LYDALL, INC. (NYSE: LDL) today announced financial results for the
third quarter ended September 30, 2020.
FINANCIAL HIGHLIGHTS - Q3 2020 vs. Q3
2019
GAAP Financial Data
- Year to date cash flow from operations of $74.6 million,
compared to $63.0 million
- Third quarter ending cash balance of $122.0 million, compared
to $51.3 million at December 31, 2019
- Net sales of $207.1 million, up 0.9%
- Gross margin of 18.3%, up 60 basis points
- Operating loss of ($9.3) million, compared to operating income
of $7.4 million
- Includes restructuring charges of $15.0 million in Q3-2020
- Loss per share of ($0.67), compared to earnings per share of
$0.17
- Includes restructuring charges of $0.65 in Q3-2020
Non-GAAP Data*
- Adjusted EBITDA of $17.6 million, compared to $20.9 million
- Adjusted EBITDA margin of 8.5%, down 170 basis points
- Organic sales growth of 0.3%
- Adjusted gross margin of 18.3%, up 50 basis points
- Adjusted operating income of $5.7 million, compared to $7.6
million
- Adjusted loss per share of ($0.02), compared to adjusted
earnings per share of $0.19
*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.
“Lydall delivered solid financial performance
and exceptional cash flow in a challenging quarter. The Company
demonstrated its continued ability to execute by delivering
profitable growth in specialty filtration, announcing
restructuring projects which simplify and focus the portfolio, and
generating healthy free cash flow of over $29 million,” Sara A.
Greenstein, President and Chief Executive Officer, said.
“Robust demand for specialty filtration products
continued, with sales in Performance Materials’ (‘PM’) Filtration
sub-segment up 38% compared to prior year, driving an adjusted
EBITDA margin of almost 21% in the segment. Our global meltblown
assets are at full capacity, and we are on schedule to be fully
operational early next year on the first of two new domestic
meltblown assets. This is expected to be a strong and immediate
contributor to 2021 EBITDA as its capacity has been fully committed
under long term contracts. Furthermore, we announced additional
capital investment in fine fiber meltblown capability in our
Saint-Rivalain, France facility to serve the indoor air quality and
PPE markets in Europe. This investment will be supported by up to
30% co-funding from France’s Ministry of Economy and Finance.”
“Global auto demand rebounded sharply in the
third quarter driving a surge in our Thermal Acoustical Solutions
(“TAS”) business, which more than doubled sales from the second
quarter. Volumes in North America were up over 150% sequentially as
a result of Lydall’s exposure to light truck and SUV platforms. At
the same time, the Company began to experience an increase in
COVID-19 cases, particularly at its North American operation,
resulting in workforce shortages and other operational
inefficiencies causing higher overtime, outsourcing costs, and
logistics costs, some of which will continue through the fourth
quarter,” said Ms. Greenstein. “We continue to be vigilant in
protecting the health, safety and well-being of our entire
workforce while balancing the increasing demands of our automotive
customers.”
Ms. Greenstein concluded, “In addition, we took
decisive action to rationalize the manufacturing footprint in our
Performance Materials business by announcing the closure of two
underperforming facilities in Europe and eliminating an
unprofitable domestic product line. These initiatives should not
only result in accretive margins going forward but also help Lydall
focus critical resources on higher return opportunities.”
Q3 2020 Consolidated
Results
Net sales of $207.1 million increased by $1.8
million, or 0.9% compared to the third quarter of 2019.
Organically, sales were up 0.3%, led by 11.4% organic growth in PM,
offset by softer demand in the Technical Nonwovens (“TNW”) segment
and a modest year over year decline in TAS. Gross margin of 18.3%
in the quarter grew by 50 basis points year-over-year. Randall B.
Gonzales, Executive Vice President and Chief Financial Officer,
stated, “Continued strong demand for specialty filtration added
$8.5 million of sales, and combined with favorable pricing and
productivity, PM results expanded consolidated gross margin by 330
basis points. As noted, while sales in TAS more than doubled
sequentially, the COVID-19 related labor shortages increased costs
in the TAS segment negatively impacting consolidated gross margin
by approximately 160 basis points.”
Operating loss of $9.3 million included $15.0
million of one-time charges related to restructuring actions in the
PM segment. These actions included non-cash asset write-offs of
$5.5 million to exit under-performing product lines and
rationalizing the manufacturing footprint of the segment. Adjusted
for these charges, consolidated operating income was $5.7
million.
Adjusted EBITDA margin in PM was 20.5%, up 880
basis points from prior year and 100 basis points from second
quarter on favorable mix of high margin specialty filtration
products. EBITDA margin of 14.2% in the TNW segment was down 230
basis points on lower volumes and absorption. Finally, EBITDA
margin of 4.8% in TAS was unfavorably impacted by COVID-19 related
costs, but the business improved significantly from second quarter,
which was in a net loss position. Mr. Gonzales commented, “PM
continues to provide strong tailwinds to our earnings, and despite
the current disruptions in TAS, we feel the business is well
positioned to succeed as automotive volumes stabilize in 2021.”
Liquidity
Net cash provided by operations in the third
quarter of 2020 was $34.2 million driven by continued working
capital management initiatives, accounts receivable factoring, and
payroll tax deferral under the CARES Act. Mr. Gonzales concluded,
“Our operating results and disciplined approach to working capital
management continue to drive strong cash flow to fund our strategic
investments in fine fiber meltblown capacity to address the
specialty filtration market, while providing a strong liquidity
position.” The Company’s cash balance was $122.0 million as of
September 30, 2020, compared to $92.5 million at June 30, 2020.
Debt balance at September 30, 2020 was $283.0 million, and the
Company’s net leverage ratio was 3.4.
Outlook
Ms. Greenstein commented, “As we approach the
end of 2020 and look forward to 2021, we continue to see
sustaining, long-term demand for specialty filtration media. Beyond
the opportunities created by the push from governments around the
world to localize critical PPE supply chains and the long-term
contracts and government support Lydall has secured in support of
this effort, we are at the forefront of the structural shift in the
market for higher efficiency filtration for indoor air quality
applications. We are expanding our innovation capabilities and
talent by investing in our Specialty Filtration Center of
Excellence, co-located at our Rochester, NH production facility to
rapidly develop high performance filtration media to serve the new
filtration standards for indoor air quality worldwide. We are
partnering with our largest customers to develop these innovative
next generation filtration solutions.
“Lydall is at the beginning of a
transformational journey. We have sharpened our focus by taking
deliberate actions to reshape our portfolio that drive higher
returns for our shareholders. These actions marked the start of a
disciplined process which will include optimization of current
product lines and re-alignment of resources to focus on strategic
growth opportunities like specialty filtration where our product
expertise and innovation provide clear competitive advantages.” Ms.
Greenstein concluded, “We look forward to discussing the value
creation roadmap at our upcoming Investor Day in December, showing
how we will enhance margins, further increase our healthy cash
flow, and intentionally direct capital towards high margin
engineered materials and solutions that promote a cleaner, quieter,
safer world.”
Conference Call
Lydall will host a conference call on October
28, 2020 at 10:00 a.m. Eastern Time to discuss results its third
quarter ended September 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 October
28, 2020 through 11:59 p.m. Eastern Time on November 4, 2020 at
(877) 344-7529, from within the U.S., or (412) 317-0088,
internationally, access code 10149285. 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 Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Net sales |
$ |
207,085 |
|
|
$ |
205,274 |
|
|
$ |
553,772 |
|
|
$ |
644,110 |
|
Cost of sales |
169,155 |
|
|
168,918 |
|
|
448,856 |
|
|
520,423 |
|
Gross profit |
37,930 |
|
|
36,356 |
|
|
104,916 |
|
|
123,687 |
|
|
|
|
|
|
|
|
|
Selling, product development
and administrative expenses |
32,227 |
|
|
28,909 |
|
|
95,418 |
|
|
94,011 |
|
Impairment of goodwill and
other long-lived assets |
— |
|
|
— |
|
|
61,109 |
|
|
— |
|
Restructuring expenses |
14,984 |
|
|
— |
|
|
14,984 |
|
|
— |
|
Operating (loss) income |
(9,281 |
) |
|
7,447 |
|
|
(66,595 |
) |
|
29,676 |
|
|
|
|
|
|
|
|
|
Employee benefit plans
settlement expenses |
— |
|
|
186 |
|
|
385 |
|
|
25,701 |
|
Interest expense |
4,537 |
|
|
3,666 |
|
|
11,870 |
|
|
11,025 |
|
Other expense (income),
net |
276 |
|
|
(885 |
) |
|
106 |
|
|
(1,359 |
) |
(Loss) income before income
taxes |
(14,094 |
) |
|
4,480 |
|
|
(78,956 |
) |
|
(5,691 |
) |
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
(2,334 |
) |
|
1,574 |
|
|
(4,944 |
) |
|
(5,519 |
) |
Income from equity method
investment |
(50 |
) |
|
(98 |
) |
|
(24 |
) |
|
(120 |
) |
Net (loss)
income |
$ |
(11,710 |
) |
|
$ |
3,004 |
|
|
$ |
(73,988 |
) |
|
$ |
(52 |
) |
|
|
|
|
|
|
|
|
(Loss) earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.67 |
) |
|
$ |
0.17 |
|
|
$ |
(4.26 |
) |
|
$ |
0.00 |
|
Diluted |
$ |
(0.67 |
) |
|
$ |
0.17 |
|
|
$ |
(4.26 |
) |
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding |
17,384 |
|
|
17,270 |
|
|
17,364 |
|
|
17,264 |
|
Weighted average number of
common shares and equivalents outstanding |
17,384 |
|
|
17,330 |
|
|
17,364 |
|
|
17,264 |
|
Summary of Segment
Information |
|
|
|
|
|
|
|
and Corporate Office
Expenses |
|
|
|
|
|
|
|
In thousands |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials Segment |
$ |
67,817 |
|
|
$ |
60,000 |
|
|
$ |
191,510 |
|
|
$ |
189,682 |
|
Technical Nonwovens Segment
(1),(2) |
58,509 |
|
|
63,912 |
|
|
167,919 |
|
|
198,596 |
|
Thermal Acoustical
Solutions |
85,523 |
|
|
87,926 |
|
|
206,732 |
|
|
275,511 |
|
Eliminations and Other
(2) |
(4,764 |
) |
|
(6,564 |
) |
|
(12,389 |
) |
|
(19,679 |
) |
Consolidated Net Sales |
$ |
207,085 |
|
|
$ |
205,274 |
|
|
$ |
553,772 |
|
|
$ |
644,110 |
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials Segment
(3) |
$ |
(6,759 |
) |
|
$ |
712 |
|
|
$ |
(58,257 |
) |
|
$ |
5,474 |
|
Technical Nonwovens Segment
(1),(2),(4) |
5,061 |
|
|
7,165 |
|
|
15,558 |
|
|
19,743 |
|
Thermal Acoustical
Solutions |
1,174 |
|
|
5,022 |
|
|
517 |
|
|
21,870 |
|
Corporate Office Expenses |
(8,757 |
) |
|
(5,452 |
) |
|
(24,413 |
) |
|
(17,411 |
) |
Consolidated Operating (Loss)
Income |
$ |
(9,281 |
) |
|
$ |
7,447 |
|
|
$ |
(66,595 |
) |
|
$ |
29,676 |
|
(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 the following:
- $3.9 million and $4.3 million in intercompany sales to the
Thermal Acoustical Solutions segment for the three-months ended
September 30, 2020 and 2019, respectively.
- 10.2 million and 13.6 million in intercompany sales to the
Thermal Acoustical Solutions segment for the nine-months ended
September 30, 2020 and 2019, respectively.
(3) Included in the Performance Materials
segment is the following:
- $61.1 million of impairment charges related to goodwill and
other long-lived assets for the nine-month period ended
September 30, 2020.
- $14.8 million restructuring charges for the three and
nine-month periods ending September 30, 2020.
- $4.0 million and $4.1 million of intangible assets
amortization for the three-month periods ended September 30,
2020 and 2019, respectively.
- $11.9 million and $12.2 million of intangible assets
amortization for the nine-month periods ended September 30,
2020 and 2019, respectively.
(4) Included in the Technical Nonwovens segment
is the following:
- $1.2 million and $1.3 million of intangible assets amortization
for the three-months ended September 30, 2020 and 2019,
respectively.
- $3.5 million and $3.8 million of intangible assets
amortization for the nine-months ended September 30, 2020 and
2019, respectively.
Financial
Position |
|
|
|
In thousands except ratio
data |
|
|
|
(Unaudited) |
|
|
|
|
September 30, 2020 |
|
December 31, 2019 |
|
|
|
|
Cash and cash equivalents |
$ |
122,043 |
|
|
$ |
51,331 |
|
Working capital |
$ |
169,149 |
|
|
$ |
153,739 |
|
Total debt |
$ |
283,039 |
|
|
$ |
272,641 |
|
Stockholders’ equity |
$ |
248,313 |
|
|
$ |
318,420 |
|
Total capitalization |
$ |
531,352 |
|
|
$ |
591,061 |
|
Total debt to total
capitalization |
53.3 |
% |
|
46.1 |
% |
Cash
Flows |
|
|
|
|
|
|
|
In thousands |
For the Three Months Ended |
|
For the Nine Months Ended |
(Unaudited) |
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
34,198 |
|
|
$ |
26,745 |
|
|
$ |
74,613 |
|
|
$ |
62,964 |
|
Net cash used for investing
activities |
$ |
(4,189 |
) |
|
$ |
(6,947 |
) |
|
$ |
(16,269 |
) |
|
$ |
(23,772 |
) |
Net cash (used for) provided
by financing activities |
$ |
(2,774 |
) |
|
$ |
(13,018 |
) |
|
$ |
10,708 |
|
|
$ |
(38,230 |
) |
Depreciation and
amortization |
$ |
17,507 |
|
|
$ |
12,681 |
|
|
$ |
42,349 |
|
|
$ |
36,682 |
|
Capital expenditures |
$ |
(5,068 |
) |
|
$ |
(6,949 |
) |
|
$ |
(20,540 |
) |
|
$ |
(27,236 |
) |
Common Stock
Data |
|
|
|
|
For the Three Months Ended September 30, |
|
2020 |
|
2019 |
|
|
|
|
High |
$ |
22.27 |
|
|
$ |
26.99 |
|
Low |
$ |
12.41 |
|
|
$ |
18.02 |
|
Close |
$ |
16.54 |
|
|
$ |
24.91 |
|
During the third quarter of 2020, 9,110,527 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 September 30, |
|
For the Nine Months Ended September 30, |
In thousands |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Net sales |
$ |
207,085 |
|
|
$ |
205,274 |
|
|
$ |
553,772 |
|
|
$ |
644,110 |
|
Net sales,
adjusted |
$ |
207,085 |
|
|
$ |
205,274 |
|
|
$ |
553,772 |
|
|
$ |
644,110 |
|
|
|
|
|
|
|
|
|
Gross profit, as
reported |
$ |
37,930 |
|
|
$ |
36,356 |
|
|
$ |
104,916 |
|
|
$ |
123,687 |
|
TNW restructuring
expenses |
— |
|
|
88 |
|
|
— |
|
|
480 |
|
Reduction-in-force severance
expenses |
— |
|
|
— |
|
|
127 |
|
|
— |
|
Gross profit,
adjusted |
$ |
37,930 |
|
|
$ |
36,444 |
|
|
$ |
105,043 |
|
|
$ |
124,167 |
|
|
|
|
|
|
|
|
|
Gross margin, as
reported |
18.3 |
% |
|
17.7 |
% |
|
18.9 |
% |
|
19.2 |
% |
Gross margin,
adjusted |
18.3 |
% |
|
17.8 |
% |
|
19.0 |
% |
|
19.3 |
% |
|
|
|
|
|
|
|
|
Operating (loss)
income, as reported |
$ |
(9,281 |
) |
|
$ |
7,447 |
|
|
$ |
(66,595 |
) |
|
$ |
29,676 |
|
Strategic initiatives
expenses |
— |
|
|
— |
|
|
3,138 |
|
|
1,246 |
|
TNW restructuring
expenses |
— |
|
|
117 |
|
|
— |
|
|
591 |
|
Impairment of goodwill and
long-lived assets |
— |
|
|
— |
|
|
61,109 |
|
|
— |
|
Reduction-in-force severance
expenses |
— |
|
|
— |
|
|
257 |
|
|
— |
|
PM restructuring expenses |
14,984 |
|
|
— |
|
|
14,984 |
|
|
— |
|
Operating income,
adjusted |
$ |
5,703 |
|
|
$ |
7,564 |
|
|
$ |
12,893 |
|
|
$ |
31,513 |
|
|
|
|
|
|
|
|
|
Operating margin, as
reported |
(4.5 |
)% |
|
3.6 |
% |
|
(12.0 |
)% |
|
4.6 |
% |
Operating margin,
adjusted |
2.8 |
% |
|
3.7 |
% |
|
2.3 |
% |
|
4.9 |
% |
|
|
|
|
|
|
|
|
(Loss) earnings per
share, as reported |
$ |
(0.67) |
|
|
$ |
0.17 |
|
|
$ |
(4.26) |
|
|
$ |
— |
|
Strategic initiatives
expenses |
$ |
— |
|
|
$ |
— |
|
|
$ |
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 |
|
|
$ |
— |
|
PM restructuring expenses |
$ |
0.86 |
|
|
$ |
— |
|
|
$ |
0.86 |
|
|
$ |
— |
|
Employee benefit plans
settlement expenses |
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
1.48 |
|
Gain on sale from a
divestiture |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.08 |
) |
Tax effect of above
adjustments |
$ |
(0.21 |
) |
|
$ |
— |
|
|
$ |
(0.43 |
) |
|
$ |
(0.61 |
) |
Diluted (loss)
earnings per share, adjusted |
$ |
(0.02 |
) |
|
$ |
0.19 |
|
|
$ |
(0.09 |
) |
|
$ |
0.89 |
|
This press release reports adjusted results for
the three and nine months ended September 30, 2020 and 2019,
which excludes strategic initiatives expenses, restructuring
expenses in the Technical Nonwovens and Performance Materials
segments, 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 nine
months ended September 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 September 30, 2020 |
|
Segments |
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
$ |
(11,710 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
4,537 |
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
(2,334 |
) |
Other expense, net |
|
|
|
|
|
|
|
|
|
|
276 |
|
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
(50 |
) |
Operating (loss) income |
$ |
(6,759 |
) |
|
$ |
5,061 |
|
|
$ |
1,174 |
|
|
$ |
(524 |
) |
|
$ |
(8,757 |
) |
|
$ |
(9,281 |
) |
Depreciation and amortization
(1) |
5,847 |
|
|
3,215 |
|
|
2,892 |
|
|
11,954 |
|
|
124 |
|
|
12,078 |
|
Other expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
276 |
|
|
276 |
|
Income from equity method
investment |
— |
|
|
(50 |
) |
|
— |
|
|
(50 |
) |
|
— |
|
|
(50 |
) |
EBITDA |
$ |
(912 |
) |
|
$ |
8,326 |
|
|
$ |
4,066 |
|
|
$ |
11,480 |
|
|
$ |
(8,909 |
) |
|
$ |
2,571 |
|
% of net
sales |
(1.3 |
)% |
|
14.2 |
% |
|
4.8 |
% |
|
5.4 |
% |
|
|
|
1.2 |
% |
PM restructuring expenses
(1) |
14,790 |
|
|
— |
|
|
— |
|
|
14,790 |
|
|
194 |
|
|
14,984 |
|
EBITDA,
adjusted |
$ |
13,878 |
|
|
$ |
8,326 |
|
|
$ |
4,066 |
|
|
$ |
26,270 |
|
|
$ |
(8,715 |
) |
|
$ |
17,555 |
|
% of net
sales |
20.5 |
% |
|
14.2 |
% |
|
4.8 |
% |
|
12.4 |
% |
|
|
|
8.5 |
% |
|
For the Three Months Ended September 30, 2019 |
|
Segments |
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
$ |
3,004 |
|
Employee benefits plans
settlement expense |
|
|
|
|
|
|
|
|
|
|
186 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
3,666 |
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
1,574 |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
(885 |
) |
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
(98 |
) |
Operating income (loss) |
$ |
712 |
|
|
$ |
7,165 |
|
|
$ |
5,022 |
|
|
$ |
12,899 |
|
|
$ |
(5,452 |
) |
|
$ |
7,447 |
|
Depreciation and
amortization |
6,290 |
|
|
3,162 |
|
|
2,726 |
|
|
12,178 |
|
|
148 |
|
|
12,326 |
|
Employee benefits plans
settlement expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
186 |
|
|
186 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(885 |
) |
|
(885 |
) |
Income from equity method
investment |
— |
|
|
(98 |
) |
|
— |
|
|
(98 |
) |
|
— |
|
|
(98 |
) |
EBITDA |
$ |
7,002 |
|
|
$ |
10,425 |
|
|
$ |
7,748 |
|
|
$ |
25,175 |
|
|
$ |
(4,605 |
) |
|
$ |
20,570 |
|
% of net
sales |
11.7 |
% |
|
16.3 |
% |
|
8.8 |
% |
|
11.9 |
% |
|
|
|
10.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
TNW restructuring
expenses |
— |
|
|
117 |
|
|
— |
|
|
117 |
|
|
— |
|
|
117 |
|
Employee benefit plans
settlement expenses |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
186 |
|
|
186 |
|
EBITDA,
adjusted |
$ |
7,002 |
|
|
$ |
10,542 |
|
|
$ |
7,748 |
|
|
$ |
25,292 |
|
|
$ |
(4,419 |
) |
|
$ |
20,873 |
|
% of net
sales |
11.7 |
% |
|
16.5 |
% |
|
8.8 |
% |
|
11.9 |
% |
|
|
|
10.2 |
% |
|
|
For the Nine Months Ended September 30, 2020 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(73,988 |
) |
Employee benefit plans
settlement expenses |
|
|
|
|
|
|
|
|
|
|
|
385 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
11,870 |
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
(4,944 |
) |
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
106 |
|
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
(24 |
) |
Operating (loss) income |
|
$ |
(58,257 |
) |
|
$ |
15,558 |
|
|
$ |
517 |
|
|
$ |
(42,182 |
) |
|
$ |
(24,413 |
) |
|
$ |
(66,595 |
) |
Depreciation and amortization
(1) |
|
18,056 |
|
|
9,347 |
|
|
8,323 |
|
|
35,726 |
|
|
388 |
|
|
36,114 |
|
Employee benefit plans
settlement expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
385 |
|
|
385 |
|
Other expense, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
106 |
|
|
106 |
|
Income from equity method
investment |
|
— |
|
|
(24 |
) |
|
— |
|
|
(24 |
) |
|
— |
|
|
(24 |
) |
EBITDA |
|
$ |
(40,201 |
) |
|
$ |
24,929 |
|
|
$ |
8,840 |
|
|
$ |
(6,432 |
) |
|
$ |
(24,516 |
) |
|
$ |
(30,948 |
) |
% of net
sales |
|
(21.0 |
)% |
|
14.8 |
% |
|
4.3 |
% |
|
(1.1 |
)% |
|
|
|
(5.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
PM restructuring expenses
(1) |
|
14,790 |
|
|
— |
|
|
— |
|
|
14,790 |
|
|
194 |
|
|
14,984 |
|
Employee benefit plans
settlement expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
385 |
|
|
385 |
|
EBITDA,
adjusted |
|
$ |
35,698 |
|
|
$ |
24,929 |
|
|
$ |
9,097 |
|
|
$ |
69,724 |
|
|
$ |
(20,799 |
) |
|
$ |
48,925 |
|
% of net
sales |
|
18.6 |
% |
|
14.8 |
% |
|
4.4 |
% |
|
12.3 |
% |
|
|
|
8.8 |
% |
|
|
For the Nine Months Ended September 30, 2019 |
|
|
Segments |
|
|
|
|
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Total |
|
Corporate Office |
|
Consolidated Lydall |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
$ |
(52 |
) |
Employee benefit plans
settlement expenses |
|
|
|
|
|
|
|
|
|
|
|
25,701 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
11,025 |
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
(5,519 |
) |
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
(1,359 |
) |
Income from equity method
investment |
|
|
|
|
|
|
|
|
|
|
|
(120 |
) |
Operating income (loss) |
|
$ |
5,474 |
|
|
$ |
19,743 |
|
|
$ |
21,870 |
|
|
$ |
47,087 |
|
|
$ |
(17,411 |
) |
|
$ |
29,676 |
|
Depreciation and
amortization |
|
18,789 |
|
|
9,526 |
|
|
7,616 |
|
|
35,931 |
|
|
487 |
|
|
36,418 |
|
Employee benefit plans
settlement expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,701 |
|
|
25,701 |
|
Other income, net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,359 |
) |
|
(1,359 |
) |
Income from equity method
investment |
|
— |
|
|
(120 |
) |
|
— |
|
|
(120 |
) |
|
— |
|
|
(120 |
) |
EBITDA |
|
$ |
24,263 |
|
|
$ |
29,389 |
|
|
$ |
29,486 |
|
|
$ |
83,138 |
|
|
$ |
(41,266 |
) |
|
$ |
41,872 |
|
% of net
sales |
|
12.8 |
% |
|
14.8 |
% |
|
10.7 |
% |
|
12.5 |
% |
|
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic initiatives
expenses |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,246 |
|
|
$ |
1,246 |
|
TNW restructuring
expenses |
|
— |
|
|
591 |
|
|
— |
|
|
591 |
|
|
— |
|
|
591 |
|
Employee benefit plans
settlement expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,701 |
|
|
25,701 |
|
Gain on sale from a
divestiture |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,459 |
) |
|
(1,459 |
) |
EBITDA,
adjusted |
|
$ |
24,263 |
|
|
$ |
29,980 |
|
|
$ |
29,486 |
|
|
$ |
83,729 |
|
|
$ |
(15,778 |
) |
|
$ |
67,951 |
|
% of net
sales |
|
12.8 |
% |
|
15.1 |
% |
|
10.7 |
% |
|
12.6 |
% |
|
|
|
10.5 |
% |
(1) For purposes of these schedules, the
depreciation and amortization expense for the three and nine-month
periods ended September 30, 2020, excludes $5.3 million of
accelerated depreciation of property, plant and equipment and other
intangible assets in the PM segment since this expense is included
in the restructuring expenses of $14.8 million.
Organic Sales(Unaudited)
|
|
Three Months Ended September 30, 2020 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth, as reported |
|
13.0 |
% |
|
(8.5 |
)% |
|
(2.7 |
)% |
|
0.9 |
% |
Acquisitions and divestitures |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
Change in tooling sales |
|
0.1 |
% |
|
— |
% |
|
(2.1 |
)% |
|
(0.9 |
)% |
Foreign currency translation |
|
1.5 |
% |
|
1.2 |
% |
|
1.5 |
% |
|
1.5 |
% |
Organic sales
growth |
|
11.4 |
% |
|
(9.7 |
)% |
|
(2.1 |
)% |
|
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020 |
|
|
Performance Materials |
|
Technical Nonwovens |
|
Thermal Acoustical Solutions |
|
Consolidated |
Sales growth, as
reported |
|
1.0 |
% |
|
(15.4 |
)% |
|
(25.0 |
)% |
|
(14.0 |
)% |
Acquisitions and divestitures |
|
0.4 |
% |
|
(0.1 |
)% |
|
— |
% |
|
0.1 |
% |
Change in tooling sales |
|
— |
% |
|
— |
% |
|
(2.8 |
)% |
|
(1.2 |
)% |
Foreign currency translation |
|
— |
% |
|
(0.7 |
)% |
|
— |
% |
|
(0.2 |
)% |
Organic sales
growth |
|
0.6 |
% |
|
(14.6 |
)% |
|
(22.2 |
)% |
|
(12.7 |
)% |
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
Lydall (NYSE:LDL)
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