LYDALL, INC. (NYSE: LDL) today announced financial results for the
fourth quarter and year ended December 31, 2018.
HIGHLIGHTS - Q4 2018 vs. Q4
2017
GAAP Financials
- Net sales of $209.9 million, up $31.9 million, or
17.9% -- Acquisitions completed in Q3 2018 contributed
$35.5 million, or 20.0%
- Gross margin of 19.9%, down 230 basis points
- Operating margin of 6.3%, down 250 basis points
- Earnings per share ("EPS") of $0.42, compared to
$0.80 -- Tax Cuts and Jobs Act ("Tax Act") resulted in a
one-time net tax benefit of $0.22 EPS in Q4 2017
- Cash flow from operations of $30.2 million, compared to $16.7
million
Non-GAAP Financial
Measures*
- Organic sales decline of 0.4%
- Adjusted gross margin of 20.3%, down 200 basis points
- Adjusted operating margin of 7.0%, down 240 basis points
- Adjusted EPS of $0.52, compared to adjusted $0.67 per share --
Increased intangibles amortization of $2.9 million, or $0.13 per
share
- Adjusted EBITDA margin of 12.1%, down 70 basis points
*Reconciliations of the Non-GAAP financial measures to Lydall’s
GAAP financial results are included at the end of this
release. See also “Use of Non-GAAP Financial Measures”
below.
Dale G. Barnhart, President and Chief Executive
Officer, stated, “The Interface Performance Materials business,
acquired in third quarter of 2018, led to overall sales growth of
nearly 18% from fourth quarter 2017, and we are pleased with the
progress on the integration. Performance Materials segment
organic sales grew by 4.2%, but we reported a slight decline in
consolidated organic sales primarily driven by softer than expected
demand in the Technical Nonwovens segment, principally in
China. Consolidated margins were below fourth quarter 2017,
but adjusted gross margin and adjusted EBITDA margin improved
sequentially by 160 basis points and 130 basis points,
respectively, from third quarter 2018 driven by improved
operational performance in the Thermal Acoustical Solutions segment
and the benefit of a full quarter of Interface results."
Q4 2018 Results
Net sales increased by $31.9 million, or 17.9%,
to $209.9 million, compared to $178.0 million in the fourth quarter
of 2017 as a result of the acquisition of Interface Performance
Materials, which increased Performance Materials ("PM") segment net
sales by $33.9 million. Organic sales growth was 4.2% in the
PM segment driven primarily from improved sales of filtration
products. The Technical Nonwovens ("TNW") segment reported
organic sales decline of 4.7% due to lower demand and timing of
orders of filtration products in China and reduced sales of
advanced materials products. The Thermal Acoustical Solutions
("TAS") segment reported a marginal reduction in organic sales as
reduced parts sales in North America and China were partially
offset by increased parts sales in Europe.
Gross margin was 19.9%, compared to 22.2% in the
fourth quarter of 2017 as the TAS and TNW segments' gross margin
negatively impacted consolidated gross margin, partially offset by
the PM segment. The TAS segment gross margin was negatively
impacted by increased labor and overhead expenses, primarily
associated with new product launch activity, which reduced
consolidated gross margin by approximately 130 basis points.
Also, commodity inflation and tariffs, and lower customer pricing
in the TAS segment negatively impacted consolidated gross margin by
approximately 50 basis points. The TNW segment gross margin
was negatively impacted by lower sales volumes, unfavorable product
mix and commodity inflation, which was partially offset by improved
customer pricing. The PM segment favorably impacted
consolidated gross margin due to the inclusion of Interface sales
at higher gross margins.
Operating margin was 6.3%, down 250 basis
points, compared to the fourth quarter of 2017 principally due to
lower gross margin and incremental intangible assets amortization
of $2.9 million, or 130 basis points. This was partially
offset by lower cash incentive and stock compensation expenses of
$2.8 million. Adjusted operating margin was 7.0%, down 240
basis points from the fourth quarter of 2017 after excluding
expenses related to strategic initiatives, restructuring and
consolidation expenses and inventory step-up from both periods.
The Company's effective tax rate in the fourth
quarter of 2018 was 26.6% compared to 5.3% in the same quarter of
2017. The fourth quarter of 2018 was unfavorably impacted by
discrete tax items impacting the effective tax rate by
approximately 5.3%, while the fourth quarter of 2017 was lower due
to the Tax Act enacted in December 2017.
Net income was $7.2 million, or $0.42 per
diluted share, compared to $13.8 million, or $0.80 per diluted
share in the fourth quarter of 2017. Adjusted earnings per
share were $0.52, including incremental intangibles amortization of
$0.13 per share, compared to $0.67 per share in the fourth quarter
of 2017.
Full Year 2018 Results
The Company reported net sales of $785.9 million
in 2018, including $48.9 million from acquisitions, compared to
$698.4 million in 2017. Organic sales growth was 2.2%, with
modest growth in all segments. Gross margin was 19.4% in 2018
compared to 23.4% in 2017. Operating margin was 6.3% in 2018
compared to 9.5% in 2017. Earnings per share in 2018 were
$2.02, compared to $2.85 per share in 2017. Adjusted earnings
per share were $2.43 in 2018, including incremental intangibles
amortization of $0.21 per share, compared to $2.80 in 2017.
Liquidity
Cash was $49.2 million at December 31, 2018,
compared to $59.9 million at December 31, 2017. Net cash
provided by operations was $30.2 million in the fourth quarter of
2018 compared to $16.7 million in the fourth quarter of 2017, and
$44.7 million in 2018 compared to $62.9 million in 2017.
Overall, lower operating income and working capital expansion drove
lower cash generation in 2018. During the fourth quarter of
2018, the Company paid down $13.0 million of outstanding borrowings
on its credit facility. As of December 31, 2018, there was
approximately $108 million of availability under the facility.
Mr. Barnhart added, “I am pleased with cash
generation in the fourth quarter, and going into 2019 we are
focused on improving our full year cash generation, through working
capital reduction, in order to accelerate debt pay-down.
Overall, our cash flow generation and ample capacity under our
credit facility will allow us to support organic growth programs
and fund capital investments."
Outlook
Mr. Barnhart concluded, “As we begin 2019,
demand is generally steady and we are experiencing a stabilization
of key raw material costs, but we continue to monitor the
uncertainties around governmental actions impacting global trade
regulations. We are executing on the integration of Interface
and expect consolidated EBITDA growth in the first quarter compared
to the first quarter of 2018. With our focused cost control
and margin improvement plans across the businesses, and expected
year over year raw material cost reductions, we currently expect
full year 2019 EBITDA margin expansion."
Conference Call
Lydall will host a conference call on February
26, 2019, at 10:00 a.m. Eastern Time to discuss results for its
fourth quarter and year ended December 31, 2018 as well as general
matters related to its businesses and markets. The call may
be accessed at (888) 338-7142, from within the U.S., or (412)
902-4181, internationally. In addition, the audio of the call
will be webcast live and will be available for replay on the
Company's website at www.lydall.com in the Investor Relations'
Section. A recording of the call will be available from 2:00
p.m. Eastern Time on February 26, 2019 through 11:59 p.m. Eastern
Time on March 5, 2019 at (877) 344-7529, from within the U.S., or
(412) 317-0088, internationally, pass code 10128314.
Additional information, including a presentation outlining key
financial data supporting the conference call, can be found on the
Company’s website www.lydall.com under the Investors
Relations’ Section.
Use of Non-GAAP Financial
Measures
In addition to the financial measures prepared
in accordance with generally accepted accounting principles
(“GAAP”), the Company uses certain non-GAAP financial measures,
including organic sales, adjusted gross profit, adjusted gross
margin, adjusted operating income, adjusted operating margin,
adjusted earnings per share, consolidated and segment EBITDA and
adjusted EBITDA. The attached financial tables address the
non-GAAP measures used in this press release and reconcile non-GAAP
measures to the most directly comparable GAAP measures. The
Company believes that the use of non-GAAP measures helps investors
gain a better understanding of our core operating results and
future prospects, consistent with how management measures and
forecasts the Company's performance, especially when comparing such
results to previous periods or forecasts. Adjusted segment
EBITDA is used as a basis to internally evaluate the financial
performance of the Company's segments because the Company believes
it reflects current core operating performance and provides an
indicator of the segment's ability to generate cash. Non-GAAP
measures should be considered in addition to, and not as a
replacement for or superior to, the corresponding GAAP measures,
and may not be comparable to similarly titled measures reported by
other companies.
Cautionary Note Concerning
Forward-Looking Statements
This press release contains “forward-looking
statements” within the Private Securities Litigation Reform Act of
1995. Any statements contained in this press release that are
not statements of historical fact, including statements about the
outlook for first quarter and full year 2019, including the
expected impact of raw material costs, the Company's ability to
successfully integrate the Interface businesses and improve margins
and cash flow generation across the Company may be deemed to be
forward-looking statements. All such forward-looking
statements are intended to provide management’s current
expectations for the future operating and financial performance of
the Company based on current expectations and assumptions relating
to the Company’s business, the economy and other future
conditions. Forward-looking statements generally can be
identified through the use of words such as “believes,”
“anticipates,” “may,” “should,” “will,” “plans,” “projects,”
“expects,” “expectations,” “estimates,” “forecasts,” “predicts,”
“targets,” “prospects,” “strategy,” “signs,” and other words of
similar meaning in connection with the discussion of future
operating or financial performance. Because forward-looking
statements relate to the future, they are subject to inherent
risks, uncertainties and changes in circumstances that are
difficult to predict. Such risks and uncertainties which
include, among others, worldwide economic or political changes that
affect the markets that the Company’s businesses serve which could
have an effect on demand for the Company’s products and impact the
Company’s profitability, challenges encountered by the Company in
the execution of restructuring programs, disruptions in the global
credit and financial markets, including diminished liquidity and
credit availability, changes in international trade agreements,
including tariffs and trade restrictions, foreign currency
volatility, swings in consumer confidence and spending, unstable
economic growth, raw material pricing and supply issues,
fluctuations in unemployment rates, retention of key employees,
increases in fuel prices, and outcomes of legal proceedings, claims
and investigations. Accordingly, the Company’s actual results
may differ materially from those contemplated by these
forward-looking statements. Investors, therefore, are
cautioned against relying on any of these forward-looking
statements. They are neither statements of historical fact
nor guarantees or assurances of future performance.
Additional information regarding the factors that may cause actual
results to differ materially from these forward-looking statements
is available in Lydall’s filings with the Securities and Exchange
Commission, including the risks and uncertainties identified in
Part I, Item 1A - Risk Factors of Lydall’s Annual Report on Form
10-K for the year ended December 31, 2018.
These forward-looking statements speak only as
of the date of this press release, and Lydall does not assume any
obligation to update or revise any forward-looking statement made
in this press release or that may from time to time be made by or
on behalf of the Company.
Lydall, Inc. is a New York Stock Exchange listed
company, headquartered in Manchester, Connecticut with global
manufacturing operations producing specialty engineered products
for the thermal/acoustical and filtration/separation markets. For
more information, visit http://www.lydall.com. Lydall® is a
registered trademark of Lydall, Inc. in the U.S. and other
countries.
Summary of
Operations |
|
|
|
|
|
|
|
In thousands except per
share data |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Quarters Ended |
|
Years Ended |
|
December 31, |
|
December 31, |
|
2018 |
|
2017 (1) |
|
2018 |
|
2017 (1) |
|
|
|
|
|
|
|
|
Net
sales |
$ |
209,938 |
|
|
$ |
178,030 |
|
|
$ |
785,897 |
|
|
$ |
698,437 |
|
Cost of sales |
168,066 |
|
|
138,550 |
|
|
633,252 |
|
|
535,078 |
|
Gross profit |
41,872 |
|
|
39,480 |
|
|
152,645 |
|
|
163,359 |
|
|
|
|
|
|
|
|
|
Selling, product
development and administrative expenses |
28,702 |
|
|
23,820 |
|
|
103,457 |
|
|
97,159 |
|
Operating income |
13,170 |
|
|
15,660 |
|
|
49,188 |
|
|
66,200 |
|
|
|
|
|
|
|
|
|
Interest expense |
3,595 |
|
|
614 |
|
|
6,212 |
|
|
2,720 |
|
Other (income) expense,
net |
(196 |
) |
|
434 |
|
|
(289 |
) |
|
2,161 |
|
Income before income
taxes |
9,771 |
|
|
14,612 |
|
|
43,265 |
|
|
61,319 |
|
|
|
|
|
|
|
|
|
Income tax expense |
2,599 |
|
|
773 |
|
|
8,453 |
|
|
11,974 |
|
(Income) loss from
equity method investment |
(12 |
) |
|
(9 |
) |
|
(132 |
) |
|
28 |
|
Net
income |
$ |
7,184 |
|
|
$ |
13,848 |
|
|
$ |
34,944 |
|
|
$ |
49,317 |
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.42 |
|
|
$ |
0.81 |
|
|
$ |
2.03 |
|
|
$ |
2.89 |
|
Diluted |
$ |
0.42 |
|
|
$ |
0.80 |
|
|
$ |
2.02 |
|
|
$ |
2.85 |
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding |
17,239 |
|
|
17,095 |
|
|
17,204 |
|
|
17,045 |
|
Weighted average number
of common shares and equivalents outstanding |
17,302 |
|
|
17,345 |
|
|
17,330 |
|
|
17,317 |
|
(1) Operating expense of $0.2 million and $0.8 million in the
quarter and year ended December 31, 2017 was reclassified to other
(income) expense, net, to give effect to the adoption of a new
accounting standard related to the presentation of net periodic
pension cost.
Summary of
Segment Information |
|
|
|
|
|
|
|
|
and Corporate
Office Expenses |
|
|
|
|
|
|
|
|
In thousands |
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials
Segment (1) |
|
$ |
65,570 |
|
|
$ |
29,070 |
|
|
$ |
169,217 |
|
|
$ |
116,669 |
|
Technical Nonwovens
Segment (2) |
|
64,747 |
|
|
69,755 |
|
|
277,071 |
|
|
269,077 |
|
Thermal Acoustical
Solutions (3) |
|
85,610 |
|
|
86,943 |
|
|
365,427 |
|
|
342,105 |
|
Eliminations and Other
(2) |
|
(5,989 |
) |
|
(7,738 |
) |
|
(25,818 |
) |
|
(29,414 |
) |
Consolidated Net
Sales |
|
$ |
209,938 |
|
|
$ |
178,030 |
|
|
$ |
785,897 |
|
|
$ |
698,437 |
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials
Segment (1) |
|
$ |
5,096 |
|
|
$ |
3,596 |
|
|
$ |
13,139 |
|
|
$ |
12,321 |
|
Technical Nonwovens
Segment |
|
3,928 |
|
|
6,255 |
|
|
21,323 |
|
|
26,047 |
|
Thermal Acoustical
Solutions (3) |
|
8,728 |
|
|
12,334 |
|
|
38,085 |
|
|
53,132 |
|
Corporate Office
Expenses |
|
(4,582 |
) |
|
(6,525 |
) |
|
(23,359 |
) |
|
(25,300 |
) |
Consolidated Operating
Income |
|
$ |
13,170 |
|
|
$ |
15,660 |
|
|
$ |
49,188 |
|
|
$ |
66,200 |
|
(1) The Performance Materials segment reports results of
Interface and PCC for the periods following the dates of
acquisitions of August 31, 2018 and July 12, 2018,
respectively.
(2) Included in the Technical Nonwovens segment and
Eliminations and Other is $5.0 million and $7.0 million in
intercompany sales to the Thermal Acoustical Solutions segment for
the quarters ended December 31, 2018 and 2017, respectively,
and $22.2 million and $26.5 million for the years ended
December 31, 2018 and 2017, respectively.
(3) Effective January 1, 2018, the Thermal/Acoustical
Metals and Thermal/Acoustical Fibers operating segments were
combined into a single operating segment named Thermal Acoustical
Solutions. Segment information for the quarter and year ended
December 31, 2017 has been recast to give effect to the new
segment structure.
Financial
Position |
|
|
|
|
In thousands except
ratio data |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
49,237 |
|
|
$ |
59,875 |
|
Working capital |
|
$ |
195,732 |
|
|
$ |
171,389 |
|
Total debt |
|
$ |
324,813 |
|
|
$ |
77,190 |
|
Stockholders'
equity |
|
$ |
369,275 |
|
|
$ |
353,396 |
|
Total
capitalization |
|
$ |
694,088 |
|
|
$ |
430,586 |
|
Total debt to total
capitalization |
|
46.8 |
% |
|
17.9 |
% |
Cash
Flows |
|
|
|
|
|
|
|
|
In thousands |
|
Quarters Ended |
|
Years Ended |
(Unaudited) |
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities |
|
$ |
30,241 |
|
|
$ |
16,744 |
|
|
$ |
44,739 |
|
|
$ |
62,936 |
|
Net cash used for
investing activities |
|
$ |
(11,184 |
) |
|
$ |
(7,076 |
) |
|
$ |
(300,965 |
) |
|
$ |
(27,329 |
) |
Net cash (used for)
provided by financing activities |
|
$ |
(13,082 |
) |
|
$ |
(15,352 |
) |
|
$ |
247,476 |
|
|
$ |
(53,209 |
) |
Depreciation and
amortization |
|
$ |
10,720 |
|
|
$ |
6,744 |
|
|
$ |
33,162 |
|
|
$ |
26,130 |
|
Capital
expenditures |
|
$ |
(11,200 |
) |
|
$ |
(7,088 |
) |
|
$ |
(31,291 |
) |
|
$ |
(27,006 |
) |
Common Stock
Data |
|
|
|
|
|
|
Quarters Ended December 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
High |
|
$ |
44.03 |
|
|
$ |
60.00 |
|
Low |
|
$ |
18.47 |
|
|
$ |
49.55 |
|
Close |
|
$ |
20.31 |
|
|
$ |
50.75 |
|
During the fourth quarter of 2018, 9,359,069 shares of Lydall
common stock (LDL) were traded on the New York Stock Exchange.
Non-GAAP MeasuresIn thousands except ratio and
per share data(Unaudited)
The following tables address the non-GAAP measures used in this
press release and reconcile the non-GAAP measures to the most
directly comparable GAAP measures:
|
|
Quarters Ended December 31, |
|
Years Ended December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
209,938 |
|
|
$ |
178,030 |
|
|
$ |
785,897 |
|
|
$ |
698,437 |
|
|
|
|
|
|
|
|
|
|
Gross Profit,
as reported |
|
$ |
41,872 |
|
|
$ |
39,480 |
|
|
$ |
152,645 |
|
|
$ |
163,359 |
|
Inventory
step-up purchase accounting adjustments |
|
585 |
|
|
— |
|
|
1,975 |
|
|
1,108 |
|
Automotive segments consolidation expenses |
|
— |
|
|
— |
|
|
— |
|
|
121 |
|
Severance
expenses |
|
— |
|
|
— |
|
|
— |
|
|
459 |
|
TNW
restructuring expenses |
|
169 |
|
|
155 |
|
|
1,894 |
|
|
395 |
|
Gross Profit,
adjusted |
|
$ |
42,626 |
|
|
$ |
39,635 |
|
|
$ |
156,514 |
|
|
$ |
165,442 |
|
|
|
|
|
|
|
|
|
|
Gross Margin,
as reported |
|
19.9 |
% |
|
22.2 |
% |
|
19.4 |
% |
|
23.4 |
% |
Gross Margin,
adjusted |
|
20.3 |
% |
|
22.3 |
% |
|
19.9 |
% |
|
23.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income, as reported |
|
$ |
13,170 |
|
|
$ |
15,660 |
|
|
$ |
49,188 |
|
|
$ |
66,200 |
|
Strategic
initiatives expenses |
|
594 |
|
|
308 |
|
|
3,631 |
|
|
778 |
|
Inventory
step-up purchase accounting adjustments |
|
585 |
|
|
— |
|
|
1,975 |
|
|
1,108 |
|
Automotive segments consolidation expenses |
|
— |
|
|
496 |
|
|
— |
|
|
1,693 |
|
Severance
expenses |
|
— |
|
|
— |
|
|
— |
|
|
987 |
|
TNW
restructuring expenses |
|
358 |
|
|
215 |
|
|
2,296 |
|
|
662 |
|
Operating
income, adjusted |
|
$ |
14,707 |
|
|
$ |
16,679 |
|
|
$ |
57,090 |
|
|
$ |
71,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin, as reported |
|
6.3 |
% |
|
8.8 |
% |
|
6.3 |
% |
|
9.5 |
% |
Operating
margin, adjusted |
|
7.0 |
% |
|
9.4 |
% |
|
7.3 |
% |
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
Diluted
earnings per share, reported |
|
$ |
0.42 |
|
|
$ |
0.80 |
|
|
$ |
2.02 |
|
|
$ |
2.85 |
|
Strategic
initiatives expenses |
|
$ |
0.03 |
|
|
$ |
0.02 |
|
|
$ |
0.21 |
|
|
$ |
0.04 |
|
Inventory
step-up purchase accounting adjustments |
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.11 |
|
|
$ |
0.06 |
|
Severance
expenses |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.06 |
|
TNW
restructuring expenses |
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.13 |
|
|
$ |
0.04 |
|
Automotive segments consolidation expenses |
|
$ |
— |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.10 |
|
Tax
effect of above adjustments |
|
$ |
— |
|
|
$ |
(0.02 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.09 |
) |
Discrete
tax adjustments |
|
$ |
0.02 |
|
|
$ |
(0.17 |
) |
|
$ |
0.02 |
|
|
$ |
(0.26 |
) |
Diluted
earnings per share, adjusted |
|
$ |
0.52 |
|
|
$ |
0.67 |
|
|
$ |
2.43 |
|
|
$ |
2.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This press release reports adjusted results for
the quarters and years ended December 31, 2018 and 2017, which
excludes strategic initiatives expenses, restructuring
expenses in the Technical Nonwovens segment, severance expenses for
workforce reductions in the Thermal Acoustical Solutions and
Technical Nonwovens segments, expenses associated with the
combination of the T/A Metals and T/A Fibers segments, purchase
accounting adjustments related to inventory step-up in the
Performance Materials and Technical Nonwovens segments and discrete
tax adjustments, including the impact of the Tax Act.
CONSOLIDATED AND SEGMENT EBITDA/ADJUSTED
EBITDAIn thousands except ratio data(Unaudited)
The following tables report consolidated and
segment earnings before interest, taxes, depreciation and
amortization ("EBITDA") and adjusted EBITDA for the quarters and
years ended December 31, 2018 and 2017. The Company uses
segment operating income (loss) for the purpose of calculating
segment EBITDA and adjusted EBITDA. Adjusted EBITDA excludes
strategic initiatives expenses, restructuring expenses, severance
expenses for workforce reductions, automotive segments
consolidation expenses and acquisitions' purchase accounting
adjustments related to inventory step-up.
|
|
For the Quarter Ended December 31, 2018 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
$ |
7,184 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
3,595 |
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
2,599 |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
(196 |
) |
Income from equity
method investment |
|
|
|
|
|
|
|
|
|
|
|
(12 |
) |
Operating income |
|
$ |
5,096 |
|
|
$ |
3,928 |
|
|
$ |
8,728 |
|
|
$ |
17,752 |
|
|
$ |
(4,582 |
) |
|
$ |
13,170 |
|
Depreciation and
amortization |
|
4,634 |
|
|
3,309 |
|
|
2,369 |
|
|
10,312 |
|
|
175 |
|
|
10,487 |
|
Other income, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(196 |
) |
|
(196 |
) |
Income from equity
method investment |
|
— |
|
|
(12 |
) |
|
— |
|
|
(12 |
) |
|
— |
|
|
(12 |
) |
EBITDA |
|
$ |
9,730 |
|
|
$ |
7,249 |
|
|
$ |
11,097 |
|
|
$ |
28,076 |
|
|
$ |
(4,211 |
) |
|
$ |
23,865 |
|
% of net
sales |
|
14.8 |
% |
|
11.2 |
% |
|
13.0 |
% |
|
13.0 |
% |
|
|
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
initiatives expenses |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
594 |
|
|
$ |
594 |
|
Inventory
step-up purchase accounting adjustments |
|
585 |
|
|
— |
|
|
— |
|
|
585 |
|
|
— |
|
|
585 |
|
TNW
restructuring expenses |
|
— |
|
|
358 |
|
|
— |
|
|
358 |
|
|
— |
|
|
358 |
|
EBITDA,
adjusted |
|
$ |
10,315 |
|
|
$ |
7,607 |
|
|
$ |
11,097 |
|
|
$ |
29,019 |
|
|
$ |
(3,617 |
) |
|
$ |
25,402 |
|
% of net
sales |
|
15.7 |
% |
|
11.7 |
% |
|
13.0 |
% |
|
13.4 |
% |
|
|
|
12.1 |
% |
|
|
For the Quarter Ended December 31, 2017 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
$ |
13,848 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
614 |
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
773 |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
434 |
|
Income from equity
method investment |
|
|
|
|
|
|
|
|
|
|
|
(9 |
) |
Operating income |
|
$ |
3,596 |
|
|
$ |
6,255 |
|
|
$ |
12,334 |
|
|
$ |
22,185 |
|
|
$ |
(6,525 |
) |
|
$ |
15,660 |
|
Depreciation and
amortization |
|
999 |
|
|
3,155 |
|
|
2,301 |
|
|
6,455 |
|
|
163 |
|
|
6,618 |
|
Other expense, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
434 |
|
|
434 |
|
Income from equity
method investment |
|
— |
|
|
(9 |
) |
|
— |
|
|
(9 |
) |
|
— |
|
|
(9 |
) |
EBITDA |
|
$ |
4,595 |
|
|
$ |
9,419 |
|
|
$ |
14,635 |
|
|
$ |
28,649 |
|
|
$ |
(6,796 |
) |
|
$ |
21,853 |
|
% of net
sales |
|
15.8 |
% |
|
13.5 |
% |
|
16.8 |
% |
|
15.4 |
% |
|
|
|
12.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
initiatives expenses |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
308 |
|
|
$ |
308 |
|
TNW
restructuring expenses |
|
— |
|
|
215 |
|
|
— |
|
|
215 |
|
|
— |
|
|
215 |
|
Automotive segments consolidation expenses |
|
— |
|
|
— |
|
|
277 |
|
|
277 |
|
|
219 |
|
|
496 |
|
EBITDA,
adjusted |
|
$ |
4,595 |
|
|
$ |
9,634 |
|
|
$ |
14,912 |
|
|
$ |
29,141 |
|
|
$ |
(6,269 |
) |
|
$ |
22,872 |
|
% of net
sales |
|
15.8 |
% |
|
13.8 |
% |
|
17.2 |
% |
|
15.7 |
% |
|
|
|
12.8 |
% |
|
|
For the Year Ended December 31, 2018 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
$ |
34,944 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
6,212 |
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
8,453 |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
(289 |
) |
Income from equity
method investment |
|
|
|
|
|
|
|
|
|
|
|
(132 |
) |
Operating income |
|
$ |
13,139 |
|
|
$ |
21,323 |
|
|
$ |
38,085 |
|
|
$ |
72,547 |
|
|
$ |
(23,359 |
) |
|
$ |
49,188 |
|
Depreciation and
amortization |
|
9,006 |
|
|
13,877 |
|
|
9,190 |
|
|
32,073 |
|
|
658 |
|
|
32,731 |
|
Other income, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(289 |
) |
|
(289 |
) |
Income from equity
method investment |
|
— |
|
|
(132 |
) |
|
— |
|
|
(132 |
) |
|
— |
|
|
(132 |
) |
EBITDA |
|
$ |
22,145 |
|
|
$ |
35,332 |
|
|
$ |
47,275 |
|
|
$ |
104,752 |
|
|
$ |
(22,412 |
) |
|
$ |
82,340 |
|
% of net
sales |
|
13.1 |
% |
|
12.8 |
% |
|
12.9 |
% |
|
12.9 |
% |
|
|
|
10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
initiatives expenses |
|
$ |
233 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
233 |
|
|
$ |
3,398 |
|
|
$ |
3,631 |
|
Inventory
step-up purchase accounting adjustments |
|
1,975 |
|
|
— |
|
|
— |
|
|
1,975 |
|
|
— |
|
|
1,975 |
|
TNW
restructuring expenses |
|
— |
|
|
2,296 |
|
|
— |
|
|
2,296 |
|
|
— |
|
|
2,296 |
|
EBITDA,
adjusted |
|
$ |
24,353 |
|
|
$ |
37,628 |
|
|
$ |
47,275 |
|
|
$ |
109,256 |
|
|
$ |
(19,014 |
) |
|
$ |
90,242 |
|
% of net
sales |
|
14.4 |
% |
|
13.6 |
% |
|
12.9 |
% |
|
13.5 |
% |
|
|
|
11.5 |
% |
|
|
For the Year Ended December 31, 2017 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
$ |
49,317 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
2,720 |
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
11,974 |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
2,161 |
|
Loss from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
28 |
|
Operating income |
|
$ |
12,321 |
|
|
$ |
26,047 |
|
|
$ |
53,132 |
|
|
$ |
91,500 |
|
|
$ |
(25,300 |
) |
|
$ |
66,200 |
|
Depreciation and
amortization |
|
3,996 |
|
|
12,625 |
|
|
8,619 |
|
|
25,240 |
|
|
699 |
|
|
25,939 |
|
Other expense, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,161 |
|
|
2,161 |
|
Loss from equity method
investment |
|
— |
|
|
28 |
|
|
— |
|
|
28 |
|
|
— |
|
|
28 |
|
EBITDA |
|
$ |
16,317 |
|
|
$ |
38,644 |
|
|
$ |
61,751 |
|
|
$ |
116,712 |
|
|
$ |
(26,762 |
) |
|
$ |
89,950 |
|
% of net
sales |
|
14.0 |
% |
|
14.4 |
% |
|
18.1 |
% |
|
16.0 |
% |
|
|
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
initiatives expenses |
|
$ |
— |
|
|
$ |
60 |
|
|
$ |
— |
|
|
$ |
60 |
|
|
$ |
718 |
|
|
$ |
778 |
|
Inventory
step-up purchase accounting adjustments |
|
— |
|
|
1,108 |
|
|
— |
|
|
1,108 |
|
|
— |
|
|
1,108 |
|
Severance
expenses |
|
— |
|
|
274 |
|
|
713 |
|
|
987 |
|
|
— |
|
|
987 |
|
TNW
restructuring expenses |
|
— |
|
|
662 |
|
|
— |
|
|
662 |
|
|
— |
|
|
662 |
|
Automotive segments consolidation expenses |
|
— |
|
|
— |
|
|
1,366 |
|
|
1,366 |
|
|
327 |
|
|
1,693 |
|
EBITDA,
adjusted |
|
$ |
16,317 |
|
|
$ |
40,748 |
|
|
$ |
63,830 |
|
|
$ |
120,895 |
|
|
$ |
(25,717 |
) |
|
$ |
95,178 |
|
% of net
sales |
|
14.0 |
% |
|
15.1 |
% |
|
18.7 |
% |
|
16.6 |
% |
|
|
|
13.6 |
% |
Organic Sales(Unaudited)
|
|
Quarter Ended December 31, 2018 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth, as
reported |
|
125.6 |
% |
|
(7.2 |
)% |
|
(1.5 |
)% |
|
17.9 |
% |
Acquisitions |
|
122.2 |
% |
|
— |
% |
|
— |
% |
|
20.0 |
% |
Change in
tooling sales |
|
0.3 |
% |
|
— |
% |
|
— |
% |
|
0.1 |
% |
Foreign
currency translation |
|
(1.1 |
)% |
|
(2.5 |
)% |
|
(1.0 |
)% |
|
(1.8 |
)% |
Organic sales
growth |
|
4.2 |
% |
|
(4.7 |
)% |
|
(0.5 |
)% |
|
(0.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth,
as reported |
|
45.0 |
% |
|
3.0 |
% |
|
6.8 |
% |
|
12.5 |
% |
Acquisitions |
|
41.9 |
% |
|
— |
% |
|
— |
% |
|
7.0 |
% |
Change in
tooling sales |
|
0.1 |
% |
|
— |
% |
|
3.7 |
% |
|
1.8 |
% |
Foreign
currency translation |
|
1.6 |
% |
|
1.4 |
% |
|
1.5 |
% |
|
1.5 |
% |
Organic sales
growth |
|
1.4 |
% |
|
1.6 |
% |
|
1.6 |
% |
|
2.2 |
% |
This press release provides information
regarding organic sales change, defined as net sales change
excluding (1) sales from acquired businesses (2) the impact of
foreign currency translation and (3) tooling sales.
Management believes that the presentation of organic sales change
is useful to investors because it enables them to assess, on a
consistent basis, sales trends related to the Company selling
products to customers, without the impact of foreign currency rate
changes that are not under management's control and do not reflect
the performance of the Company and management. Tooling sales
are excluded because tooling revenue is not generated from selling
the Company's products to customers, but rather is reimbursement
from our customers for the design and production of tools used by
the Company in our manufacturing processes. Tooling sales can
be sporadic and may mask underlying business conditions and obscure
business trends.
For further information:
Brendan Moynihan
Vice President, Financial Planning and Investor Relations
Telephone 860-646-1233
Facsimile 860-646-4917
info@lydall.com
www.lydall.com
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