LYDALL, INC. (NYSE: LDL) today announced financial results for the
fourth quarter and year ended December 31, 2019.
HIGHLIGHTS - Q4 2019 vs. Q4
2018
GAAP Financials
- Net sales of $193.3 million, down 7.9%
- Gross margin of 14.5%, down 540 basis points
- Operating loss of ($68.5) million compared to operating income
of $13.2 million – Goodwill and other long-lived
asset impairment charges of $64.2 million, or ($3.71) per
share – CEO transition and employee severance
expenses of $4.2 million, or ($0.19) per share
- Loss per share of ($4.07), compared to earnings per share of
$0.42
- Cash generated from operations of $23.9 million, compared to
$30.2 million
Non-GAAP Financial
Measures*
- Organic sales decline of (8.3%)
- Adjusted gross margin of 15.1%, down 520 basis points
- Adjusted operating margin down 680 basis points
- Adjusted loss of ($0.17) per share, compared to adjusted
earnings of $0.52 per share
- Adjusted EBITDA of $12.4 million, compared to $25.4
million*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.
Randall B. Gonzales, Executive Vice President
and Chief Financial Officer, stated, "Fourth quarter results were
disappointing, and included non-cash impairment charges of $64.2
million principally due to the under-performance of the Interface
business in our Performance Materials segment.
"Organic sales declined 8.3% on further
weakening of demand for fiber based gasket solutions in the
Interface business, lower demand for industrial filtration products
in China and Europe, and lower domestic automotive volumes
attributable to the General Motors strike.
"Adjusted EBITDA was negatively impacted by
manufacturing inefficiencies in the Thermal Acoustical Solutions
segment and unfavorable mix and lower cost absorption in the
Performance Materials segment. Despite lower sales volumes,
the Technical Nonwovens segment reported improved adjusted EBITDA
margin in the quarter compared to the fourth quarter of 2018.
"Overall, we were pleased with our cash flow
from operations of $87 million in 2019, enabling us to pay down $52
million of debt."
Q4 2019 Results
Net sales decreased by $16.7 million, or 7.9%,
to $193.3 million, compared to $209.9 million in the fourth quarter
of 2018 primarily from lower sales in the Performance Materials
("PM") and the Technical Nonwovens ("TNW") business segments.
On an organic basis, PM segment's net sales declined by 15.1%
primarily from lower sealing and advanced solutions product
sales. Weak demand for industrial filtration products in
China and Europe, as well as lower sales of automotive rolled goods
to the Thermal Acoustical Solutions ("TAS") segment, contributed to
organic sales compression of 8.4% in the TNW business
segment. Organic sales decline was 3.1% in the TAS segment
predominantly due to the General Motors strike in October that
negatively impacted net sales by approximately $3.2 million in the
quarter.
Gross margin was 14.5%, compared to 19.9% in the
fourth quarter of 2018, and on an adjusted basis, declined 520
basis points driven primarily by declines in the TAS and PM
segments with relatively flat TNW gross margin. The TAS
segment gross margin decline was due to manufacturing
inefficiencies which drove increased labor, outsourcing and
logistics costs at the Company's North American and European
automotive facilities, as well as the unfavorable mix of lower
acoustical parts sales. Lower gross margin from the PM
segment was primarily driven by unfavorable product mix, increased
overhead costs and unfavorable cost absorption on lower
production.
Operating loss was ($68.5) million, compared to
operating income of $13.2 in the fourth quarter of 2018.
During the fourth quarter, the Company recorded non-cash impairment
charges of $64.2 million, principally from goodwill impairment as
the PM segment's book value exceeded its fair value. On an
adjusted basis, operating income was $0.3 million compared to $14.7
million in the fourth quarter of 2018, and was lower due to reduced
gross profit and incremental intangible assets amortization of $1.4
million. Adjusted EBITDA margin was 6.4%, compared to 12.1%
in the fourth quarter of 2018.
Net loss was ($70.5) million, or ($4.07) per
diluted share, compared to net income of $7.2 million, or $0.42 per
diluted share in the fourth quarter of 2018. Adjusted loss
per share were ($0.17) compared to adjusted earnings per share of
$0.52 in the fourth quarter of 2018.
Full Year 2019 Results
The Company reported net sales of $837.4 million
in 2019 compared to $785.9 million in 2018. Organic sales
declined 1.6%, with reductions in the PM and TNW segments and
modest growth in the TAS segment. Gross margin was 18.1% in
2019 compared to 19.4% in 2018. The impairment charges of
$64.2 million led to an operating loss of ($38.8) million in 2019
compared to operating income of $49.2 million in 2018.
Adjusted operating margin was 3.8% in 2019 compared to 7.3% in
2018. Diluted loss per share in 2019 was ($4.08), and
included $3.72 per share for the impairment charges and $0.86 per
share for the pension settlement expenses, compared to diluted
earnings of $2.02 per share in 2018. Adjusted earnings per
share were $0.72 in 2019 compared to $2.43 in 2018. Adjusted
EBITDA was $80.4 million in 2019 compared to $90.2 million in
2018.
Cash provided by operating activities was $86.9
million in 2019 compared to $44.7 million in 2018. During
2019, the Company paid down $52.2 million in debt.
Liquidity
Cash was $51.3 million at December 30, 2019,
compared to $49.2 million at December 31, 2018. Net cash
provided by operations was $23.9 million in the fourth quarter of
2019 compared to $30.2 million in the fourth quarter of 2018, and
$86.9 million in 2019 compared to $44.7 million in 2018. In
the fourth quarter of 2019, cash from operations was positively
impacted by the factoring of select trade accounts receivable to a
banking institution of approximately $15 million that would have
normally been collected from customers in 2020. There was
approximately $122 million of availability under the Company's
credit facility at December 31, 2019.
Mr. Gonzales, concluded, "We completed a
reduction-in-force program in the fourth quarter of 2019 that is
expected to deliver approximately $4.5 million in savings in
2020. The Company remains focused on cash flow generation
through corporate treasury activities and working capital
optimization in our segments. We are now benefiting from a
cross-currency swap to take advantage of interest rate
differentials between the U.S. Dollar and Euro, which is expected
to save the Company $1.3 million in interest expense in 2020."
2020 Outlook
Sara A. Greenstein, President and Chief
Executive Officer, stated, "Early in my tenure, I have visited our
major operations and am encouraged by the strong relationships with
our customers, the quality of products we manufacture and the
passion of our global workforce.
"While we have seen some recent stabilization in
the end markets for Interface sealing products, weaker demand
in European industrial markets is impacting all of our
segments. In China, we are closely monitoring the impact of
the coronavirus on the Company's businesses. We expect our
first quarter and full year results will be negatively impacted,
but are uncertain with regards to the severity and duration of the
impact. Despite these headwinds, we expect first quarter 2020
adjusted EBITDA will improve sequentially from fourth quarter 2019
adjusted EBITDA results.
"We have started a strategic review, which we
expect to conclude by the end of the second quarter of 2020, to
evaluate our portfolio and end markets. The objective is to
prioritize strategic actions that optimize capital allocation and
drive long-term shareholder value. As part of the
process, we are identifying specific near-term opportunities for
improvement in commercial performance, cost structure and working
capital."
Conference Call
Lydall will host a conference call on February
26, 2020, at 10:00 a.m. Eastern Time to discuss results for its
fourth quarter and year ended December 31, 2019 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 12:00
p.m. Eastern Time on February 26, 2020 through 11:59 p.m. Eastern
Time on March 4, 2020 at (877) 344-7529, from within the U.S., or
(412) 317-0088, internationally, pass code 10139279.
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 2020, expected savings from a reduction-in-force
program, the expected impact of the coronavirus on the Company's
businesses, and optimizing profit and cash flow generation 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, challenges in integrating
acquired companies, disruptions in the global credit and financial
markets, including diminished liquidity and credit availability,
changes in international trade agreements, including tariffs and
trade restrictions, disruptions in the Company's businesses from
the coronavirus, 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 and the successful execution of the CEO
transition, 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,
2019.
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.
|
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|
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|
|
|
|
|
|
|
|
Summary of
Operations |
|
|
|
|
|
|
|
In thousands except per share
data |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Quarters Ended |
|
Years Ended |
|
December 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
Net sales |
$ |
193,288 |
|
|
$ |
209,938 |
|
|
$ |
837,398 |
|
|
$ |
785,897 |
|
Cost of sales |
165,185 |
|
|
168,066 |
|
|
685,608 |
|
|
633,252 |
|
Gross profit |
28,103 |
|
|
41,872 |
|
|
151,790 |
|
|
152,645 |
|
|
|
|
|
|
|
|
|
Selling, product development
and administrative expenses |
32,398 |
|
|
28,702 |
|
|
126,409 |
|
|
103,457 |
|
Impairment of goodwill and
other long-lived assets |
64,206 |
|
|
— |
|
|
64,206 |
|
|
— |
|
Operating (loss) income |
(68,501 |
) |
|
13,170 |
|
|
(38,825 |
) |
|
49,188 |
|
|
|
|
|
|
|
|
|
Employee benefit plan
settlement (income) expense |
(454 |
) |
|
— |
|
|
25,247 |
|
|
— |
|
Interest expense |
3,237 |
|
|
3,595 |
|
|
14,262 |
|
|
6,212 |
|
Other expense (income),
net |
102 |
|
|
(196 |
) |
|
(1,257 |
) |
|
(289 |
) |
(Loss) income before income
taxes |
(71,386 |
) |
|
9,771 |
|
|
(77,077 |
) |
|
43,265 |
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
(897 |
) |
|
2,599 |
|
|
(6,416 |
) |
|
8,453 |
|
Income from equity method
investment |
(28 |
) |
|
(12 |
) |
|
(148 |
) |
|
(132 |
) |
Net (loss)
income |
$ |
(70,461 |
) |
|
$ |
7,184 |
|
|
$ |
(70,513 |
) |
|
$ |
34,944 |
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(4.07 |
) |
|
$ |
0.42 |
|
|
$ |
(4.08 |
) |
|
$ |
2.03 |
|
Diluted |
$ |
(4.07 |
) |
|
$ |
0.42 |
|
|
$ |
(4.08 |
) |
|
$ |
2.02 |
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding |
17,293 |
|
|
17,239 |
|
|
17,271 |
|
|
17,204 |
|
Weighted average number of
common shares and equivalents outstanding |
17,293 |
|
|
17,302 |
|
|
17,271 |
|
|
17,330 |
|
|
|
|
|
|
|
|
|
|
Summary of Segment
Information |
|
|
|
|
|
|
|
|
and Corporate Office
Expenses |
|
|
|
|
|
|
|
|
In thousands |
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials Segment (1) |
|
$ |
55,798 |
|
|
$ |
65,570 |
|
|
$ |
245,480 |
|
|
$ |
169,217 |
|
Technical Nonwovens Segment
(2),(3) |
|
56,750 |
|
|
64,747 |
|
|
255,346 |
|
|
277,071 |
|
Thermal Acoustical
Solutions |
|
86,066 |
|
|
85,610 |
|
|
361,577 |
|
|
365,427 |
|
Eliminations and Other
(3) |
|
(5,326 |
) |
|
(5,989 |
) |
|
(25,005 |
) |
|
(25,818 |
) |
Consolidated Net Sales |
|
$ |
193,288 |
|
|
$ |
209,938 |
|
|
$ |
837,398 |
|
|
$ |
785,897 |
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials Segment
(1) |
|
$ |
(65,278 |
) |
|
$ |
5,096 |
|
|
$ |
(59,804 |
) |
|
$ |
13,139 |
|
Technical Nonwovens Segment
(2),(3) |
|
3,152 |
|
|
3,928 |
|
|
22,895 |
|
|
21,323 |
|
Thermal Acoustical
Solutions |
|
1,720 |
|
|
8,728 |
|
|
23,590 |
|
|
38,085 |
|
Corporate Office Expenses |
|
(8,095 |
) |
|
(4,582 |
) |
|
(25,506 |
) |
|
(23,359 |
) |
Consolidated Operating (Loss)
Income |
|
$ |
(68,501 |
) |
|
$ |
13,170 |
|
|
$ |
(38,825 |
) |
|
$ |
49,188 |
|
(1) The Performance Materials segment reports
the results of Interface and PCC for the periods following the date
of acquisitions of August 31, 2018 and July 12, 2018, respectively,
and included $1.5 million and $12.7 million of incremental
intangible assets amortization for the quarter and year ended
December 31, 2019, respectively.
(2) The Technical Nonwovens segment reports the
results of Geosol through the date of disposition of May 9,
2019.
(3) Included in the Technical Nonwovens segment
and Eliminations and Other is $4.4 million and $5.1 million in
intercompany sales to the Thermal Acoustical Solutions segment for
the quarters ended December 31, 2019 and 2018, respectively,
and $21.0 million and $22.2 million for the years ended
December 31, 2019 and 2018, respectively.
|
|
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|
|
Financial
Position |
|
|
|
|
In thousands except ratio
data |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
51,331 |
|
|
$ |
49,237 |
|
Working capital |
|
$ |
153,739 |
|
|
$ |
195,732 |
|
Total debt |
|
$ |
272,641 |
|
|
$ |
324,813 |
|
Stockholders' equity |
|
$ |
318,420 |
|
|
$ |
369,275 |
|
Total capitalization |
|
$ |
591,061 |
|
|
$ |
694,088 |
|
Total debt to total
capitalization |
|
46.1 |
% |
|
46.8 |
% |
|
|
|
|
|
|
|
|
|
Cash
Flows |
|
|
|
|
|
|
|
|
In thousands |
|
Quarters Ended |
|
Years Ended |
(Unaudited) |
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
23,898 |
|
|
$ |
30,241 |
|
|
$ |
86,862 |
|
|
$ |
44,739 |
|
Net cash used for investing
activities |
|
$ |
(8,613 |
) |
|
$ |
(11,184 |
) |
|
$ |
(32,385 |
) |
|
$ |
(300,965 |
) |
Net cash (used for) provided
by financing activities |
|
$ |
(13,697 |
) |
|
$ |
(13,082 |
) |
|
$ |
(51,927 |
) |
|
$ |
247,476 |
|
Depreciation and
amortization |
|
$ |
12,318 |
|
|
$ |
10,720 |
|
|
$ |
49,000 |
|
|
$ |
33,162 |
|
Capital expenditures |
|
$ |
(8,614 |
) |
|
$ |
(11,200 |
) |
|
$ |
(35,850 |
) |
|
$ |
(31,291 |
) |
|
|
|
|
|
Common Stock
Data |
|
|
|
|
|
|
Quarters Ended December 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
High |
|
$ |
25.84 |
|
|
$ |
44.03 |
|
Low |
|
$ |
17.93 |
|
|
$ |
18.47 |
|
Close |
|
$ |
20.52 |
|
|
$ |
20.31 |
|
During the fourth quarter of 2019, 9,283,443 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, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
193,288 |
|
|
$ |
209,938 |
|
|
$ |
837,398 |
|
|
$ |
785,897 |
|
Net sales,
adjusted |
|
$ |
193,288 |
|
|
$ |
209,938 |
|
|
$ |
837,398 |
|
|
$ |
785,897 |
|
|
|
|
|
|
|
|
|
|
Gross profit, as
reported |
|
$ |
28,103 |
|
|
$ |
41,872 |
|
|
$ |
151,790 |
|
|
$ |
152,645 |
|
TNW restructuring
expenses |
|
150 |
|
|
169 |
|
|
630 |
|
|
1,894 |
|
Inventory step-up purchase
accounting adjustments |
|
— |
|
|
585 |
|
|
— |
|
|
1,975 |
|
Reduction-in-force severance
expenses |
|
$ |
987 |
|
|
$ |
— |
|
|
$ |
987 |
|
|
$ |
— |
|
Gross profit,
adjusted |
|
$ |
29,240 |
|
|
$ |
42,626 |
|
|
$ |
153,407 |
|
|
$ |
156,514 |
|
|
|
|
|
|
|
|
|
|
Gross margin, as
reported |
|
14.5 |
% |
|
19.9 |
% |
|
18.1 |
% |
|
19.4 |
% |
Gross margin,
adjusted |
|
15.1 |
% |
|
20.3 |
% |
|
18.3 |
% |
|
19.9 |
% |
|
|
|
|
|
|
|
|
|
Operating (loss)
income, as reported |
|
$ |
(68,501 |
) |
|
$ |
13,170 |
|
|
$ |
(38,825 |
) |
|
$ |
49,188 |
|
Strategic initiatives
expenses |
|
210 |
|
|
594 |
|
|
1,456 |
|
|
3,631 |
|
TNW restructuring
expenses |
|
177 |
|
|
358 |
|
|
767 |
|
|
2,296 |
|
Inventory step-up purchase
accounting adjustments |
|
— |
|
|
585 |
|
|
— |
|
|
1,975 |
|
Impairment of long-lived
assets |
|
64,206 |
|
|
— |
|
|
64,206 |
|
|
— |
|
CEO transition expenses |
|
2,259 |
|
|
— |
|
|
2,259 |
|
|
— |
|
Reduction-in-force severance
expenses |
|
1,943 |
|
|
— |
|
|
1,943 |
|
|
— |
|
Operating income,
adjusted |
|
$ |
294 |
|
|
$ |
14,707 |
|
|
$ |
31,806 |
|
|
$ |
57,090 |
|
|
|
|
|
|
|
|
|
|
Operating margin, as
reported |
|
(35.4 |
)% |
|
6.3 |
% |
|
(4.6 |
)% |
|
6.3 |
% |
Operating margin,
adjusted |
|
0.2 |
% |
|
7.0 |
% |
|
3.8 |
% |
|
7.3 |
% |
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share, as reported |
|
$ |
(4.07 |
) |
|
$ |
0.42 |
|
|
$ |
(4.08 |
) |
|
$ |
2.02 |
|
Strategic initiatives
expenses |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
|
$ |
0.09 |
|
|
$ |
0.21 |
|
TNW restructuring
expenses |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
$ |
0.13 |
|
Inventory step-up purchase
accounting adjustments |
|
$ |
— |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.11 |
|
Impairment of long-lived
assets |
|
$ |
3.71 |
|
|
$ |
— |
|
|
$ |
3.71 |
|
|
$ |
— |
|
CEO transition expenses |
|
$ |
0.13 |
|
|
$ |
— |
|
|
$ |
0.13 |
|
|
$ |
— |
|
Reduction-in-force severance
expenses |
|
$ |
0.11 |
|
|
$ |
— |
|
|
$ |
0.11 |
|
|
$ |
— |
|
Employee benefit plans
settlement expenses |
|
$ |
(0.03 |
) |
|
$ |
— |
|
|
$ |
1.46 |
|
|
$ |
— |
|
Gain on sale from a
divestiture |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.08 |
) |
|
$ |
— |
|
Tax effect of above
adjustments |
|
$ |
(0.04 |
) |
|
$ |
— |
|
|
$ |
(0.66 |
) |
|
$ |
(0.06 |
) |
Discrete tax adjustments |
|
$ |
— |
|
|
$ |
0.02 |
|
|
$ |
— |
|
|
$ |
0.02 |
|
Diluted (loss)
earnings per share, adjusted |
|
$ |
(0.17 |
) |
|
$ |
0.52 |
|
|
$ |
0.72 |
|
|
$ |
2.43 |
|
|
This press release reports adjusted results for
the quarters and years ended December 31, 2019 and 2018, which
excludes strategic initiatives expenses, restructuring expenses in
the Technical Nonwovens segment, purchase accounting adjustments
related to inventory step-up in the Performance Materials segment,
impairment charges in the Performance Materials segment, corporate
office CEO transition expenses, reduction-in-force severance
expenses, employee benefit plans settlement expenses (income), gain
on sale from a divestiture and discrete tax adjustments.
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, 2019 and 2018. 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, non-cash
impairment charges, purchase accounting adjustments related to
inventory step-up, CEO transition expenses, reduction-in-force
severance expenses, employee benefit plans settlement expenses
(income) and gain on sale from a divestiture.
|
|
|
|
|
For the Quarter Ended December 31, 2019 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(70,461 |
) |
Employee benefits plans
settlement income |
|
|
|
|
|
|
|
|
|
|
|
(454 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
3,237 |
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
(897 |
) |
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
102 |
|
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
(28 |
) |
Operating (loss) income |
|
$ |
(65,278 |
) |
|
$ |
3,152 |
|
|
$ |
1,720 |
|
|
$ |
(60,406 |
) |
|
$ |
(8,095 |
) |
|
$ |
(68,501 |
) |
Depreciation and
amortization |
|
6,329 |
|
|
3,176 |
|
|
2,552 |
|
|
12,057 |
|
|
148 |
|
|
12,205 |
|
Employee benefits plans
settlement income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(454 |
) |
|
(454 |
) |
Other expense, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
102 |
|
|
102 |
|
Income from equity method
investment |
|
— |
|
|
(28 |
) |
|
— |
|
|
(28 |
) |
|
— |
|
|
(28 |
) |
EBITDA |
|
$ |
(58,949 |
) |
|
$ |
6,356 |
|
|
$ |
4,272 |
|
|
$ |
(48,321 |
) |
|
$ |
(7,595 |
) |
|
$ |
(55,916 |
) |
% of net
sales |
|
(105.6 |
)% |
|
11.2 |
% |
|
5.0 |
% |
|
(24.3 |
)% |
|
|
|
(28.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic initiatives
expenses |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
210 |
|
|
$ |
210 |
|
TNW restructuring
expenses |
|
$ |
— |
|
|
$ |
177 |
|
|
$ |
— |
|
|
$ |
177 |
|
|
$ |
— |
|
|
$ |
177 |
|
Impairment of long-lived
assets |
|
64,206 |
|
|
— |
|
|
— |
|
|
64,206 |
|
|
— |
|
|
64,206 |
|
CEO transition expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,259 |
|
|
2,259 |
|
Reduction-in-force severance
expenses |
|
295 |
|
|
253 |
|
|
1,386 |
|
|
1,934 |
|
|
9 |
|
|
1,943 |
|
Employee benefit plans
settlement income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(454 |
) |
|
(454 |
) |
EBITDA,
adjusted |
|
$ |
5,552 |
|
|
$ |
6,786 |
|
|
$ |
5,658 |
|
|
$ |
17,996 |
|
|
$ |
(5,571 |
) |
|
$ |
12,425 |
|
% of net
sales |
|
10.0 |
% |
|
12.0 |
% |
|
6.6 |
% |
|
9.1 |
% |
|
|
|
6.4 |
% |
|
|
|
|
|
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 (loss) |
|
$ |
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 |
|
TNW restructuring
expenses |
|
— |
|
|
358 |
|
|
— |
|
|
358 |
|
|
— |
|
|
358 |
|
Inventory step-up purchase
accounting adjustments |
|
585 |
|
|
— |
|
|
— |
|
|
585 |
|
|
— |
|
|
585 |
|
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 Year Ended December 31, 2019 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(70,513 |
) |
Employee benefit plans
settlement expenses |
|
|
|
|
|
|
|
|
|
|
|
25,247 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
14,262 |
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
(6,416 |
) |
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
(1,257 |
) |
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
(148 |
) |
Operating income (loss) |
|
$ |
(59,804 |
) |
|
$ |
22,895 |
|
|
$ |
23,590 |
|
|
$ |
(13,319 |
) |
|
$ |
(25,506 |
) |
|
$ |
(38,825 |
) |
Depreciation and
amortization |
|
25,118 |
|
|
12,702 |
|
|
10,168 |
|
|
47,988 |
|
|
635 |
|
|
48,623 |
|
Employee benefit plans
settlement expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,247 |
|
|
25,247 |
|
Other income, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,257 |
) |
|
(1,257 |
) |
Income from equity method
investment |
|
— |
|
|
(148 |
) |
|
— |
|
|
(148 |
) |
|
— |
|
|
(148 |
) |
EBITDA |
|
$ |
(34,686 |
) |
|
$ |
35,745 |
|
|
$ |
33,758 |
|
|
$ |
34,817 |
|
|
$ |
(48,861 |
) |
|
$ |
(14,044 |
) |
% of net
sales |
|
(14.1 |
)% |
|
14.0 |
% |
|
9.3 |
% |
|
4.0 |
% |
|
|
|
(1.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic initiatives
expenses |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,456 |
|
|
$ |
1,456 |
|
TNW restructuring
expenses |
|
— |
|
|
767 |
|
|
— |
|
|
767 |
|
|
— |
|
|
767 |
|
Impairment of long-lived
assets |
|
64,206 |
|
|
— |
|
|
— |
|
|
64,206 |
|
|
— |
|
|
64,206 |
|
CEO transition expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,259 |
|
|
2,259 |
|
Reduction-in-force severance
expenses |
|
295 |
|
|
253 |
|
|
1,386 |
|
|
1,934 |
|
|
9 |
|
|
1,943 |
|
Employee benefit plans
settlement expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,247 |
|
|
25,247 |
|
Gain on sale from a
divestiture |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,459 |
) |
|
(1,459 |
) |
EBITDA,
adjusted |
|
$ |
29,815 |
|
|
$ |
36,765 |
|
|
$ |
35,144 |
|
|
$ |
101,724 |
|
|
$ |
(21,349 |
) |
|
$ |
80,375 |
|
% of net
sales |
|
12.1 |
% |
|
14.4 |
% |
|
9.7 |
% |
|
11.8 |
% |
|
|
|
9.6 |
% |
|
|
|
|
|
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 (loss) |
|
$ |
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 |
|
TNW restructuring
expenses |
|
— |
|
|
2,296 |
|
|
— |
|
|
2,296 |
|
|
— |
|
|
2,296 |
|
Inventory step-up purchase
accounting adjustments |
|
1,975 |
|
|
— |
|
|
— |
|
|
1,975 |
|
|
— |
|
|
1,975 |
|
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 |
% |
Organic Sales(Unaudited)
|
|
Quarter Ended December 31, 2019 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth, as reported |
|
(14.9 |
)% |
|
(12.4 |
)% |
|
0.5 |
% |
|
(7.9 |
)% |
Acquisitions and divestitures |
|
0.8 |
% |
|
(3.3 |
)% |
|
— |
% |
|
(0.7 |
)% |
Change in tooling sales |
|
— |
% |
|
— |
% |
|
4.7 |
% |
|
1.9 |
% |
Foreign currency translation |
|
(0.6 |
)% |
|
(0.7 |
)% |
|
(1.1 |
)% |
|
(0.8 |
)% |
Organic sales
growth |
|
(15.1 |
)% |
|
(8.4 |
)% |
|
(3.1 |
)% |
|
(8.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth, as
reported |
|
45.1 |
% |
|
(7.8 |
)% |
|
(1.1 |
)% |
|
6.6 |
% |
Acquisitions and divestitures |
|
52.3 |
% |
|
(2.5 |
)% |
|
— |
% |
|
10.4 |
% |
Change in tooling sales |
|
0.1 |
% |
|
— |
% |
|
(0.4 |
)% |
|
(0.1 |
)% |
Foreign currency translation |
|
(1.5 |
)% |
|
(2.6 |
)% |
|
(1.8 |
)% |
|
(2.1 |
)% |
Organic sales
growth |
|
(5.8 |
)% |
|
(2.7 |
)% |
|
1.1 |
% |
|
(1.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
This press release provides information
regarding organic sales change, defined as net sales change
excluding (1) sales from acquired and divested 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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