition positively impacted sales in this end user market.

We also generated significant double-digit growth in auto catalyst products, driven by wider adoption of gasoline particular filtration. When you look at the base business, comparable revenues from aerospace were still around $8 million below the pre-pandemic levels in 2019.

Sales in the general industrial end user market increased 15.6% for the full year, driven by strong recovery in our magnesium products in specialty Gas Cylinders. Overall, we delivered solid growth. We feel optimistic about further demand recovery in 2022 especially in the aerospace end-user market.

Now please turn to Slide 8 for a summary of our fourth quarter P&L results. Fourth quarter sales of $98.7 million increased 20.2% from the prior year including $7.8 million of SCI's acquisition sales were 9.5% of growth. Organic volume growth 70.4% was mostly driven by our industrial and transportation products.

Quarterly revenue was also impacted by $2 million in positive price as we partially offset writing material in labor costs. Consolidated adjusted EBITDA of $14.6 million for the quarter decreased 5.8% from the prior year despite the headwinds from rising inflation.

In the quarter, we were unable to fully pass-through inflationary cost pressures will be faced unprecedented volatility an increase as in raw material prices. We have already implemented multiple adjustments. We remain confident in our ability to pass-through cost inflation to our customers to surcharges, adjustments for contractual obligations.

As Alok mentioned earlier, the recently acquired SCI business delivered stronger than anticipated revenues in the quarter but is expected to remain unprofitable. We anticipate cash remain expected cost synergies in 2022 and beyond making the difference accretive to Luxfer in 2023.

From a full year perspective, sales grew by 16.2% to $374.1 million including 7.7% increased from the SCI acquisition and higher growth and our transportation and industrial products. Consolidated adjusted EBITDA of $63.4 million increased by 17.6% as cost reductions and volume offset net inflation.

Overall, we have a strong ending to the year with Q4 revenues exceeding pre-pandemic levels and we entered 2022 with a record backlog. Now let's look at the product segment results on Slide 9.

Elektron sales of $48.7 million to 3.2% from the prior year, stronger volume recovery for industrial magnesium and auto catalyst products were offset by lower military sales. EBITDA decreased by 5.5% to 8.6 million as we were unable to timely pass-through inflation of our customers.

Gas Cylinders segment sales grew 43.3% to $50 million including $7.8 million in sales from the SCI acquisition. In addition, we felt strong demand for industrial specialty Gas Cylinders and SCBA products. EBITDA of $6 million grew 27.7% from the prior year with volume and cost reduction offsetting unrecovered inflation.

From a full year perspective, Elektron sales grew 7.1% to $195.8 million with specific strength in gas particulate filtration and industrial products. Resulting EBITDA of $40.7 million grew by 24.8% including cost reductions.

Full year Gas Cylinders segment sales of $178.3 million grew by 25.7% including 17.5% growth from SCIs, resulting EBITDA of $22.7 million grew by 6.6% including SCI and efficiencies and unrecovered inflation. Now, let's look at our key balance sheet and cash flow metrics on Slide 10. We maintained our strong balance sheet in 2021.

Our net debt finished the year at $53.4 million, which is a slight expansion from the prior year and net debt to EBITDA was 0.8 time. In December, we made a one-time payment of $13 million into our UK pension funds for a total of $18.2 million for the year.

Fourth quarter operating working capital finished at $88.4 million or 22.4% of sales, which is slightly up from the prior year results of 21.9%. We increased the inventory of key raw materials as they became available to ensure speeder delivery for our customers. We continue to target an operating working capital range of 20% to 23% of sales.

We consumed $11.6 million in free cash flow in the quarter, primarily due to that one time UK pension payments. We continue generating solid operating cash flows that enabled this payment with minimal impacts to our balance sheet. And I'm happy to report that on a trailing 12 month basis, we deliver 17.4% ROIC based on adjusted earnings.

2021 was another solid year of balance sheets trend with operating cash flow generation and improved pension position. In addition, we renewed our revolving credit facility for another five years with significantly better terms. This strong balance sheet affords us greater flexibility as we enter 2022.

Now let's review our capital allocation priorities on Slide 11. Our capital allocation priorities remain unchanged. Strong balance sheet allows us to enhance shareholder value by deploying capital towards growth investments and operational excellence initiatives.

In addition, we continue to explore synergistic bolt-on acquisitions that can further accelerate shareholder value creation. In fourth quarter, we maintain our quarterly dividends of $3.4 million it's been $3.6 million in share buybacks, returning a total of $7 million to shareholders.

For the full year, we paid $13.6 million in dividends and spent $6.4 million to share buybacks, returning $20 million to shareholders in 2021. Now before we provide specific financial guidance for 2022 and beyond, let me go over some key assumptions behind our 2022 outlooks on Slide 12.

Now, we enter 2022 with a sense of uncertainty and concern regarding rising cost pressures and increase the supply chain constraints. However, we are stronger and more resilient today than at any time in our recent history. Our technology and operations are aligned with secular sustainable growth drivers.

We're investing in innovation to continue our growth through the products. We have customer first value to guide us through these challenging times. Going into 2022 we're encouraged by the robust demand level and massive growth and macro growth environments including the current level of energy prices.

In addition, 2022 differentiated growth will be driven by ongoing investment in alternative fuel and promote new products such as UGRE, which will deliver growth in the defense end user market, and our capital deployment strategy is delivering results.

As we have built a strong and flexible balance sheet, enabling us to return cash to our shareholders while investing in organic and organic growth opportunities. We don't have any debt maturities in the next 12 months and we'll continue to pursue bolt-on synergistic acquisitions that will enhance shareholder value.

While the beginning of 2022 will likely be challenging due to supply chain disruptions, I'm confident that we're headed in the right direction. Now, before I turn the call over to Steve, I wanted to thank Alok and the entire Luxfer team for my wonderful experience here at the Company.

Well, I'm looking forward to this next phase of my personal life, I'm very proud of my time at Luxfer and all as a team has accomplished, and I'm confident Luxfer will continue to enhance shareholder value while always putting our customers first.

And I'm especially pleased to introduce Steve Webster as the next Chief Financial Officer for role I know he will excel in. So, Steve, go ahead..

Thanks, Heather. It's a pleasure to be here today and I really appreciate your valuable support and guidance over the past four years, and I wish you all the best for your retirement. Now please turn to Slide 13 for our 2022 financial guidance.

We expect revenues to increase between 12% to 20% driven by volume, price and a small impact of the SCI acquisition. We currently project that our pricing will lag our material inflation assumptions by three to nine months. We expect volume to grow low-to mid-single-digits in our industrial and defense end user markets.

Alternative fuel and aerospace recovery will drive double-digit growth in the transportation end-user market. Given strong demand levels and a healthy order backlog, our growth assumptions are constrained by ongoing material supply challenges and labor shortages as previously discussed.

We expect full year EPS to be in the range of $1.30 to $1.50 based on our assumption that supply disruptions will gradually ease and achieve near normalcy by the second half of the year.

The current inflation environment continues to limit our visibility as timing differences between cost increases and customer pass-through can impact near time profitability. We continue executing cash management initiatives, targeting 100% free cash flow conversion for the full year, excluding restructuring.

Our restructuring and exceptional cash needs in 2022 are expected to be similar to last year, as we continue to wind down our potential liabilities related to 2018 European factory consolidation. We will not make any additional pension contributions in 2022, which compares favorably to the $18.2 million pension cash payments in 2021.

As we've entered the final phase of our transformation plan, we wanted to provide a longer-term outlook for key financial metrics on Slide 14. Over the past few years, Luxfer's transformation plan has simplified the Company, generated significant cost savings and instilled a high performance growth culture.

In addition, we have repositioned our portfolio to better align it with secular growth trends and sustainably improved margins. Given that we are in the final or phase of the transformation plan, we are pleased to introduce our longer-term EPS goal of $2 or more by 2025.

A large part of the growth will be driven by forecasted recovery in aerospace revenues, restoration of manufacturing efficiencies at SCI and a full pass-through of the recent inflationary impact.

In addition to recovery, earnings and EPS growth will also be driven by a consistent strategy of new product innovation, continuous productivity improvements and disciplined capital deployment, all of which will lead to accelerated revenue growth with solid margin expansion. Now, I'll turn the call back over to Alok for wrap up..

Thanks Steve. Before I wrap up, I wanted to share on Slide 15, why I believe that, Luxfer is stronger and more valuable today than at any other time in 125 year history. We are pleased with our financial performance in 2021 despite the unstable macro and operating landscape.

While meeting our customers' needs remains our top priority, we look forward to utilizing our financial flexibility to invest in new products and explore portfolio opportunities to build an even stronger company.

In summary, we have created a solid foundation for Luxfer's continued growth success as our low cost structure and optimized operational footprint have created a long-term sustainable competitive advantage.

In addition, our competency of innovating niche applications in materials engineering will enable growth in end markets where proprietary technologies are most valued.

We have also strengthened our high performance values based culture and will continue fostering an environment where commercial excellence and innovation makes us the partner of choice for our customers. Finally, our pursuit of bolt-on acquisitions will continue to serve as a key factor in our growth strategy.

Overall, we are optimistic about new opportunities for growth in 2022 and beyond, and we look forward to providing updates as the year progresses. Once again, I want to thank all Luxfer employees around the world who despite a tough operating environment, always put our customers first. Thank you for listening.

With that, I will turn the call over to the operator to begin the question-and-answer session..

Thank you. [Operator Instructions] And we will take our first question from Chris Moore with CJS Securities. Please go ahead..

Thanks for taking a few questions. Maybe we can just start with the going a little bit deeper press on the raw material shortages.

From a kind of a pricing catch up perspective, can you maybe just talk about that a little bit further, the assumption is by the second half of the year, that'll be more balanced or we just kind of any thoughts on the pricing side, from a catch up standpoint?.

So, from a pricing perspective, traditionally, we have always talked about and shown that we can recover price inflation balance within a matter of like 90 days or so, that's been kind of a medium.

Given the significantly higher volatility and some of the more uncertain challenges, we think that going to extend right now, probably closer to six to nine months compared to three to six months as we used to talk about earlier. So in that sense, it's more challenging than they've had in the past.

At the same time, we are doing all we can to work with our core suppliers, get additional material, and satisfy the demand level, which is higher than anything we have seen in the past. So, that's kind of additional benefit of the higher demand and works in our favor.

We remain concerned about the shortages to Chris as you started the question which shortages. But so far, we have been able to the secure supply work with our core suppliers. And we think the situation would get better in the second half.

It's not gotten any better than when we talked in Q3, which would have been our optimistic scenario, but we are optimistic that it will get better in the second half based on conversations with our suppliers and other things such as freight availability and condition change in the macro..

We say with the shortages for a minute, if you were to kind of rank the uncertainty, is it start with magnesium and then zirconium sands.

You talk about magnesium carbon fiber is aluminum, zirconium sands, which are the one or two really were visibility leaked in terms of actually being able to get the product?.

So, I think magnesium since that is our largest product line being impacted remains high on our list of uncertainty. Second would be zirconium stand for us. We would talk about carbon fiber and then aluminum.

In all cases, we are really good long standing relationships with our suppliers, and we typically are looking for premium materials from our suppliers. So, we confident that will be able to work through it. The disruption currently is highest in magnesium hence we call that out more in the mortgage of the script..

Last one for me just with regards to SCI, so you had talked about $0.15 dilutive for '21. It sounds like EBITDA was a little bit better than you expected. Was that 15 close? And then for '22, I wasn't sure.

I know you took my creativity '23, for '22, are we talking about breakeven or still a slight loss in '22 on SCI?.

Great question, Chris. So maybe to come back, for 2022, we would expect this to be breakeven by the end of the year, but for the full year we would expect it to have operating losses at current forecasts.

For last year, we're talking about sort of a range of $0.10 to $0.15, and we had it closer to $0.10 because the performance was better because some of the cost synergies sooner, and volume was better than we forecasted. So about $0.10 loss in 2021, we are going to achieve breakeven by the end of this year, so say half of that loss this year.

And next year, we would expect it to be accretive as the cost synergy actions get complete. And the ability to faster inflation increases. We do have some legacy contracts that we are working through there..

We'll take our next question from Craig Irwin with ROTH Capital Partners. Please go ahead..

First, I should say, Heather, it's been great working with you. Hopefully, our paths crossed in the future. And Steve, welcome aboard. I look forward to working with you. Look, this quarter, from a pricing standpoint was very much as you describe last call.

You said that you're expected to be able to get price to offset these commodities, headwinds and other supply chain issues, but the things were the lag a little bit. So it seems like in Elektron, maybe things played a little differently than in Gas Cylinders, right.

Elektron seems to have done a little bit better and Gas Cylinders maybe there's a little bit more ketchup.

Can you maybe give us a little bit more detail on how you handle pricing in these two segments? And what sort of incremental price might be available from actions already taken?.

Sure. So I think from actions already taken perspective, if I just step back on that. So we have taken multiple actions as you would imagine. In some cases, we have been forced to do four or five adjustments in the matter of four to five months just given the rapid nature of inflation and the high uncertainty of the markets.

But yes, we have pretty high amount of, I don't think if they work like pricing backlog or if it just think of like the impact of actions already taken, that's going to flow through. The reason we are hesitant or want to be conservative is we also don't know where inflation is going to be heading next.

Whether it's going to come down or it's going to go up again. We will we be doing a fixed adjustment in the six months in a row.

But right now, I mean, if we did nothing as you can see from Q4 perspective and if you just take that further, I mean, automatically looking at a five plus percent of pricing impact in 2022, plus more actions to be taken as certain contracts and other obligations that we do on a yearly basis come up for renewal.

So, yes, we have a quite a bit of impact of actions already taken. We will have more, as the timing passes. The largest uncertainty for us is, not our ability to get pricing, it's more the inflationary impact and whether they would accelerate or whether they would kind of come back more to normal..

Excellent. My next question is specifically about the Gas Cylinders segment. So you already handled the '22 outlook for profitability there quite clearly. But when we look at the bridge that you give us for sales and for EBITDA in the fourth quarter, you break out the acquisition content for sales, but not in EBITDA.

So, EBITDA if we assume volume number of 64 matches the 16 in incremental EBITDA volume mix, that's a pretty, pretty chunky, incremental margin that you're looking at there.

Can you maybe tease that apart for and help understand, what is driving this very high incremental EBITDA margin that you are seeing on the volume growth?.

Yes. Good morning, Craig. It's Heather. So I I'll start to take that one. And so, if you're -- and you're looking specifically, I think at the Q4 bridge there. And so, that kind of 25% or so incremental margin is, we think a very healthy margin.

And if you remember, a year ago, when we went through our discontinued operations exercise and got rid of some of the lower performing and lower margin business, we think that 25% incremental margins, I think we have to 20% to 25%. So it was a slightly, we're at the higher end of that range this quarter.

So that is the expectation for this segment, especially with where we have positioned the product right now. Certainly, when you look at the Q4 performance, we were pleased with a lot of the various segments. I think, we did call out that aerospace while it's still behind our pre-pandemic levels.

We certainly see it improving and that's something that has higher margins. So, when I think about the incremental here at that 25% level, I think, it's within a range, and certainly, 20% to 25%, I believe is where we have guided to..

Excellent then last question, if I may. There is a lot talk of shale gas in the press again. Oil prices going higher today and some of the macro political events, but it does impact the conversation about U.S. oil exports, imports, et cetera.

What are your thoughts on the outlook for the SoluMag business? Is it possible that we actually start to see some sales at these tracking products that in the past, but then a very rich contribution to your margins as they float through?.

Yes. Craig, I'll take that. First of all, I mean, from our perspective, we have talked about in the past that higher oil prices in general are better for us, better for us from obviously industrial activity, better for us from just looking at conversion of diesel buses into CNG, and better for us when it comes to save product like SoluMag.

So I think they're good for from all three perspectives. On SoluMag, yes, I mean, I'm pleased with the level of fracking activity. We have pleased with the progress we have made over the past few years and business development and continuing to stabilize the product.

At the same time, we learned a lesson last time that focusing too much on a single product and investor communication and results could backfire because our prices are notoriously volatile. But yes, will SoluMag do better than what it did last year? Absolutely, I mean, at this date we are confident that's going to happen.

But we don't want to take the broader view of that as a company, that's one of our many products and while that has upsides compared to the past few years. We got significant growth momentum and other things like hydrogen, you and I talked about that.

And hydrogen growth is likely going to be outpacing, any growth we get from SoluMag that continue to double every year. So what I'm answering your question, Craig, and I also just I hate to focus too much on just one single product..

So, yes. No, completely understood, so when you compare hydrogen growth to SoluMag growth, are you comparing $1 volume or percentage growth? And would you expect SoluMag to make to make a material contribution at '22? That's really the bigger question.

It's how material, will this be to overall business momentum with several things are obviously working?.

I think that's fair. So maybe to give more precise, historically, we've talked about SoluMag being kind of $6 million to $10 million in sales. Towards the end of the year, we were starting to talk about 8 to 10. Now maybe we'll talk about 10 to 14. So I mean, I think it's in that range that we will be talking about for SoluMag with healthy margins.

Alternate fuel, as you know, is much bigger product portfolio for us and would be the thing like hydrogen doubled last year in probably double again. So, I think the dollar number would be higher in hydrogen for sure..

So, we'll take our next question from Phil Gibbs with KeyBanc Capital. Please go ahead..

Alok, Heather, and Steve and team, good job on the fourth quarter, I do echo that in a tough environment. As you look out to 2022, I think the midpoint of rev guidance range was 16% growth.

How much of that is volume and how much of that is prices? Is it split pretty equally?.

I think that's a good assumption to start out with Phil. As you know, if material availability gets better and inflation gets lower then volume will drive at higher. But I think as a starting point, half and half is a good way to think about it..

And then, remind us just how big your commercial aerospace was maybe on an annualized revenue basis in the fourth quarter where you got some defense mixed in there historically, magnesium, but you've also bought SCI, which has commercial aero exposure.

So just trying to size that business up now with a lot of moving pieces have moved around, and clearly a market that should get better in the next couple of years?.

Heather, do you want to take a crack at that?.

Yes. So, I can start that for yourself. So, our total aerospace business in the fourth quarter was $8 million. And yes, you are correct. There was some contribution from the SCI acquisition. So, they do play, predominantly, SCI contributes mainly in terms of fuel, but there is some aerospace, so that might be a couple or so of $8 million.

Within aero, it always has been a bit challenging to completely, in the segment between defense and commercial. So, I think historically, we said, we kind of think about the base business being half and half over time any given quarter it can skew a little bit one way or the other..

So you think just the commercial aerospace portion is 8 million or that includes some defense?.

Include 8 million is defense, go ahead Alok..

I think it includes some defense sales because that's hard to separate, but I mean it's basically helicopters, wide-body, and we put it all together. On a high level, I think we are running at about a $30 million total sale and we think recovery will take that number up to 40 million.

I mean we're kind of 8 million to 10 million behind on where we should be to take full recovery. So, we see that as one of the key drivers of growth in 2022 and 2023..

So you don't get to that full 10 million of recovery though, excuse me, in 2020, 2022 or that that's more of what you're seeing what you can get back toward as a cycle recovery the world?.

I think that takes about two years or so to get to, so just like all the other aerospace company. The orders are starting now that will start going into 2023. So, I think it will be end up '23 when we get to the full run rate..

And there are no further questions at this time. An encore recording of this conference call will be available in about two hours. A link to a recording of this webcast will be available at the Luxfer website at www.luxfer.com. Thank you for joining us today.

The next regularly scheduled call will be April of 2022 when the Company discusses its 2022 first quarter financial results. This ends the Luxfer conference call and have a wonderful day..