LYDALL, INC. (NYSE: LDL) today announced financial results for the
second quarter ended June 30, 2020 and provided an update of
COVID-19 impacts.
FINANCIAL HIGHLIGHTS - Q2 2020 vs. Q2
2019
GAAP Financials
- Second quarter ending cash balance of $92.5 million, compared
to $43.4 million
- Year to date cash flow from operations of $40.4 million,
compared to $36.2 million
- Net sales of $146.2 million, down 33.8%
- Gross margin of 19.4%, down 110 basis points
- Operating loss of ($1.7) million, compared to operating income
of $13.2 million
- Loss per share of ($0.34), compared to loss per share of
($0.40)
- Prior year includes employee benefit plan settlement expenses
of $0.86 per share
Non-GAAP Financial
Measures*
- Organic sales decline of 31.7%
- Adjusted gross margin of 19.5%, down 100 basis points
- Adjusted operating margin of (0.2%), down 640 basis points
- Adjusted loss per share of ($0.27), compared to adjusted
earnings per share of $0.41
- Adjusted EBITDA of $11.4 million, compared to $25.3 million
- Adjusted EBITDA margin of 7.8%, down 370 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.
“I am incredibly proud of Lydall's global
employees who delivered extraordinary results while the world was
in the midst of the COVID-19 pandemic. In times like these, cash
matters most and the team rose to the occasion by generating almost
$14 million of cash from operations in the second quarter," Sara A.
Greenstein, President and Chief Executive Officer, said.
"Additionally, we quickly pivoted our resources to the production
of personal protective equipment for our first responders, medical
professionals, military personnel and the general public, which
contributed to our adjusted consolidated EBITDA margin of nearly 8%
in the quarter. We also announced new strategic investments to
accelerate domestic meltblown filtration media capacity supported
by a $13.5 million commitment from the U.S. Government.
“The demand for the filtration media produced in
our Performance Materials segment has significantly increased.
Lydall saw a 20% increase in Filtration sales in the second quarter
compared to prior year, a trend we expect to continue. In our
Technical Nonwovens segment, we completed a large order for
nonwoven material used in medical gowns to support first responders
for the New York Department of Health," said Ms. Greenstein. "When
our automotive customers shuttered their factories late in the
first quarter, the Thermal Acoustical Solutions business saw a
historic decline in second quarter volumes in North America and
Europe. The team responded quickly and decisively to flex our cost
structure, and by the end of the second quarter our factories were
back to nearly full pre-COVID production to support our automotive
customers’ production re-starts.”
Ms. Greenstein added, “Most importantly, we
continue to operate safely as the pandemic continues, adapting to a
new normal that includes more frequent cleaning, social distancing
and new work processes. Our employees have shown exceptional
commitment and resilience during these challenging times, and I
thank them for all their contributions.”
Q2 2020 Consolidated
Results
Net sales of $146.2 million decreased by $74.7
million, or 33.8%, compared to $220.8 million in the second quarter
of 2019, primarily due to the effects of COVID-19 related
automotive OEM shutdowns and weaker industrial demand. Gross margin
in the second quarter declined 110 basis points year-over-year to
19.4%. Randall B. Gonzales, Executive Vice President and Chief
Financial Officer, stated, "despite the effects of the pandemic,
the Performance Materials ("PM") and Technical Nonwovens ("TNW")
segments improved gross margin on lower sales volumes. This helped
offset lower gross margin in the Thermal Acoustical Solutions
("TAS") segment which was heavily impacted by widespread customer
shutdowns. While TAS sales declined 60% or $55.8 million
compared to prior year, volumes within the quarter grew
sequentially each month in line with auto production."
Operating loss was ($1.7) million, compared to
operating income of $13.2 million in the second quarter of 2019,
driven by the negative impact of the COVID-19 pandemic in the TAS
segment and, to a lesser extent, the TNW segment. This was
partially offset by the PM segment which benefited from the
increased demand for specialty filtration solutions. On an adjusted
basis, operating loss was ($0.3) million compared to $13.7 million
in the second quarter of 2019.
Adjusted EBITDA margin in PM was 19.5%, up 470
basis points on favorable mix and productivity actions while TNW
EBITDA margin was 18.8%, up 260 basis points driven by a $1.3
million insurance recovery in this quarter from flood related
losses in the first quarter of 2020. Compressed margins in TAS due
to COVID-19 resulted in consolidated adjusted EBITDA margin of
7.8%, down 370 basis points compared to the second quarter of
2019. Mr. Gonzales commented, "Performance in the second
quarter demonstrates the earnings potential of the business. We
were able to quickly flex our cost structure, reducing overhead by
almost $15 million from prior year in reaction to lower demand,
while leveraging resources to address surging demand for
filtration. These actions mitigated the profit loss on lower sales
and will position the business to drive incremental returns as
volumes recover."
Liquidity
Net cash provided by operations through the
second quarter of 2020 was $40.4 million driven by continued
working capital management initiatives, accounts receivable
factoring, and payroll tax deferral under the CARES Act. Mr.
Gonzales concluded, "Although we experienced unprecedented
headwinds from the pandemic, through disciplined management of
working capital we not only maintained but also increased our cash
balance through the quarter, while reducing our net factoring." The
Company’s cash balance was $92.5 million at June 30, 2020, compared
to $87.8 million at March 31, 2020. Debt balance at June 30 was
$286 million, and the Company's net leverage ratio was 3.5, well
below the maximum of 6.5 allowed by our amended credit
agreement.
Outlook
"As we move into the second half of the year,
our focus remains on the well-being of our employees, meeting the
needs of our customers, and driving more value for our
shareholders," Ms. Greenstein commented. "While we expect our
Performance Materials Sealing business will face headwinds in the
second half, continued strong demand for Filtration products should
offset this, with meltblown media sales for N95 and surgical masks
contributing incremental sales of $10 to $12 million. As a
respected leader in filtration, we continue to pursue opportunities
with government leaders across the world who recognize that a
strong localized supply chain of PPE is a national priority. Lydall
is well positioned, globally, to leverage our technical expertise
and decades of experience to provide solutions in the fight against
COVID-19 and develop innovative new solutions for clean air
applications.
"We anticipate the North American and European
automotive markets will recover in similar fashion to what we
experienced in China. While the timing and magnitude of the
recovery by region remains uncertain, we believe auto production
will begin to stabilize in the third quarter, albeit with volumes
in the second half of 2020 lower than the same period in
2019." Ms. Greenstein continued, "In Technical Nonwovens, we
are seeing seasonally strong construction activity driving robust
demand for geosynthetics and continued demand for medical related
nonwoven products, offset by softer sales in Industrial Filtration
applications as the industrial outlook remains uncertain.
"In summary, Lydall and its management team have
demonstrated their ability to successfully navigate unprecedented
challenges, and I have full confidence the team will continue to
quickly adapt to market changes," Ms. Greenstein shared. "Going
forward, we will sharpen our strategic focus where our global
footprint, deep product expertise, customer and supplier
relationships, and innovation are clear competitive advantages in
attractive markets. Specialty filtration is a cornerstone of our
strategy, as shown by the investments we’re making this year. I
remain confident in our ability to deliver long-term shareholder
value through our focus on value added engineered materials and
specialty filtration solutions that promote a cleaner, quieter,
safer world."
Conference Call
Lydall will host a conference call on July 29,
2020 at 10:00 a.m. Eastern Time to discuss results its second
quarter ended June 30, 2020 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 July 29, 2020 through
11:59 p.m. Eastern Time on August 5, 2020 at (877) 344-7529, from
within the U.S., or (412) 317-0088, internationally, access code
10146673. 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, the expected impact of the coronavirus pandemic
(COVID-19) 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, 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 pandemic (COVID-19),
foreign currency volatility, swings in consumer confidence and
spending, raw material pricing and supply issues, 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, 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.
Headquartered in Manchester, Connecticut with
global manufacturing operations, Lydall delivers value-added
engineered materials and specialty filtration solutions that
promote a cleaner, quieter and safer world. We partner with our
customers to develop bespoke, high-performing and efficient
solutions that are adaptable and scalable to meet their needs.
Lydall is a New York Stock Exchange-listed company. 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Net sales |
$ |
146,160 |
|
|
|
$ |
220,811 |
|
|
|
$ |
346,687 |
|
|
|
$ |
438,836 |
|
|
Cost of sales |
117,742 |
|
|
|
175,536 |
|
|
|
279,701 |
|
|
|
351,505 |
|
|
Gross profit |
28,418 |
|
|
|
45,275 |
|
|
|
66,986 |
|
|
|
87,331 |
|
|
|
|
|
|
|
|
|
|
Selling, product development
and administrative expenses |
30,164 |
|
|
|
32,096 |
|
|
|
63,191 |
|
|
|
65,102 |
|
|
Impairment of goodwill and
other long-lived assets |
— |
|
|
|
— |
|
|
|
61,109 |
|
|
|
— |
|
|
Operating (loss) income |
(1,746 |
) |
|
|
13,179 |
|
|
|
(57,314 |
) |
|
|
22,229 |
|
|
|
|
|
|
|
|
|
|
Employee benefit plans
settlement expenses |
— |
|
|
|
25,515 |
|
|
|
385 |
|
|
|
25,515 |
|
|
Interest expense |
4,476 |
|
|
|
3,731 |
|
|
|
7,333 |
|
|
|
7,359 |
|
|
Other expense (income),
net |
248 |
|
|
|
(873 |
) |
|
|
(170 |
) |
|
|
(474 |
) |
|
Loss before income taxes |
(6,470 |
) |
|
|
(15,194 |
) |
|
|
(64,862 |
) |
|
|
(10,171 |
) |
|
|
|
|
|
|
|
|
|
Income tax benefit |
(595 |
) |
|
|
(8,199 |
) |
|
|
(2,610 |
) |
|
|
(7,093 |
) |
|
(Income) loss from equity
method investment |
(18 |
) |
|
|
(49 |
) |
|
|
26 |
|
|
|
(22 |
) |
|
Net loss |
$ |
(5,857 |
) |
|
|
$ |
(6,946 |
) |
|
|
$ |
(62,278 |
) |
|
|
$ |
(3,056 |
) |
|
|
|
|
|
|
|
|
|
Loss per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.34 |
) |
|
|
$ |
(0.40 |
) |
|
|
$ |
(3.59 |
) |
|
|
$ |
(0.18 |
) |
|
Diluted |
$ |
(0.34 |
) |
|
|
$ |
(0.40 |
) |
|
|
$ |
(3.59 |
) |
|
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding |
17,372 |
|
|
|
17,267 |
|
|
|
17,354 |
|
|
|
17,260 |
|
|
Weighted average number of
common shares and equivalents outstanding |
17,372 |
|
|
|
17,267 |
|
|
|
17,354 |
|
|
|
17,260 |
|
|
Summary of Segment
Information |
|
|
|
|
|
|
|
|
and Corporate Office
Expenses |
|
|
|
|
|
|
|
|
In thousands |
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials Segment |
|
$ |
58,473 |
|
|
|
$ |
65,102 |
|
|
|
$ |
123,693 |
|
|
|
$ |
129,682 |
|
|
Technical Nonwovens Segment
(1),(2) |
|
52,007 |
|
|
|
69,078 |
|
|
|
109,410 |
|
|
|
134,684 |
|
|
Thermal Acoustical
Solutions |
|
37,448 |
|
|
|
93,272 |
|
|
|
121,209 |
|
|
|
187,585 |
|
|
Eliminations and Other
(2) |
|
(1,768 |
) |
|
|
(6,641 |
) |
|
|
(7,625 |
) |
|
|
(13,115 |
) |
|
Consolidated Net Sales |
|
$ |
146,160 |
|
|
|
$ |
220,811 |
|
|
|
$ |
346,687 |
|
|
|
$ |
438,836 |
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials Segment
(3) |
|
$ |
5,443 |
|
|
|
$ |
3,303 |
|
|
|
$ |
(51,498 |
) |
|
|
$ |
4,762 |
|
|
Technical Nonwovens Segment
(1),(2),(4) |
|
6,684 |
|
|
|
7,844 |
|
|
|
10,497 |
|
|
|
12,578 |
|
|
Thermal Acoustical
Solutions |
|
(6,285 |
) |
|
|
7,357 |
|
|
|
(657 |
) |
|
|
16,848 |
|
|
Corporate Office Expenses |
|
(7,588 |
) |
|
|
(5,325 |
) |
|
|
(15,656 |
) |
|
|
(11,959 |
) |
|
Consolidated Operating (Loss)
Income |
|
$ |
(1,746 |
) |
|
|
$ |
13,179 |
|
|
|
$ |
(57,314 |
) |
|
|
$ |
22,229 |
|
|
(1) The Technical Nonwovens segment reports the
results of Geosol through the date of disposition of May 9,
2019.
(2) Included in the Technical Nonwovens segment
and Eliminations and Other is $1.4 million and $4.6 million in
intercompany sales to the Thermal Acoustical Solutions segment for
the quarters ended June 30, 2020 and 2019, respectively, and
6.4 million and 9.3 million in intercompany sales to the Thermal
Acoustical Solutions segment for the six months ended June 30,
2020 and 2019
(3) Included in the Performance Materials
segment is $61.1 million of impairment charges related to goodwill
and other long-lived assets for the six months ended June 30,
2020, $4.0 million and $4.1 million of intangible assets
amortization for the three months ended June 30, 2020 and
2019, respectively, and $7.9 million and $8.1 million of
intangible assets amortization for the six months ended
June 30, 2020 and 2019, respectively.
(4) Included in the Technical Nonwovens segment
is $1.2 million and $1.3 million of intangible assets amortization
for the three months ended June 30, 2020 and 2019,
respectively, and $2.3 million and $2.6 million of
intangible assets amortization for the six months ended
June 30, 2020 and 2019.
Financial
Position |
|
|
|
|
In thousands except ratio
data |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
92,546 |
|
|
$ |
51,331 |
|
Working capital |
|
$ |
172,417 |
|
|
$ |
153,739 |
|
Total debt |
|
$ |
285,510 |
|
|
$ |
272,641 |
|
Stockholders' equity |
|
$ |
253,262 |
|
|
$ |
318,420 |
|
Total capitalization |
|
$ |
538,772 |
|
|
$ |
591,061 |
|
Total debt to total
capitalization |
|
53.0 |
% |
|
46.1 |
% |
Cash
Flows |
|
|
|
|
|
|
|
|
In thousands |
|
For the Three Months Ended |
|
For the Six Months Ended |
(Unaudited) |
|
June 30, |
|
June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
|
$ |
13,674 |
|
|
|
$ |
21,849 |
|
|
|
$ |
40,415 |
|
|
|
$ |
36,219 |
|
|
Net cash used for investing
activities |
|
$ |
(4,581 |
) |
|
|
$ |
(10,140 |
) |
|
|
$ |
(12,080 |
) |
|
|
$ |
(16,825 |
) |
|
Net cash (used for) provided
by financing activities |
|
$ |
(4,893 |
) |
|
|
$ |
(18,102 |
) |
|
|
$ |
13,482 |
|
|
|
$ |
(25,212 |
) |
|
Depreciation and
amortization |
|
$ |
12,612 |
|
|
|
$ |
12,066 |
|
|
|
$ |
24,842 |
|
|
|
$ |
24,001 |
|
|
Capital expenditures |
|
$ |
(6,315 |
) |
|
|
$ |
(11,048 |
) |
|
|
$ |
(15,472 |
) |
|
|
$ |
(20,287 |
) |
|
Common Stock
Data |
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
2020 |
|
2019 |
|
|
|
|
|
High |
|
$ |
17.73 |
|
|
$ |
26.47 |
|
Low |
|
$ |
5.67 |
|
|
$ |
17.90 |
|
Close |
|
$ |
13.56 |
|
|
$ |
20.20 |
|
During the second quarter of 2020, 14,906,709 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:
|
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
In thousands |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
146,160 |
|
|
|
$ |
220,811 |
|
|
|
$ |
346,687 |
|
|
|
$ |
438,836 |
|
|
Net sales,
adjusted |
|
$ |
146,160 |
|
|
|
$ |
220,811 |
|
|
|
$ |
346,687 |
|
|
|
$ |
438,836 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as
reported |
|
$ |
28,418 |
|
|
|
$ |
45,275 |
|
|
|
$ |
66,986 |
|
|
|
$ |
87,331 |
|
|
TNW restructuring
expenses |
|
— |
|
|
|
42 |
|
|
|
— |
|
|
|
372 |
|
|
Reduction-in-force severance
expenses |
|
$ |
127 |
|
|
|
$ |
— |
|
|
|
$ |
127 |
|
|
|
$ |
— |
|
|
Gross profit,
adjusted |
|
$ |
28,545 |
|
|
|
$ |
45,317 |
|
|
|
$ |
67,113 |
|
|
|
$ |
87,703 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin, as
reported |
|
19.4 |
|
% |
|
20.5 |
|
% |
|
19.3 |
|
% |
|
19.9 |
|
% |
Gross margin,
adjusted |
|
19.5 |
|
% |
|
20.5 |
|
% |
|
19.4 |
|
% |
|
20.0 |
|
% |
|
|
|
|
|
|
|
|
|
Operating (loss)
income, as reported |
|
$ |
(1,746 |
) |
|
|
$ |
13,179 |
|
|
|
$ |
(57,314 |
) |
|
|
$ |
22,229 |
|
|
Strategic initiatives
expenses |
|
1,230 |
|
|
|
405 |
|
|
|
3,138 |
|
|
|
1,246 |
|
|
TNW restructuring
expenses |
|
— |
|
|
|
97 |
|
|
|
— |
|
|
|
473 |
|
|
Impairment of goodwill and
long-lived assets |
|
— |
|
|
|
— |
|
|
|
61,109 |
|
|
|
— |
|
|
Reduction-in-force severance
expenses |
|
257 |
|
|
|
— |
|
|
|
257 |
|
|
|
— |
|
|
Operating income,
adjusted |
|
$ |
(259 |
) |
|
|
$ |
13,681 |
|
|
|
$ |
7,190 |
|
|
|
$ |
23,948 |
|
|
|
|
|
|
|
|
|
|
|
Operating margin, as
reported |
|
(1.2 |
) |
% |
|
6.0 |
|
% |
|
(16.5 |
) |
% |
|
5.1 |
|
% |
Operating margin,
adjusted |
|
(0.2 |
) |
% |
|
6.2 |
|
% |
|
2.1 |
|
% |
|
5.5 |
|
% |
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share, as reported |
|
$ |
(0.34 |
) |
|
|
$ |
(0.40 |
) |
|
|
$ |
(3.59 |
) |
|
|
$ |
(0.18 |
) |
|
Strategic initiatives
expenses |
|
$ |
0.07 |
|
|
|
$ |
0.02 |
|
|
|
$ |
0.18 |
|
|
|
$ |
0.07 |
|
|
TNW restructuring
expenses |
|
$ |
— |
|
|
|
$ |
0.01 |
|
|
|
$ |
— |
|
|
|
$ |
0.03 |
|
|
Impairment of goodwill and
long-lived assets |
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
3.52 |
|
|
|
$ |
— |
|
|
Reduction-in-force severance
expenses |
|
$ |
0.02 |
|
|
|
$ |
— |
|
|
|
$ |
0.02 |
|
|
|
$ |
— |
|
|
Employee benefit plans
settlement expenses |
|
$ |
— |
|
|
|
$ |
1.47 |
|
|
|
$ |
0.02 |
|
|
|
$ |
1.47 |
|
|
Gain on sale from a
divestiture |
|
$ |
— |
|
|
|
$ |
(0.08 |
) |
|
|
$ |
— |
|
|
|
$ |
(0.08 |
) |
|
Tax effect of above
adjustments |
|
$ |
(0.02 |
) |
|
|
$ |
(0.61 |
) |
|
|
$ |
(0.22 |
) |
|
|
$ |
(0.61 |
) |
|
Diluted (loss)
earnings per share, adjusted |
|
$ |
(0.27 |
) |
|
|
$ |
0.41 |
|
|
|
$ |
(0.07 |
) |
|
|
$ |
0.70 |
|
|
This press release reports adjusted results for
the three and six months ended June 30, 2020 and 2019, which
excludes strategic initiatives expenses, restructuring expenses in
the Technical Nonwovens segment, impairment charges in the
Performance Materials segment, reduction-in-force severance
expenses, employee benefit plans settlement expenses, and gain on
sale from a divestiture.
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 three and six
months ended June 30, 2020 and 2019. 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, reduction-in-force severance expenses, employee
benefit plans settlement expenses, and gain on sale from a
divestiture.
|
|
For the Three Months Ended June 30, 2020 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(5,857 |
) |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
4,476 |
|
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
(595 |
) |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
248 |
|
|
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
(18 |
) |
|
Operating (loss) income |
|
$ |
5,443 |
|
|
$ |
6,684 |
|
|
|
$ |
(6,285 |
) |
|
|
$ |
5,842 |
|
|
|
$ |
(7,588 |
) |
|
|
$ |
(1,746 |
) |
|
Depreciation and
amortization |
|
5,954 |
|
|
3,093 |
|
|
|
2,714 |
|
|
|
11,761 |
|
|
|
130 |
|
|
|
11,891 |
|
|
Other expense, net |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
248 |
|
|
|
248 |
|
|
Income from equity method
investment |
|
— |
|
|
(18 |
) |
|
|
— |
|
|
|
(18 |
) |
|
|
— |
|
|
|
(18 |
) |
|
EBITDA |
|
$ |
11,397 |
|
|
$ |
9,795 |
|
|
|
$ |
(3,571 |
) |
|
|
$ |
17,621 |
|
|
|
$ |
(7,706 |
) |
|
|
$ |
9,915 |
|
|
% of net
sales |
|
19.5 |
% |
|
18.8 |
% |
|
|
(9.5 |
)% |
|
|
11.9 |
% |
|
|
|
|
6.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic initiatives
expenses |
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
1,230 |
|
|
|
$ |
1,230 |
|
|
Reduction-in-force severance
expenses |
|
— |
|
|
— |
|
|
|
257 |
|
|
|
257 |
|
|
|
— |
|
|
|
257 |
|
|
EBITDA,
adjusted |
|
$ |
11,397 |
|
|
$ |
9,795 |
|
|
|
$ |
(3,314 |
) |
|
|
$ |
17,878 |
|
|
|
$ |
(6,476 |
) |
|
|
$ |
11,402 |
|
|
% of net
sales |
|
19.5 |
% |
|
18.8 |
% |
|
|
(8.8 |
)% |
|
|
12.1 |
% |
|
|
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2019 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(6,946 |
) |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
3,731 |
|
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
(8,199 |
) |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
(873 |
) |
|
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
(49 |
) |
|
Operating income (loss) |
|
$ |
3,303 |
|
|
$ |
7,844 |
|
|
|
$ |
7,357 |
|
|
|
$ |
18,504 |
|
|
|
$ |
(5,325 |
) |
|
|
$ |
13,179 |
|
|
Depreciation and
amortization |
|
6,329 |
|
|
3,222 |
|
|
|
2,458 |
|
|
|
12,009 |
|
|
|
166 |
|
|
|
12,175 |
|
|
Employee benefits plans
settlement expense |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25,515 |
|
|
|
25,515 |
|
|
Other income, net |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(873 |
) |
|
|
(873 |
) |
|
Income from equity method
investment |
|
— |
|
|
(49 |
) |
|
|
— |
|
|
|
(49 |
) |
|
|
— |
|
|
|
(49 |
) |
|
EBITDA |
|
$ |
9,632 |
|
|
$ |
11,115 |
|
|
|
$ |
9,815 |
|
|
|
$ |
30,562 |
|
|
|
$ |
(29,801 |
) |
|
|
$ |
761 |
|
|
% of net
sales |
|
14.8 |
% |
|
16.1 |
% |
|
|
10.5 |
% |
|
|
13.4 |
% |
|
|
|
|
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic initiatives
expenses |
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
405 |
|
|
|
$ |
405 |
|
|
TNW restructuring
expenses |
|
— |
|
|
97 |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
|
|
97 |
|
|
Employee benefit plans
settlement expenses |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25,515 |
|
|
|
25,515 |
|
|
Gain on sale from a
divestiture |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,459 |
) |
|
|
(1,459 |
) |
|
EBITDA,
adjusted |
|
$ |
9,632 |
|
|
$ |
11,212 |
|
|
|
$ |
9,815 |
% |
|
|
$ |
30,659 |
|
|
|
$ |
(5,340 |
) |
|
|
$ |
25,319 |
|
|
% of net
sales |
|
14.8 |
% |
|
16.2 |
% |
|
|
10.5 |
% |
|
|
13.5 |
% |
|
|
|
|
11.5 |
% |
|
|
|
For the Six Months Ended June 30, 2020 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(62,278 |
) |
|
Employee benefit plans
settlement expenses |
|
|
|
|
|
|
|
|
|
|
|
|
385 |
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
7,333 |
|
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
(2,610 |
) |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
(170 |
) |
|
Loss from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
|
26 |
|
|
Operating income (loss) |
|
$ |
(51,498 |
) |
|
|
$ |
10,497 |
|
|
$ |
(657 |
) |
|
|
$ |
(41,658 |
) |
|
|
$ |
(15,656 |
) |
|
|
$ |
(57,314 |
) |
|
Depreciation and
amortization |
|
|
12,208 |
|
|
|
|
6,131 |
|
|
|
5,431 |
|
|
|
|
23,770 |
|
|
|
|
265 |
|
|
|
|
24,035 |
|
|
Employee benefit plans
settlement expenses |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
385 |
|
|
|
|
385 |
|
|
Other income, net |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(170 |
) |
|
|
|
(170 |
) |
|
Loss from equity method
investment |
|
|
— |
|
|
|
|
26 |
|
|
|
— |
|
|
|
|
26 |
|
|
|
|
— |
|
|
|
|
26 |
|
|
EBITDA |
|
$ |
(39,290 |
) |
|
|
$ |
16,602 |
|
|
$ |
4,774 |
|
|
|
$ |
(17,914 |
) |
|
|
$ |
(15,606 |
) |
|
|
$ |
(33,520 |
) |
|
% of net
sales |
|
|
(31.8 |
)% |
|
|
|
15.2 |
% |
|
|
3.9 |
% |
|
|
|
(5.1 |
)% |
|
|
|
|
|
(9.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic initiatives
expenses |
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
3,138 |
|
|
|
$ |
3,138 |
|
|
Impairment of goodwill and
long-lived assets |
|
|
61,109 |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
61,109 |
|
|
|
|
— |
|
|
|
|
61,109 |
|
|
Reduction-in-force severance
expenses |
|
|
— |
|
|
|
|
— |
|
|
|
257 |
|
|
|
|
257 |
|
|
|
|
— |
|
|
|
|
257 |
|
|
Employee benefit plans
settlement expenses |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
385 |
|
|
|
|
385 |
|
|
EBITDA,
adjusted |
|
$ |
21,819 |
|
|
|
$ |
16,602 |
|
|
$ |
5,031 |
|
|
|
$ |
43,452 |
|
|
|
$ |
(12,083 |
) |
|
|
$ |
31,369 |
|
|
% of net
sales |
|
|
17.6 |
% |
|
|
|
15.2 |
% |
|
|
4.2 |
% |
|
|
|
12.3 |
% |
|
|
|
|
|
9.0 |
% |
|
|
|
For the Six Months Ended June 30, 2019 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(3,056 |
) |
|
Employee benefit plans
settlement expenses |
|
|
|
|
|
|
|
|
|
|
|
|
25,515 |
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
7,359 |
|
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
(7,093 |
) |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
(474 |
) |
|
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
|
(22 |
) |
|
Operating income (loss) |
|
$ |
4,762 |
|
|
$ |
12,578 |
|
|
|
$ |
16,848 |
|
|
$ |
34,188 |
|
|
|
$ |
(11,959 |
) |
|
|
$ |
22,229 |
|
|
Depreciation and
amortization |
|
|
12,499 |
|
|
|
6,365 |
|
|
|
|
4,890 |
|
|
|
23,754 |
|
|
|
|
338 |
|
|
|
|
24,092 |
|
|
Employee benefit plans
settlement expenses |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
25,515 |
|
|
|
|
25,515 |
|
|
Other income, net |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
(474 |
) |
|
|
|
(474 |
) |
|
Income from equity method
investment |
|
|
— |
|
|
|
(22 |
) |
|
|
|
— |
|
|
|
(22 |
) |
|
|
|
— |
|
|
|
|
(22 |
) |
|
EBITDA |
|
$ |
17,261 |
|
|
$ |
18,965 |
|
|
|
$ |
21,738 |
|
|
$ |
57,964 |
|
|
|
$ |
(36,662 |
) |
|
|
$ |
21,302 |
|
|
% of net
sales |
|
|
13.3 |
% |
|
|
14.1 |
% |
|
|
|
11.6 |
% |
|
|
12.8 |
% |
|
|
|
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic initiatives
expenses |
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
1,246 |
|
|
|
$ |
1,246 |
|
|
TNW restructuring
expenses |
|
|
— |
|
|
|
473 |
|
|
|
|
— |
|
|
|
473 |
|
|
|
|
— |
|
|
|
|
473 |
|
|
Employee benefit plans
settlement expenses |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
25,515 |
|
|
|
|
25,515 |
|
|
Gain on sale from a
divestiture |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
(1,459 |
) |
|
|
|
(1,459 |
) |
|
EBITDA,
adjusted |
|
$ |
17,261 |
|
|
$ |
19,438 |
|
|
|
$ |
21,738 |
|
|
$ |
58,437 |
|
|
|
$ |
(11,360 |
) |
|
|
$ |
47,077 |
|
|
% of net
sales |
|
|
13.3 |
% |
|
|
14.4 |
% |
|
|
|
11.6 |
% |
|
|
12.9 |
% |
|
|
|
|
|
10.7 |
% |
|
Organic Sales(Unaudited)
|
|
Three Months Ended June 30, 2020 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth, as reported |
|
(10.2 |
) |
% |
|
(24.7 |
) |
% |
|
(59.9 |
) |
% |
|
(33.8 |
) |
% |
Acquisitions and divestitures |
|
— |
|
% |
|
(0.1 |
) |
% |
|
— |
|
% |
|
— |
|
% |
Change in tooling sales |
|
(0.1 |
) |
% |
|
— |
|
% |
|
(2.7 |
) |
% |
|
(1.2 |
) |
% |
Foreign currency translation |
|
(0.6 |
) |
% |
|
(1.9 |
) |
% |
|
(0.4 |
) |
% |
|
(0.9 |
) |
% |
Organic sales
growth |
|
(9.5 |
) |
% |
|
(22.7 |
) |
% |
|
(56.8 |
) |
% |
|
(31.7 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth, as
reported |
|
(4.6 |
) |
% |
|
(18.8 |
) |
% |
|
(35.4 |
) |
% |
|
(21.0 |
) |
% |
Acquisitions and divestitures |
|
0.6 |
|
% |
|
(0.2 |
) |
% |
|
— |
|
% |
|
0.1 |
|
% |
Change in tooling sales |
|
— |
|
% |
|
— |
|
% |
|
(3.1 |
) |
% |
|
(1.3 |
) |
% |
Foreign currency translation |
|
(0.8 |
) |
% |
|
(1.6 |
) |
% |
|
(0.6 |
) |
% |
|
(1.0 |
) |
% |
Organic sales
growth |
|
(4.4 |
) |
% |
|
(17.0 |
) |
% |
|
(31.7 |
) |
% |
|
(18.8 |
) |
% |
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:
Media:
Danielle Orsino
Telephone 949-365-6609
danielle@dynamisadvisors.com
Investors:
Brendan Moynihan
Vice President, Investor Relations
Telephone 860-646-1233
Facsimile 860-646-4917
info@lydall.com
www.lydall.com
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