10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to         

Commission File Number: 1-7665 

LYDALL INC /DE/

(Exact name of registrant as specified in its charter)

Delaware					06-0865505
(State or Other Jurisdiction of Incorporation or Organization)					(I.R.S. Employer Identification No.)
One Colonial Road	,	Manchester	,	Connecticut	06042
(Address of principal executive offices)					(zip code)

(860) 646-1233

(Registrant’s telephone number, including area code) 

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	LDL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐Accelerated filer ☒Non-accelerated filer ☐ Smaller reporting company ☐Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Total Shares outstanding October 15, 2020 17,733,429 

LYDALL, INC.

INDEX

			Page Number
Cautionary Note Concerning Forward – Looking Statements			3
Part I.	Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Statements of Operations (Unaudited)	5
		Condensed Consolidated Statements of Comprehensive Income (Unaudited)	6
		Condensed Consolidated Balance Sheets (Unaudited)	7
		Condensed Consolidated Statements of Cash Flows (Unaudited)	8
		Notes to Condensed Consolidated Financial Statements (Unaudited)	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	48
	Item 4.	Controls and Procedures	48
Part II.	Other Information
	Item 1.	Legal Proceedings	50
	Item 1A.	Risk Factors	51
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
	Item 6.	Exhibits	56
Signature			57

2

Lydall, Inc. and its subsidiaries are hereafter collectively referred to as “Lydall,” the “Company” or the “Registrant.” Lydall and its subsidiaries’ names, abbreviations thereof, logos, and product and service designators are all either the registered or unregistered trademarks or trade names of Lydall, Inc. and its subsidiaries.

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact 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 assumptions relating to the Company’s business, the economy and 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. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash and other measures of 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. Accordingly, the Company’s actual results may differ materially from those contemplated by the 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. Forward-looking statements in this Quarterly Report on Form 10-Q include, among others, statements relating to:

•The impact of the coronavirus pandemic ("COVID-19") on the Company's businesses;

•Overall economic and business conditions and the effects on the Company’s markets;

•Ability to meet financial covenants in the Company's credit agreement;

•Outlook for the fourth quarter and full year 2020;

•Ability to improve operational effectiveness;

•Expected vehicle production in the North American, European or Asian markets;

•Growth opportunities in markets served by the Company;

•Expected costs and future savings associated with restructuring, reduction-in-force, or other cost savings programs;

•Expected gross margin, operating margin and working capital improvements from cost control and other improvement programs;

•Future impact of raw material commodity costs;

•Product development and new business opportunities;

•Future strategic transactions, including but not limited to: acquisitions, joint ventures, alliances, licensing agreements and divestitures;

•Pension plan funding;

•Future cash flow and uses of cash;

•Future amounts of stock-based compensation expense;

•Future earnings and other measurements of financial performance;

•Ability to meet cash operating requirements;

•Future levels of indebtedness and capital spending;

•Future impact of the variability of interest rates and foreign currency exchange rates and impacts of hedging instruments;

•Expected future impact of recently issued accounting pronouncements upon adoption;

•Future effective income tax rates and realization of deferred tax assets;

•Estimates of fair values of reporting units and long-lived assets used in assessing goodwill and long-lived assets for possible impairment; and

•The expected outcomes of legal proceedings and other contingencies, including environmental matters.

3

All forward-looking statements are inherently subject to a number of risks and uncertainties that could cause the actual results of the Company to differ materially from those reflected in forward-looking statements made in this Quarterly Report on Form 10-Q, as well as in press releases and other statements made from time to time by the Company’s authorized officers. Such risks and uncertainties include, among others, the duration, severity, and impact of COVID-19 or other new pandemics and the measures taken in response thereto, in particular the impact the virus has on the Company's operations and ability to meet customer demands; worldwide economic cycles and political changes and uncertainties that affect the markets which 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 and policies, including tariff regulation and trade restrictions; swings in consumer confidence and spending; unstable economic growth; volatility in foreign currency exchange rates; raw material pricing and supply issues; fluctuations in unemployment rates; retention of key employees; increases in fuel prices; and outcomes of legal proceedings, claims and investigations, as well as other risks and uncertainties identified in Part II, Item 1A - Risk Factors of this Quarterly Report on Form 10-Q, and Part I, Item 1A - Risk Factors of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The Company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Amounts)

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2020		2019		2020		2019
	(Unaudited)				(Unaudited)
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:
Basic	17,384		17,270		17,364		17,264
Diluted	17,384		17,330		17,364		17,264

See accompanying Notes to Condensed Consolidated Financial Statements.

5

LYDALL, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In Thousands)

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2020		2019		2020		2019
	(Unaudited)				(Unaudited)
Net (loss) income	$	(11,710)	$	3,004	$	(73,988)	$	(52)
Other comprehensive income (loss):
Foreign currency translation	8,245		(8,726)		3,434		(6,396)
Pension and other postretirement benefit plans, net of tax	(49)		21		282		19,395
Unrealized gain/(loss) on derivative instruments, net of tax	(1,963)		(148)		(2,202)		(2,174)
Comprehensive (loss) income	$	(5,477)	$	(5,849)	$	(72,474)	$	10,773

See accompanying Notes to Condensed Consolidated Financial Statements.

6

LYDALL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

	September 30, 2020		December 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	122,043	$	51,331
Accounts receivable, net of allowance for doubtful accounts of $2,465 and $1,842, respectively	113,258		107,786
Contract assets	27,186		28,245
Inventories	71,167		80,544
Taxes receivable	6,636		3,427
Prepaid expenses	6,117		3,814
Other current assets	8,516		8,450
Total current assets	354,923		283,597
Property, plant and equipment, at cost	491,291		487,371
Accumulated depreciation	(286,713)		(265,729)
Property, plant and equipment, net	204,578		221,642
Operating lease right-of-use assets	21,522		23,116
Goodwill	85,385		133,912
Other intangible assets, net	99,445		115,577
Other assets, net	7,785		8,093
Total assets	$	773,638	$	785,937
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	9,844	$	9,928
Accounts payable	101,785		73,426
Accrued payroll and other compensation	24,806		17,198
Accrued taxes	10,125		5,638
Other accrued liabilities	39,214		23,668
Total current liabilities	185,774		129,858
Long-term debt	273,195		262,713
Long-term operating lease liabilities	17,369		18,424
Deferred tax liabilities	27,016		34,561
Benefit plan liabilities	18,770		18,957
Other long-term liabilities	3,201		3,004
Commitments and Contingencies (Note 16)
Stockholders' equity:
Preferred stock	—		—
Common stock	255		253
Capital in excess of par value	96,536		94,140
Retained earnings	266,641		340,629
Accumulated other comprehensive loss	(24,465)		(25,979)
Treasury stock, at cost	(90,654)		(90,623)
Total stockholders’ equity	248,313		318,420
Total liabilities and stockholders’ equity	$	773,638	$	785,937

See accompanying Notes to Condensed Consolidated Financial Statements.

7

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	For the Nine Months Ended September 30,
	2020		2019
	(Unaudited)
Cash flows from operating activities:
Net loss	$	(73,988)	$	(52)
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on divestiture	—		(1,459)
Depreciation and amortization	42,349		36,682
Impairment of goodwill and long-lived assets	61,109		—
Deferred income taxes	(6,911)		(12,849)
Employee benefit plans settlement expenses	385		25,701
Stock-based compensation	2,508		2,073
Other, net	47		—
Loss (gain) on disposition of property, plant and equipment	164		(43)
Income from equity method investment	(24)		(120)
Changes in operating assets and liabilities:
Accounts receivable	(8,288)		10,528
Contract assets	1,269		(4,330)
Inventories	10,117		(6,206)
Accounts payable	28,391		13,427
Accrued payroll and other compensation	7,192		4,935
Accrued taxes	4,558		1,810
Other, net	5,735		(7,133)
Net cash provided by operating activities	74,613		62,964
Cash flows from investing activities:
Capital expenditures	(20,540)		(27,236)
Collections of finance receivables	4,257		—
Proceeds from divestiture	—		2,298
Proceeds from the sale of property, plant and equipment	14		297
Business acquisitions, net of cash acquired	—		869
Net cash used for investing activities	(16,269)		(23,772)
Cash flows from financing activities:
Proceeds from borrowings	20,000		—
Debt repayments	(9,500)		(38,185)
Proceeds from servicing receivables	207		—
Common stock issued	32		5
Common stock repurchased	(31)		(50)
Net cash provided by (used for) financing activities	10,708		(38,230)
Effect of exchange rate changes on cash	1,660		(1,280)
Increase (decrease) in cash and cash equivalents	70,712		(318)
Cash and cash equivalents at beginning of period	51,331		49,237
Cash and cash equivalents at end of period	$	122,043	$	48,919

Non-cash capital expenditures of $4.8 million and $3.8 million were included in accounts payable at September 30, 2020 and 2019, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

8

LYDALL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Financial Statement Presentation

Description of Business

Lydall, Inc. and its subsidiaries (collectively, the “Company” or “Lydall”) design and manufacture specialty engineered nonwoven filtration media, industrial thermal insulating solutions, and thermal and acoustical barriers for filtration/separation and heat abatement and sound dampening applications.

Recent Developments: COVID-19

The impact of the novel strain of the coronavirus (“COVID-19”) has grown throughout the world, including in all global and regional markets served by the Company. During 2020, governmental authorities implemented numerous measures attempting to contain and mitigate the effects of COVID-19, including travel bans and restrictions, quarantines, social distancing orders, shelter in place orders, and shutdowns of non-essential activities. The Company’s manufacturing facilities are located in areas that have been affected by the pandemic and shutdowns. Certain Company facilities in the United States, Europe, and Asia carried out shutdowns as a result of government-imposed restrictions or in conjunction with customer plant closures during the first quarter. The Company’s Asia facilities resumed operations in late February and other facilities ramped back up moderately, in line with customer demand, during the second quarter. In the third quarter, the Company has seen a stronger recovery in the Performance Materials segment, specifically in the Filtration business, and in the Thermal Acoustical Solutions and Technical Nonwovens segments as discussed below.

Performance Materials (“PM”) Developments

Performance Materials sales were down 4.6% in the first half of 2020 from the comparative period in 2019 with incremental demand for specialty filtration media products more than offset by softer demand in the Sealing and Advanced Solutions business. PM’s Filtration sales continued to be very strong in the third quarter, up approximately 37.8% from the comparative period in the prior year, led by continued demand for fine fiber meltblown media used in personal protective equipment such as N95 respirators and surgical and medical masks. This demand is expected to moderate into the fourth quarter and expected to be down slightly on a sequential basis due to normal seasonality. Weaker demand in automotive, agricultural, and construction equipment markets resulted in a sales decline of approximately 1.7% in the Sealing and Advanced Solutions business in the third quarter of 2020 from the comparative period in 2019.

As a result of continued strong demand for filtration products, the Company approved investments to add two production lines in Performance Materials’ Rochester facility for the production of fine fiber meltblown filtration media used in the N95 respirator and surgical and medical masks. In addition, the Company has an agreement with the U.S. Government that provides partial funding of the investments in the production lines and funding for other technical resources.

In the third quarter of 2020, the Company announced an investment in a new fine fiber meltblown production line in its French facility to support the European Union face mask production and air filter production in the fight against COVID-19. The Company has a tentative agreement with the French Government to partially fund a portion of this investment.

In the third quarter, the Company initiated actions to close underperforming operating locations in Europe and discontinue production of a lower efficiency air filtration media product and, in turn, fully depreciated the supporting machinery and equipment in North America. These actions are part of the Company's ongoing assessment of underperforming assets and focus of resources on the significant investments to expand fine fiber meltblown production. These actions are expected to be completed in 2021 and projected to improve overall segment margin performance beginning in 2021. For additional information, see Note 12, "Restructuring".

Technical Nonwovens (“TNW”) Developments

During the first half of 2020, TNW experienced slowdowns in all geographic locations; predominantly in its facilities in South Carolina, the United Kingdom, and China. TNW’s Texel business in Canada, however, is a leading supplier of nonwoven products used in the production of healthcare applications including medical wipes, pads, and gowns. In response to the COVID-19 pandemic, the Company re-prioritized its manufacturing capabilities in North America and Europe to focus on serving customers for these products.

9

TNW’s sales in the first half of 2020 declined 18.8% from the comparable period in 2019 on generally slower demand in industrial end markets globally. In the third quarter of 2020, sales increased 12.5% on a sequential basis from the previous quarter but decreased 8.5% compared to the prior year quarter. Softer industrial end markets and lower sales into automotive applications resulted in the year-over-year sales declines in the quarter. Third quarter 2020 sales were down 10.0% in Industrial Filtration and 6.8% in Advanced Materials businesses from the same period in the previous year.

Thermal Acoustical Solutions (“TAS”) Developments

As previously disclosed, the Company ramped-down its TAS operations in North Carolina in the United States, as well as in France and Germany, coinciding with the shutdown of its major automotive customers' facilities in those regions beginning in late March 2020. During the first half of 2020, TAS sales decreased 35.4% from prior year, heavily impacted by customer shutdowns during March, April, and May. TAS began to ramp-up production in mid-second quarter of 2020 in North America and Europe as customers began to re-open their plants in these regions. During the third quarter 2020, part sales were down 0.8% from the previous year as TAS continued to see stronger demand in North America and Europe with sales increasing significantly compared to second quarter 2020.

As customer demand increased in North America, the Company began to experience an increase of 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. In addition, recent recoveries in the manufacturing industries are causing higher commodity pricing in North America. In late third quarter 2020, as a result of labor shortages and operational inefficiencies directly related to COVID-19, TAS was unable to manufacture parts timely, resulting in customer production line stoppages. In early October 2020, due to the unforeseen and unforeseeable nature of the COVID-19 pandemic, which is out of the Company’s control, the Company invoked force majeure or commercial impracticability as legal excuse for delayed performance of contracts and defense to any claim that may be asserted by customers. A recent resurgence of cases in that same facility has caused the Company to expand its declaration of force majeure or commercial impracticability to other impacted customers. The Company has taken various actions to resolve these issues and expects TAS to continue to incur incremental costs in the fourth quarter of 2020.

Liquidity and Cash Preservation

The Company continued to experience working capital cash flow improvements through September 30, 2020, generating $74.6 million in cash from operating activities. As the Company continues to ramp-up production and invest in new fine fiber meltblown production equipment to meet customer demand, the Company expects cash outflows to support working capital requirements and capital projects.

During the first nine months of 2020, the Company took significant measures to reduce its overall cash expenditures, including the furlough or lay-off of hourly/salary plant workers and select furloughs of corporate and other salaried employees, deferred company contributions to its pension plans and matching contributions under the Company's 401(k) defined contribution plan, reduction of purchase obligations for raw materials, and reduction/delay of non-critical capital spending. As a result, the Company reduced its monthly cash expenditures. The Company may elect to continue certain actions if the COVID-19 pandemic continues.

In addition, the Company has taken advantage of specific benefits, including wage recovery provided by social programs in Europe and China and deferred domestic employer tax in the U.S. through the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. Through September 30, 2020, the Company benefited from $2.0 million in social cost reimbursements predominately in Europe and China. The Company may pursue, wherever it qualifies, governmental assistance and take advantage of governmental programs. The Company cannot guarantee, however, that it will qualify for, or receive, any additional assistance that it pursues.

As noted above, the Company reached an agreement with the U.S. Government in June 2020 that provides funding to cover a portion of the cost to install two new production lines for the production of meltblown material for N95 respirators, surgical and medical masks, and for other technical resources. The Company will receive monthly payments in accordance with the agreement to fund up to $13.5 million. Additionally, the Company has a tentative agreement with the French Government to fund up to 30% of the Company’s investment in its facility in France supporting the European Union face mask production and air filter production.

In addition to the significant measures taken to reduce and contain costs, the Company took actions in March 2020 to provide additional liquidity, primarily including a $20.0 million draw down on its amended credit facility. On May 11, 2020, the Company entered into an amended credit agreement (see Note 6, "Long-term Debt and Financing Arrangements" for the key amended terms and conditions) to modify certain financial maintenance covenants, at least one of which the Company expected to fail during the second quarter of 2020 as a result of the impact of COVID-19. On October 14, 2020, the Company amended

10

its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's financial covenants. The Company was in compliance with those modified financial covenants as of and for the three-month period ended September 30, 2020, and management does not anticipate noncompliance in the foreseeable future.

Through September of 2020, the Company generated $74.6 million of net cash provided by operations and had cash on hand of $122.0 million as of September 30, 2020. The Company continues to maintain the necessary capital to meet its debt obligations and interest payments. As previously disclosed in late 2019, the Company entered into arrangements with a banking institution to sell trade accounts receivable balances for selected customers. The Company continues to sell trade accounts receivable balances under these arrangements. See Transfer of Financial Assets in this Note 1, “Basis of Financial Statement Presentation” for more information.

The spread of COVID-19 and the measures taken to constrain the spread of the virus have had, and will continue to have, a material negative impact on the Company’s financial results, and such negative impact may continue well beyond the containment of such outbreak. There is inherent uncertainty in the assumptions the Company uses to estimate its future liquidity due to the impact of the COVID-19 outbreak. In addition, the magnitude, duration, and speed of the global pandemic is uncertain. Consequently, the impact on the Company's business, financial condition or longer-term financial or operational results is uncertain. However, management believes, based on the actions taken to reduce cash expenditures and the Company’s financial position, that net cash provided by operations combined with its cash and cash equivalents and borrowing availability under its Credit Facility will be sufficient to fund its current obligations, capital spending, debt service requirements, and working capital needs over at least the next twelve months.

Steps Taken to Protect Employees

The Company continues to monitor the global outbreak and spread of COVID-19 and take steps to mitigate the potential risks to the Company and its employees posed by the spread, related circumstances, and economic impacts of COVID-19. As the Company brings employees back to work, it has implemented changes to help ensure the safety and health of all its employees and continues to assess and update its business continuity plans in the context of this pandemic. The Company established the Lydall Emergency Preparedness Team (“LEPT”), implementing strict travel restrictions, enforcing rigorous hygiene protocols, increasing sanitization efforts at all facilities and implementing remote working arrangements for the majority of its employees who work outside the plants. The Company will continue its work to ensure it maintains a safe and healthy work environment and continue to allow remote working arrangements as long as necessary, where appropriate.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The year-end Condensed Consolidated Balance Sheet was derived from the audited financial statements for the year ended December 31, 2019, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the condensed consolidated financial information reflects all adjustments necessary for a fair statement of the Company’s consolidated financial position, results of operations, and cash flows for the interim periods reported, but do not include all the disclosures required by U.S. GAAP. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations, and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including the result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods. Actual results could differ from those estimates.

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Recent Accounting Pronouncements Adopted

Effective January 1, 2020, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-13, "Financial Instruments - Credit Losses (Topic 326)." The new standard amends guidance on reporting credit losses for assets held at amortized cost basis. The Company has determined the only financial assets subject to the new standard are its trade receivables and contract assets. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

Effective January 1, 2020, the Company adopted the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement," which adds, amends, and removes certain disclosure requirements related to fair value measurements.  Among other changes, this standard requires certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements.  Please refer to Note 5, “Impairments of Goodwill and Other Long-Lived Assets”, for discussion of the inputs used in the quantitative impairment assessments for the three-month period ended March 31, 2020.

Effective January 1, 2020, the Company adopted FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract."  The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider.  The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848); Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments in this update are elective, and provide optional expedients and exceptions in accounting for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance in this update is effective for transactions entered into between March 12, 2020 and December 31, 2022. The Company adopted this ASU upon issuance and notes no impact to the Company's consolidated financial statements and disclosures as of September 30, 2020.

Recent Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)." The amendments in this update are intended to simplify the accounting for convertible debt instruments and convertible preferred stock. This ASU is effective for fiscal years and interim periods beginning after December 15, 2021 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)." The amendments in this update are intended to reduce diversity in practice and increase comparability of the accounting for interaction of equity securities, investments accounted for under the equity method of accounting, and the accounting for certain forward contracts and purchased options accounted for under Topic 815. This ASU is effective for fiscal years and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The new standard is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740, and by clarifying and amending existing guidance in other areas of the same topic. This ASU is effective for fiscal years and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU requires entities to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. This ASU also requires entities to disclose an explanation for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for fiscal years beginning after December 15, 2020

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with early adoption permitted.  The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and disclosures.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1, “Significant Accounting Policies” within Part IV, Item 15 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Risks and Uncertainties

Worldwide economic cycles, political changes, and the COVID-19 pandemic affect the markets that the Company’s businesses serve and affect demand for the Company's products and could impact profitability. Among other factors, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, swings in consumer confidence and spending, and unstable economic growth and fluctuations in unemployment rates has caused economic instability and can have a negative impact on the Company’s results of operations, financial condition, and liquidity.

Transfers of Financial Assets 

In December 2019, the Company entered into two arrangements with a banking institution to sell trade accounts receivable balances for select customers. Under the programs, the Company has no risk of loss due to credit default and is charged a fee based on the nominal value of receivables sold and the time between the sale of the trade accounts receivables to banking institutions and collection from the customer.  Under one of the programs, the Company services the trade receivables after sale and receives 90.0% of the trade receivables in cash at the time of sale and the remaining 10.0% in cash, net of fees, at the earlier of customer payment or 150 days.  In the three-month and nine-month periods ended September 30, 2020, under both programs, the Company sold $21.3 million and $64.3 million, respectively, in trade receivable balances, received $59.1 million in total cash under the programs, and incurred $0.2 million in fees.  The Company expects to receive the remainder, net of fees, in the fourth quarter of 2020.

Condensed Consolidated Statements of Comprehensive Income

In connection with the preparation of its 2019 audited financial statements, the Company identified that in its previously filed unaudited interim financial statements for the three-month and six-month periods ended June 30, 2019 and the nine-month period ended September 30, 2019, the Company had incorrectly excluded, from its Condensed Consolidated Statements of Comprehensive Income, the impact to comprehensive income resulting from the settlement of its U.S. Lydall Pension Plan (see Note 11, "Employer Sponsored Benefit Plans"). As a result, unaudited comprehensive income for such periods was understated by approximately $19.0 million. This error did not have any impact on the Company’s corresponding previously filed Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows. Management has concluded that such errors did not result in the previously issued unaudited financial statements being materially misstated. In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the Condensed Consolidated Statements of Comprehensive Income for the nine-month period ended September 30, 2019 as follows:

	Nine Months Ended September 30, 2019
In thousands	As reported		As revised
Pension liability adjustment, net of tax	$	379	$	19,395
Comprehensive (loss) income	$	(8,243)	$	10,773

2. Revenue from Contracts with Customers

The Company accounts for revenue in accordance with ASC 606, "Revenue from Contracts with Customers". Revenues are generated from the design and manufacture of specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers for filtration/separation and thermal/acoustical applications. The Company’s revenue recognition policies require the Company to make significant judgments and estimates. In applying the Company’s revenue recognition policy, determinations must be made as to when control of products passes to the Company’s customers which can be either at a point in time or over time. Revenue is generally recognized at a point in time when control passes to customers upon shipment of the Company’s products and revenue is generally recognized over time when control of the Company’s products transfers to customers during the manufacturing process. The Company analyzes several factors, including but not limited to, the nature of the products being sold and contractual terms and conditions in contracts with customers to help the

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Company make such judgments about revenue recognition. Unfulfilled performance obligations are generally expected to be satisfied within one year.

Contract Assets and Liabilities

The Company’s contract assets primarily include unbilled amounts typically resulting from sales under contracts when the over time method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. These unbilled accounts receivable in contract assets are transferred to accounts receivable upon invoicing, typically when the right to payment becomes unconditional in which case payment is due based only upon the passage of time.

The Company’s contract liabilities primarily relate to billings and advance payments received from customers and deferred revenue. These contract liabilities represent the Company’s obligation to transfer its products to its customers for which the Company has received, or is owed consideration from its customers. Contract liabilities are included in Other long-term liabilities on the Company’s Condensed Consolidated Balance Sheets.

Contract assets and liabilities consisted of the following:

In thousands	September 30, 2020		December 31, 2019		Dollar Change
Contract assets	$	27,186	$	28,245	$	(1,059)
Contract liabilities	$	3,414	$	1,441	$	1,973

The $1.1 million decrease in contact assets from December 31, 2019 to September 30, 2020 was primarily due to timing of billings to customers.

The $2.0 million increase in contract liabilities from December 31, 2019 to September 30, 2020 was primarily due to an increase in customer deposits, offset by $1.1 million of revenue recognized in the first nine months of 2020 related to contract liabilities at December 31, 2019.

Disaggregated Revenue

The Company disaggregates revenue from customers by geographic region, as it believes this disclosure best depicts how the nature, amount, timing, and uncertainty of the Company's revenues and cash flows are affected by economic factors. Disaggregated revenue by geographical region for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

	For the Three Months Ended September 30, 2020								For the Three Months Ended September 30, 2019
In thousands	North America		Europe		Asia		Total Net Sales		North America		Europe		Asia		Total Net Sales
Performance Materials	$	45,759	$	18,776	$	3,282	$	67,817	$	42,693	$	15,203	$	2,104	$	60,000
Technical Nonwovens	34,727		17,318		6,464		58,509		42,128		16,544		5,240		63,912
Thermal Acoustical Solutions	57,841		22,861		4,821		85,523		61,315		22,208		4,403		87,926
Eliminations and Other	(4,569)		(195)		—		(4,764)		(6,405)		(159)		—		(6,564)
Total Net Sales	$	133,758	$	58,760	$	14,567	$	207,085	$	139,731	$	53,796	$	11,747	$	205,274

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	For the Nine Months Ended September 30, 2020								For the Nine Months Ended September 30, 2019
In thousands	North America		Europe		Asia		Total Net Sales		North America		Europe		Asia		Total Net Sales
Performance Materials	$	131,866	$	52,552	$	7,092	$	191,510	$	136,892	$	47,589	$	5,201	$	189,682
Technical Nonwovens	101,694		49,674		16,551		167,919		121,984		53,384		23,228		198,596
Thermal Acoustical Solutions	137,517		57,825		11,390		206,732		189,152		73,853		12,506		275,511
Eliminations and Other	(11,914)		(475)		—		(12,389)		(19,139)		(540)		—		(19,679)
Total Net Sales	$	359,163	$	159,576	$	35,033	$	553,772	$	428,889	$	174,286	$	40,935	$	644,110

3. Inventories

Inventories as of September 30, 2020 and December 31, 2019 were as follows:

In thousands	September 30, 2020		December 31, 2019
Raw materials	$	31,442	$	36,322
Work in process	14,228		14,873
Finished goods	25,497		29,349
Total inventories	$	71,167	$	80,544

Included in work in process is net tooling inventory of $2.0 million and $1.8 million at September 30, 2020 and December 31, 2019, respectively.

4. Goodwill and Other Intangible Assets

Goodwill

The Company performs an assessment of its goodwill for impairment at least annually in the fourth quarter, and whenever events or changes in circumstances indicate that the carrying value may exceed its fair value. There were no such events or changes in circumstances during the three-month period ended September 30, 2020. See Note 5, "Impairments of Goodwill and Other Long-Lived Assets", for discussion of the goodwill impairment recorded during the three-month period ended March 31, 2020.

The changes in the carrying amount of goodwill by segment as of and for the nine-month period ended September 30, 2020 were as follows:

In thousands	December 31, 2019		Currency translation adjustments		Impairment		September 30, 2020
Performance Materials	$	80,658	$	(22)	$	(48,671)	$	31,965
Technical Nonwovens	53,254		166		—		53,420
Total goodwill	$	133,912	$	144	$	(48,671)	$	85,385

Goodwill Impairment

During the three-month period ended March 31, 2020, the Company performed a goodwill impairment analysis in the Performance Materials and Technical Nonwovens reporting units and recorded a goodwill impairment charge of $48.7 million in the Performance Materials reporting unit. See Note 5, "Impairments of Goodwill and Other Long-Lived Assets", for further discussion of the goodwill impairment.

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Other Intangible Assets

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019:

	September 30, 2020				December 31, 2019
In thousands	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer Relationships	$	141,784	$	(44,636)	$	142,400	$	(30,648)
Patents	791		(670)		759		(607)
Technology	2,500		(1,102)		2,500		(977)
Trade Names	7,322		(6,544)		7,293		(5,143)
License Agreements	629		(629)		610		(610)
Other	570		(570)		551		(551)
Total other intangible assets	$	153,596	$	(54,151)	$	154,113	$	(38,536)

5. Impairments of Goodwill and Other Long-Lived Assets

During the three-month period ended March 31, 2020, the Company experienced disruptions in some operations from lower customer demand directly attributable to the COVID-19 pandemic. Many of the Company's automotive customers temporarily ceased operations due to the impact of the COVID-19 pandemic on the global economy resulting in the following:

•The Company’s China facilities carried out a planned shutdown in conjunction with the lunar New Year in late January, which was extended to late February as a result of government imposed restrictions.  The facilities did not resume operations until late February and ramped back up moderately in line with customer demand. Currently, all of the Company’s plants in China are operating and all of its automotive customer plants in China have re-opened.  The Company has not experienced any significant disruption it its supply chains in China since resuming operations;

•On March 20, 2020, the Company announced ramp-downs at its Thermal Acoustical Solutions ("TAS") operations in North America and Europe as a direct result of customer stoppages. The Company's facilities in North America and Europe have since resumed operations;

•Leading economic indicators began to signal a broad economic recession and a future decline in automotive sales;

•Certain of the Company’s Performance Materials ("PM") and Technical Nonwovens ("TNW") operations with exposure to automotive end markets also experienced reductions in sales, which, in some cases, have been partially offset by increases in sales of other products. These operations also have exposure to various industrial end markets. Leading economic indicators for certain of these markets also signaled a downturn in demand; and

•The Company's share price and market capitalization experienced a significant decline.

During the three-month period ended March 31, 2020, the Company considered the combination of the above to be triggering events that required an impairment analysis for the goodwill held at the PM and TNW reporting units, and for certain long-lived assets. Therefore, during the three-month period ended March 31, 2020, in accordance with both ASC 350 Intangibles - Goodwill and Other, and with ASC 360 Property, Plant & Equipment, the Company performed an impairment analysis of its goodwill held by the PM and TNW reporting units, and on certain of its long-lived assets (principally land, machinery and equipment, customer relationships, and buildings and improvements).

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As a result of these impairment tests, the Company recorded the following impairment charges during the three-month period ended March 31, 2020:

In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Totals
Impairment of goodwill	$	48,671	$	—	$	—	$	48,671
Impairment of other long-lived assets	12,438		—		—		12,438
Total impairments	$	61,109	$	—	$	—	$	61,109

Goodwill

During the three-month period ended March 31, 2020, the Company performed a quantitative goodwill impairment assessment for both the PM and TNW reporting units. In the quantitative impairment assessment, the Company weighted equally both an income approach (discounted cash flow model) and a market approach to determine the fair value of the reporting units. The Company’s significant assumptions in the discounted cash flow model included, but were not limited to, future cash flow projections, the weighted average cost of capital, the terminal growth rate, and the tax rate.

Lower expected demand in automotive and other end markets due to the COVID-19 pandemic resulted in a reduction in sales and cash generation projections as compared to prior projections for the reporting units. Projected future cash flows includes management estimates and assumptions that are based on the best available information as of the date of the assessment.  Future cash flows can be affected by numerous factors including changes in economic, industry or market conditions, changes in the underlying business or products of the reporting unit, changes in competition, and changes in technology. The cash flows of the Company's reporting units can be significantly affected by the depth of the estimated decline in automotive and other end markets and the Company's estimates of the pace and level of their recovery as well as the ability of the Company to increase production in response to the recovery.

The weighted average cost of capital for the PM reporting unit increased from 9.2 percent in the three-month period ended December 31, 2019 to 11.5 percent in the three-month period ended March 31, 2020. The weighted average cost of capital for the TNW reporting unit increased from 9.2 percent in the three-month period ended December 31, 2019 to 10.8 percent in the three-month period ended March 31, 2020. There are inherent uncertainties and management judgment required in an analysis of goodwill impairment. The Company believes the income approach was appropriate because it provided a fair value estimate based upon the reporting unit's expected long-term operations and cash flow performance.

The Company also used a form of the market approach, which was derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting unit operates giving consideration to risk profiles, size, geography, and diversity of products and services. The EBITDA multiples used in the market approach for both reporting units declined from the three-month period ended December 31, 2019 to the three-month period ended March 31, 2020 due to market-related changes in the industries in which these reporting units operate as a result of COVID-19.

Other assumptions included adding an implied control premium to the valuation based on estimating the fair value on a controlling basis, which was derived from research on control premiums observed in recent mergers and acquisitions in the industries in which the Company operates. The control premium for both reporting units increased by 5 percent from the three-month period ended December 31, 2019 to the three-month period ended March 31, 2020. Control premiums can be higher in periods of depressed stock prices. The Company believes the market approach was appropriate because it provided a fair value using multiples from companies with operations and economic characteristics similar to the PM reporting unit.

The Company also performed an overall reconciliation to corroborate the fair value derived from the income and market approaches to the Company's overall market capitalization. The revised projections, together with a deterioration in the inputs described above, drove a reduction in the fair value of both reporting units. As a result, the carrying value of the PM reporting unit was determined to exceed its fair value by $48.7 million, resulting in the impairment charge. After recording the impairment charge during the three-month period ended March 31, 2020, the remaining goodwill associated with the PM reporting unit was $31.9 million. The fair value of the TNW reporting unit exceeded its carrying value and, therefore, no impairment was required. Any declines in financial projections, including changes to key assumptions, could have a material adverse impact on the fair value of the reporting units, and therefore could result in further impairment charges.

In the three-month period ended December 31, 2019, as part of its annual impairment assessment, the Company determined that the fair value of the PM reporting unit was less than its carrying value and recorded a goodwill impairment of $63.0 million.

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Other Long-Lived Assets

During the three-month period ended March 31, 2020, the Company performed the following impairment assessments for long-lived assets in accordance with ASC 360:

•As a result of the COVID-19 pandemic and the Company's action plan to address the risks associated with it, the Company accelerated certain actions. One such action was a review of an underperforming European plant within the PM segment. As a result of a strategic shift regarding this plant, the Company performed an impairment assessment on the long-lived assets of the plant. To determine the recoverability of this asset group, the Company completed an undiscounted cash flow analysis (income approach) and compared it to the asset group carrying value. The impairment test concluded that the assets were not recoverable because the undiscounted cash flows were less than the carrying amount. The Company determined that the carrying value of the assets exceeded the fair value and recorded a long-lived asset impairment charge of $12.4 million.

•As a result of the temporary plant closures announced on March 20, 2020 in response to the COVID-19 pandemic's effects on the automotive sector, the Company performed impairment assessments on the long-lived assets for its TAS plants. The Company considered each operating plant's asset group, primarily consisting of machinery and equipment, and buildings and improvements. To determine the recoverability of each asset group, the Company completed an undiscounted cash flow analysis (income approach) and compared it to each asset groups' carrying value. For two of the asset groups, the undiscounted cash flows exceeded the carrying value of the asset group so no further assessment of impairment was necessary. For two of the European plants, the undiscounted cash flows did not exceed the plants' carrying values. As part of step two of the impairment assessment, the Company used the market approach to determine fair value based on independent appraisals of the long-lived assets. The Company determined that impairment was not necessary since the fair value of the long-lived asset groups for each operating plant exceeded their carrying amounts.

There were no events or circumstances during the three-month period ended September 30, 2020 that indicated any further triggering events under ASC 360 were present. Changes in future operating results could result in a future non-cash impairment charge.

During the three-month period ended December 31, 2019, the Company determined that fair value of a certain asset group in the PM segment exceeded its carrying value and recorded a long-lived asset impairment charge of $1.2 million.

6. Long-term Debt and Financing Arrangements

On August 31, 2018, the Company amended and restated its $175 million senior secured revolving credit agreement ("2018 Credit Agreement"), which increased the available borrowing from $175 million to $450 million, added three additional lenders, and extended the maturity date from July 7, 2021 to August 31, 2023. On May 11, 2020, the Company amended its 2018 Credit Agreement ("2020 Amendment") which, among other changes, decreased borrowings from $450 million to $314 million and modified certain financial covenants contained in the 2018 Credit Agreement.

2018 Credit Agreement

Under the terms of the 2018 Credit Agreement, the lenders provided up to a $450 million credit facility (the “Facility”) to the Company, including a term loan commitment of $200 million and revolving loans to or for the benefit of the Company and its subsidiaries of up to $250 million. The Facility was secured by substantially all of the assets of the Company.

Interest was charged on borrowings at the Company’s option of either: (i) Base Rate plus the Applicable Rate, or (ii) the Eurodollar Rate plus the Applicable Rate. The Base Rate is a fluctuating rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by Bank of America, and (c) the Eurocurrency Rate plus 1.00%. The Eurocurrency Rate means (i) if denominated in LIBOR quoted currency, a fluctuating LIBOR per annum rate equal to the London Interbank Offered Rate; (ii) if denominated in Canadian Dollars, the rate per annum equal to the Canadian Dollar Offered Rate; or (iii) the rate per annum as designated with respect to such alternative currency at the time such alternative currency is approved by the Lenders. The Applicable Rate is determined based on the Company’s Consolidated Leverage Ratio (as defined in the 2018 Credit Agreement). The Applicable Rate added to the Base Rate Committed Loans ranged from 0.00% to 1.25%, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranged from 0.75% to 2.00%. The Company paid a quarterly fee ranging from 0.15% to 0.275% on the unused portion of the revolving commitment.

The Company has an interest rate swap in place to convert a portion of the Company's borrowings from a variable rate to a fixed rate. See Note 7, "Derivatives" for additional information.

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The Company is permitted to prepay term and revolving borrowings in whole or in part at any time without premium or penalty, subject to certain minimum payment requirements, and the Company was generally permitted to irrevocably cancel unutilized portions of the revolving commitments under the 2018 Credit Agreement. The Company is required to repay the term commitment in an amount of $2.5 million per quarter beginning with the quarter ending December 31, 2018 through the quarter ending June 30, 2023.

The 2018 Credit Agreement contained covenants required of the Company and its subsidiaries, including various affirmative and negative financial and operational covenants. The Company was required to meet certain quarterly financial covenants calculated from the four fiscal quarters most recently ended, including: (i) a minimum Consolidated Fixed Charge Coverage Ratio, which requires that at the end of each fiscal quarter the ratio of (a) consolidated EBITDA to (b) the sum of consolidated interest charges, redemptions, non-financed maintenance capital expenditures, restricted payments and taxes paid, each as defined in the 2018 Credit Agreement, may not be lower than 1.25 to 1.0; and (ii) a Consolidated Net Leverage Ratio, which required that at the end of each fiscal quarter the ratio of consolidated funded indebtedness minus consolidated domestic cash to consolidated EBITDA, as defined in the 2018 Credit Agreement, could not be greater than 3.5 to 1.0.

2020 Amendments to the 2018 Credit Agreement

On May 11, 2020, the Company amended its $450 million senior secured revolving 2018 Credit Agreement. The principal purpose of the Amendment was to modify certain financial covenants contained in the 2018 Credit Agreement, at least one of which the Company expected to fail as early as the second quarter of 2020 as a result of the impact of COVID-19. The amended terms and conditions included the following:

•Modified the financial covenants as follows:

◦Consolidated Net Leverage Ratio, which requires that on the last day of each fiscal quarter the ratio not be greater than 6.5:1 through the period ending March 31, 2021, 4.50:1 for the period ending June 30, 2021 through the period ending March 31, 2022, and 3.50:1 for the periods ending June 30, 2022 and thereafter;

◦The minimum Consolidated Fixed Charge Coverage Ratio, which requires that on the last day of each fiscal quarter the ratio not be lower than 1.10:1 calculated on a trailing twelve month basis through the period ending June 30, 2020, 1.25:1 calculated on a distinct quarterly basis for the periods ended September 30, 2020 through June 30, 2021, and 1.25:1 calculated on a trailing twelve month basis beginning with the period ending September 30, 2021 and thereafter;

•Required the Company maintain a minimum cash and cash equivalents balance of $40 million, excluding deposit accounts in China;

•Decreased the term loan facility from $200 million to $144 million and decreased the revolving credit facility from $250 million to $170 million for a total overall facility of $314 million; and eliminated the accordion feature;

•Established a floor on the Base and Eurocurrrency Rate of 1%;

•Modified the definition of the Applicable Rate, as determined based on the Company’s Consolidated Net Leverage Ratio, by increasing the range for the Base Rate for Committed Loans to 2.00% to 3.25% and increasing the range for the Eurocurrency Rate Committed Loans and Letters of Credit to 3.00% to 4.25%;

•Increased the quarterly commitment fee to 0.375% on the unused portion of the revolving commitment; and

•Required the Company to pay an amendment fee to the Lenders based on their commitment levels.

There was no modification to the maturity date of the facility.

On October 14, 2020, the Company further amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's financial covenants. The Company believes that its liquidity resources, including the Facility, are sufficient to meet its working capital needs and other cash requirements. The Company was in compliance with those modified financial covenants at September 30, 2020, and management does not anticipate noncompliance in the foreseeable future.

At September 30, 2020, the Company had $283.5 million of borrowings outstanding and standby letters of credit outstanding of $1.8 million. The borrowings outstanding included a $138.5 million term loan, net of $0.5 million in debt issuance costs being

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amortized to interest expense over the debt maturity period. The Company had available borrowings of $23.7 million and $121.6 million at September 30, 2020 and December 31, 2019, respectively.

In addition to the amounts outstanding under the Facility, the Company has various foreign credit facilities totaling approximately $9.4 million. At September 30, 2020, the Company's foreign subsidiaries had $0.2 million in borrowings outstanding as well as $1.3 million in standby letters of credit outstanding.

The Company also has a finance lease agreement for equipment at a North America operation requiring monthly principal and interest payments through October 31, 2020.

Total outstanding debt consists of:

In thousands	Effective Rate		Maturity	September 30, 2020		December 31, 2019
Revolver loan	5.25	%	8/31/2023	$	144,500	$	126,500
Term loan, net of debt issuance costs	5.25	%	8/31/2023	138,536		146,106
Finance leases	1.60	%	10/31/2020	3		35
				283,039		272,641
Less portion due within one year				(9,844)		(9,928)
Total long-term debt, net of debt issuance costs				$	273,195	$	262,713

The weighted average interest rate on long-term debt was 5.2% for the nine-month period ended September 30, 2020 and 4.3% for the year-ended December 31, 2019.

7. Derivatives

The Company selectively uses financial instruments to manage market risk associated with exposure to fluctuations in interest rates and foreign currency rates. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Interest Rate Hedging

The Company’s interest rate exposure is most sensitive to fluctuations in interest rates in the United States and Europe, which impacts interest paid on its debt. The Company has debt with variable rates of interest based generally on LIBOR. From time to time, the Company enters into interest rate swap agreements to manage interest rate risk. These instruments are designated as cash flow hedges and are recorded at fair value (see Note 8, "Fair Value Measurements" for additional information).

In November 2018, the Company entered into a five-year interest rate swap agreement with a bank to convert the interest on a notional $139.0 million of the Company's borrowings under its 2018 Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 3.09% plus the borrowing spread. The notional amount reduces quarterly by fluctuating amounts through August 2023. In April 2017, the Company entered into a three-year interest rate swap agreement with a bank to convert the interest on a notional $60.0 million of the Company's borrowings from a variable rate, plus the borrowing spread, to a fixed rate of 1.58% plus the borrowing spread. The notional amount reduced quarterly by $5.0 million through March 31, 2020 and is now settled. Prior to May 11, 2020, these interest rate swap agreements were accounted for as cash flow hedges. Effectiveness of the remaining derivative agreement was assessed quarterly, or more frequently, if necessary, by ensuring that the critical terms of the swap continued to match the critical terms of the hedged debt in order to report gains or losses on the derivative instrument in other comprehensive income.

On May 11, 2020, the Company amended its 2018 Credit Agreement, see Note 6, "Long-term Debt and Financing Arrangements". The amendment included, among other modifications, the establishment of a floor on the base and Eurocurrency rate of 1%. As a result, the Company determined that the critical terms of the swap no longer matched the critical terms of the hedged debt and performed an assessment of the effectiveness of the interest rate swap agreement. The Company concluded the interest rate swap agreement is no longer effective. The Company also concluded that the hedged forecasted transaction (the occurrence of variable interest rate payments on the hedged debt) continues to be probable of occurring. Therefore, as of May 11, 2020, the Company discontinued hedge accounting. After May 11, 2020, any fair value gains or losses on the derivative agreement are recorded as interest expense in the Company's Consolidated Statement of Operations. The cumulative loss on the discontinued hedge relationship through May 11, 2020, which was recorded in Accumulated Other Comprehensive Income, will be amortized into earnings / (losses) through August 31, 2023, the maturity date of the hedged debt. The loss included in Accumulated Other Comprehensive Income related to the discontinued hedging relationship at

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September 30, 2020 was $4.5 million, net of tax. The amount reclassified out of other comprehensive income into interest expense on the Company's Condensed Consolidated Statement of Operations for the three and nine-months ended September 30, 2020 was $0.9 million and $1.4 million, respectively. The Company expects $3.1 million to be reclassified from Accumulated Other Comprehensive Income over the next twelve months.

Net Investment Hedges

The Company’s operations are subject to certain risks, including foreign currency exchange rate fluctuations. From time to time, the Company enters into cross-currency swaps designated as hedges, recorded at fair value (see Note 8, "Fair Value Measurements"), to protect the Company's net investments in subsidiaries denominated in currencies other than the US dollar.

In November 2019, the Company entered into three fixed-to-fixed cross-currency swaps with banking institutions with aggregate notional amounts totaling €67.8 million ($75 million U.S. dollar equivalent). These swaps hedge a portion of the Company's net investment in a Euro functional currency denominated subsidiary against the variability of exchange rate translation impacts between the U.S. dollar and Euro. These contracts require monthly cash interest exchanges over the life of the contracts with the Company recognizing a reduction to interest expense due to the favorable interest rate differential between the U.S. dollar and Euro. Also, settlement of the notional €22.6 million ($25 million U.S. dollar equivalent) cross-currency swaps occur at maturity dates of August 2021, August 2022 and August 2023. The Company assesses hedge effectiveness of the cross-currency swaps quarterly by ensuring the critical terms of the swaps continue to match the critical terms of the designated net investment. The Company elected to assess effectiveness using the spot method, and as a result, records the interest rate differential monthly in the Company's Statement of Operations.

Derivative instruments are recognized as either assets or liabilities on the balance sheet in either current or non-current other assets or other accrued liabilities or other long-term liabilities depending upon maturity and commitment. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods in which the hedge transaction affects earnings. Any ineffective portion, or amounts related to contracts that are not designated as hedges, are recorded directly to earnings. The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. The Company does not use derivatives for speculative or trading purposes.

The following table sets forth the fair value amounts of derivative instruments held by the Company presented in the Condensed Consolidated Balance Sheets as Other current assets and Other accrued liabilities:

	September 30, 2020				December 31, 2019
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Interest rate contracts	$	—	$	5,967	$	2	$	4,538
Cross-currency swaps	—		3,310		—		1,817
Total derivatives	$	—	$	9,277	$	2	$	6,355

The following table sets forth the (loss) income recorded in accumulated other comprehensive (loss) income, net of tax, for the three and nine-month periods ended September 30, 2020 and 2019 for derivatives held by the Company and designated as hedging instruments:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Cash flow hedges:
Interest rate contracts	$	706	$	(148)	$	(1,059)	$	(2,174)
Cross-currency swaps	(2,669)		—		(1,143)		—
Total derivatives	$	(1,963)	$	(148)	$	(2,202)	$	(2,174)

8. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

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The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

•Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following table presents the carrying value and fair value of financial instruments that are not carried at fair value:

	September 30, 2020				December 31, 2019
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt	$	283,500	$	288,891	$	273,000	$	269,434

The fair values of the Company’s long-term debt outstanding were computed based on discounted future cash flows (observable inputs), as applicable, which falls under Level 2 of the fair value hierarchy. Differences from carrying values are attributable to interest rate changes subsequent to when the transactions occurred.

The fair values of cash and cash equivalents, accounts receivable, net and accounts payable approximate their carrying amounts due to the short-term maturities of these instruments.

Recurring Fair Value Measures

The Company holds derivative instruments for interest rate swap contracts and cross-currency swaps that are measured using observable market inputs such as forward rates and its counterparties' credit risks. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At September 30, 2020 and December 31, 2019, these derivative instruments were included in other current assets and other accrued liabilities on the Consolidated Balance Sheet. Based on the Company's continued ability to trade and enter into interest rate swaps and cross-currency swaps, the Company considers the markets for their fair value instruments to be open.

Nonrecurring Fair Value Measurements

During the three-month period ended March 31, 2020, the Company incurred a $48.7 million impairment charge for goodwill at its Performance Materials segment and a $12.4 million impairment charge for a certain asset group at one of the Performance Materials' European businesses. See Note 5, "Impairment of Goodwill and Other Long-Lived Assets" for information regarding the calculation of fair value.

9. Equity Compensation Plans

As of September 30, 2020, the Company’s equity compensation plans consisted of the 2003 Stock Incentive Compensation Plan (the “2003 Plan”), and the Amended and Restated 2012 Stock Incentive Plan, (the “2012 Plan” and together with the 2003 Plan, the “Plans”) under which incentive and non-qualified stock options and time and performance based restricted shares have been granted to employees and directors from authorized but unissued shares of common stock or treasury shares. The 2003 Plan is not active, but continues to govern all outstanding awards granted under the plan until the awards themselves are exercised or terminate in accordance with their terms. The 2012 Plan, amended and approved by stockholders on April 24, 2020, authorizes 3.0 million shares of common stock for awards. The 2012 Plan also authorized an additional 19,720 shares of common stock to the extent awards granted under prior stock plans that were outstanding as of April 24, 2020 are forfeited. The 2012 Plan provides for the following types of awards: options, restricted stock, restricted stock units and other stock-based awards. During the fourth quarter of 2019, additional shares of common stock were issued pursuant to separate inducement share agreements with two individuals as material inducement to their employment with the Company (the "Inducement Grants"). The Inducement Grants awarded stock options and restricted stock to the two individuals. Amounts shown below are inclusive of the Plans and the Inducement Grants.

The Company accounts for the expense of all share-based compensation by measuring the awards at fair value on the date of grant. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Options issued by

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the Company under its stock option plans have a term of ten years and generally vest ratably over a period of three to four years. Time-based and performance-based restricted stock grants are expensed over the vesting period of the award, which is typically two to four years. The number of performance-based restricted shares that ultimately vest depends upon achievement of certain relative performance metrics as measured against the performance of the S&P 600 industrial index during a three-year performance period. The Company estimates the grant date value of performance awards using a Monte Carlo simulation model on the date of grant. The Company accounts for forfeitures as they occur. Stock options issued under the current plan must have an exercise price that may not be less than the fair market value of the Company’s common stock on the date of grant. The Plans provide for automatic acceleration of vesting in the event of a change in control of the Company.

The Company incurred equity compensation expense of $0.7 million and $0.6 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $2.5 million and $2.1 million for the nine-month periods ended September 30, 2020 and 2019, respectively, for the Plans, including restricted stock awards. The Company also incurred equity compensation expense of $0.2 million and $0.2 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $0.5 million and $0.5 million for the nine-month periods ended September 30, 2020 and 2019, respectively, for stock awards granted to Directors. No equity compensation costs were capitalized as part of inventory.

Stock Options

The following table is a summary of outstanding and exercisable options for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020			For the Nine Months Ended September 30, 2020
In thousands except per share amounts	Shares	Weighted- Average Exercise Price		Shares	Weighted- Average Exercise Price
Stock Options outstanding at the beginning of the period	748	$	25.36	683	$	27.15
Granted	11	$	16.27	180	$	17.37
Exercised	—	$	—	(4)	$	8.67
Forfeited or Expired	(71)	$	26.25	(171)	$	25.46
Stock Options outstanding at September 30, 2020	688	$	25.11	688	$	25.11
Exercisable at September 30, 2020	305	$	32.54	305	$	32.54
Unvested at September 30, 2020	383	$	19.20	383	$	19.20

There was no cash received from exercise of stock options during the three-month period ended September 30, 2020. The amount of cash received from the exercise of stock options was less than $0.1 million during the nine-month period ended September 30, 2020. The intrinsic value of stock options exercised was less than $0.1 million with a tax benefit of less than $0.1 million during the nine-month period ended September 30, 2020.

At September 30, 2020, the total unrecognized compensation cost related to non-vested stock option awards was approximately $2.1 million, with a weighted average expected amortization period of 2.7 years.

Restricted Stock

Restricted stock includes both performance-based and time-based awards. The following is a summary of the Company's unvested time-based restricted shares for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	220	159
Granted	—	77
Vested	(5)	(8)
Forfeited or Expired	(12)	(25)
Unvested at September 30, 2020	203	203

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The following is a summary of the Company's unvested performance-based restricted shares for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	161	129
Granted	5	71
Vested	—	—
Forfeited or Expired	(18)	(52)
Unvested at September 30, 2020	148	148

At September 30, 2020, there were 350,348 total unvested restricted stock awards with total unrecognized compensation cost related to these awards of $4.4 million with a weighted average expected amortization period of 2.1 years.

10. Stock Repurchases

During the nine-month period ended September 30, 2020, the Company purchased 2,340 shares of common stock valued at less than $0.1 million, through tax withholding, pursuant to provisions in agreements with recipients of restricted stock granted under the Company’s equity compensation plans, in which the Company withholds that number of shares having fair value equal to each recipient’s minimum tax withholding due.

11. Employer Sponsored Benefit Plans

The Company maintains one domestic pension plan: the Retirement Income Plan for Employees of Interface Performance Materials, Inc. ("IPM Pension Plan"). During the three-month period ended March 31, 2020, the Company settled the pension obligation of the Interface Sealing Solutions, Inc. Pension Plan ("ISS Pension Plan") through lump sum distributions to participants or by irrevocably transferring pension liabilities to an insurance company through the purchase of a group annuity contract. This purchase, funded with pension assets, resulted in a pre-tax settlement loss of $0.4 million in the three-month period ended March 31, 2020, related to the recognition of accumulated deferred actuarial losses. The settlement loss and expenses were included as non-operating expense in the condensed consolidated statements of operations.

The IPM Pension Plan covers a portion of Interface's union and non-union employees. The plan is closed to new employees and benefits are no longer accruing for the majority of participants. The Company expects to make required contributions of approximately $1.2 million to the IPM Pension Plan during 2020. There were no contributions made during the three-month period ended September 30, 2020, as the Company took advantage of the delay in minimum funding contribution due dates as allowed under the CARES Act, and is delaying payment of the minimum funding contributions of $0.3 million originally due during April 2020, and $0.3 million originally due during July 2020. These and other required minimum funding contributions for the remainder of 2020 will be made later in 2020. Contributions of $0.4 million were made during the nine-month period ended September 30, 2020. Contributions of $0.3 million and $1.1 million were made during the three-month and nine-month periods ended September 30, 2019, respectively, inclusive of contributions made to the ISS Pension Plan.

Prior to 2020, the Company also maintained the U.S. Lydall Pension Plan. During the second quarter of 2019, the Company settled the pension obligation of the U.S. Lydall Pension Plan through lump sum distributions to participants or by irrevocably transferring pension liabilities to two insurance companies through the purchase of group annuity contracts.

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The following is a summary of the components of net periodic benefit cost for the domestic defined benefit pension plans for

the three-month and nine-month periods ended September 30, 2020 and 2019:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Components of employer benefit cost
Service cost	$	40	$	30	$	120	$	90
Interest cost	428		530		1,285		2,356
Expected return on assets	(532)		(488)		(1,597)		(2,105)
Amortization of actuarial loss	—		—		2		464
Net periodic benefit cost	$	(64)	$	72	$	(190)	$	805
Settlement loss	—		186		385		25,701
Total employer benefit plan cost	$	(64)	$	258	$	195	$	26,506

The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs in operating expenses and the non-service cost components of net periodic benefit cost in other income.

12. Restructuring

During the third quarter of 2020, the Company’s Performance Materials segment undertook actions to discontinue production of a lower efficiency air filtration media product and, in turn, fully depreciated the supporting machinery and equipment in North America and consolidated certain product lines and began exiting underperforming facilities in Europe. These restructuring activities, which are projected to conclude in the first half of 2021, are expected to reduce operating costs, increase production efficiency, and enhance the Company’s flexibility by better aligning its manufacturing operations with the segment's customer base. Accordingly, the Company expects to record total pre-tax expenses of approximately $17.0 to $20.0 million, primarily related to severance and employee retention expenses, in connection with these restructuring activities, of which approximately $11.5 to $14.5 million are expected to result in cash expenditures. The Company incurred non-cash expenditures of approximately $5.5 million, which consisted of fully depreciating and/or amortizing long-lived assets and, to a lesser extent, writing-off inventory.

In North America, the Company decided to shut down two underperforming nonwoven manufacturing carded lines and ancillary equipment, originally acquired in 2018, that served commercial and residential HVAC markets with low to medium efficiency air filtration media. The Company experienced lower demand as a result of COVID-19, which accelerated a market shift from lower efficiency air filtration media to higher performance rated air filtration media. As a result, the Company recorded a pre-tax restructuring charge of $5.4 million, primarily due to accelerated depreciation of property, plant and equipment and other intangible assets. The Company does not anticipate incurring additional restructuring expenses related to the closure of these manufacturing Carded lines.

The Company undertook actions to consolidate global production facilities in the Sealing & Advanced Solutions business from five facilities to four, resulting in the closure of an underperforming facility in Germany. In the first quarter of 2020, the Company performed an impairment analysis of the long-lived assets and determined that the carrying value of the assets did not exceed their fair value and recorded an impairment charge of $12.4 million (see Note 5, “Impairments of Goodwill and Other Long-Lived Assets” for additional information). The closure is expected to be completed in the first quarter of 2021. In addition, the Company decided to close a small volume membrane filtration production facility in the Netherlands. In the fourth quarter of 2019, the Company performed an impairment of the long-lived assets for this facility and recorded an impairment charge of $1.2 million. The assets have been fully depreciated through September 30, 2020. The closure is expected to be completed in the second quarter of 2021.

As a result of the two facility closures in Europe, the Company recorded pre-tax restructuring charges of $9.6 million consisting of severance costs, legal expenses, and inventory write-offs and anticipates it could incur an additional $2.0 million to $5.0 million in restructuring expenses, primarily related to severance costs from these facility closures.

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The following table summarizes the total restructuring charges by cost type:

In Thousands	Severance and Related Expenses		Facility Exit and Asset Write-Off Expenses		Total
Expense incurred during quarter ended:
September 30, 2020	$	9,484	$	5,500	$	14,984
Total pre-tax expense incurred	$	9,484	$	5,500	$	14,984

For the three and nine-month periods ended September 30, 2020, $15.0 million was included in restructuring expenses on the Company’s Condensed Consolidated Statements of Operations with $14.8 million recorded in the Performance Materials segment and $0.2 million recorded within Corporate Office expenses.

There were cash outflows of $0.2 million for the restructuring program for the three and nine months ended September 30, 2020.

The following table summarizes the accrued liability balance by cost type for the restructuring actions:

In Thousands	Total
Balance as of December 31, 2019	$	—
Pre-tax restructuring expenses, excluding asset write-off expenses	9,485
Cash paid	(203)
Currency translation adjustments	(119)
Balance as of September 30, 2020	$	9,163

The above accrued liability balances were included in Other accrued liabilities on the Company’s Condensed Consolidated Balance Sheets.

13. Income Taxes

For the three-month period ended September 30, 2020, the Company's effective tax rate was 16.6% compared to an effective tax rate of 35.1% for the three-month period ended September 30, 2019. For the three months ended September 30, 2020, the rate was negatively impacted by valuation allowance activity of $2.0 million, offset by a state tax benefit of $0.8 million. resulting in a lower effective tax rate when in a pre-tax loss position. For the three months ended September 30, 2019, the effective tax rate was negatively impacted by losses in jurisdictions in which no tax benefit can be recognized.

For the nine-month period ended September 30, 2020, the Company's effective tax rate was 6.3% compared to an effective tax rate of 97.0% for the nine-month period ended September 30, 2019. For the nine months ended September 30, 2020, the Company had a pre-tax loss primarily resulting from impairment charges of $61.1 million. The impairment charges significantly impacted the Company's effective tax rate because $48.7 million of the impairment charges related to non-deductible goodwill, resulting in a low effective tax rate for the nine months ended September 30, 2020 when in a pre-tax loss position. Additionally, the effective rate was negatively impacted by valuation allowance activity of $2.7 million. For the nine-month period ended September 30, 2019, the Company recorded a tax benefit of $5.5 million primarily driven by $10.5 million of tax benefit related to the pension plan settlement. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the nine months ended September 30, 2019 was 25.2%. This was negatively impacted by $1.8 million from losses in jurisdictions in which no tax benefit can be recognized, partially offset by the Company's geographical mix of earnings.

The Company and its subsidiaries file a consolidated federal income tax return, as well as returns required by various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including such major jurisdictions as the United States, Canada, China, France, Germany, Hong Kong, India, the Netherlands, and the United Kingdom. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2016, state and local examinations for years before 2015, and non-U.S. income tax examinations for years before 2013.

The Company’s effective tax rates in future periods could be affected by an increase or decrease in earnings in countries where tax rates differ from the United States federal tax rate, the relative impact of permanent tax adjustments on earnings from domestic operations, changes in net deferred tax asset valuation allowances, including valuation allowances on loss

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carryforwards in which no tax benefit can be recognized, stock vesting, pension plan terminations, the completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of ongoing tax planning strategies and audits.

On July 20, 2020, the U.S. Treasury Department and IRS released T.D. 9902 final regulations for publication in the Federal Register related to the global intangible low-taxed income (“GILTI”) high-tax exception. The final regulations largely adopt the framework of the 2019 proposed regulations, with certain key departures. The most significant departures are that an election to apply the GILTI high-tax exception may be made annually instead of once every five years, and that the calculation is made with respect to each “tested unit” of a controlled foreign corporation, rather than on a qualified business unit by qualified business unit basis. The company has evaluated the final regulations and included the impacts of these changes in the Company’s third quarter financial statements.

14. (Loss) Earnings Per Share

For the three-month and nine-month periods ended September 30, 2020 and 2019, basic earnings per share were computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding during the period. Unexercised stock options and unvested restricted shares are excluded from this calculation but are included in the diluted earnings per share calculation using the treasury stock method as long as their effect is not antidilutive.

The following table provides a reconciliation of weighted-average shares used to determine basic and diluted earnings per share:

	For the Three Months Ended   September 30,		For the Nine Months Ended   September 30,
In thousands	2020	2019	2020	2019
Basic weighted-average common shares outstanding	17,384	17,270	17,364	17,264
Effect of dilutive options and restricted stock awards	—	60	—	—
Diluted weighted-average common shares outstanding	17,384	17,330	17,364	17,264

Dilutive stock awards totaling 77,707 and 28,085 shares of Common Stock were excluded from the diluted per share computation for the three-month and nine-month periods ended September 30, 2020, as the Company reported a net loss during those periods and, therefore, the effect of including these options would be antidilutive. Dilutive stock options totaling 53,892 shares of Common Stock were excluded from the diluted per share computation for the nine-month period ended September 30, 2019, as the Company reported a net loss during that period and, therefore, the effect of including these options would be antidilutive.

For each of the three-month periods ended September 30, 2020 and 2019, stock options for 658,654 shares and 584,725 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

For each of the nine-month periods ended September 30, 2020 and 2019, stock options for 722,006 shares and 542,669 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

15. Segment Information

As of September 30, 2020, the Company’s reportable segments were Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions primarily for air, fluid power, life science and industrial applications (“Filtration”), and sealing and gasket solutions, thermal insulation, energy storage, and other engineered products (“Sealing and Advanced Solutions”).

Filtration products include LydAir® MG (Micro-Glass) Air Filtration Media, LydAir® MB (Melt Blown) Air Filtration Media, LydAir® SC (Synthetic Composite) Air Filtration Media, and Arioso® Membrane Composite Media. These high efficiency specialty filtration products constitute the critical filtration media component of clean-air systems for applications in Indoor Air Quality (commercial, residential, and specialized HVAC applications such as cleanrooms and hospital environments), respiratory Personal Protective Equipment (N95 respirators and surgical masks), power generation, and specialty industrial process applications. Lydall has leveraged its extensive technical expertise and applications knowledge into a suite of media products covering the vast liquid filtration landscape across the transportation and industrial fields. The LyPore® Liquid Filtration Media series address a variety of application needs in fluid power including hydraulic filters, air-water and air-oil

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coalescing, industrial fluid processes and diesel fuel filtration. LyPore® media and Solupor® ultra-high molecular weight polyethylene membranes also serve critical liquid filtration/separation applications such as biopharmaceutical pre-filtration and clarification, lateral flow diagnostic and analytical testing, potable water filtration and high purity process filtration such as those found in food and beverage and medical applications.

Sealing and Advanced Solutions products include nonwoven specialty engineered materials for a multitude of applications. Interface fiber-reinforced gasket materials serve the heavy-duty diesel, automobile, small engine, transmission and compressor markets. These products handle demanding sealing challenges with a diverse range of metallic, non-metallic, rubber-coated and laminate materials that comprise the extensive Sealing materials portfolio. Interface Engineered Components are ready-to-use soft and hard gasket parts sold directly to OEMs and aftermarket applications. An example is Select-a-Seal® rubber-edged composite (REC) technology that provides robust sealing, compression, adhesion, and shear strength for driveline applications. Advanced Solutions’ nonwoven veils, papers, and specialty composites for the building products, appliance, energy, and industrial markets include Manniglas® Thermal Insulation Papers, and Lytherm® Insulation Media for high temperature technology applications. The Company's Cryotherm® Super-Insulating Media, CRS-Wrap® Super-Insulating Media and Cryo-Lite® Cryogenic Insulation products are industry standards for state-of-the-art cryogenic insulation designs used by manufacturers of cryogenic equipment for liquid gas storage, piping, and transportation. Additional specialty composite materials include specialty fiber calendar bowl products to service the printing and textile industries and press pad materials for industrial lamination processes.

Technical Nonwovens Segment

The Technical Nonwovens segment primarily produces needle punch nonwoven solutions for a multitude of industries and applications. Products are manufactured and sold globally under the leading brands of Lydall Industrial Filtration, Southern Felt, Gutsche, and Texel. Industrial Filtration products include nonwoven rolled-good felt media and filter bags used primarily in industrial air and liquid filtration applications. Nonwoven filter media is an effective solution to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, mining, food, and pharmaceutical. Advanced Materials products include nonwoven rolled-good media used in commercial applications and predominantly serves the geosynthetics, automotive, industrial, medical, and safety apparel markets. Automotive media is provided to Tier I/II suppliers as well as the Company's Thermal Acoustical Solutions segment.

Technical Nonwovens segment products include air and liquid filtration media sold under the brand names Fiberlox® high performance filtration felts, Checkstatic™ conductive filtration felts, Microfelt® high efficiency filtration felts, Pleatlox® pleatable filtration felts, Ultratech™ PTFE filtration felts, Powertech® and Powerlox® power generation filtration felts, Microcap® high efficiency liquid filtration felts, Duotech membrane composite filtration felts, along with the porotex® family of high temperature filtration felts including microvel® and optivel® products. Technical Nonwovens Advanced Materials products are sold under the brand names Thermofit® thermo-formable products, Ecoduo® recycled content materials, Duotex® floor protection products, and Versaflex® composite molding materials. Technical Nonwovens also offers extensive finishing and coating capabilities which provide custom engineered properties tailored to meet the most demanding applications. The business leverages a wide range of fiber types and extensive technical capabilities to provide products that meet customers’ needs across a variety of applications providing both high performance and durability.

Thermal Acoustical Solutions Segment 

The Thermal Acoustical Solutions segment offers a full range of innovative engineered products tailored for the transportation and industrial sectors to thermally shield sensitive components from high heat, improve exhaust gas treatment and lower harmful emissions as well as assist in the reduction of noise, vibration, and harshness (NVH). Within the transportation sector, the Company’s products are found in the interior (dash insulators, cabin flooring), underbody (wheel well, aerodynamic belly pan, fuel tank, exhaust, tunnel, spare tire) and under hood (engine compartment, outer dash, powertrain, catalytic converter, turbo charger, manifolds) of cars, trucks, SUVs, heavy duty trucks, and recreational vehicles.

Thermal Acoustical Solutions segment products offer thermal and acoustical insulating solutions comprised of organic and inorganic fiber composites that provide weight reduction, superior noise suppression and increased durability over conventional designs, as well as products that efficiently combine multiple layers of metal and thermal - acoustical insulation media to provide an engineered shielding solution for an array of application areas. Lydall’s dBCore® is a lightweight acoustical composite that emphasizes absorption principles over heavy-mass type systems. Lydall’s dBLyte® is a high-performance acoustical barrier with sound absorption and blocking properties and can be used throughout a vehicle’s interior to minimize intrusive noise from an engine compartment and road. Lydall’s ZeroClearance® is an innovative thermal solution that utilizes an adhesive backing for attachment and is used to protect vehicle components from excessive heat. Lydall’s flux® product family includes several patented or IP-rich products that address applications which include: Direct Exhaust Mount heat shields, which are assembled to high temperature components like catalytic converters, turbochargers or exhaust manifolds using

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aluminized and stainless steel and high performance and high temperature heat insulating materials; Powertrain heat shields that absorb noise at the source and do not contribute to the engine's noise budget; and durable, thermally robust solutions for temperature sensitive plastic components such as fuel tanks that are in proximity to high temperature heat sources.

The tables below present net sales and operating income by segment for the three-month and nine-month periods ended September 30, 2020 and 2019, and also a reconciliation of total segment net sales and operating income to total consolidated net sales and operating income.

Consolidated net sales by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials Segment:
Filtration	$	30,899	$	22,427	$	86,422	$	71,093
Sealing and Advanced Solutions	36,918		37,573		105,088		118,589
Performance Materials Segment net sales	67,817		60,000		191,510		189,682
Technical Nonwovens Segment (1):
Industrial Filtration	29,643		32,935		90,425		114,005
Advanced Materials (2)	28,866		30,977		77,494		84,591
Technical Nonwovens Segment net sales	58,509		63,912		167,919		198,596
Thermal Acoustical Solutions Segment:
Parts	79,687		80,309		189,456		250,591
Tooling	5,836		7,617		17,276		24,920
Thermal Acoustical Solutions Segment net sales	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 (loss) by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials (3)	$	(6,759)	$	712	$	(58,257)	$	5,474
Technical Nonwovens (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 Income	$	(9,281)	$	7,447	$	(66,595)	$	29,676

(1)The Technical Nonwovens segment includes 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 of intercompany sales to the Thermal Acoustical Solutions segment for the three-month periods ended September 30, 2020 and 2019, respectively.

•$10.2 million and $13.6 million of intercompany sales to the Thermal Acoustical Solutions segment for the nine-month periods 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.

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(4)Included in the Technical Nonwovens segment is the following:

•$1.2 million and $1.3 million of intangible assets amortization for the three-month periods ended September 30, 2020 and 2019, respectively.

•$3.5 million and $3.8 million of intangible assets amortization for the nine-month periods ended September 30, 2020 and 2019, respectively.

16. Commitments and Contingencies

Environmental Remediation

In the fourth quarter of 2016, as part of a groundwater discharging permitting process, water samples collected from wells and process water basins at the Company’s Rochester New Hampshire manufacturing facility, within the Performance Materials segment, showed concentrations of Per and Polyfluorinated Substances (“PFAS”) in excess of state ambient groundwater quality standards. In January 2017, the Company received a notification from the State of New Hampshire Department of Environmental Services (“NHDES”) naming Lydall Performance Materials, Inc. a responsible party with respect to the discharge of regulated contaminants and, as such, is required to take action to investigate and remediate the impacts in accordance with standards established by the NHDES. The Company conducted a site investigation, the scope of which was reviewed by the NHDES, in order to assess the extent of potential soil and groundwater contamination and develop a remedial action. Based on input received from NHDES in March 2017 with regard to the scope of the site investigation, the Company recorded $0.2 million of expense. In 2018, the Company received a response from the NHDES to the site investigation report outlining proposed remedial actions. The Company recorded an additional $0.1 million of expense in 2018 associated with the expected costs to remediate the impacts of the discharge of regulated contaminants in accordance with standards established by the NHDES. During 2018 the environmental liability was fully reduced reflecting payments made to vendors, resulting in no balance at December 31, 2018. Additionally, the Company incurred $0.2 million of capital expenditures in 2018, in relation to the lining of the Company's fresh water lagoons. The site investigation and remedial action plan are ongoing. The Company cannot be sure that costs will not exceed the current estimates until this matter is closed with the NHDES, nor that any future corrective action at this location would not have a material effect on the Company’s financial condition, results of operations or cash flows.

In December 2018, the New York State Department of Environmental Conservation (“NYDEC”) informed the Company that the newly acquired Interface site located at Hoosick Falls, NY will be the subject of an investigation in to the possibility of it being an inactive hazardous disposable waste site.  The letter specifically references PFAS that have been detected in a nearby water supply, soil and/or surface water.  Notably, the PFAS contamination has been identified in the Hoosick Falls area for some time and other large manufacturers in the area have previously been identified as a source.  The NYDEC approved a site characterization plan in December 2019. The Company recorded expense of $0.3 million in the fourth quarter of 2019 as a result of the site characterization plan preparation and site characterization activities. Additional site characterization activities are planned for the fourth quarter of 2020. The Company does not know the scope or extent of its future obligations, if any, that may arise from the site investigation and therefore is unable to estimate the cost of any corrective action. Accordingly, the Company cannot assure that the costs of any future corrective at this location would not have a material effect on the Company's financial condition, results of operations or cash flows.

Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly impact any estimates of environmental remediation costs.

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17. Stockholders' Equity and Accumulated Other Comprehensive Income

Changes in stockholders' equity for the three and nine-month periods ended September 30, 2020 were as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Beginning Balance	$	253,262	$	387,105	$	318,420	$	369,275
Comprehensive (loss) income, net of tax	(5,477)		(5,849)		(72,474)		10,773
Stock repurchased	(23)		(7)		(31)		(62)
Stock issued under employee plans	—		5		4		5
Stock-based compensation expense	551		417		2,006		1,611
Stock issued to directors	—		—		388		252
Adoption of ASC 606 (1)	—		—		—		(183)
Ending Balance	$	248,313	$	381,671	$	248,313	$	381,671

The components of accumulated other comprehensive (loss) income are shown below:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In Thousands	2020		2019		2020		2019
Foreign currency translation:
Beginning balance	$	(22,833)	$	(16,128)	$	(18,022)	$	(18,458)
Net gain (loss) on foreign currency translation	8,245		(8,726)		3,434		(6,396)
Other comprehensive income (loss), net of tax	8,245		(8,726)		3,434		(6,396)
Ending balance	(14,588)		(24,854)		(14,588)		(24,854)
Pension and other postretirement benefit plans:
Beginning balance	(2,749)		(2,879)		(3,080)		(22,253)
Amounts reclassified from accumulated other comprehensive (loss) income (2)	(49)		21		282		19,395
Other comprehensive (loss) income, net of tax	(49)		21		282		19,395
Ending balance	(2,798)		(2,858)		(2,798)		(2,858)
Unrealized gain/(loss) on derivative instruments:
Beginning balance	(5,116)		(4,000)		(4,877)		(1,974)
Net loss on derivative instruments (3)	(2,669)		(148)		(3,306)		(2,174)
Amounts reclassified from accumulated other comprehensive income (4)	706		—		1,104		—
Other comprehensive loss, net of tax	(1,963)		(148)		(2,202)		(2,174)
Ending balance	(7,079)		(4,148)		(7,079)		(4,148)
Total accumulated other comprehensive loss	$	(24,465)	$	(31,860)	$	(24,465)	$	(31,860)

(1) During the three-month period ended March 31, 2019, the Company recorded an adjustment reducing retained earnings and contract assets by $0.2 million to correct an error in the adoption of ASC 606.

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(2) For the three-months ended September 30, 2020 and 2019, amount represents routine amortization of actuarial gains and losses in net periodic benefit cost and other activity of less than $0.1 million, net of less than $0.1 million tax benefit. For the nine-months ended September 30, 2020, amount represents the settlement of the ISS Pension Plan in the first quarter of 2020 of $0.4 million, net of $0.1 million tax benefit, and routine amortization of actuarial gains and losses in net periodic benefit cost and other activity of less than $0.1 million, net of less than $0.1 million tax benefit. For the nine-months ended September 30, 2019, amount represents the settlement of the Lydall Pension Plan in the second quarter of 2019 of $19.0 million, net of $11.5 million tax benefit, and routine amortization of actuarial losses in net periodic benefit cost during the first five months of fiscal year 2019 prior to the plan termination of $0.4 million, net of $0.1 million tax benefit.

(3) Amount represents unrealized losses on the fair value of hedging activities, net of tax benefits of $0.8 million and less than $0.1 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $1.0 million and $0.7 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

(4) Amounts represents the impact of de-designation of the interest rate swap agreement, net of tax expenses of $0.2 million and $0.3 million, for the three-month and nine-month periods ended September 30, 2020, respectively.

18. Subsequent Events

On October 14, 2020, the Company amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's modified financial covenants.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview and Outlook

Business

Lydall, Inc. and its subsidiaries (collectively, the “Company” or “Lydall”) design and manufacture specialty engineered nonwoven filtration media, industrial thermal insulating solutions, and thermal and acoustical barriers for filtration/separation and heat abatement and sound dampening applications. The Company principally conducts its business through three reportable segments: Performance Materials, Technical Nonwovens and Thermal Acoustical Solutions, with sales globally. The Performance Materials ("PM") segment includes filtration media solutions primarily for air, fluid power, life science and industrial applications (“Filtration”), and gasket and sealing solutions, thermal insulation, energy storage, and other engineered products (“Sealing and Advanced Solutions”). The Technical Nonwovens ("TNW") segment consists of Industrial Filtration products that include nonwoven rolled-goods felt media and filter bags used primarily in industrial air and liquid filtration applications as well as Advanced Materials products that include nonwoven rolled-good media that is used in other commercial applications and predominantly serves the geosynthetics, automotive, industrial, and medical markets. Advanced Materials products also include automotive rolled-good material for use in the Thermal Acoustical Solutions segment manufacturing process. Nonwoven filter media is used to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, food, and pharmaceutical. The Thermal Acoustical Solutions ("TAS") segment offers innovative engineered products to assist in noise and heat abatement within the transportation and industrial sectors.

Recent Developments - COVID-19

The impact of the novel strain of the coronavirus (“COVID-19”) has grown throughout the world, including in all global and regional markets served by the Company. During 2020, governmental authorities implemented numerous measures attempting to contain and mitigate the effects of COVID-19, including travel bans and restrictions, quarantines, social distancing orders, shelter in place orders and shutdowns of non-essential activities. The Company’s manufacturing facilities are located in areas that have been affected by the pandemic and shutdowns. Certain Company facilities in the United States, Europe and Asia carried out shutdowns as a result of government-imposed restrictions or in conjunction with customer plant closures during the first quarter. The Company’s Asia facilities resumed operations in late February and other facilities ramped back up moderately, in line with customer demand, during the second quarter. In the third quarter, the Company has seen a stronger recovery in its Performance Materials segment, specifically in its Filtration business, and in the Thermal Acoustical Solutions and Technical Nonwovens segments as discussed below.

Performance Materials (“PM”) Developments

Performance Materials sales were down 4.6% in the first half of 2020 from the comparative period in 2019 with incremental demand for specialty filtration media products more than offset by softer demand in the Sealing and Advanced Solutions business. PM’s Filtration sales continued to be very strong in the third quarter, up approximately 37.8% from the comparative period in the prior year, led by continued demand for fine fiber meltblown media used in personal protective equipment such as N95 respirators and surgical and medical masks. This demand is expected to moderate into the fourth quarter and expected to be down slightly on a sequential basis due to normal seasonality. Weaker demand in automotive, agricultural, and construction equipment markets resulted in a sales decline of approximately 1.7% in the Sealing and Advanced Solutions business in the third quarter of 2020 from the comparative period in 2019.

As a result of continued strong demand for filtration products, the Company approved investments to add two production lines in Performance Materials’ Rochester facility for the production of fine fiber meltblown filtration media used in the N95 respirator and surgical and medical masks. In addition, the Company reached an agreement with the U.S. Government that provides partial funding of the investments in the production lines in addition to funding for other technical resources.

In the third quarter of 2020, the Company announced an investment in a new fine fiber meltblown production line in its French facility to support the European Union face mask production and air filter production in the fight against COVID-19. This investment is being partially funded by the French Government.

In the third quarter, the Company initiated actions to close underperforming operating locations in Europe and discontinue production of a lower efficiency air filtration media product and, in turn, fully depreciated the supporting machinery and equipment in North America. These actions are part of the Company's ongoing assessment of underperforming assets and focus

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of resources on the significant investments to expand fine fiber meltblown production. These actions are expected to be completed in 2021 and projected to improve overall segment margin performance beginning in 2021. For additional information, see Note 12, "Restructuring".

Technical Nonwovens (“TNW”) Developments

During the first half of 2020, TNW experienced slowdowns in all geographic locations; predominantly in its facilities in South Carolina, the United Kingdom, and China. TNW’s Texel business in Canada, however, is a leading supplier of nonwoven products used in the production of healthcare applications including medical wipes, pads, and gowns. In response to the COVID-19 pandemic, the Company re-prioritized its manufacturing capabilities in North America and Europe to focus on serving customers for these products.

TNW’s sales in the first half of 2020 declined 18.8% from the comparable period in 2019 on generally slower demand in industrial end markets globally. In the third quarter of 2020, sales increased 12.5% on a sequential basis from the previous quarter but decreased 8.5% compared to the prior year quarter. Softer industrial end markets and lower sales into automotive applications resulted in the year-over-year sales declines in the quarter. Third quarter 2020 sales were down 10.0% in Industrial Filtration and 6.8% in Advanced Materials businesses from the same period in the previous year.

Thermal Acoustical Solutions (“TAS”) Developments

As previously disclosed, the Company ramped-down its TAS operations in North Carolina in the United States, as well as in France and Germany, coinciding with the shutdown of its major automotive customers' facilities in those regions beginning in late March 2020. During the first half of 2020, TAS sales decreased 35.4% from prior year, heavily impacted by customer shutdowns during March, April, and May. TAS began to ramp-up production in mid-second quarter of 2020 in North America and Europe as customers began to re-open their plants in these regions. During the third quarter 2020, part sales were down 0.8% from the previous year as TAS continued to see stronger demand in North America and Europe with sales increasing significantly compared to second quarter 2020.

As customer demand increased in North America, the Company began to experience an increase of 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. In addition, recent recoveries in the manufacturing industries are causing higher commodity pricing in North America. In late third quarter 2020, as a result of labor shortages and operational inefficiencies directly related to COVID-19, TAS was unable to manufacture parts timely, resulting in customer production line stoppages. In early October 2020, due to the unforeseen and unforeseeable nature of the COVID-19 pandemic, which is out of the Company’s control, the Company invoked force majeure or commercial impracticability as legal excuse for delayed performance of contracts and defense to any claim that may be asserted by customers. A recent resurgence of cases in that same facility has caused the Company to expand its declaration of force majeure or commercial impracticability to other impacted customers. The Company has taken various actions to resolve these issues and expects TAS to continue to incur incremental costs in the fourth quarter of 2020.

Looking Forward

The continuation of the ramp-up of production is dependent on customer demand and no additional outbreaks of COVID-19 that could cause a major slowdown in demand impacting the Company’s ability to operate because of government mandates, employee illnesses or other related unforeseen events. The Company anticipates the global automotive industry will continue to stabilize in the fourth quarter, but fourth quarter volumes are expected to be lower than the comparative 2019 period as a result of the global economic slowdown caused by the COVID-19 pandemic. New vehicle sales are highly dependent on the strength of the consumer. If unemployment remains at higher levels, new vehicle sales could be significantly lower than historical and previously projected sales levels. The Company expects workforce shortages directly driven by COVID-19 to continue into the fourth quarter for the TAS segment. The Company also expects to face continued headwinds in PM’s sealing businesses but stronger demand for filtration products is expected to offset this decline. Additionally, the Company expects seasonally strong construction activity, which drives demand for geosynthetic products, to decline as winter approaches and continued softness in industrial end markets in its Technical Nonwovens segment in the fourth quarter of 2020.

Liquidity and Cash Preservation

The Company continued to experience working capital cash flow improvements through September 30, 2020 generating $74.6 million in cash from operating activities. As the Company continues to ramp up production and invest in new fine fiber meltblown production equipment to meet customer demand, the Company expects cash outflows to support working capital requirements and capital projects.

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During the nine months of 2020, the Company took significant measures to reduce its overall cash expenditures, including the furlough or lay-off of hourly/salary plant workers and select furloughs of corporate and other salaried employees, deferred company contributions to its pension plans and matching contributions under the Company's 401(k) defined contribution plan, reduction of purchase obligations for raw materials and reduction/delay of non-critical capital spending. As a result, the Company reduced its monthly cash expenditures. The Company may elect to continue certain actions if the COVID-19 pandemic continues.

In addition, the Company has taken advantage of specific benefits, including wage recovery provided by social programs in Europe and China and deferred domestic employer tax in the U.S. through the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. Through September 30, 2020, the Company benefited from $2.0 million in social cost reimbursements predominately in Europe and China. The Company may pursue, wherever it qualifies, governmental assistance and take advantage of governmental programs. The Company cannot guarantee, however, that it will qualify for, or receive, any additional assistance that it pursues.

As noted above, the Company reached an agreement with the U.S. Government in June 2020 that provides funding to cover a portion of the cost to install two new production lines for the production of meltblown material for N95 respirator, surgical and medical masks and for other technical resources. The Company will receive monthly payments in accordance with the agreement to fund up to $13.5 million. Additionally, the Company has a tentative agreement with the French Government to fund up to 30% of the Company’s investment in its facility in France supporting the European Union face mask production and air filter production.

In addition to the significant measures taken to reduce and contain costs, the Company took actions in March 2020 to provide additional liquidity, primarily including a $20.0 million draw down on its amended credit facility. On May 11, 2020, the Company entered into an amended credit agreement (see Note 6, "Long-term Debt and Financing Arrangements" for the key amended terms and conditions) to modify certain financial maintenance covenants, at least one of which the Company expected to fail during the second quarter of 2020 as a result of the impact of COVID-19. On October 14, 2020, the Company amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's financial covenants. The Company was in compliance with those modified financial covenants as of and for the three-month period ended September 30, 2020, and management does not anticipate noncompliance in the foreseeable future.

Through September of 2020, the Company generated $74.6 million of net cash provided by operations and had cash on hand of $122.0 million as of September 30, 2020. The Company continues to maintain the necessary capital to meet its debt obligations and interest payments. As previously disclosed in late 2019, the Company entered into arrangements with a banking institution to sell trade accounts receivable balances for selected customers. The Company continues to sell trade accounts receivable balances under these arrangements. See Transfer of Financial Assets under Note 1, “Basis of Financial Statement Presentation” for more information.

The spread of COVID-19 and the measures taken to constrain the spread of the virus have had, and will continue to have, a material negative impact on the Company’s financial results, and such negative impact may continue well beyond the containment of such outbreak. There is inherent uncertainty in the assumptions the Company uses to estimate its future liquidity due to the impact of the COVID-19 outbreak. In addition, the magnitude, duration, and speed of the global pandemic is uncertain. Consequently, the impact on the Company's business, financial condition or longer-term financial or operational results is uncertain. However, management believes, based on the actions taken to reduce cash expenditures and the Company’s financial position, that net cash provided by operations combined with its cash and cash equivalents and borrowing availability under its Credit Facility will be sufficient to fund its current obligations, capital spending, debt service requirements and working capital needs over at least the next twelve months.

Steps Taken to Protect Employees

The Company continues to monitor the global outbreak and spread of COVID-19 and take steps to mitigate the potential risks to the Company and its employees posed by the spread, related circumstances, and economic impacts of COVID-19. As the Company brings employees back to work, it has implemented changes to help ensure the safety and health of all its employees and continues to assess and update its business continuity plans in the context of this pandemic. The Company established the Lydall Emergency Preparedness Team (“LEPT”), implementing strict travel restrictions, enforcing rigorous hygiene protocols, increasing sanitization efforts at all facilities and implementing remote working arrangements for the majority of its employees who work outside the plants. The Company will continue its work to ensure it maintains a safe and healthy work environment and continue to allow remote working arrangements as long as necessary where appropriate.

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Third Quarter 2020 Highlights

Below are financial performance highlights for the three-month period ended September 30, 2020 compared to the three-month period ended September 30, 2019:

•Net sales were $207.1 million in the third quarter of 2020, compared to $205.3 million in the third quarter of 2019, an increase of $1.8 million, or 0.9%, driven by $7.8 million in higher sales in the Company's Performance Materials segment, resulting from higher demand in filtration products for face mask media in response to the COVID-19 pandemic, partially offset by lower sales in the Company's Technical Nonwovens and Thermal Acoustical Solutions segments. The change in consolidated net sales is summarized in the following table:

Components (in thousands)	Change in Net Sales		Percent Change
Parts volume and pricing change	$	648	0.3	%
Change in tooling sales	(1,827)		(0.9)	%
Foreign currency translation	2,990		1.5	%
Total	$	1,811	0.9	%

•Gross margin increased to 18.3% for the three-month period ended September 30, 2020 as compared to 17.7% in the corresponding period in 2019. The Performance Materials segment favorably impacted consolidated gross margin by approximately 330 basis points, primarily due to favorable product mix, driven by increased demand for face mask media in response to the COVID-19 pandemic and higher liquid filtration sales, combined with favorable raw material commodity and production costs, and lower overhead costs. Gross margin from the Thermal Acoustical Solutions segment adversely impacted consolidated gross margin by approximately 160 basis points due to labor shortages and operating inefficiencies directly related to an increase in COVID-19 cases in its North American facility, resulting in higher freight and temporary labor expenses in order to meet larger OEM customers' demands. The Technical Nonwovens segment adversely impacted consolidated gross margin by approximately 110 basis points due to unfavorable overhead absorption on lower segment net sales combined with unfavorable product mix.

•Operating loss was $(9.3) million for the three-month period ended September 30, 2020 compared to operating income of $7.4 million in the corresponding period in 2019. The operating loss was driven by restructuring charges of $15.0 million primarily in the Performance Materials segment and significant operating inefficiencies in the Company's Thermal Acoustical Solutions segment as noted above. The following expenses adversely impacted operating income for the third quarters of 2020 and 2019:

	For the Three Months Ended September 30, 2020
Components (in thousands except per share amounts)	Operating Income Impact		Pre-tax EPS Impact		Tax Effect EPS Impact (1)		Net EPS Impact
PM restructuring expenses	$	(14,984)	$	(0.86)	$	0.21	$	(0.65)

	For the Three Months Ended September 30, 2019
Components (in thousands except per share amounts)	Operating Income Impact		Pre-tax EPS Impact		Tax Effect EPS Impact (1)		Net EPS Impact
TNW restructuring expenses	$	(117)	$	(0.01)	$	0.00	$	(0.01)

(1) Tax expense represents the statutory tax rate in the jurisdiction in which the expense was incurred.

•The net loss was $(11.7) million, or $(0.67) per diluted share, for the three-month period ended September 30, 2020 compared to net income of $3.0 million, or $0.17 per diluted share, in the corresponding period in 2019.

•Cash was $122.0 million at September 30, 2020, compared to $51.3 million at December 31, 2019. Net cash provided by operations was $74.6 million for the nine-month period ended September 30, 2020 compared to $63.0 million in the corresponding period in 2019, with the improvement primarily driven by increases in payable days across the Company's operations. On October 14, 2020, the Company amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the

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Company's modified financial covenants. See Note 6. "Long-term Debt and Financing Arrangements" to the Condensed Consolidated Financial Statements for highlights of the key amended terms and conditions.

Results of Operations

All of the following tabular comparisons are for the three-month and nine-month periods ended September 30, 2020 and 2019, unless otherwise indicated.

Net Sales

	For the Three Months Ended   September 30,						For the Nine Months Ended   September 30,
In thousands	2020		2019		Percent Change		2020		2019		Percent Change
Net sales	$	207,085	$	205,274	0.9	%	$	553,772	$	644,110	(14.0)	%

Net sales for the three-month period ended September 30, 2020 increased by $1.8 million, or 0.9%, compared to the third quarter of 2019. This increase was primarily driven by an increase in Performance Materials segment sales of $7.8 million, or 3.8% of consolidated net sales, related to higher net sales of filtration products on higher demand in the air filtration market in response to the COVID-19 pandemic. This increase was partially offset by lower sealing and advanced solutions sales as large OEM customers continued to ramped-up production. The increase in Performance Materials segment sales was partially offset by a $5.4 million decrease, or 2.6% of consolidated sales, in the Technical Nonwovens segment, driven primarily by softness in industrial end markets, primarily air filtration, in North American and Europe. Additionally, the Thermal Acoustical Solutions segment reported a decrease in net sales of $2.4 million, or 1.2% of consolidated net sales, primarily due to lower tooling sales of $1.8 million and lower net parts sales of $0.6 million, as the Company continues to ramp-up production in line with it's large OEM customers. Foreign currency translation favorably impacted net sales by $3.0 million, or 1.5% of consolidated net sales.

Net sales for the nine-month period ended September 30, 2020 decreased by $90.3 million, or 14.0%, compared to the corresponding period in 2019. This decrease was primarily due to lower net parts sales of $61.1 million, or 9.5% of consolidated net sales, in the Thermal Acoustical Solutions segment, driven by temporary plant ramp downs across all of its operations in the first half of 2020 due to large OEM customer shutdowns resulting from the COVID-19 pandemic, and lower net tooling sales of $7.6 million. The Technical Nonwovens segment reported a decrease in net sales of $30.7 million, or 4.8% of consolidated net sales, driven primarily by the global softness in industrial end markets, primarily air filtration. The Performance Materials segment reported an increase in net sales of $1.8 million, or 0.3% of consolidated net sales, driven by increased net sales in filtration as demand increased in the air filtration market for face mask media in response to the COVID-19 pandemic, partially offset by decreased sealing and advanced solutions sales related to large OEM customer shutdowns beginning in mid-March due to COVID-19. Foreign currency translation had a negative impact on net sales of $1.2 million, or 0.2% of consolidated net sales.

Cost of Sales

	For the Three Months Ended   September 30,						For the Nine Months Ended   September 30,
In thousands	2020		2019		Percent Change		2020		2019		Percent Change
Cost of sales	$	169,155	$	168,918	0.1	%	$	448,856	$	520,423	(13.8)	%

Cost of sales for the three-month period ended September 30, 2020 increased by $0.2 million, or 0.1%, compared to the corresponding period in 2019. The increase was primarily driven by a significant increase in variable overhead costs, principally in the Thermal Acoustical Solutions segment related to higher costs associated with COVID-19, primarily in the Company's North American plant, and, to a lesser extent, in the Technical Nonwovens segment related to unfavorable overhead costs on lower volume. Additionally, higher net sales in the Performance Materials segment due to higher demand for face mask media in response to COVID-19 contributed to the higher cost of sales. The increase in cost of sales was partially offset by lower net sales in the Technical Nonwovens and Thermal Acoustical Solutions segments and lower raw material commodity and production costs across all segments, coupled with favorable product mix in the Performance Materials and Thermal Acoustical Solutions segments. Foreign currency translation increased cost of sales by $2.5 million, or 1.5%, in the third quarter of 2020 compared to the third quarter of 2019.

Cost of sales for the nine-month period ended September 30, 2020 decreased by $71.6 million, or 13.8%, compared to of the corresponding period in 2019. The decrease was driven by lower net sales across all segments, primarily due to plant ramp

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downs in the Thermal Acoustical Solutions segment as noted above and, to a lesser extent, the Technical Nonwovens segment due to the COVID-19 pandemic. In addition, lower raw material commodity and production costs across all segments contributed to lower cost of sales. These decreases to cost of sales were partially offset by higher overhead costs in the Thermal Acoustical Solutions and Technical Nonwovens segments due to the drivers noted above, combined with unfavorable product mix, primarily in the Thermal Acoustical Solutions segment resulting from lower fibers sales related to the sunsetting of major platforms in the second half of 2019 with select OEM manufacturers. Foreign currency translation decreased cost of sales by $1.1 million, or 0.2%, in the first nine months of 2020 compared to the first nine months of 2019.

Gross Profit

	For the Three Months Ended   September 30,								For the Nine Months Ended   September 30,
In thousands	2020			2019			Percent Change		2020			2019			Percent Change
Gross profit	$	37,930		$	36,356		4.3	%	$	104,916		$	123,687		(15.2)	%
Gross margin	18.3		%	17.7		%			18.9		%	19.2		%

Gross margin for the three-month period ended September 30, 2020 increased 60 basis points compared to the corresponding period in 2019. The Performance Materials segment favorably impacted consolidated gross margin by approximately 330 basis points, primarily due to favorable product mix, driven by higher demand for face mask media in response to the COVID-19 pandemic and increased liquid filtration sales, combined with favorable customer pricing, and raw material commodity and production costs. The Thermal Acoustical Solutions segment adversely impacted consolidated gross margin by approximately 160 basis points driven by higher COVID-19-related costs as noted above. The Technical Nonwovens segment negatively impacted consolidated gross margin by approximately 110 basis points due to unfavorable overhead absorption on reduced segment net sales combined with unfavorable product mix in the third quarter of 2020 compared to the third quarter of 2019.

Gross margin for the for the nine-month period ended September 30, 2020 decreased 30 basis points compared to the corresponding period in 2019. The Thermal Acoustical Solutions segment negatively impacted consolidated gross margin by approximately 300 basis points driven by the significant reduction in segment net sales due to the COVID-19 pandemic and higher COVID-19-related costs in the third quarter of 2020. The Performance Materials segment favorably impacted consolidated gross margin by approximately 290 basis points due to the drivers noted above while the Technical Nonwovens segment had a minimal impact on consolidated gross margin in the first nine months of 2020 compared to the corresponding period in 2019.

Selling, Product Development and Administrative Expenses

	For the Three Months Ended   September 30,								For the Nine Months Ended   September 30,
In thousands	2020			2019			Percent Change		2020			2019			Percent Change
Selling, product development and administrative expenses	$	32,227		$	28,909		11.5	%	$	95,418		$	94,011		1.5	%
Percentage of sales	15.6		%	14.1		%			17.2		%	14.6		%

Selling, product development and administrative expenses for the three-month period ended September 30, 2020 increased $3.3 million, or 150 basis points as a percentage of net sales, compared to the corresponding period in 2019. The increase in selling, product development and administrative expenses were driven by higher compensation-related expenses of $2.6 million, higher consulting costs of $0.6 million, and an increase in other general administrative costs of $0.9 million. These increases were partially offset by lower travel expenses of $0.8 million.

Selling, product development and administrative expenses for the nine-month period ended September 30, 2020 increased $1.4 million, or 260 basis points as a percentage of net sales, compared to the corresponding period in 2019. The increase in selling, product development and administrative expenses were driven by higher compensation-related expenses of $3.7 million and higher strategic initiatives expenses of $1.9 million. These increases were partially offset by lower salaries expenses of $1.7 million, lower travel expenses of $1.2 million, lower consulting expenses of $0.5 million, and a decrease in other general administrative costs of $0.8 million.

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Impairment of Goodwill and Other Long-Lived Assets

	For the Three Months Ended   September 30,						For the Nine Months Ended   September 30,
In thousands	2020		2019		Dollar Change		2020		2019		Dollar Change
Impairment of goodwill and other long-lived assets	$	—	$	—	$	—	$	61,109	$	—	$	61,109

As previously reported, the Company recorded a goodwill impairment charge of $48.7 million in the Performance Materials segment during the three-month period ended March 30, 2020. Lower expected demand in automotive and other end markets due to the COVID-19 pandemic resulted in a reduction in sales and cash generation projections as compared to prior projections for the reporting units. As a result of these revised projections and changes in other Company and market-based inputs to the determination of fair value, the carrying value of the Performance Materials reporting unit exceeded its fair value by $48.7 million, resulting in the impairment charge.

As a result of the COVID 19 pandemic and the Company's action plan to address the risks associated with it, the Company accelerated certain strategic actions. One such action was a review of an underperforming European plant within the Performance Materials segment. As a result of a strategic shift regarding this plant, the Company performed an impairment assessment on the long-lived assets of the plant. The impairment test concluded that the asset group was not recoverable, and the Company then determined that carrying value of the asset group exceeded its fair value and recorded a long-lived asset impairment charge of $12.4 million.

Restructuring Expenses

	For the Three Months Ended   September 30,						For the Nine Months Ended   September 30,
In thousands	2020		2019		Dollar Change		2020		2019		Dollar Change
Restructuring expenses	$	14,984	$	—	$	14,984	$	14,984	$	—	$	14,984

During the third quarter of 2020, the Company’s Performance Materials segment undertook actions to discontinue production of a lower efficiency air filtration media product and, in turn, fully depreciated the supporting machinery and equipment in North America and consolidated certain product lines and began exiting underperforming facilities in Europe. These restructuring activities, which are projected to conclude in the first half of 2021, are expected to reduce operating costs, increase production efficiency and enhance the Company’s flexibility by better aligning its manufacturing operations with the segment's customer base. Accordingly, the Company expects to record pre-tax expenses of approximately $17.0 to $20.0 million, primarily related to severance and employee retention expenses, in connection with these restructuring activities, of which approximately $11.5 to $14.5 million are expected to result in cash expenditures. The Company incurred non-cash expenditures of approximately $5.5 million which consisted of fully depreciating and/or amortizing long-lived assets and, to a lesser extent, writing-off inventory.

In North America, the Company decided to shut down two underperforming nonwoven manufacturing carded lines and ancillary equipment, originally acquired in 2018, that served commercial and residential HVAC markets with low to medium efficiency air filtration media. The Company experienced lower demand as a result of COVID-19, which accelerated a market shift from lower efficiency air filtration media to higher performance rated air filtration media. As a result, the Company recorded a pre-tax restructuring charge of $5.4 million, primarily due to accelerated depreciation of property, plant and equipment and other intangible assets.

The Company undertook actions to consolidate global production facilities in the Sealing and Advanced Solutions business from five facilities to four, resulting in the closure of an underperforming facility in Germany. In addition, the Company decided to close a small volume membrane filtration production facility in the Netherlands. As a result of the two facility closures in Europe, the Company recorded pre-tax restructuring charges of $9.6 million consisting of severance costs, legal expenses and inventory write-offs. The Company expects to generate annualized savings of $5.0 million to $6.0 million. See Note 12, "Restructuring" for additional information.

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Employee Benefit Plans Settlement Expenses

	For the Three Months Ended   September 30,						For the Nine Months Ended   September 30,
In thousands	2020		2019		Dollar Change		2020		2019		Dollar Change
Employee benefit plans settlement expenses	$	—	$	186	$	(186)	$	385	$	25,701	$	(25,316)

In the first quarter of 2020, the Company settled the pension obligation of the Interface Sealing Solutions, Inc. Pension Plan through lump sum distributions to participants or by irrevocably transferring pension liabilities to an insurance company through the purchase of a group annuity contract. The settlement, funded with pension plan assets, resulted in a non-cash settlement expense of $0.4 million in the first quarter of 2020 related to the recognition of accumulated deferred actuarial losses.

In the second quarter of 2019, the Company settled the pension obligation of the U.S. Lydall Pension Plan through lump sum distributions to participants or by irrevocably transferring pension liabilities to two insurance companies through the purchase of group annuity contracts. The settlement, funded with Pension Plan assets, resulted in a non-cash settlement expense of $25.5 million in the second quarter of 2019 related to the recognition of accumulated deferred actuarial losses and an additional $0.2 million in the third quarter of 2019 to complete the termination of the pension plan.

Interest Expense

	For the Three Months Ended   September 30,								For the Nine Months Ended   September 30,
In thousands	2020			2019			Percent Change		2020			2019			Percent Change
Interest expense	$	4,537		$	3,666		23.8	%	$	11,870		$	11,025		7.7	%
Weighted average interest rate	6.2		%	4.4		%			5.2		%	4.3		%

The increase in interest expense for the three and nine-month periods ended September 30, 2020 compared to the corresponding period in 2019 was due to higher interest rates related to the amendment of the Company's Facility in the second quarter of 2020, partially offset by reduction to interest expense due to the favorable interest rate differential between the U.S. dollar and Euro related to the net investment hedge the company entered into in the fourth quarter of 2019.

Other (Income) Expense, net

	For the Three Months Ended   September 30,						For the Nine Months Ended   September 30,
In thousands	2020		2019		Dollar Change		2020		2019		Dollar Change
Other expense (income), net	$	276	$	(885)	$	1,161	$	106	$	(1,359)	$	1,465

Other expense (income), net, was unfavorable for the three-month period ended September 30, 2020 compared to the corresponding 2019 period primarily due to the absence of a gain of $0.6 million recognized for a change in estimate of the contingent purchase price of the 2018 PCC acquisition and higher foreign currency losses recognized on the revaluation of cash, trade payables and receivables and intercompany loans denominated in currencies other than the functional currencies of the Company's subsidiaries.

Other expense (income), net, was unfavorable for the nine-month period ended September 30, 2020 compared to the corresponding 2019 period primarily due to the absence of the $1.5 million gain on the sale of a business that occurred in the second quarter of 2019 and a gain of $0.7 million recognized for a change in estimate of the contingent purchase price of the PCC acquisition in the first nine months of 2019. Additionally, 2020 included higher foreign currency losses recognized on the revaluation of cash, trade payables and receivables and intercompany loans denominated in currencies other than the functional currencies of the Company's subsidiaries.

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Income Taxes

For the three-month period ended September 30, 2020, the Company's effective tax rate was 16.6% compared to an effective tax rate of 35.1% for the three-month period ended September 30, 2019. For the three months ended September 30, 2020, the rate was negatively impacted by valuation allowance activity of $2.0 million, offset by a state tax benefit of $0.8 million. resulting in a lower effective tax rate when in a pre-tax loss position. For the three months ended September 30, 2019, the effective tax rate was negatively impacted by losses in jurisdictions in which no tax benefit can be recognized.

For the nine-month period ended September 30, 2020, the Company's effective tax rate was 6.3% compared to an effective tax rate of 97.0% for the nine-month period ended September 30, 2019. For the nine months ended September 30, 2020, the Company had a pre-tax loss primarily resulting from impairment charges of $61.1 million. The impairment charges significantly impacted the Company's effective tax rate because $48.7 million of the impairment charges related to non-deductible goodwill, resulting in a low effective tax rate for the nine months ended September 30, 2020 when in a pre-tax loss position. Additionally, the effective rate was negatively impacted by valuation allowance activity of $2.7 million. For the nine-month period ended September 30, 2019, the Company recorded a tax benefit of $5.5 million primarily driven by $10.5 million of tax benefit related to the pension plan settlement. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the nine months ended September 30, 2019 was 25.2%. This was negatively impacted by $1.8 million from losses in jurisdictions in which no tax benefit can be recognized, partially offset by the Company's geographical mix of earnings.

The Company and its subsidiaries file a consolidated federal income tax return, as well as returns required by various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including such major jurisdictions as the United States, Canada, China, France, Germany, Hong Kong, India, the Netherlands, and the United Kingdom. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2016, state and local examinations for years before 2015, and non-U.S. income tax examinations for years before 2013.

The Company’s effective tax rates in future periods could be affected by an increase or decrease in earnings in countries where tax rates differ from the United States federal tax rate, the relative impact of permanent tax adjustments on earnings from domestic operations, changes in net deferred tax asset valuation allowances, including valuation allowances on loss carryforwards in which no tax benefit can be recognized, stock vesting, pension plan terminations, the completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of ongoing tax planning strategies and audits.

On July 20, 2020, the U.S. Treasury Department and IRS released T.D. 9902 final regulations for publication in the Federal Register related to the global intangible low-taxed income (“GILTI”) high-tax exception. The final regulations largely adopt the framework of the 2019 proposed regulations, with certain key departures. The most significant departures are that an election to apply the GILTI high-tax exception may be made annually instead of once every five years, and that the calculation is made with respect to each “tested unit” of a controlled foreign corporation, rather than on a qualified business unit by qualified business unit basis. The company has evaluated the final regulations and included the impacts of these changes in the Company’s third quarter financial statements.

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Segment Results

The following tables present segment net sales and operating income for the primary product and service categories for the three-month and nine-month periods ended September 30, 2020 and September 30, 2019, respectively.

Net sales by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials Segment:
Filtration	$	30,899	$	22,427	$	86,422	$	71,093
Sealing and Advanced Solutions	36,918		37,573		105,088		118,589
Performance Materials Segment net sales	67,817		60,000		191,510		189,682
Technical Nonwovens Segment (1):
Industrial Filtration	29,643		32,935		90,425		114,005
Advanced Materials (2)	28,866		30,977		77,494		84,591
Technical Nonwovens Segment net sales	58,509		63,912		167,919		198,596
Thermal Acoustical Solutions Segment:
Parts	79,687		80,309		189,456		250,591
Tooling	5,836		7,617		17,276		24,920
Thermal Acoustical Solutions Segment net sales	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 (loss) by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials (3)	$	(6,759)	$	712	$	(58,257)	$	5,474
Technical Nonwovens (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 Income	$	(9,281)	$	7,447	$	(66,595)	$	29,676

(1)The Technical Nonwovens segment includes 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 of intercompany sales to the Thermal Acoustical Solutions segment for the three-month periods ended September 30, 2020 and 2019, respectively.

•$10.2 million and $13.6 million of intercompany sales to the Thermal Acoustical Solutions segment for the nine-month periods 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.

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(4)Included in the Technical Nonwovens segment is the following:

•$1.2 million and $1.3 million of intangible assets amortization for the three-month periods ended September 30, 2020 and 2019, respectively.

•$3.5 million and $3.8 million of intangible assets amortization for the nine-month periods ended September 30, 2020 and 2019, respectively.

Performance Materials

Segment net sales increased $7.8 million in the third quarter of 2020 compared to the third quarter of 2019. The increase was primarily driven by higher net sales in filtration of $8.5 million as demand increased in the air filtration market for face mask media in response to the COVID-19 pandemic. This increase was partially offset by lower sealing and advanced solutions net sales of $0.7 million as these products partially serve the automotive industry and were impacted by lower demand as automotive customers continued to ramp-up production following shutdowns in the first half of 2020 related to COVID-19. Foreign currency translation positively impacted segment net sales by $0.9 million, or 1.6%.

The Performance Materials segment reported an operating loss of ($6.8) million in the third quarter of 2020, compared to operating income of $0.7 million in the third quarter of 2019. The decrease in operating income of $7.5 million was primarily driven by segment restructuring charges of $14.8 million in the third quarter of 2020. This decrease was partially offset by an improvement in segment gross margin of 780 basis points, primarily related to favorable product mix from increased demand for face mask media, combined with lower material commodity and production costs. Additionally, selling, product development and general administrative expenses decreased $0.3 million, or 280 basis points as a percent of segment net sales, primarily driven by lower travel expenses of $0.4 million, lower salaries of $0.2 million, lower bad debt expense of $0.2 million, and reduced other general administrative costs of $0.1 million. These decreases were partially offset by increased accrued cash incentive compensation of $0.6 million.

Segment net sales increased $1.8 million for the nine-month period ended September 30, 2020 compared to the corresponding period in 2019. The increase was driven by the drivers noted above. Foreign currency translation had a marginal impact on segment net sales in the first nine months of 2020 compared to the first nine months of 2019.

The Performance Materials segment reported an operating loss of ($58.3) million for the nine-month period ended September 30, 2020, compared to operating income of $5.5 million for the corresponding 2019 period. The decrease in operating income of $63.7 million was primarily driven by goodwill and other long-lived asset impairment charges of $61.1 million in the first quarter of 2020 and segment restructuring charges of $14.8 million in the third quarter of 2020. This decrease was partially offset by an improvement in segment gross margin of 460 basis points, primarily due to favorable product mix driven by increased demand for face mask media, lower material commodity and production costs, lower fixed overhead costs from savings driven by the fourth quarter 2019 reduction-in-force program, and lower depreciation expense related to the asset-write off in one of the segment's European plants in the first quarter of 2020. Additionally, selling, product development and general administrative expenses decreased $2.9 million, or 170 basis points as a percent of segment net sales, primarily driven by decreased travel, consulting, and salaries expenses, partially offset by increased accrued cash incentive compensation.

Technical Nonwovens

Segment net sales decreased $5.4 million, or 8.5%, in the third quarter of 2020 compared to the third quarter of 2019. Industrial filtration net sales decreased $3.3 million, or 10.0%, driven by soft industrial end markets, primarily air filtration, in North America and Europe, as a result of the COVID-19 pandemic. Advanced materials net sales decreased $2.1 million, or 6.8%, in the third quarter of 2020 compared to the third quarter of 2019, driven primarily by lower geosynthetic product demand in Canada. Foreign currency translation positively impacted segment net sales by $0.8 million, or 1.2%.

The Technical Nonwovens segment reported operating income of $5.1 million, or 8.6% of segment net sales, in the third quarter of 2020, compared to $7.2 million, or 11.2% of net segment sales, in the third quarter of 2019. The decrease in operating income of $2.1 million was primarily driven by lower sales adversely impacting operating margin by 260 basis points. The decrease in operating margin was primarily driven by a decrease in gross margin of 180 basis points, primarily related to reduced customer pricing, unfavorable product mix, and unfavorable absorption on overhead costs, partially offset by lower material commodity and productivity costs. Selling, product development and general administrative expenses were flat with prior year with an increase in compensation costs offset by lower travel costs.

Segment net sales decreased $30.7 million, or 15.4%, in the first nine months of 2020 compared to the first nine months of 2019. Foreign currency translation had a negative impact on segment net sales of $1.3 million, or 0.7%, in the first nine months of 2020 compared to the corresponding period in 2019. Industrial filtration net sales decreased $23.6 million, or 20.7%, driven by soft global industrial end markets across all regions as a result of the COVID-19 pandemic, coupled with the negative impact

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of foreign currency. Advanced materials net sales decreased $7.1 million, or 8.4%, driven by $3.4 million in lower sales of automotive rolled-good material due to the plant ramp-downs in the first half of 2020 caused by COVID-19, coupled with lower geosynthetic product demand in Canada.

The Technical Nonwovens segment reported operating income of $15.6 million, or 9.3% of segment net sales, in the first nine months of 2020, compared to $19.7 million, or 9.9% of segment net sales, in the first nine months of 2019. The decrease in operating income of $4.2 million was driven by lower sales volume due to the COVID-19 pandemic, resulting in operating margin erosion of 60 basis points. The decrease in operating margin was primarily driven by higher selling, product development and general administrative expenses of 70 basis points, as a percentage of segment net sales, partially offset by improved gross margin of 10 basis points, as a percentage of segment sales. The gross margin improvement was primarily driven by lower raw material commodity costs and favorable product mix in North America related to personal protective equipment, partially offset by higher labor and variable overhead costs. The increase in selling, product development and general administrative expenses, as a percentage of segment net sales, was primarily due to the $30.7 million reduction in sales, but was partially offset by decreased expenses of $1.9 million, primarily driven by lower salaries expenses of $0.8 million, a decrease in travel expenses of $0.6 million, lower intangible amortization expense of $0.3 million, and lower other general administrative costs of $0.2 million.

Thermal Acoustical Solutions

Segment net sales decreased $2.4 million, or 2.7%, in the third quarter of 2020 compared to the third quarter of 2019. This decrease was primarily due to lower tooling sales of $1.8 million and, to a lesser extent, lower net parts sales of $0.6 million, as the Company continues to ramp-up production in line with it's large OEM customers ramp-up after plant closures in the first half of 2020 due to the COVID-19 pandemic. Foreign currency translation favorably impacted segment net sales by $1.3 million, or 1.5%.

The Thermal Acoustical Solutions segment reported operating income of $1.2 million, or 1.4% of segment net sales, in the third quarter of 2020, compared to operating income of $5.0 million, or 5.7% of segment net sales, in the third quarter of 2019. The decrease in operating income of $3.8 million, or 430 basis points, as a percentage of net sales, was primarily due to the degradation of gross margin of 350 basis points driven by operating inefficiencies due to work force shortages directly related to an increase in COVID-19 cases, resulting in higher expedited freight and temporary labor costs as the Company continued to ramp-up production at its facility in North America to meet its large OEM customers' demand. Operating income was further impacted by an increase in selling, product development and administrative expenses of $0.5 million for higher compensation and consulting expenses, partially offset by lower other general administrative costs.

Segment net sales decreased $68.8 million, or 25.0%, for the nine-month period ended September 30, 2020 compared to the corresponding 2019 period. This decrease was primarily due to lower net parts sales of $61.1 million, driven by temporary plant ramp-downs across all of its operations in the first half of 2020 as the Company's large OEM customers closed plants due to the COVID-19 pandemic. Additionally, net tooling sales decreased $7.6 million compared to the corresponding 2019 period. Foreign currency translation had a marginal impact on segment net sales.

The Thermal Acoustical Solutions segment reported operating income of $0.5 million, or 0.3% of segment net sales, for the nine-month period ended September 30, 2020 compared to operating income of $21.9 million, or 7.9% of segment net sales, for the corresponding 2019 period. The decrease in operating income of $21.4 million was primarily due to the degradation of gross margin driven by the significant reduction in segment net sales due to the COVID-19 pandemic in addition to the operating inefficiencies in North America that occurred in the third quarter as discussed above. Selling, product development and administrative expenses decreased $0.7 million; however, as a percentage of net sales, increased due to the significant sales volume reduction. The reduction in selling, product development and administrative costs was driven by lower employee-related costs and travel expenses, partially offset by an increase in bad debt expense of $0.3 million and higher consulting expenses of $0.2 million.

Corporate Office Expenses

Corporate office expenses for the three-month period ended September 30, 2020 were $8.8 million, compared to $5.5 million in the corresponding period in 2019. The increase of $3.3 million was primarily due to an increase in compensation-related costs of $1.9 million, higher consulting costs of $0.5 million and an increase in other general administrative expenses of $0.9 million in the third quarter of 2020 compared to the third quarter of 2019.

Corporate office expenses for the nine-month period ended September 30, 2020 were $24.4 million, compared to $17.4 million in the corresponding period in 2019. The increase of $7.0 million was primarily due to an increase in corporate strategic

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initiatives expenses of $1.9 million, higher compensation-related costs of $2.9 million, an increase in stock compensation expense of $0.5 million and higher other general administrative expenses of $1.7.

Liquidity and Capital Resources

The Company assesses its liquidity in terms of its ability to generate cash to fund operating, investing and financing activities. The principal source of liquidity is operating cash flows and borrowings under the Credit Facility. In addition to operating cash flows, other significant factors that affect the overall management of liquidity include capital expenditures, investments in businesses, strategic transactions, income tax payments, debt service payments, outcomes of contingencies, foreign currency exchange rates and employee benefit plan funding. The Company manages worldwide cash requirements by considering available funds among domestic and foreign subsidiaries. The Company expects to finance its 2020 operating activities and capital spending requirements from existing cash balances, cash provided by operating activities and through borrowings under the Credit Facility, as needed.

In December 2019, the Company entered into two arrangements with a banking institution to sell trade accounts receivable balances for select customers. In the three-month and nine-month periods ended September 30, 2020, under both programs, the Company sold $21.3 million and $64.3 million, respectively, in trade receivable balances, received $59.1 million in total cash under the programs.  The Company expects to receive the remainder, net of fees, in the fourth quarter of 2020. See “Transfer of Financial Assets” in Note 1, “Basis of Financial Statement Presentation” for additional information.

In June 2020, the Company reached an agreement with the U.S. Government that provides funding to cover a portion of the cost to install two new production lines for the production of meltblown material for N95 respirator, surgical and medical masks and for other technical resources. The Company will receive monthly payments in accordance with the agreement to fund up to $13.5 million. Additionally, the Company has a tentative agreement with the French Government to fund up to 30% of the Company’s investment in its facility in France supporting the European Union face mask production and air filter production.

At September 30, 2020, the Company held $122.0 million in cash and cash equivalents, including $62.8 million in the U.S. with the remaining held by foreign subsidiaries and $283.5 million of borrowings outstanding and standby letters of credit outstanding of $1.8 million.

The Company’s continued access to sources of liquidity depends on multiple factors, including global economic conditions, the COVID-19 pandemic’s effects on its customers and their production rates, the condition of global financial markets, the availability of sufficient amounts of financing, its operating performance and its credit ratings. The Company borrowed $20 million under the revolver portion of its Facility during the first quarter of 2020, in order to increase its cash position and preserve financial flexibility in light of the impact of the COVID-19 outbreak on its results of operations and liquidity. The Company is taking further actions to improve its liquidity, including capital expenditure and operating expense reductions and increased management and oversight of its working capital.

Interest rates on amounts outstanding under the Credit Agreement are variable based on LIBOR. The LIBOR benchmark has been the subject of national, international, and other regulatory guidance and proposals for reform. In July 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit rates for calculation of LIBOR after 2021. These reforms may cause LIBOR to perform differently than in the past, and LIBOR may ultimately cease to exist after 2021. Alternative, benchmark rate(s) may replace LIBOR and could affect the Company's debt securities, derivative instruments, receivables, debt payments and receipts. At this time, it is not possible to predict the effect of any changes to LIBOR, any phase out of LIBOR or any establishment of alternative benchmark rates. Any new benchmark rate will likely not replicate LIBOR exactly, which could impact the Company's contracts that terminate after 2021. There is uncertainty about how applicable law, the courts or the Company will address the replacement of LIBOR with alternative rates on variable rate retail loan contracts and other contracts that do not include alternative rate fallback provisions. In addition, any changes to benchmark rates may have an uncertain impact on the Company's cost of funds and access to the capital markets, which could impact liquidity, financial position or results of operations.

The Company continues to assess strategic initiatives that could result in costs being incurred in future quarters related to restructuring activities.

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Financing Arrangements

2020 Amendment to the 2018 Credit Agreement

On August 31, 2018, the Company amended and restated its $175 million senior secured revolving credit agreement ("2018 Credit Agreement") which increased the available borrowing from $175 million to $450 million, added three additional lenders and extended the maturity date from July 7, 2021 to August 31, 2023. On May 11, 2020, the Company amended its 2018 Credit Agreement ("2020 Amendment") which, among other changes, modified certain financial covenants contained in the 2018 Credit Agreement, decreased the term loan facility from $200 million to $144 million and reduced the revolving credit facility from $250 million to $170 million. On October 14, 2020, the Company amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's financial covenants. See Note 6, “Long-term Debt and Financing Arrangements” for additional information.

The Company has an interest rate swap in place to convert a portion of the Company's borrowings from a variable rate to a fixed rate. See Note 7, "Derivatives" for additional information.

Discussion and Analysis of Cash Flows

Operating Cash Flows

Net cash provided by operating activities for the nine-month period ended September 30, 2020 was $74.6 million compared with $63.0 million in the corresponding period in 2019. In the first nine months of 2020, net loss and non-cash adjustments were $25.6 million compared to $49.9 million in the first nine months of 2019. Since December 31, 2019, net operating assets and liabilities decreased by $49.0 million, compared to $13.0 million during the comparative nine-month period beginning December 31, 2018. The decrease in working capital since December 31, 2019 was primarily due to an increase of $28.4 million in accounts payable, $7.2 million in accrued payroll and other compensation and an decrease of $10.1 in inventory, partially offset by an increase in accounts receivable of $8.3 million. The increase in accounts payable was primarily driven by the timing of vendor payments, including capital expenditures within all segments of the Company. The increase in accounts receivable was primarily due to higher net sales in the third quarter of 2020 compared to the fourth quarter of 2019.

Investing Cash Flows

In the nine-month periods ended September 30, 2020 and 2019, net cash used for investing activities consisted of capital expenditures of $20.5 and $27.2 million, respectively. In the first nine months of 2020 net cash used for investing activities was partially offset by $4.3 million in cash inflows for collections of finance receivables under the Company’s receivable financing arrangements. In the first nine months of 2019, net cash used for investing activities included cash proceeds of $1.4 million from a final purchase price adjustment for the Interface acquisition less cash outflows of $0.5 million to fund an acquisition. The Company also received proceeds of $2.3 million from the divestiture of the Geosol business during the second quarter of 2019.

Financing Cash Flows

In the nine-month period ended September 30, 2020, net cash provided by financing activities was $10.7 million compared to net cash used for financing activities of $38.2 million in the corresponding period in 2019. The Company made debt repayments of $9.5 million and $38.2 million in the first nine months of 2020 and 2019, respectively. In the first nine months of 2020, the Company borrowed $20.0 million from its Amended Credit Facility as a precautionary measure in light of the uncertainty caused by COVID-19. The Company held $0.2 million in proceeds from servicing receivables owed to the banking institution which was paid in October.

Critical Accounting Estimates

The preparation of the Company’s consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Note 1, "Significant Accounting Policies" of the “Notes to Consolidated Financial Statements” and Critical Accounting Estimates in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and the “Notes to Condensed Consolidated Financial Statements” of this report describe the significant accounting policies and critical accounting estimates used in the preparation of the consolidated financial statements. The Company’s management is required to make judgments and estimates about the effect of matters that are inherently uncertain. Actual results could differ from management’s estimates.

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During the three-month period ended March 31, 2020, the Company recorded a goodwill impairment charge of $48.7 million, and a long-lived asset impairment charge of $12.4 million, both in the Performance Materials reporting unit. See Note 5, "Impairments of Goodwill and Other Long-Lived Assets", to the “Notes to Condensed Consolidated Financial Statements” of this report for additional discussion of the facts and circumstances surrounding and critical estimates made regarding the impairment charges. The Company continues to monitor the recoverability of the long-lived assets within the Thermal Acoustical Solutions segment taking into consideration on-going financial results and automotive market conditions.

There have been no other significant changes in the Company’s critical accounting estimates during the nine-month period ended September 30, 2020.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company’s limited market risk exposures relate to changes in foreign currency exchange rates and interest rates.

Foreign Currency Risk

The Company has operations in France, Germany, China, the United Kingdom, Canada, India and the Netherlands, in addition to the United States. As a result of this, the Company’s financial results are affected by factors such as changes in foreign currency exchange rates or economic conditions in the foreign markets where the Company manufactures and distributes its products. The Company’s currency exposure is to the U.S. dollar, the Euro, the Chinese Yuan, the British Pound Sterling, the Canadian Dollar, the Japanese Yen, the Indian Rupee and the Hong Kong Dollar. The Company’s foreign and domestic operations attempt to limit foreign currency exchange transaction risk by completing transactions in local functional currencies, whenever practicable. The Company may periodically enter into foreign currency forward exchange contracts to mitigate exposure to foreign currency volatility. In addition, the Company utilizes bank loans and other debt instruments throughout its operations. To mitigate foreign currency risk, such debt is denominated primarily in the functional currency of the operation maintaining the debt.

The Company also has exposure to fluctuations in currency risk on intercompany loans that the Company makes to certain of its subsidiaries. The Company may periodically enter into foreign currency forward contracts which are intended to offset the impact of foreign currency movements on the underlying intercompany loan obligations.

Interest Rate Risk

The Company’s interest rate exposure is most sensitive to fluctuations in interest rates in the United States and Europe, which impact interest paid on its debt. The Company has borrowings outstanding of $283.5 million from its Amended Credit Facility at September 30, 2020, with variable rates of interest based generally on LIBOR. Increases in interest rates could therefore significantly increase the associated interest payments that the Company is required to make on this debt. From time to time, the Company may enter into interest rate swaps or other hedging agreements to manage interest rate risk.

In November 2018, the Company entered into a five year interest rate swap agreement with a bank which converts the interest on a notional $139.0 million of the Company's one-month LIBOR-based borrowings under its 2018 Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 3.09% plus the borrowing spread. The notional amount reduces quarterly by fluctuating amounts through August 2023. In April 2017, the Company entered into a three-year interest rate swap agreement with a bank which converts the interest on a notional $60.0 million of the Company's borrowings from a variable rate, plus the borrowing spread, to a fixed rate of 1.58% plus the borrowing spread. The notional amount reduced quarterly by $5.0 million through March 31, 2020 and is now settled. Effectiveness of the remaining derivative agreement was assessed quarterly, or more frequently, if necessary, by ensuring that the critical terms of the swap continues to match the critical terms of the hedged debt in order to report gains or losses on the derivative instrument in other comprehensive income.

On May 11, 2020, the Company amended its 2018 Credit Agreement, see Note 6, "Long-term Debt and Financing Arrangements". The amendment included, among other modifications, the establishment of a floor on the base and Eurocurrency rate of 1%. As a result, the Company performed an assessment of the effectiveness of the interest rate swap agreement to determine if the critical terms of the interest rate swap agreement continues to match the critical terms of the debt. The Company concluded the interest rate swap agreement is no longer effective. See Note 7. "Derivatives" for more information.

The Company has assessed its exposure to changes in interest rates by analyzing the sensitivity to the Company's earnings assuming various changes in market interest rates. Assuming a hypothetical increase of one percentage point in interest rates on the variable portion of the $283.5 million outstanding borrowings as of September 30, 2020, the Company’s net income would decrease by an estimated $1.4 million over a twelve-month period.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, including the Company’s President and Chief Executive Officer (the “CEO”) and the Executive Vice President and Chief Financial Officer (the "CFO"), conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the

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Securities Exchange Act of 1934, as amended (the “Exchange Act”). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the "SEC"), and that such information is accumulated and communicated to management of the Company, with the participation of its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2020 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the three-month period ended September 30, 2020 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company has not experienced any material impact to its internal control over financial reporting during the COVID-19 pandemic. Most of the Company’s corporate and non-production employees worked remotely during the period in which these financial statements were prepared due to the impact of COVID-19. The Company enhanced its oversight and monitoring during the financial close and reporting process, including higher awareness and monitoring of cybersecurity threats. Other than enhancing its oversight and monitoring processes, the Company did not alter or compromise its disclosure controls and procedures. The Company continues to monitor and assess the need to modify or enhance its disclosure controls to ensure disclosure controls and procedures continue to be effective.

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PART II.      OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to legal proceedings, claims, investigations and inquiries that arise in the ordinary course of business such as, but not limited to, actions with respect to commercial, intellectual property, employment, personal injury, and environmental matters. The Company believes that it has meritorious defenses against the claims currently asserted against it and intends to defend them vigorously. While the outcome of litigation is inherently uncertain and the Company cannot be sure that it will prevail in any of the cases, subject to the matter referenced below, the Company is not aware of any matters pending that are expected to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

In the fourth quarter of 2016, as part of a groundwater discharging permitting process, water samples collected from wells and process water basins at the Company’s Rochester New Hampshire manufacturing facility, within the Performance Materials segment, showed concentrations of Per and Polyfluorinated Substances (“PFAS”) in excess of state ambient groundwater quality standards. In January 2017, the Company received a notification from the State of New Hampshire Department of Environmental Services (“NHDES”) naming Lydall Performance Materials, Inc. a responsible party with respect to the discharge of regulated contaminants and, as such, is required to take action to investigate and remediate the impacts in accordance with standards established by the NHDES. The Company conducted a site investigation, the scope of which was reviewed by the NHDES, in order to assess the extent of potential soil and groundwater contamination and develop a remedial action. Based on input received from NHDES in March 2017 with regard to the scope of the site investigation, the Company recorded $0.2 million of expense. In 2018, the Company received a response from the NHDES to the site investigation report outlining proposed remedial actions. The Company recorded an additional $0.1 million of expense in 2018 associated with the expected costs to remediate the impacts of the discharge of regulated contaminants in accordance with standards established by the NHDES. During 2018 the environmental liability was fully reduced reflecting payments made to vendors, resulting in no balance at December 31, 2018. Additionally, the Company incurred $0.2 million of capital expenditures in 2018, in relation to the lining of the Company's fresh water lagoons. The site investigation and remedial action plan are ongoing. The Company cannot be sure that costs will not exceed the current estimates until this matter is closed with the NHDES, nor that any future corrective action at this location would not have a material effect on the Company’s financial condition, results of operations or cash flow.

In December 2018, the New York State Department of Environmental Conservation (“NYDEC”) informed the Company that the newly acquired Interface site located at Hoosick Falls, NY will be the subject of an investigation in to the possibility of it being an inactive hazardous disposable waste site.  The letter specifically references PFAS that have been detected in a nearby water supply, soil and/or surface water.  Notably, the PFAS contamination has been identified in the Hoosick Falls area for some time and other large manufacturers in the area have previously been identified as a source.  The NYDEC approved a site characterization plan in December 2019. The Company recorded expense of $0.3 million in the fourth quarter of 2019 as a result of the site characterization plan preparation and site characterization activities. Additional site characterization activities are planned for the fourth quarter of 2020. The Company does not know the scope or extent of its future obligations, if any, that may arise from the site investigation and therefore is unable to estimate the cost of any corrective action. Accordingly, the Company cannot assure that the costs of any future corrective at this location would not have a material effect on the Company's financial condition, results of operations or cash flows.

Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly impact any estimates of environmental remediation costs.

Some of the Company’s OEM contracts in the Thermal Acoustical Solutions (“TAS”) segment contain provisions that require the Company to pay expedited freight if it fails or threatens to fail to deliver product timely and/or damages if the Company is the cause of production disruptions at customer facilities. Historically, the Company has paid expedited freight costs as needed to meet delivery obligations. In late third quarter 2020, as a result of labor shortages and operational inefficiencies directly related to COVID-19, TAS was unable to manufacture parts timely, resulting in customer production disruptions. Because of the unforeseen and unforeseeable nature of the COVID-19 pandemic, which is out of the Company’s control, in early October the Company invoked force majeure or commercial impracticability to certain customers as a legal excuse for delayed performance of contract and defense to claims that may be asserted by customers. A recent resurgence of cases in that same facility has caused the Company to expand its declaration of force majeure or commercial impracticability to other impacted customers. Although the Company believes it has a strong legal basis for asserting force majeure or commercial impracticability as a result of COVID-19, it is reasonably possible customers may assert claims against the Company, and the

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Company could be subject to financial damages to customers, which could have a material effect on the Company’s consolidated results of operations and cash flows. The Company has not received any such claims and is unable to estimate the amount of any such future claims, if any, at this time

Item 1A. Risk Factors

See Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as updated by Part II, Item 1, Legal Proceedings, of this Report and by the new risk factors added below. The COVID-19 pandemic has heightened, and in some cases manifested, certain of the risks the Company normally faces in operating the business, including those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and the risk factor disclosure in the Form 10-K is qualified by the information relating to COVID-19 that is described in this report, including the risk factors set forth below. The risks described in this report and in the Annual Report on Form 10-K, and the “Cautionary Note Concerning Forward-Looking Statements” in this report, are not the only risks faced by the Company. Additional risks and uncertainties not currently known or that are currently judged to be immaterial may also materially affect the Company’s business, financial position, results of operations or cash flows.

The Company’s financial condition and results of operations have been, and are expected to continue to be, adversely affected by the recent COVID-19 pandemic.

The global outbreak of COVID-19 has caused a material adverse effect on the level of economic activity around the world, including in all markets served by the Company. In response to this outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations. The Company has implemented numerous measures attempting to manage and mitigate the effects of the virus. While the Company has implemented programs to mitigate the impact of these measures on its results of operations, there can be no assurance that these programs will be successful. The Company cannot predict the degree to, or the time period over, which its sales and operations will be affected by this outbreak and preventative measures, and the effects could be material.

The COVID-19 pandemic poses the risk that we or the Company’s affiliates, employees, suppliers, customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, social distancing protocols, shutdowns, shelter in place orders, travel restrictions and other actions and restrictions that may be requested or mandated by governmental authorities. For example, the Company experienced a temporary reduction of its manufacturing and operating capacity in China as a result of government-mandated actions to control the spread of COVID-19. Additionally, beginning in March 2020, the Company experienced the ramp-down of its automotive manufacturing facilities in the Americas and European regions coinciding with the shutdown of its major automotive customer facilities in these regions. While many of the Company’s other facilities have been designated by its customers as essential business in jurisdictions in which facility closures have otherwise been mandated, the Company can give no assurance that this will not change in the future or that its businesses will continue to be classified as essential in each of the jurisdictions in which it operates.

Additionally, restrictions on the Company’s access to its manufacturing facilities or on its support operations or workforce, or similar limitations for its distributors and suppliers, could continue to limit customer demand and/or the Company’s capacity to meet customer demand and have a material adverse effect on its business, financial condition and results of operations. In addition, the Company has modified its business practices (including employee travel, employee work locations, limited/restricted third-party access to the Company's facilities, and cancellation of physical participation in meetings, events and conferences), and may take further actions as may be required by government authorities, for the continued health and safety of its employees, or that the Company otherwise determines are in the best interests of its employees, customers, partners, and suppliers. Further, the Company has experienced disruptions and operational inefficiencies from COVID-19-related illnesses and workforce shortages and may continue to experience such disruptions and operational inefficiencies in the future. The Company may experience delays in its supply chain, which is likely to result in higher supply chain costs to the Company in order to maintain the supply of materials and components for its products.

Managing the impact of COVID-19 on the Company has and will continue to require significant investment of time from its management and employees, as well as resources across its global enterprise. The focus on managing and mitigating the impacts of COVID-19 on the Company’s business may cause it to divert or delay the application of its resources toward other or new initiatives or investments, which may cause a material adverse impact on its results of operations.

The Company may also experience impacts from market downturns and changes in consumer behavior related to pandemic fears and impacts on its workforce as a result of COVID-19. The Company has experienced a significant decline in demand from certain customers as a result of COVID-19. In addition, the Company’s customers may choose to delay or abandon

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projects for which the Company provides products and/or services in response to the adverse impact of COVID-19 and the measures to contain its spread have had on the global economy.

In late third quarter 2020, the Thermal Acoustical Solutions segment caused interruption of two customer production lines as a result of labor shortages and operational inefficiencies directly related to COVID-19 causing the Company to invoke force majeure (or excusable delay) with these two customers. A recent resurgence of cases in that same facility has caused the Company to expand its declaration of force majeure (or excusable delay) with most of its automotive customers. If the COVID-19 pandemic becomes more pronounced in the markets in which the Company or its automotive industry customers operate, or there is a resurgence in the virus in markets currently recovering from the spread of COVID-19, then its operations in areas impacted by such events could experience further materially adverse financial impacts due to market changes and other resulting events and circumstances. The extent to which the COVID-19 outbreak continues to impact the Company’s financial condition will depend on future developments that are highly uncertain and are difficult to predict, including new government actions or restrictions, new information that may emerge concerning the severity, the longevity and the impact of COVID-19 on economic activity. To the extent the COVID-19 pandemic materially adversely affects the Company’s business and financial results, it may also have the effect of significantly heightening many of the other risks associated with the Company's business and indebtedness, including those described in the most recent Annual Report on Form 10-K for the year ended December 31, 2019.

The COVID-19 pandemic presents significant challenges to the Company’s liquidity and ability to comply with its financial covenants.

The Company’s continued access to sources of liquidity and ability to comply with its financial covenants depends on multiple factors, including global economic conditions, the COVID-19 pandemic’s effects on its customers and their production rates, the condition of global financial markets, the availability of sufficient amounts of financing, its operating performance and its credit worthiness. The Company relies on the credit markets to provide it with liquidity to operate and grow its businesses beyond the liquidity that operating cash flows provide. In March 2020, the Company drew down an incremental $20.0 million under its 2018 Credit Agreement to provide liquidity as it addresses critical issues that may arise. In addition, on May 11, 2020, the Company amended its 2018 Credit Agreement, which, among other changes, decreased available from $450 million to $314 million and modified financial covenants, at least one of which the Company expected to fail under the 2018 Credit Agreement as early as the second quarter of 2020. As a result of the impacts of the COVID-19 pandemic, the Company's access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, its prospects and its credit ratings. The Company believes that its liquidity resources, including the Facility, are sufficient to meet its working capital needs and other cash requirements. The Company was in compliance with the modified financial covenants as of and for the three-month period ended September 30, 2020, and management does not anticipate noncompliance in the foreseeable future.

The Company may not be able to collect amounts owed to it or sell its inventory due to customers becoming significantly impacted by the COVID-19 pandemic.

The Company may experience an increase in uncollectible receivables if customers are severely impacted by COVID-19 and are unable to pay. Additionally, the Company may experience an increase in inventory write-off charges for those inventory items that have no alternative use for customers that are severely impacted by COVID-19.

Increased cybersecurity vulnerabilities and threats and more sophisticated and targeted computer crime pose a risk to the Company’s systems, networks, and data.

Increased global cybersecurity vulnerabilities and threats and more sophisticated and targeted cyber-related attacks pose an ongoing risk to the security of the Company’s systems and networks and the confidentiality, availability and integrity of the Company’s data. While the Company has not to date suffered a material loss from cyber incidents, from time to time, the Company experiences attacks on its systems and networks, including attacks that introduce malicious software into the Company's systems and networks, or gain access to and manipulate information in order to perpetrate a fraud on the Company or customers. Cyber threats are constantly evolving, thereby increasing the efforts and controls required to prevent, detect and successfully defend against them. While the Company attempts to mitigate these risks by employing a number of measures, including employee training, monitoring and testing, and maintenance of protective systems and contingency plans, the Company remains vulnerable to additional known or unknown threats. Moreover, as a result of the COVID-19 pandemic, a greater number of employees are working remotely, which further increases the Company's vulnerability to the cyber risks. The Company's systems and networks contain sensitive, confidential or personal data or information in certain of the Company’s businesses that is subject to foreign, federal, state and local privacy and security laws, regulations and customer-imposed controls.

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Despite efforts made by the Company to protect sensitive, confidential or personal data or information, the Company remains vulnerable to security breaches, ransomware, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance and the compromising or loss of sensitive, confidential or personal data or information could adversely impact the Company's results of operations and cash flows. Although the Company carries cybersecurity insurance, in the event of a cyber incident, that insurance may not be extensive enough or adequate in scope of coverage or amount to cover damages the Company may incur. In addition, a cyber-related attack could result in other negative consequences, including loss of information, damage to the Company’s reputation or competitiveness, remediation or increased protection costs, litigation or regulatory action.

The General Data Protection Regulation ("GDPR"), which went into effect in the European Union ("EU") on May 25, 2018, among other things, mandates new requirements regarding the handling of personal data of employees and customers, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves. If the Company fails to comply with these laws or regulations, we could be subject to significant litigation, monetary damages, regulatory enforcement actions or fines in one or more jurisdictions.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three-month period ended September 30, 2020, the Company acquired 1,424 shares of common stock through withholding, pursuant to provisions in agreements with recipients of restricted stock granted under the Company’s equity compensation plans, which allow the Company to withhold the number of shares having fair value equal to each recipient’s tax withholding due.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares That May Yet Be Purchased Under the Program
July 1, 2020 - July 31, 2020	1,070	$	15.86	—	—
August 1, 2020 - August 31, 2020	—	$	—	—	—
September 1, 2020 - September 30, 2020	354	$	18.84	—	—
	1,424	$	16.60	—	—

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Item 5. Other Information

2020 Amendment to the 2018 Credit Agreement

On October 14, 2020, the Company amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's financial covenants. See Note 6, "Long-term Debt and Financing Arrangements" and Part 1, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Financing Arrangements” for additional information. A copy of the Amendment is filed herewith as Exhibit 10.2 and incorporated herein by reference. The above description of the Amendment is qualified in its entirety by reference to such exhibit.

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Item 6. Exhibits

Exhibit Number	Description
10.1	Third Amendment to Second Amended and Restated Credit Agreement, dated May 11, 2020, by and among Lydall, Inc., as borrower, the Guarantors named therein, and Bank of America, N.A., as Agent for the Lenders, filed as Exhibit 10.1 to the registrant's Form 10-Q dated May 11, 2020, and incorporated herein by this reference.
10.2	Fourth Amendment to Second Amended and Restated Credit Agreement, dated October 14, 2020, by and among Lydall, Inc., as borrower, the Guarantors named therein, and Bank of America, N.A., as Agent for the Lenders, filed as Exhibit 10.2 to the registrant's Form 10-Q dated October 27, 2020, filed herewith.
31.1	Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, of principal executive officer, filed herewith.
31.2	Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, of principal financial officer, filed herewith.
32.1	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LYDALL, INC.
October 27, 2020	By:	/s/ Randall B. Gonzales
		Randall B. Gonzales Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer)

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EX-10.2

FOURTH AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

    THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is made as of the 14^th day of October, 2020, by and among LYDALL, INC., a Delaware corporation (“Borrower”), LYDALL THERMAL/ACOUSTICAL, INC., a Delaware corporation (“Lydall Thermal”), LYDALL PERFORMANCE MATERIALS, INC., a Connecticut corporation (“Lydall Performance”), LYDALL INTERNATIONAL, INC., a Delaware corporation (“Lydall International”), SOUTHERN FELT COMPANY, INC., a South Carolina corporation (“Southern Felt”), LYDALL NORTH AMERICA, LLC, a Connecticut limited liability company (“Lydall North America”), LYDALL PERFORMANCE MATERIALS (US), INC., a Delaware corporation (“Lydall Performance (US)”), LYDALL SEALING SOLUTIONS, INC., a Delaware corporation (“Lydall Sealing”), and SUSQUEHANNA CAPITAL ACQUISITION CO., a Delaware corporation (“Susquehanna Capital” and each of Lydall Thermal, Lydall Performance, Lydall International, Southern Felt, Lydall North America, Lydall Performance (US), and Lydall Sealing, is sometimes individually referred to herein as a “Guarantor”, and all such entities are herein collectively referred to as, the “Guarantors”) and Bank of America, N.A., a national banking association (“Bank of America”), as Swingline Lender and L/C Issuer, and on behalf of itself and as administrative agent (in such capacity, the “Agent”), for the ratable benefit of itself and the other lenders that are a party to the Credit Agreement (defined below) (collectively with Bank of America, the “Lenders”). Capitalized terms used herein but not defined shall have the meaning given to such terms in the Credit Agreement.

RECITALS

WHEREAS, Borrower, Guarantors, Agent and Lenders are parties to that certain Second Amended and Restated Credit Agreement dated as of August 31, 2018, as amended by that certain First Amendment to Second Amended and Restated Credit Agreement dated as of December 6, 2019, as further amended by that certain Second Amendment to Second Amended and Restated Credit Agreement dated as of February 14, 2020, as further amended by that certain Third Amendment to Second Amended and Restated Credit Agreement dated as of May 11, 2020 (as amended and in effect from time to time, the “Credit Agreement”).

WHEREAS, the parties hereto desire to amend the Credit Agreement pursuant to terms herein to, among other things, reflect certain capital transactions of the Borrower and its Subsidiaries.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows:

1.    Amendments to Credit Agreement.

(a)    The following definitions from Section 1.01 of the Credit Agreement are hereby amended and restated as follows:

    “Consolidated EBITDA” means, for any period, the sum (in each case, without duplication) of the following determined on a Consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP, (a) Consolidated Net Income for the most recently completed Measurement Period plus (b) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision for federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense, (iv) costs and expenses incurred in connection with the Closing Date Acquisition and other Permitted Acquisitions, evidenced by supporting documentation acceptable to the Administrative Agent; (v) fees and expenses payable by Borrower in connection with this Agreement and the other Loan Documents; (vi) non-cash stock compensation expenses, (vii) increases to costs of goods sold because of the one-time write-up of inventory in connection with the Closing Date Acquisition, not to exceed $5,000,000 in the aggregate; (viii) increases to costs of goods sold because of the one-time write-up of inventory in connection with any Permitted Acquisition other than the Closing Date Acquisition, (ix) one-time, non-cash charges and losses resulting from the Expected Plan Termination, not to exceed $30,000,000 in the aggregate, (x) one-time, non-cash charges and losses resulting from any future employee benefit plan termination acquired by Lydall as part of the acquisition of the business known as Interface Performance Materials, not to exceed $15,000,000 in the aggregate; (xi) other non-cash charges and losses but excluding any such non-cash charges or losses to the extent (A) there were cash charges with respect to such charges and losses in past accounting periods or (B) there is a reasonable expectation that there will be cash charges with respect to such charges and losses in future accounting periods; (xii) costs and expenses incurred in connection with Permitted Transfers, evidenced by supporting documentation acceptable to the Administrative Agent; (xiii) so long as such costs are incurred before May 1, 2020, actual severance costs incurred due to reduction-in-force and other restructuring initiatives, not to exceed an aggregate amount of $2,000,000; (xiv) so long as such costs are incurred before May 1, 2020, one-time cash compensation and related recruiting expenses associated with the transition of the Company’s President and Chief Executive Officer, not to exceed $2,500,000; (xv) non-cash impairment charges; (xvi) one-time costs to close or sell the Performance Materials facility in Altenkirchen, Germany, not to exceed $13,500,000 in the aggregate, so long as such costs are incurred on or before March 31, 2021; (xvii) so long as such costs are incurred on or before September 30, 2020, one-time costs to close the Performance Materials facility in the Netherlands, not to exceed $2,400,000; (xviii) so long as such costs are incurred on or before September 30, 2020, non-cash expenses to close the Carded Line product in the Green Island, New York facility, not to exceed $5,500,000; and (xix) so long as such costs are incurred on or before December 31, 2020, one-time costs for consulting fees related to the automotive business, not to exceed $2,000,000; provided, that, for any twelve (12) month period, the aggregate amount of the adjustments to Consolidated EBITDA made pursuant to clauses (iv), (v), (viii), (xi) and (xii) above, plus the aggregate amount of Synergies and Cost Savings for such period, shall not exceed ten percent (10%) of Consolidated EBITDA for such period; less (c) to the extent reflected as a gain or otherwise included in the calculation of Consolidated Net Income for such period (i) non-cash gains (excluding any such non-cash gains to the extent (A) there were cash gains with respect to such gains in past accounting periods or (B) there is a reasonable expectation that there will be cash gains with respect to such gains in future accounting periods).

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“LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of Base Rate, Interest Period, timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters (including, for the avoidance of doubt, the definition of Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of lookback periods) as may be appropriate, in the discretion of the Administrative Agent, to reflect the adoption and implementation of such LIBOR Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York.

“SOFR” with respect to any Business Day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s website (or any successor source) at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day and, in each case, that has been selected or recommended by the Relevant Governmental Body.

(b) The following definitions are hereby deleted from Section 1.01:

“SOFR-Based Rate” means SOFR or Term SOFR.

(c)    The following definitions are hereby added to Section 1.01, in their appropriate alphabetical order:

“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

“LIBOR Replacement Date” has the meaning specified in Section 3.03(c).

“LIBOR Successor Rate” has the meaning specified in Section 3.03(c).

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“Pre-Adjustment Successor Rate” has the meaning specified in Section 3.03(c).

“Related Adjustment” means, in determining any LIBOR Successor Rate, the first relevant available alternative set forth in the order below that can be determined by the Administrative Agent applicable to such LIBOR Successor Rate:

a.the spread adjustment, or method for calculating or determining such spread adjustment, that has been selected or recommended by the Relevant Governmental Body for the relevant Pre-Adjustment Successor Rate (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto) and which adjustment or method (x) is published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion or (y) solely with respect to Term SOFR, if not currently published, which was previously so recommended for Term SOFR and published on an information service acceptable to the Administrative Agent; or

b.the spread adjustment that would apply (or has previously been applied) to the fallback rate for a derivative transaction referencing the ISDA Definitions (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto).

(d)    Section 3.03(c) is hereby amended and restated in its entirety as follows:

“(c) Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrower or Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to the Borrower) that the Borrower or Required Lenders (as applicable) have determined, that:

i.adequate and reasonable means do not exist for ascertaining LIBOR for any Interest Period hereunder or any other tenors of LIBOR, including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary; or

i.the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent or such administrator has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for determining the interest rate of loans, provided that, at the time of such statement, there is no successor administrator that is satisfactory to the Administrative Agent, that will continue to provide LIBOR after such specific date (such specific date, the “Scheduled Unavailability Date”); or

ii.the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over such administrator has made a public statement announcing that all Interest Periods and other tenors of LIBOR are no longer representative; or

iii.syndicated loans currently being executed, or that include language similar to that contained in this Section 3.03, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR;

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then, in the case of clauses (i)-(iii) above, on a date and time determined by the Administrative Agent (any such date, the “LIBOR Replacement Date”), which date shall be at the end of an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and shall occur reasonably promptly upon the occurrence of any of the events or circumstances under clauses (i), (ii) or (iii) above and, solely with respect to clause (ii) above, no later than the Scheduled Unavailability Date, LIBOR will be replaced hereunder and under any Loan Document with, subject to the proviso below, the first available alternative set forth in the order below for any payment period for interest calculated that can be determined by the Administrative Agent, in each case, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (the “LIBOR Successor Rate”; and any such rate before giving effect to the Related Adjustment, the “Pre-Adjustment Successor Rate”):

(x)    Term SOFR plus the Related Adjustment; and

(y)     SOFR plus the Related Adjustment;

and in the case of clause (iv) above, the Borrower and Administrative Agent may amend this Agreement solely for the purpose of replacing LIBOR under this Agreement and under any other Loan Document in accordance with the definition of “LIBOR Successor Rate” and such amendment will become effective at 5:00 p.m., on the fifth Business Day after the Administrative Agent shall have notified all Lenders and the Borrower of the occurrence of the circumstances described in clause (iv) above unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to the implementation of a LIBOR Successor Rate pursuant to such clause;

provided that, if the Administrative Agent determines that Term SOFR has become available, is administratively feasible for the Administrative Agent and would have been identified as the Pre-Adjustment Successor Rate in accordance with the foregoing if it had been so available at the time that the LIBOR Successor Rate then in effect was so identified, and the Administrative Agent notifies the Borrower and each Lender of such availability, then from and after the beginning of the Interest Period, relevant interest payment date or payment period for interest calculated, in each case, commencing no less than thirty (30) days after the date of such notice, the Pre-Adjustment Successor Rate shall be Term SOFR and the LIBOR Successor Rate shall be Term SOFR plus the relevant Related Adjustment.

The Administrative Agent will promptly (in one or more notices) notify the Borrower and each Lender of (x) any occurrence of any of the events, periods or circumstances under clauses (i) through (iii) above, (y) a LIBOR Replacement Date and (z) the LIBOR Successor Rate.

    Any LIBOR Successor Rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such LIBOR Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.

    Notwithstanding anything else herein, if at any time any LIBOR Successor Rate as so determined would otherwise be less than one percent (1%), the LIBOR Successor Rate will be deemed to be one percent (1%) for the purposes of this Agreement and the other Loan Documents.

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    In connection with the implementation of a LIBOR Successor Rate, the Administrative Agent will have the right to make LIBOR Successor Rate Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such LIBOR Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such LIBOR Successor Rate Conforming Changes to the Borrower and the Lenders reasonably promptly after such amendment becomes effective.

If the events or circumstances of the type described in 3.03(c)(i)-(iii) have occurred with respect to the LIBOR Successor Rate then in effect, then the successor rate thereto shall be determined in accordance with the definition of “LIBOR Successor Rate.””

(e)    A new Section 3.03(d) is hereby added as follows:

“(d)    Notwithstanding anything to the contrary herein, (i) after any such determination by the Administrative Agent or receipt by the Administrative Agent of any such notice described under Section 3.03(c)(i)-(iii), as applicable, if the Administrative Agent determines that none of the LIBOR Successor Rates is available on or prior to the LIBOR Replacement Date, (ii) if the events or circumstances described in Section 3.03(c)(iv) have occurred but none of the LIBOR Successor Rates is available, or (iii) if the events or circumstances of the type described in Section 3.03(c)(i)-(iii) have occurred with respect to the LIBOR Successor Rate then in effect and the Administrative Agent determines that none of the LIBOR Successor Rates is available, then in each case, the Administrative Agent and the Borrower may amend this Agreement solely for the purpose of replacing LIBOR or any then current LIBOR Successor Rate in accordance with this Section 3.03 at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with another alternate benchmark rate giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks and, in each case, including any Related Adjustments and any other mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such benchmarks, which adjustment or method for calculating such adjustment shall be published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustments shall constitute a LIBOR Successor Rate. Any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.”

(f)    A new Section 3.03(e) is hereby added as follows:

    “(e)     If, at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, no LIBOR Successor Rate hasbeen determined in accordance with clauses (c) or (d) of this Section 3.03 and the circumstances under clauses (c)(i) or (c)(iii) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended, (to the extent of the affected Eurodollar Rate Loans, Interest Periods, interest payment dates or payment periods), and (y) the

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Eurodollar Rate component shall no longer be utilized in determining the Base Rate, until the LIBOR Successor Rate has been determined in accordance with clauses (c) or (d). Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans (to the extent of the affected Eurodollar Rate Loans, Interest Periods, interest payment dates or payment periods) or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans (subject to the foregoing clause (y)) in the amount specified therein.”

(g)    Exhibit C to the Credit Agreement is hereby deleted in its entirety and replaced by Exhibit C attached hereto.

2.    Reaffirmation of Guaranty.

    (a)     Each Guarantor hereby reaffirms its guarantee of all obligations of the Borrower to the Agent and the Lenders as such obligations arise pursuant to the Credit Agreement and the Loan Documents (the “Reaffirmation”).

    (b)     Each Guarantor represents and warrants to the Agent that (i) no default exists under the Credit Agreement or the Loan Documents or will exist with the giving of notice, the passage of time or both, (ii) all of the terms, conditions, obligations, agreements, warranties and representations contained in the Credit Agreement and the Loan Documents remain true and accurate and are hereby ratified and confirmed in all material respects (except that to the extent that any term, condition, obligation, agreement, warranty and representation is already qualified by materiality, in which case, such any term, condition, obligation, agreement, warranty and representation shall be true and correct as written as of such date), (iii) nothing in the Credit Agreement or any Loan Document shall operate to release it from any of its liability to pay any and all sums it owes to the Lender or to perform all of the terms, conditions, obligations and agreements contained in the Credit Agreement and the Loan Documents, (iv) the debt evidenced by the notes issued in connection with the Credit Agreement and the other Loan Documents is a valid debt of the Borrower owed to the Lenders and neither Borrower nor it has any defense, setoff, counterclaim or independent action against Agent or any Lender of any kind, whether relating to the Credit Agreement, any Loan Document or otherwise.

    (c)     Each Guarantor represents and warrants to Agent that (i) it has the power and authority to enter into this Agreement and to reaffirm its guarantee of all obligations of the Borrower to the Agent or the Lenders, as such obligations arise pursuant to the Credit Agreement and the Loan Documents, (ii) it has taken all necessary corporate action to authorize this Reaffirmation and the transactions contemplated hereby and (iii) this Reaffirmation, any related documents to which it is a party and the Loan Documents to which it is a party, are its valid and binding obligations, enforceable in accordance with their terms.

    (d)     Each Guarantor represents and warrants to Agent that the consummation of the transactions contemplated by this Reaffirmation (i) is not prevented by, nor does it conflict with or result in a breach of terms, conditions or provisions of its organizational documents, or any evidence of indebtedness, agreement or instrument of whatever nature to which it is a party or by which it is bound, (ii) does not constitute a default under any of the foregoing, and (iii) does not violate any federal, state, local or foreign law, regulation or order or any order of any court or agency which is binding upon it.

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    (e)     Each Guarantor reaffirms that any grant and pledge of security interests by it in its assets pursuant to the Credit Agreement and the Loan Documents secures all Obligations and continues in full force and effect.

3.    Conditions to Effectiveness of Fourth Amendment. The effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent:

(a)    Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated as of the date hereof and each in form and substance reasonably satisfactory to Agent:

    (i)    executed counterparts of this Agreement, sufficient in number for distribution to Lenders and the Borrower;

    (ii)    such documents and certifications as the Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing (where such concept is applicable) and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(b)    the Borrower shall have paid the reasonable attorney’s fees of Agent’s counsel.

(c)     Borrower shall have paid to Administrative Agent, for the account of each of the Lenders that consent to this Amendment (including Bank of America), an amendment fee in an amount equal to ten basis points (10 bps) times the aggregate Commitment of all consenting Lenders.

4.Miscellaneous.

    (a) This Agreement may be executed in any number of counterparts (including those delivered by facsimile or other electronic means), each of which shall be deemed to be an original, and all of which shall collectively constitute a single agreement, fully binding and enforceable against the parties hereto.

    (b) Except as specifically amended by the terms of this Agreement, all terms and conditions set forth in the Credit Agreement and the other Loan Documents shall remain in full force and effect and none of the rights or obligations of any party thereto shall be modified in any manner.

    (c) This Agreement shall be binding upon the parties hereto and their respective successors and assigns.

    (d) This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

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[Signature page to follow]

    9

    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

BORROWER:LYDALL, INC.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer

[Signature Page to Fourth Amendment]

GUARANTORS:LYDALL THERMAL/ACOUSTICAL, INC.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer

LYDALL PERFORMANCE MATERIALS, INC.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer        

LYDALL INTERNATIONAL, INC.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer            

SOUTHERN FELT COMPANY, INC.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer    

LYDALL NORTH AMERICA, LLC

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer    

[Signature Page to Fourth Amendment]

GUARANTORS:LYDALL PERFORMANCE MATERIALS, (US) INC.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer    

LYDALL SEALING SOLUTIONS, INC.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer    

                        SUSQUEHANNA CAPITAL ACQUISITION CO.

By:    

Name:    Chad A. McDaniel

Title:    Executive Vice President, General Counsel & Chief Administrative Officer    

[Signature Page to Fourth Amendment]

bank of america, n.a., as Administrative Agent

By:

Name:

Title:

BANK OF AMERICA, N.A.,

[Signature Page to Fourth Amendment]

as a Lender, L/C Issuer and Swingline Lender

By:    

Name:    

Title:    

LENDERS:Wells fargo bank, n.a.,

[Signature Page to Fourth Amendment]

as a Lender

By:    

Name:    Barbara A. Keegan

Title:    Senior Vice President

LENDERS:jpmorgan chase bank, n.a.,

[Signature Page to Fourth Amendment]

as a Lender

By:    

Name:    

Title:    

LENDERS:KEYBANK national association

[Signature Page to Fourth Amendment]

as a Lender

By:    

Name:    

Title:    

LENDERS:SANTANDER Bank, n.a.,

[Signature Page to Fourth Amendment]

as a Lender

By:    

Name:    

Title:    

LENDERS:TD Bank, n.a.,

[Signature Page to Fourth Amendment]

as a Lender

By:    

Name:    

Title:    

LENDERS:WEBSTER BANK, nATIONAL ASSOCIATION,

[Signature Page to Fourth Amendment]

as a Lender

By:    

Name:    

Title:    

[Signature Page to Fourth Amendment]

Exhibit C

Compliance Certificate

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Sara A. Greenstein, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lydall, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 27, 2020	/s/ Sara A. Greenstein
	Sara A. Greenstein President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Randall B. Gonzales, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lydall, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 27, 2020	/s/ Randall B. Gonzales
	Randall B. Gonzales Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lydall, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The foregoing certifications are accompanying the Form 10-Q solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code) and are not being filed as a part of this Form 10-Q or as a separate disclosure document.

October 27, 2020	/s/ Sara A. Greenstein
	Sara A. Greenstein President and Chief Executive Officer
October 27, 2020	/s/ Randall B. Gonzales
	Randall B. Gonzales Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer)

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Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Oct. 15, 2020
Cover [Abstract]
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000060977
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	1-7665
Entity Registrant Name	LYDALL INC /DE/
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	06-0865505
Entity Address, Address Line One	One Colonial Road
Entity Address, City or Town	Manchester
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06042
City Area Code	860
Local Phone Number	646-1233
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	LDL
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Small Business	false
Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		17,733,429

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
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	0	0	61,109	0
Restructuring expenses	14,984	0	14,984	0
Operating (loss) income	(9,281)	7,447	(66,595)	29,676
Employee benefit plans settlement expenses	0	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 (USD per share)	$ (0.67)	$ 0.17	$ (4.26)	$ (0.00)
Diluted (USD per share)	$ (0.67)	$ 0.17	$ (4.26)	$ (0.00)
Weighted average number of common shares outstanding:
Basic (shares)	17,384	17,270	17,364	17,264
Diluted (shares)	17,384	17,330	17,364	17,264

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (11,710)	$ 3,004	$ (73,988)	$ (52)
Other comprehensive income (loss):
Foreign currency translation	8,245	(8,726)	3,434	(6,396)
Pension and other postretirement benefit plans, net of tax	(49)	21	282	19,395
Unrealized gain/(loss) on derivative instruments, net of tax	(1,963)	(148)	(2,202)	(2,174)
Comprehensive (loss) income	$ (5,477)	$ (5,849)	$ (72,474)	$ 10,773

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 122,043	$ 51,331
Accounts receivable, net of allowance for doubtful accounts of $2,465 and $1,842, respectively	113,258	107,786
Contract assets	27,186	28,245
Inventories	71,167	80,544
Taxes receivable	6,636	3,427
Prepaid expenses	6,117	3,814
Other current assets	8,516	8,450
Total current assets	354,923	283,597
Property, plant and equipment, at cost	491,291	487,371
Accumulated depreciation	(286,713)	(265,729)
Property, plant and equipment, net	204,578	221,642
Operating lease right-of-use assets	21,522	23,116
Goodwill	85,385	133,912
Other intangible assets, net	99,445	115,577
Other assets, net	7,785	8,093
Total assets	773,638	785,937
Current liabilities:
Current portion of long-term debt	9,844	9,928
Accounts payable	101,785	73,426
Accrued payroll and other compensation	24,806	17,198
Accrued taxes	10,125	5,638
Other accrued liabilities	39,214	23,668
Total current liabilities	185,774	129,858
Long-term debt	273,195	262,713
Long-term operating lease liabilities	17,369	18,424
Deferred tax liabilities	27,016	34,561
Benefit plan liabilities	18,770	18,957
Other long-term liabilities	3,201	3,004
Commitments and Contingencies (Note 16)
Stockholders' equity:
Preferred stock	0	0
Common stock	255	253
Capital in excess of par value	96,536	94,140
Retained earnings	266,641	340,629
Accumulated other comprehensive loss	(24,465)	(25,979)
Treasury stock, at cost	(90,654)	(90,623)
Total stockholders’ equity	248,313	318,420
Total liabilities and stockholders’ equity	$ 773,638	$ 785,937

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 2,465	$ 1,842

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net loss	$ (73,988)	$ (52)
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on divestiture	0	(1,459)
Depreciation and amortization	42,349	36,682
Impairment of goodwill and long-lived assets	61,109	0
Deferred income taxes	(6,911)	(12,849)
Employee benefit plans settlement expenses	385	25,701
Stock-based compensation	2,508	2,073
Other, net	47	0
Loss (gain) on disposition of property, plant and equipment	164	(43)
Income from equity method investment	(24)	(120)
Changes in operating assets and liabilities:
Accounts receivable	(8,288)	10,528
Contract assets	1,269	(4,330)
Inventories	10,117	(6,206)
Accounts payable	28,391	13,427
Accrued payroll and other compensation	7,192	4,935
Accrued taxes	4,558	1,810
Other, net	5,735	(7,133)
Net cash provided by operating activities	74,613	62,964
Cash flows from investing activities:
Capital expenditures	(20,540)	(27,236)
Collections of finance receivables	4,257	0
Proceeds from divestiture	0	2,298
Proceeds from the sale of property, plant and equipment	14	297
Business acquisitions, net of cash acquired	0	869
Net cash used for investing activities	(16,269)	(23,772)
Cash flows from financing activities:
Proceeds from borrowings	20,000	0
Debt repayments	(9,500)	(38,185)
Proceeds from servicing receivables	207	0
Common stock issued	32	5
Common stock repurchased	(31)	(50)
Net cash provided by (used for) financing activities	10,708	(38,230)
Effect of exchange rate changes on cash	1,660	(1,280)
Increase (decrease) in cash and cash equivalents	70,712	(318)
Cash and cash equivalents at beginning of period	51,331	49,237
Cash and cash equivalents at end of period	$ 122,043	$ 48,919

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Statement of Cash Flows [Abstract]
Non-cash capital expenditures	$ 4.8	$ 3.8

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Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation

Description of Business

Lydall, Inc. and its subsidiaries (collectively, the “Company” or “Lydall”) design and manufacture specialty engineered nonwoven filtration media, industrial thermal insulating solutions, and thermal and acoustical barriers for filtration/separation and heat abatement and sound dampening applications.

Recent Developments: COVID-19

The impact of the novel strain of the coronavirus (“COVID-19”) has grown throughout the world, including in all global and regional markets served by the Company. During 2020, governmental authorities implemented numerous measures attempting to contain and mitigate the effects of COVID-19, including travel bans and restrictions, quarantines, social distancing orders, shelter in place orders, and shutdowns of non-essential activities. The Company’s manufacturing facilities are located in areas that have been affected by the pandemic and shutdowns. Certain Company facilities in the United States, Europe, and Asia carried out shutdowns as a result of government-imposed restrictions or in conjunction with customer plant closures during the first quarter. The Company’s Asia facilities resumed operations in late February and other facilities ramped back up moderately, in line with customer demand, during the second quarter. In the third quarter, the Company has seen a stronger recovery in the Performance Materials segment, specifically in the Filtration business, and in the Thermal Acoustical Solutions and Technical Nonwovens segments as discussed below.

Performance Materials (“PM”) Developments

Performance Materials sales were down 4.6% in the first half of 2020 from the comparative period in 2019 with incremental demand for specialty filtration media products more than offset by softer demand in the Sealing and Advanced Solutions business. PM’s Filtration sales continued to be very strong in the third quarter, up approximately 37.8% from the comparative period in the prior year, led by continued demand for fine fiber meltblown media used in personal protective equipment such as N95 respirators and surgical and medical masks. This demand is expected to moderate into the fourth quarter and expected to be down slightly on a sequential basis due to normal seasonality. Weaker demand in automotive, agricultural, and construction equipment markets resulted in a sales decline of approximately 1.7% in the Sealing and Advanced Solutions business in the third quarter of 2020 from the comparative period in 2019.

As a result of continued strong demand for filtration products, the Company approved investments to add two production lines in Performance Materials’ Rochester facility for the production of fine fiber meltblown filtration media used in the N95 respirator and surgical and medical masks. In addition, the Company has an agreement with the U.S. Government that provides partial funding of the investments in the production lines and funding for other technical resources.

In the third quarter of 2020, the Company announced an investment in a new fine fiber meltblown production line in its French facility to support the European Union face mask production and air filter production in the fight against COVID-19. The Company has a tentative agreement with the French Government to partially fund a portion of this investment.

In the third quarter, the Company initiated actions to close underperforming operating locations in Europe and discontinue production of a lower efficiency air filtration media product and, in turn, fully depreciated the supporting machinery and equipment in North America. These actions are part of the Company's ongoing assessment of underperforming assets and focus of resources on the significant investments to expand fine fiber meltblown production. These actions are expected to be completed in 2021 and projected to improve overall segment margin performance beginning in 2021. For additional information, see Note 12, "Restructuring".

Technical Nonwovens (“TNW”) Developments

During the first half of 2020, TNW experienced slowdowns in all geographic locations; predominantly in its facilities in South Carolina, the United Kingdom, and China. TNW’s Texel business in Canada, however, is a leading supplier of nonwoven products used in the production of healthcare applications including medical wipes, pads, and gowns. In response to the COVID-19 pandemic, the Company re-prioritized its manufacturing capabilities in North America and Europe to focus on serving customers for these products.

TNW’s sales in the first half of 2020 declined 18.8% from the comparable period in 2019 on generally slower demand in industrial end markets globally. In the third quarter of 2020, sales increased 12.5% on a sequential basis from the previous quarter but decreased 8.5% compared to the prior year quarter. Softer industrial end markets and lower sales into automotive applications resulted in the year-over-year sales declines in the quarter. Third quarter 2020 sales were down 10.0% in Industrial Filtration and 6.8% in Advanced Materials businesses from the same period in the previous year.

Thermal Acoustical Solutions (“TAS”) Developments

As previously disclosed, the Company ramped-down its TAS operations in North Carolina in the United States, as well as in France and Germany, coinciding with the shutdown of its major automotive customers' facilities in those regions beginning in late March 2020. During the first half of 2020, TAS sales decreased 35.4% from prior year, heavily impacted by customer shutdowns during March, April, and May. TAS began to ramp-up production in mid-second quarter of 2020 in North America and Europe as customers began to re-open their plants in these regions. During the third quarter 2020, part sales were down 0.8% from the previous year as TAS continued to see stronger demand in North America and Europe with sales increasing significantly compared to second quarter 2020.

As customer demand increased in North America, the Company began to experience an increase of 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. In addition, recent recoveries in the manufacturing industries are causing higher commodity pricing in North America. In late third quarter 2020, as a result of labor shortages and operational inefficiencies directly related to COVID-19, TAS was unable to manufacture parts timely, resulting in customer production line stoppages. In early October 2020, due to the unforeseen and unforeseeable nature of the COVID-19 pandemic, which is out of the Company’s control, the Company invoked force majeure or commercial impracticability as legal excuse for delayed performance of contracts and defense to any claim that may be asserted by customers. A recent resurgence of cases in that same facility has caused the Company to expand its declaration of force majeure or commercial impracticability to other impacted customers. The Company has taken various actions to resolve these issues and expects TAS to continue to incur incremental costs in the fourth quarter of 2020.

Liquidity and Cash Preservation

The Company continued to experience working capital cash flow improvements through September 30, 2020, generating $74.6 million in cash from operating activities. As the Company continues to ramp-up production and invest in new fine fiber meltblown production equipment to meet customer demand, the Company expects cash outflows to support working capital requirements and capital projects.

During the first nine months of 2020, the Company took significant measures to reduce its overall cash expenditures, including the furlough or lay-off of hourly/salary plant workers and select furloughs of corporate and other salaried employees, deferred company contributions to its pension plans and matching contributions under the Company's 401(k) defined contribution plan, reduction of purchase obligations for raw materials, and reduction/delay of non-critical capital spending. As a result, the Company reduced its monthly cash expenditures. The Company may elect to continue certain actions if the COVID-19 pandemic continues.

In addition, the Company has taken advantage of specific benefits, including wage recovery provided by social programs in Europe and China and deferred domestic employer tax in the U.S. through the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. Through September 30, 2020, the Company benefited from $2.0 million in social cost reimbursements predominately in Europe and China. The Company may pursue, wherever it qualifies, governmental assistance and take advantage of governmental programs. The Company cannot guarantee, however, that it will qualify for, or receive, any additional assistance that it pursues.

As noted above, the Company reached an agreement with the U.S. Government in June 2020 that provides funding to cover a portion of the cost to install two new production lines for the production of meltblown material for N95 respirators, surgical and medical masks, and for other technical resources. The Company will receive monthly payments in accordance with the agreement to fund up to $13.5 million. Additionally, the Company has a tentative agreement with the French Government to fund up to 30% of the Company’s investment in its facility in France supporting the European Union face mask production and air filter production.

In addition to the significant measures taken to reduce and contain costs, the Company took actions in March 2020 to provide additional liquidity, primarily including a $20.0 million draw down on its amended credit facility. On May 11, 2020, the Company entered into an amended credit agreement (see Note 6, "Long-term Debt and Financing Arrangements" for the key amended terms and conditions) to modify certain financial maintenance covenants, at least one of which the Company expected to fail during the second quarter of 2020 as a result of the impact of COVID-19. On October 14, 2020, the Company amended

its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's financial covenants. The Company was in compliance with those modified financial covenants as of and for the three-month period ended September 30, 2020, and management does not anticipate noncompliance in the foreseeable future.

Through September of 2020, the Company generated $74.6 million of net cash provided by operations and had cash on hand of $122.0 million as of September 30, 2020. The Company continues to maintain the necessary capital to meet its debt obligations and interest payments. As previously disclosed in late 2019, the Company entered into arrangements with a banking institution to sell trade accounts receivable balances for selected customers. The Company continues to sell trade accounts receivable balances under these arrangements. See Transfer of Financial Assets in this Note 1, “Basis of Financial Statement Presentation” for more information.

The spread of COVID-19 and the measures taken to constrain the spread of the virus have had, and will continue to have, a material negative impact on the Company’s financial results, and such negative impact may continue well beyond the containment of such outbreak. There is inherent uncertainty in the assumptions the Company uses to estimate its future liquidity due to the impact of the COVID-19 outbreak. In addition, the magnitude, duration, and speed of the global pandemic is uncertain. Consequently, the impact on the Company's business, financial condition or longer-term financial or operational results is uncertain. However, management believes, based on the actions taken to reduce cash expenditures and the Company’s financial position, that net cash provided by operations combined with its cash and cash equivalents and borrowing availability under its Credit Facility will be sufficient to fund its current obligations, capital spending, debt service requirements, and working capital needs over at least the next twelve months.

Steps Taken to Protect Employees

The Company continues to monitor the global outbreak and spread of COVID-19 and take steps to mitigate the potential risks to the Company and its employees posed by the spread, related circumstances, and economic impacts of COVID-19. As the Company brings employees back to work, it has implemented changes to help ensure the safety and health of all its employees and continues to assess and update its business continuity plans in the context of this pandemic. The Company established the Lydall Emergency Preparedness Team (“LEPT”), implementing strict travel restrictions, enforcing rigorous hygiene protocols, increasing sanitization efforts at all facilities and implementing remote working arrangements for the majority of its employees who work outside the plants. The Company will continue its work to ensure it maintains a safe and healthy work environment and continue to allow remote working arrangements as long as necessary, where appropriate.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The year-end Condensed Consolidated Balance Sheet was derived from the audited financial statements for the year ended December 31, 2019, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the condensed consolidated financial information reflects all adjustments necessary for a fair statement of the Company’s consolidated financial position, results of operations, and cash flows for the interim periods reported, but do not include all the disclosures required by U.S. GAAP. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations, and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including the result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods. Actual results could differ from those estimates.

Recent Accounting Pronouncements Adopted

Effective January 1, 2020, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-13, "Financial Instruments - Credit Losses (Topic 326)." The new standard amends guidance on reporting credit losses for assets held at amortized cost basis. The Company has determined the only financial assets subject to the new standard are its trade receivables and contract assets. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

Effective January 1, 2020, the Company adopted the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement," which adds, amends, and removes certain disclosure requirements related to fair value measurements.  Among other changes, this standard requires certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements.  Please refer to Note 5, “Impairments of Goodwill and Other Long-Lived Assets”, for discussion of the inputs used in the quantitative impairment assessments for the three-month period ended March 31, 2020.

Effective January 1, 2020, the Company adopted FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract."  The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider.  The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848); Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments in this update are elective, and provide optional expedients and exceptions in accounting for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance in this update is effective for transactions entered into between March 12, 2020 and December 31, 2022. The Company adopted this ASU upon issuance and notes no impact to the Company's consolidated financial statements and disclosures as of September 30, 2020.

Recent Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)." The amendments in this update are intended to simplify the accounting for convertible debt instruments and convertible preferred stock. This ASU is effective for fiscal years and interim periods beginning after December 15, 2021 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)." The amendments in this update are intended to reduce diversity in practice and increase comparability of the accounting for interaction of equity securities, investments accounted for under the equity method of accounting, and the accounting for certain forward contracts and purchased options accounted for under Topic 815. This ASU is effective for fiscal years and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The new standard is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740, and by clarifying and amending existing guidance in other areas of the same topic. This ASU is effective for fiscal years and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU requires entities to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. This ASU also requires entities to disclose an explanation for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for fiscal years beginning after December 15, 2020

with early adoption permitted.  The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and disclosures.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1, “Significant Accounting Policies” within Part IV, Item 15 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Risks and Uncertainties

Worldwide economic cycles, political changes, and the COVID-19 pandemic affect the markets that the Company’s businesses serve and affect demand for the Company's products and could impact profitability. Among other factors, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, swings in consumer confidence and spending, and unstable economic growth and fluctuations in unemployment rates has caused economic instability and can have a negative impact on the Company’s results of operations, financial condition, and liquidity.

Transfers of Financial Assets 

In December 2019, the Company entered into two arrangements with a banking institution to sell trade accounts receivable balances for select customers. Under the programs, the Company has no risk of loss due to credit default and is charged a fee based on the nominal value of receivables sold and the time between the sale of the trade accounts receivables to banking institutions and collection from the customer.  Under one of the programs, the Company services the trade receivables after sale and receives 90.0% of the trade receivables in cash at the time of sale and the remaining 10.0% in cash, net of fees, at the earlier of customer payment or 150 days.  In the three-month and nine-month periods ended September 30, 2020, under both programs, the Company sold $21.3 million and $64.3 million, respectively, in trade receivable balances, received $59.1 million in total cash under the programs, and incurred $0.2 million in fees.  The Company expects to receive the remainder, net of fees, in the fourth quarter of 2020.

Condensed Consolidated Statements of Comprehensive Income

In connection with the preparation of its 2019 audited financial statements, the Company identified that in its previously filed unaudited interim financial statements for the three-month and six-month periods ended June 30, 2019 and the nine-month period ended September 30, 2019, the Company had incorrectly excluded, from its Condensed Consolidated Statements of Comprehensive Income, the impact to comprehensive income resulting from the settlement of its U.S. Lydall Pension Plan (see Note 11, "Employer Sponsored Benefit Plans"). As a result, unaudited comprehensive income for such periods was understated by approximately $19.0 million. This error did not have any impact on the Company’s corresponding previously filed Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows. Management has concluded that such errors did not result in the previously issued unaudited financial statements being materially misstated. In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the Condensed Consolidated Statements of Comprehensive Income for the nine-month period ended September 30, 2019 as follows:

	Nine Months Ended September 30, 2019
In thousands	As reported		As revised
Pension liability adjustment, net of tax	$	379	$	19,395
Comprehensive (loss) income	$	(8,243)	$	10,773

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Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with CustomersThe Company accounts for revenue in accordance with ASC 606, "Revenue from Contracts with Customers". Revenues are generated from the design and manufacture of specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers for filtration/separation and thermal/acoustical applications. The Company’s revenue recognition policies require the Company to make significant judgments and estimates. In applying the Company’s revenue recognition policy, determinations must be made as to when control of products passes to the Company’s customers which can be either at a point in time or over time. Revenue is generally recognized at a point in time when control passes to customers upon shipment of the Company’s products and revenue is generally recognized over time when control of the Company’s products transfers to customers during the manufacturing process. The Company analyzes several factors, including but not limited to, the nature of the products being sold and contractual terms and conditions in contracts with customers to help the

Company make such judgments about revenue recognition. Unfulfilled performance obligations are generally expected to be satisfied within one year.

Contract Assets and Liabilities

The Company’s contract assets primarily include unbilled amounts typically resulting from sales under contracts when the over time method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. These unbilled accounts receivable in contract assets are transferred to accounts receivable upon invoicing, typically when the right to payment becomes unconditional in which case payment is due based only upon the passage of time.

The Company’s contract liabilities primarily relate to billings and advance payments received from customers and deferred revenue. These contract liabilities represent the Company’s obligation to transfer its products to its customers for which the Company has received, or is owed consideration from its customers. Contract liabilities are included in Other long-term liabilities on the Company’s Condensed Consolidated Balance Sheets.

Contract assets and liabilities consisted of the following:

In thousands	September 30, 2020		December 31, 2019		Dollar Change
Contract assets	$	27,186	$	28,245	$	(1,059)
Contract liabilities	$	3,414	$	1,441	$	1,973

The $1.1 million decrease in contact assets from December 31, 2019 to September 30, 2020 was primarily due to timing of billings to customers.

The $2.0 million increase in contract liabilities from December 31, 2019 to September 30, 2020 was primarily due to an increase in customer deposits, offset by $1.1 million of revenue recognized in the first nine months of 2020 related to contract liabilities at December 31, 2019.

Disaggregated Revenue

The Company disaggregates revenue from customers by geographic region, as it believes this disclosure best depicts how the nature, amount, timing, and uncertainty of the Company's revenues and cash flows are affected by economic factors. Disaggregated revenue by geographical region for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

	For the Three Months Ended September 30, 2020								For the Three Months Ended September 30, 2019
In thousands	North America		Europe		Asia		Total Net Sales		North America		Europe		Asia		Total Net Sales
Performance Materials	$	45,759	$	18,776	$	3,282	$	67,817	$	42,693	$	15,203	$	2,104	$	60,000
Technical Nonwovens	34,727		17,318		6,464		58,509		42,128		16,544		5,240		63,912
Thermal Acoustical Solutions	57,841		22,861		4,821		85,523		61,315		22,208		4,403		87,926
Eliminations and Other	(4,569)		(195)		—		(4,764)		(6,405)		(159)		—		(6,564)
Total Net Sales	$	133,758	$	58,760	$	14,567	$	207,085	$	139,731	$	53,796	$	11,747	$	205,274

	For the Nine Months Ended September 30, 2020								For the Nine Months Ended September 30, 2019
In thousands	North America		Europe		Asia		Total Net Sales		North America		Europe		Asia		Total Net Sales
Performance Materials	$	131,866	$	52,552	$	7,092	$	191,510	$	136,892	$	47,589	$	5,201	$	189,682
Technical Nonwovens	101,694		49,674		16,551		167,919		121,984		53,384		23,228		198,596
Thermal Acoustical Solutions	137,517		57,825		11,390		206,732		189,152		73,853		12,506		275,511
Eliminations and Other	(11,914)		(475)		—		(12,389)		(19,139)		(540)		—		(19,679)
Total Net Sales	$	359,163	$	159,576	$	35,033	$	553,772	$	428,889	$	174,286	$	40,935	$	644,110

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Inventories

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories as of September 30, 2020 and December 31, 2019 were as follows:

In thousands	September 30, 2020		December 31, 2019
Raw materials	$	31,442	$	36,322
Work in process	14,228		14,873
Finished goods	25,497		29,349
Total inventories	$	71,167	$	80,544

Included in work in process is net tooling inventory of $2.0 million and $1.8 million at September 30, 2020 and December 31, 2019, respectively.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill

The Company performs an assessment of its goodwill for impairment at least annually in the fourth quarter, and whenever events or changes in circumstances indicate that the carrying value may exceed its fair value. There were no such events or changes in circumstances during the three-month period ended September 30, 2020. See Note 5, "Impairments of Goodwill and Other Long-Lived Assets", for discussion of the goodwill impairment recorded during the three-month period ended March 31, 2020.

The changes in the carrying amount of goodwill by segment as of and for the nine-month period ended September 30, 2020 were as follows:

In thousands	December 31, 2019		Currency translation adjustments		Impairment		September 30, 2020
Performance Materials	$	80,658	$	(22)	$	(48,671)	$	31,965
Technical Nonwovens	53,254		166		—		53,420
Total goodwill	$	133,912	$	144	$	(48,671)	$	85,385

Goodwill Impairment

During the three-month period ended March 31, 2020, the Company performed a goodwill impairment analysis in the Performance Materials and Technical Nonwovens reporting units and recorded a goodwill impairment charge of $48.7 million in the Performance Materials reporting unit. See Note 5, "Impairments of Goodwill and Other Long-Lived Assets", for further discussion of the goodwill impairment.

Other Intangible Assets

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019:

	September 30, 2020				December 31, 2019
In thousands	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer Relationships	$	141,784	$	(44,636)	$	142,400	$	(30,648)
Patents	791		(670)		759		(607)
Technology	2,500		(1,102)		2,500		(977)
Trade Names	7,322		(6,544)		7,293		(5,143)
License Agreements	629		(629)		610		(610)
Other	570		(570)		551		(551)
Total other intangible assets	$	153,596	$	(54,151)	$	154,113	$	(38,536)

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Impairments of Goodwill and Other Long-Lived Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Impairments of Goodwill and Other Long-Lived Assets

Impairments of Goodwill and Other Long-Lived Assets

During the three-month period ended March 31, 2020, the Company experienced disruptions in some operations from lower customer demand directly attributable to the COVID-19 pandemic. Many of the Company's automotive customers temporarily ceased operations due to the impact of the COVID-19 pandemic on the global economy resulting in the following:

•The Company’s China facilities carried out a planned shutdown in conjunction with the lunar New Year in late January, which was extended to late February as a result of government imposed restrictions.  The facilities did not resume operations until late February and ramped back up moderately in line with customer demand. Currently, all of the Company’s plants in China are operating and all of its automotive customer plants in China have re-opened.  The Company has not experienced any significant disruption it its supply chains in China since resuming operations;

•On March 20, 2020, the Company announced ramp-downs at its Thermal Acoustical Solutions ("TAS") operations in North America and Europe as a direct result of customer stoppages. The Company's facilities in North America and Europe have since resumed operations;

•Leading economic indicators began to signal a broad economic recession and a future decline in automotive sales;

•Certain of the Company’s Performance Materials ("PM") and Technical Nonwovens ("TNW") operations with exposure to automotive end markets also experienced reductions in sales, which, in some cases, have been partially offset by increases in sales of other products. These operations also have exposure to various industrial end markets. Leading economic indicators for certain of these markets also signaled a downturn in demand; and

•The Company's share price and market capitalization experienced a significant decline.

During the three-month period ended March 31, 2020, the Company considered the combination of the above to be triggering events that required an impairment analysis for the goodwill held at the PM and TNW reporting units, and for certain long-lived assets. Therefore, during the three-month period ended March 31, 2020, in accordance with both ASC 350 Intangibles - Goodwill and Other, and with ASC 360 Property, Plant & Equipment, the Company performed an impairment analysis of its goodwill held by the PM and TNW reporting units, and on certain of its long-lived assets (principally land, machinery and equipment, customer relationships, and buildings and improvements).

As a result of these impairment tests, the Company recorded the following impairment charges during the three-month period ended March 31, 2020:

In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Totals
Impairment of goodwill	$	48,671	$	—	$	—	$	48,671
Impairment of other long-lived assets	12,438		—		—		12,438
Total impairments	$	61,109	$	—	$	—	$	61,109

Goodwill

During the three-month period ended March 31, 2020, the Company performed a quantitative goodwill impairment assessment for both the PM and TNW reporting units. In the quantitative impairment assessment, the Company weighted equally both an income approach (discounted cash flow model) and a market approach to determine the fair value of the reporting units. The Company’s significant assumptions in the discounted cash flow model included, but were not limited to, future cash flow projections, the weighted average cost of capital, the terminal growth rate, and the tax rate.

Lower expected demand in automotive and other end markets due to the COVID-19 pandemic resulted in a reduction in sales and cash generation projections as compared to prior projections for the reporting units. Projected future cash flows includes management estimates and assumptions that are based on the best available information as of the date of the assessment.  Future cash flows can be affected by numerous factors including changes in economic, industry or market conditions, changes in the underlying business or products of the reporting unit, changes in competition, and changes in technology. The cash flows of the Company's reporting units can be significantly affected by the depth of the estimated decline in automotive and other end markets and the Company's estimates of the pace and level of their recovery as well as the ability of the Company to increase production in response to the recovery.

The weighted average cost of capital for the PM reporting unit increased from 9.2 percent in the three-month period ended December 31, 2019 to 11.5 percent in the three-month period ended March 31, 2020. The weighted average cost of capital for the TNW reporting unit increased from 9.2 percent in the three-month period ended December 31, 2019 to 10.8 percent in the three-month period ended March 31, 2020. There are inherent uncertainties and management judgment required in an analysis of goodwill impairment. The Company believes the income approach was appropriate because it provided a fair value estimate based upon the reporting unit's expected long-term operations and cash flow performance.

The Company also used a form of the market approach, which was derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting unit operates giving consideration to risk profiles, size, geography, and diversity of products and services. The EBITDA multiples used in the market approach for both reporting units declined from the three-month period ended December 31, 2019 to the three-month period ended March 31, 2020 due to market-related changes in the industries in which these reporting units operate as a result of COVID-19.

Other assumptions included adding an implied control premium to the valuation based on estimating the fair value on a controlling basis, which was derived from research on control premiums observed in recent mergers and acquisitions in the industries in which the Company operates. The control premium for both reporting units increased by 5 percent from the three-month period ended December 31, 2019 to the three-month period ended March 31, 2020. Control premiums can be higher in periods of depressed stock prices. The Company believes the market approach was appropriate because it provided a fair value using multiples from companies with operations and economic characteristics similar to the PM reporting unit.

The Company also performed an overall reconciliation to corroborate the fair value derived from the income and market approaches to the Company's overall market capitalization. The revised projections, together with a deterioration in the inputs described above, drove a reduction in the fair value of both reporting units. As a result, the carrying value of the PM reporting unit was determined to exceed its fair value by $48.7 million, resulting in the impairment charge. After recording the impairment charge during the three-month period ended March 31, 2020, the remaining goodwill associated with the PM reporting unit was $31.9 million. The fair value of the TNW reporting unit exceeded its carrying value and, therefore, no impairment was required. Any declines in financial projections, including changes to key assumptions, could have a material adverse impact on the fair value of the reporting units, and therefore could result in further impairment charges.

In the three-month period ended December 31, 2019, as part of its annual impairment assessment, the Company determined that the fair value of the PM reporting unit was less than its carrying value and recorded a goodwill impairment of $63.0 million.

Other Long-Lived Assets

During the three-month period ended March 31, 2020, the Company performed the following impairment assessments for long-lived assets in accordance with ASC 360:

•As a result of the COVID-19 pandemic and the Company's action plan to address the risks associated with it, the Company accelerated certain actions. One such action was a review of an underperforming European plant within the PM segment. As a result of a strategic shift regarding this plant, the Company performed an impairment assessment on the long-lived assets of the plant. To determine the recoverability of this asset group, the Company completed an undiscounted cash flow analysis (income approach) and compared it to the asset group carrying value. The impairment test concluded that the assets were not recoverable because the undiscounted cash flows were less than the carrying amount. The Company determined that the carrying value of the assets exceeded the fair value and recorded a long-lived asset impairment charge of $12.4 million.

•As a result of the temporary plant closures announced on March 20, 2020 in response to the COVID-19 pandemic's effects on the automotive sector, the Company performed impairment assessments on the long-lived assets for its TAS plants. The Company considered each operating plant's asset group, primarily consisting of machinery and equipment, and buildings and improvements. To determine the recoverability of each asset group, the Company completed an undiscounted cash flow analysis (income approach) and compared it to each asset groups' carrying value. For two of the asset groups, the undiscounted cash flows exceeded the carrying value of the asset group so no further assessment of impairment was necessary. For two of the European plants, the undiscounted cash flows did not exceed the plants' carrying values. As part of step two of the impairment assessment, the Company used the market approach to determine fair value based on independent appraisals of the long-lived assets. The Company determined that impairment was not necessary since the fair value of the long-lived asset groups for each operating plant exceeded their carrying amounts.

There were no events or circumstances during the three-month period ended September 30, 2020 that indicated any further triggering events under ASC 360 were present. Changes in future operating results could result in a future non-cash impairment charge.

During the three-month period ended December 31, 2019, the Company determined that fair value of a certain asset group in the PM segment exceeded its carrying value and recorded a long-lived asset impairment charge of $1.2 million.

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Long-term Debt and Financing Arrangements

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Long-term Debt and Financing Arrangements

Long-term Debt and Financing Arrangements

On August 31, 2018, the Company amended and restated its $175 million senior secured revolving credit agreement ("2018 Credit Agreement"), which increased the available borrowing from $175 million to $450 million, added three additional lenders, and extended the maturity date from July 7, 2021 to August 31, 2023. On May 11, 2020, the Company amended its 2018 Credit Agreement ("2020 Amendment") which, among other changes, decreased borrowings from $450 million to $314 million and modified certain financial covenants contained in the 2018 Credit Agreement.

2018 Credit Agreement

Under the terms of the 2018 Credit Agreement, the lenders provided up to a $450 million credit facility (the “Facility”) to the Company, including a term loan commitment of $200 million and revolving loans to or for the benefit of the Company and its subsidiaries of up to $250 million. The Facility was secured by substantially all of the assets of the Company.

Interest was charged on borrowings at the Company’s option of either: (i) Base Rate plus the Applicable Rate, or (ii) the Eurodollar Rate plus the Applicable Rate. The Base Rate is a fluctuating rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by Bank of America, and (c) the Eurocurrency Rate plus 1.00%. The Eurocurrency Rate means (i) if denominated in LIBOR quoted currency, a fluctuating LIBOR per annum rate equal to the London Interbank Offered Rate; (ii) if denominated in Canadian Dollars, the rate per annum equal to the Canadian Dollar Offered Rate; or (iii) the rate per annum as designated with respect to such alternative currency at the time such alternative currency is approved by the Lenders. The Applicable Rate is determined based on the Company’s Consolidated Leverage Ratio (as defined in the 2018 Credit Agreement). The Applicable Rate added to the Base Rate Committed Loans ranged from 0.00% to 1.25%, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranged from 0.75% to 2.00%. The Company paid a quarterly fee ranging from 0.15% to 0.275% on the unused portion of the revolving commitment.

The Company has an interest rate swap in place to convert a portion of the Company's borrowings from a variable rate to a fixed rate. See Note 7, "Derivatives" for additional information.

The Company is permitted to prepay term and revolving borrowings in whole or in part at any time without premium or penalty, subject to certain minimum payment requirements, and the Company was generally permitted to irrevocably cancel unutilized portions of the revolving commitments under the 2018 Credit Agreement. The Company is required to repay the term commitment in an amount of $2.5 million per quarter beginning with the quarter ending December 31, 2018 through the quarter ending June 30, 2023.

The 2018 Credit Agreement contained covenants required of the Company and its subsidiaries, including various affirmative and negative financial and operational covenants. The Company was required to meet certain quarterly financial covenants calculated from the four fiscal quarters most recently ended, including: (i) a minimum Consolidated Fixed Charge Coverage Ratio, which requires that at the end of each fiscal quarter the ratio of (a) consolidated EBITDA to (b) the sum of consolidated interest charges, redemptions, non-financed maintenance capital expenditures, restricted payments and taxes paid, each as defined in the 2018 Credit Agreement, may not be lower than 1.25 to 1.0; and (ii) a Consolidated Net Leverage Ratio, which required that at the end of each fiscal quarter the ratio of consolidated funded indebtedness minus consolidated domestic cash to consolidated EBITDA, as defined in the 2018 Credit Agreement, could not be greater than 3.5 to 1.0.

2020 Amendments to the 2018 Credit Agreement

On May 11, 2020, the Company amended its $450 million senior secured revolving 2018 Credit Agreement. The principal purpose of the Amendment was to modify certain financial covenants contained in the 2018 Credit Agreement, at least one of which the Company expected to fail as early as the second quarter of 2020 as a result of the impact of COVID-19. The amended terms and conditions included the following:

•Modified the financial covenants as follows:

◦Consolidated Net Leverage Ratio, which requires that on the last day of each fiscal quarter the ratio not be greater than 6.5:1 through the period ending March 31, 2021, 4.50:1 for the period ending June 30, 2021 through the period ending March 31, 2022, and 3.50:1 for the periods ending June 30, 2022 and thereafter;

◦The minimum Consolidated Fixed Charge Coverage Ratio, which requires that on the last day of each fiscal quarter the ratio not be lower than 1.10:1 calculated on a trailing twelve month basis through the period ending June 30, 2020, 1.25:1 calculated on a distinct quarterly basis for the periods ended September 30, 2020 through June 30, 2021, and 1.25:1 calculated on a trailing twelve month basis beginning with the period ending September 30, 2021 and thereafter;

•Required the Company maintain a minimum cash and cash equivalents balance of $40 million, excluding deposit accounts in China;

•Decreased the term loan facility from $200 million to $144 million and decreased the revolving credit facility from $250 million to $170 million for a total overall facility of $314 million; and eliminated the accordion feature;

•Established a floor on the Base and Eurocurrrency Rate of 1%;

•Modified the definition of the Applicable Rate, as determined based on the Company’s Consolidated Net Leverage Ratio, by increasing the range for the Base Rate for Committed Loans to 2.00% to 3.25% and increasing the range for the Eurocurrency Rate Committed Loans and Letters of Credit to 3.00% to 4.25%;

•Increased the quarterly commitment fee to 0.375% on the unused portion of the revolving commitment; and

•Required the Company to pay an amendment fee to the Lenders based on their commitment levels.

There was no modification to the maturity date of the facility.

On October 14, 2020, the Company further amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's financial covenants. The Company believes that its liquidity resources, including the Facility, are sufficient to meet its working capital needs and other cash requirements. The Company was in compliance with those modified financial covenants at September 30, 2020, and management does not anticipate noncompliance in the foreseeable future.

At September 30, 2020, the Company had $283.5 million of borrowings outstanding and standby letters of credit outstanding of $1.8 million. The borrowings outstanding included a $138.5 million term loan, net of $0.5 million in debt issuance costs being

amortized to interest expense over the debt maturity period. The Company had available borrowings of $23.7 million and $121.6 million at September 30, 2020 and December 31, 2019, respectively.

In addition to the amounts outstanding under the Facility, the Company has various foreign credit facilities totaling approximately $9.4 million. At September 30, 2020, the Company's foreign subsidiaries had $0.2 million in borrowings outstanding as well as $1.3 million in standby letters of credit outstanding.

The Company also has a finance lease agreement for equipment at a North America operation requiring monthly principal and interest payments through October 31, 2020.

Total outstanding debt consists of:

In thousands	Effective Rate		Maturity	September 30, 2020		December 31, 2019
Revolver loan	5.25	%	8/31/2023	$	144,500	$	126,500
Term loan, net of debt issuance costs	5.25	%	8/31/2023	138,536		146,106
Finance leases	1.60	%	10/31/2020	3		35
				283,039		272,641
Less portion due within one year				(9,844)		(9,928)
Total long-term debt, net of debt issuance costs				$	273,195	$	262,713

The weighted average interest rate on long-term debt was 5.2% for the nine-month period ended September 30, 2020 and 4.3% for the year-ended December 31, 2019.

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Derivatives

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

The Company selectively uses financial instruments to manage market risk associated with exposure to fluctuations in interest rates and foreign currency rates. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Interest Rate Hedging

The Company’s interest rate exposure is most sensitive to fluctuations in interest rates in the United States and Europe, which impacts interest paid on its debt. The Company has debt with variable rates of interest based generally on LIBOR. From time to time, the Company enters into interest rate swap agreements to manage interest rate risk. These instruments are designated as cash flow hedges and are recorded at fair value (see Note 8, "Fair Value Measurements" for additional information).

In November 2018, the Company entered into a five-year interest rate swap agreement with a bank to convert the interest on a notional $139.0 million of the Company's borrowings under its 2018 Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 3.09% plus the borrowing spread. The notional amount reduces quarterly by fluctuating amounts through August 2023. In April 2017, the Company entered into a three-year interest rate swap agreement with a bank to convert the interest on a notional $60.0 million of the Company's borrowings from a variable rate, plus the borrowing spread, to a fixed rate of 1.58% plus the borrowing spread. The notional amount reduced quarterly by $5.0 million through March 31, 2020 and is now settled. Prior to May 11, 2020, these interest rate swap agreements were accounted for as cash flow hedges. Effectiveness of the remaining derivative agreement was assessed quarterly, or more frequently, if necessary, by ensuring that the critical terms of the swap continued to match the critical terms of the hedged debt in order to report gains or losses on the derivative instrument in other comprehensive income.

On May 11, 2020, the Company amended its 2018 Credit Agreement, see Note 6, "Long-term Debt and Financing Arrangements". The amendment included, among other modifications, the establishment of a floor on the base and Eurocurrency rate of 1%. As a result, the Company determined that the critical terms of the swap no longer matched the critical terms of the hedged debt and performed an assessment of the effectiveness of the interest rate swap agreement. The Company concluded the interest rate swap agreement is no longer effective. The Company also concluded that the hedged forecasted transaction (the occurrence of variable interest rate payments on the hedged debt) continues to be probable of occurring. Therefore, as of May 11, 2020, the Company discontinued hedge accounting. After May 11, 2020, any fair value gains or losses on the derivative agreement are recorded as interest expense in the Company's Consolidated Statement of Operations. The cumulative loss on the discontinued hedge relationship through May 11, 2020, which was recorded in Accumulated Other Comprehensive Income, will be amortized into earnings / (losses) through August 31, 2023, the maturity date of the hedged debt. The loss included in Accumulated Other Comprehensive Income related to the discontinued hedging relationship at

September 30, 2020 was $4.5 million, net of tax. The amount reclassified out of other comprehensive income into interest expense on the Company's Condensed Consolidated Statement of Operations for the three and nine-months ended September 30, 2020 was $0.9 million and $1.4 million, respectively. The Company expects $3.1 million to be reclassified from Accumulated Other Comprehensive Income over the next twelve months.

Net Investment Hedges

The Company’s operations are subject to certain risks, including foreign currency exchange rate fluctuations. From time to time, the Company enters into cross-currency swaps designated as hedges, recorded at fair value (see Note 8, "Fair Value Measurements"), to protect the Company's net investments in subsidiaries denominated in currencies other than the US dollar.

In November 2019, the Company entered into three fixed-to-fixed cross-currency swaps with banking institutions with aggregate notional amounts totaling €67.8 million ($75 million U.S. dollar equivalent). These swaps hedge a portion of the Company's net investment in a Euro functional currency denominated subsidiary against the variability of exchange rate translation impacts between the U.S. dollar and Euro. These contracts require monthly cash interest exchanges over the life of the contracts with the Company recognizing a reduction to interest expense due to the favorable interest rate differential between the U.S. dollar and Euro. Also, settlement of the notional €22.6 million ($25 million U.S. dollar equivalent) cross-currency swaps occur at maturity dates of August 2021, August 2022 and August 2023. The Company assesses hedge effectiveness of the cross-currency swaps quarterly by ensuring the critical terms of the swaps continue to match the critical terms of the designated net investment. The Company elected to assess effectiveness using the spot method, and as a result, records the interest rate differential monthly in the Company's Statement of Operations.

Derivative instruments are recognized as either assets or liabilities on the balance sheet in either current or non-current other assets or other accrued liabilities or other long-term liabilities depending upon maturity and commitment. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods in which the hedge transaction affects earnings. Any ineffective portion, or amounts related to contracts that are not designated as hedges, are recorded directly to earnings. The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. The Company does not use derivatives for speculative or trading purposes.

The following table sets forth the fair value amounts of derivative instruments held by the Company presented in the Condensed Consolidated Balance Sheets as Other current assets and Other accrued liabilities:

	September 30, 2020				December 31, 2019
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Interest rate contracts	$	—	$	5,967	$	2	$	4,538
Cross-currency swaps	—		3,310		—		1,817
Total derivatives	$	—	$	9,277	$	2	$	6,355

The following table sets forth the (loss) income recorded in accumulated other comprehensive (loss) income, net of tax, for the three and nine-month periods ended September 30, 2020 and 2019 for derivatives held by the Company and designated as hedging instruments:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Cash flow hedges:
Interest rate contracts	$	706	$	(148)	$	(1,059)	$	(2,174)
Cross-currency swaps	(2,669)		—		(1,143)		—
Total derivatives	$	(1,963)	$	(148)	$	(2,202)	$	(2,174)

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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value MeasurementsFair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

•Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following table presents the carrying value and fair value of financial instruments that are not carried at fair value:

	September 30, 2020				December 31, 2019
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt	$	283,500	$	288,891	$	273,000	$	269,434

The fair values of the Company’s long-term debt outstanding were computed based on discounted future cash flows (observable inputs), as applicable, which falls under Level 2 of the fair value hierarchy. Differences from carrying values are attributable to interest rate changes subsequent to when the transactions occurred.

The fair values of cash and cash equivalents, accounts receivable, net and accounts payable approximate their carrying amounts due to the short-term maturities of these instruments.

Recurring Fair Value Measures

The Company holds derivative instruments for interest rate swap contracts and cross-currency swaps that are measured using observable market inputs such as forward rates and its counterparties' credit risks. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At September 30, 2020 and December 31, 2019, these derivative instruments were included in other current assets and other accrued liabilities on the Consolidated Balance Sheet. Based on the Company's continued ability to trade and enter into interest rate swaps and cross-currency swaps, the Company considers the markets for their fair value instruments to be open.

Nonrecurring Fair Value Measurements

During the three-month period ended March 31, 2020, the Company incurred a $48.7 million impairment charge for goodwill at its Performance Materials segment and a $12.4 million impairment charge for a certain asset group at one of the Performance Materials' European businesses. See Note 5, "Impairment of Goodwill and Other Long-Lived Assets" for information regarding the calculation of fair value.

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Equity Compensation Plans

3 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Equity Compensation Plans

Equity Compensation Plans

As of September 30, 2020, the Company’s equity compensation plans consisted of the 2003 Stock Incentive Compensation Plan (the “2003 Plan”), and the Amended and Restated 2012 Stock Incentive Plan, (the “2012 Plan” and together with the 2003 Plan, the “Plans”) under which incentive and non-qualified stock options and time and performance based restricted shares have been granted to employees and directors from authorized but unissued shares of common stock or treasury shares. The 2003 Plan is not active, but continues to govern all outstanding awards granted under the plan until the awards themselves are exercised or terminate in accordance with their terms. The 2012 Plan, amended and approved by stockholders on April 24, 2020, authorizes 3.0 million shares of common stock for awards. The 2012 Plan also authorized an additional 19,720 shares of common stock to the extent awards granted under prior stock plans that were outstanding as of April 24, 2020 are forfeited. The 2012 Plan provides for the following types of awards: options, restricted stock, restricted stock units and other stock-based awards. During the fourth quarter of 2019, additional shares of common stock were issued pursuant to separate inducement share agreements with two individuals as material inducement to their employment with the Company (the "Inducement Grants"). The Inducement Grants awarded stock options and restricted stock to the two individuals. Amounts shown below are inclusive of the Plans and the Inducement Grants.

The Company accounts for the expense of all share-based compensation by measuring the awards at fair value on the date of grant. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Options issued by

the Company under its stock option plans have a term of ten years and generally vest ratably over a period of three to four years. Time-based and performance-based restricted stock grants are expensed over the vesting period of the award, which is typically two to four years. The number of performance-based restricted shares that ultimately vest depends upon achievement of certain relative performance metrics as measured against the performance of the S&P 600 industrial index during a three-year performance period. The Company estimates the grant date value of performance awards using a Monte Carlo simulation model on the date of grant. The Company accounts for forfeitures as they occur. Stock options issued under the current plan must have an exercise price that may not be less than the fair market value of the Company’s common stock on the date of grant. The Plans provide for automatic acceleration of vesting in the event of a change in control of the Company.

The Company incurred equity compensation expense of $0.7 million and $0.6 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $2.5 million and $2.1 million for the nine-month periods ended September 30, 2020 and 2019, respectively, for the Plans, including restricted stock awards. The Company also incurred equity compensation expense of $0.2 million and $0.2 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $0.5 million and $0.5 million for the nine-month periods ended September 30, 2020 and 2019, respectively, for stock awards granted to Directors. No equity compensation costs were capitalized as part of inventory.

Stock Options

The following table is a summary of outstanding and exercisable options for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020			For the Nine Months Ended September 30, 2020
In thousands except per share amounts	Shares	Weighted- Average Exercise Price		Shares	Weighted- Average Exercise Price
Stock Options outstanding at the beginning of the period	748	$	25.36	683	$	27.15
Granted	11	$	16.27	180	$	17.37
Exercised	—	$	—	(4)	$	8.67
Forfeited or Expired	(71)	$	26.25	(171)	$	25.46
Stock Options outstanding at September 30, 2020	688	$	25.11	688	$	25.11
Exercisable at September 30, 2020	305	$	32.54	305	$	32.54
Unvested at September 30, 2020	383	$	19.20	383	$	19.20

There was no cash received from exercise of stock options during the three-month period ended September 30, 2020. The amount of cash received from the exercise of stock options was less than $0.1 million during the nine-month period ended September 30, 2020. The intrinsic value of stock options exercised was less than $0.1 million with a tax benefit of less than $0.1 million during the nine-month period ended September 30, 2020.

At September 30, 2020, the total unrecognized compensation cost related to non-vested stock option awards was approximately $2.1 million, with a weighted average expected amortization period of 2.7 years.

Restricted Stock

Restricted stock includes both performance-based and time-based awards. The following is a summary of the Company's unvested time-based restricted shares for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	220	159
Granted	—	77
Vested	(5)	(8)
Forfeited or Expired	(12)	(25)
Unvested at September 30, 2020	203	203

The following is a summary of the Company's unvested performance-based restricted shares for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	161	129
Granted	5	71
Vested	—	—
Forfeited or Expired	(18)	(52)
Unvested at September 30, 2020	148	148

At September 30, 2020, there were 350,348 total unvested restricted stock awards with total unrecognized compensation cost related to these awards of $4.4 million with a weighted average expected amortization period of 2.1 years.

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Stock Repurchases

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Stock Repurchases

Stock Repurchases

During the nine-month period ended September 30, 2020, the Company purchased 2,340 shares of common stock valued at less than $0.1 million, through tax withholding, pursuant to provisions in agreements with recipients of restricted stock granted under the Company’s equity compensation plans, in which the Company withholds that number of shares having fair value equal to each recipient’s minimum tax withholding due.

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Employer Sponsored Benefit Plans

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Employer Sponsored Benefit Plans

Employer Sponsored Benefit Plans

The Company maintains one domestic pension plan: the Retirement Income Plan for Employees of Interface Performance Materials, Inc. ("IPM Pension Plan"). During the three-month period ended March 31, 2020, the Company settled the pension obligation of the Interface Sealing Solutions, Inc. Pension Plan ("ISS Pension Plan") through lump sum distributions to participants or by irrevocably transferring pension liabilities to an insurance company through the purchase of a group annuity contract. This purchase, funded with pension assets, resulted in a pre-tax settlement loss of $0.4 million in the three-month period ended March 31, 2020, related to the recognition of accumulated deferred actuarial losses. The settlement loss and expenses were included as non-operating expense in the condensed consolidated statements of operations.

The IPM Pension Plan covers a portion of Interface's union and non-union employees. The plan is closed to new employees and benefits are no longer accruing for the majority of participants. The Company expects to make required contributions of approximately $1.2 million to the IPM Pension Plan during 2020. There were no contributions made during the three-month period ended September 30, 2020, as the Company took advantage of the delay in minimum funding contribution due dates as allowed under the CARES Act, and is delaying payment of the minimum funding contributions of $0.3 million originally due during April 2020, and $0.3 million originally due during July 2020. These and other required minimum funding contributions for the remainder of 2020 will be made later in 2020. Contributions of $0.4 million were made during the nine-month period ended September 30, 2020. Contributions of $0.3 million and $1.1 million were made during the three-month and nine-month periods ended September 30, 2019, respectively, inclusive of contributions made to the ISS Pension Plan.

Prior to 2020, the Company also maintained the U.S. Lydall Pension Plan. During the second quarter of 2019, the Company settled the pension obligation of the U.S. Lydall Pension Plan through lump sum distributions to participants or by irrevocably transferring pension liabilities to two insurance companies through the purchase of group annuity contracts.

The following is a summary of the components of net periodic benefit cost for the domestic defined benefit pension plans for

the three-month and nine-month periods ended September 30, 2020 and 2019:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Components of employer benefit cost
Service cost	$	40	$	30	$	120	$	90
Interest cost	428		530		1,285		2,356
Expected return on assets	(532)		(488)		(1,597)		(2,105)
Amortization of actuarial loss	—		—		2		464
Net periodic benefit cost	$	(64)	$	72	$	(190)	$	805
Settlement loss	—		186		385		25,701
Total employer benefit plan cost	$	(64)	$	258	$	195	$	26,506

The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs in operating expenses and the non-service cost components of net periodic benefit cost in other income.

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Restructuring

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

During the third quarter of 2020, the Company’s Performance Materials segment undertook actions to discontinue production of a lower efficiency air filtration media product and, in turn, fully depreciated the supporting machinery and equipment in North America and consolidated certain product lines and began exiting underperforming facilities in Europe. These restructuring activities, which are projected to conclude in the first half of 2021, are expected to reduce operating costs, increase production efficiency, and enhance the Company’s flexibility by better aligning its manufacturing operations with the segment's customer base. Accordingly, the Company expects to record total pre-tax expenses of approximately $17.0 to $20.0 million, primarily related to severance and employee retention expenses, in connection with these restructuring activities, of which approximately $11.5 to $14.5 million are expected to result in cash expenditures. The Company incurred non-cash expenditures of approximately $5.5 million, which consisted of fully depreciating and/or amortizing long-lived assets and, to a lesser extent, writing-off inventory.

In North America, the Company decided to shut down two underperforming nonwoven manufacturing carded lines and ancillary equipment, originally acquired in 2018, that served commercial and residential HVAC markets with low to medium efficiency air filtration media. The Company experienced lower demand as a result of COVID-19, which accelerated a market shift from lower efficiency air filtration media to higher performance rated air filtration media. As a result, the Company recorded a pre-tax restructuring charge of $5.4 million, primarily due to accelerated depreciation of property, plant and equipment and other intangible assets. The Company does not anticipate incurring additional restructuring expenses related to the closure of these manufacturing Carded lines.

The Company undertook actions to consolidate global production facilities in the Sealing & Advanced Solutions business from five facilities to four, resulting in the closure of an underperforming facility in Germany. In the first quarter of 2020, the Company performed an impairment analysis of the long-lived assets and determined that the carrying value of the assets did not exceed their fair value and recorded an impairment charge of $12.4 million (see Note 5, “Impairments of Goodwill and Other Long-Lived Assets” for additional information). The closure is expected to be completed in the first quarter of 2021. In addition, the Company decided to close a small volume membrane filtration production facility in the Netherlands. In the fourth quarter of 2019, the Company performed an impairment of the long-lived assets for this facility and recorded an impairment charge of $1.2 million. The assets have been fully depreciated through September 30, 2020. The closure is expected to be completed in the second quarter of 2021.

As a result of the two facility closures in Europe, the Company recorded pre-tax restructuring charges of $9.6 million consisting of severance costs, legal expenses, and inventory write-offs and anticipates it could incur an additional $2.0 million to $5.0 million in restructuring expenses, primarily related to severance costs from these facility closures.

The following table summarizes the total restructuring charges by cost type:

In Thousands	Severance and Related Expenses		Facility Exit and Asset Write-Off Expenses		Total
Expense incurred during quarter ended:
September 30, 2020	$	9,484	$	5,500	$	14,984
Total pre-tax expense incurred	$	9,484	$	5,500	$	14,984

For the three and nine-month periods ended September 30, 2020, $15.0 million was included in restructuring expenses on the Company’s Condensed Consolidated Statements of Operations with $14.8 million recorded in the Performance Materials segment and $0.2 million recorded within Corporate Office expenses.

There were cash outflows of $0.2 million for the restructuring program for the three and nine months ended September 30, 2020.

The following table summarizes the accrued liability balance by cost type for the restructuring actions:

In Thousands	Total
Balance as of December 31, 2019	$	—
Pre-tax restructuring expenses, excluding asset write-off expenses	9,485
Cash paid	(203)
Currency translation adjustments	(119)
Balance as of September 30, 2020	$	9,163

The above accrued liability balances were included in Other accrued liabilities on the Company’s Condensed Consolidated Balance Sheets.

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Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the three-month period ended September 30, 2020, the Company's effective tax rate was 16.6% compared to an effective tax rate of 35.1% for the three-month period ended September 30, 2019. For the three months ended September 30, 2020, the rate was negatively impacted by valuation allowance activity of $2.0 million, offset by a state tax benefit of $0.8 million. resulting in a lower effective tax rate when in a pre-tax loss position. For the three months ended September 30, 2019, the effective tax rate was negatively impacted by losses in jurisdictions in which no tax benefit can be recognized.

For the nine-month period ended September 30, 2020, the Company's effective tax rate was 6.3% compared to an effective tax rate of 97.0% for the nine-month period ended September 30, 2019. For the nine months ended September 30, 2020, the Company had a pre-tax loss primarily resulting from impairment charges of $61.1 million. The impairment charges significantly impacted the Company's effective tax rate because $48.7 million of the impairment charges related to non-deductible goodwill, resulting in a low effective tax rate for the nine months ended September 30, 2020 when in a pre-tax loss position. Additionally, the effective rate was negatively impacted by valuation allowance activity of $2.7 million. For the nine-month period ended September 30, 2019, the Company recorded a tax benefit of $5.5 million primarily driven by $10.5 million of tax benefit related to the pension plan settlement. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the nine months ended September 30, 2019 was 25.2%. This was negatively impacted by $1.8 million from losses in jurisdictions in which no tax benefit can be recognized, partially offset by the Company's geographical mix of earnings.

The Company and its subsidiaries file a consolidated federal income tax return, as well as returns required by various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including such major jurisdictions as the United States, Canada, China, France, Germany, Hong Kong, India, the Netherlands, and the United Kingdom. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2016, state and local examinations for years before 2015, and non-U.S. income tax examinations for years before 2013.

The Company’s effective tax rates in future periods could be affected by an increase or decrease in earnings in countries where tax rates differ from the United States federal tax rate, the relative impact of permanent tax adjustments on earnings from domestic operations, changes in net deferred tax asset valuation allowances, including valuation allowances on loss

carryforwards in which no tax benefit can be recognized, stock vesting, pension plan terminations, the completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of ongoing tax planning strategies and audits.

On July 20, 2020, the U.S. Treasury Department and IRS released T.D. 9902 final regulations for publication in the Federal Register related to the global intangible low-taxed income (“GILTI”) high-tax exception. The final regulations largely adopt the framework of the 2019 proposed regulations, with certain key departures. The most significant departures are that an election to apply the GILTI high-tax exception may be made annually instead of once every five years, and that the calculation is made with respect to each “tested unit” of a controlled foreign corporation, rather than on a qualified business unit by qualified business unit basis. The company has evaluated the final regulations and included the impacts of these changes in the Company’s third quarter financial statements.

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(Loss) Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

(Loss) Earnings Per Share

Loss) Earnings Per Share

For the three-month and nine-month periods ended September 30, 2020 and 2019, basic earnings per share were computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding during the period. Unexercised stock options and unvested restricted shares are excluded from this calculation but are included in the diluted earnings per share calculation using the treasury stock method as long as their effect is not antidilutive.

The following table provides a reconciliation of weighted-average shares used to determine basic and diluted earnings per share:

	For the Three Months Ended   September 30,		For the Nine Months Ended   September 30,
In thousands	2020	2019	2020	2019
Basic weighted-average common shares outstanding	17,384	17,270	17,364	17,264
Effect of dilutive options and restricted stock awards	—	60	—	—
Diluted weighted-average common shares outstanding	17,384	17,330	17,364	17,264

Dilutive stock awards totaling 77,707 and 28,085 shares of Common Stock were excluded from the diluted per share computation for the three-month and nine-month periods ended September 30, 2020, as the Company reported a net loss during those periods and, therefore, the effect of including these options would be antidilutive. Dilutive stock options totaling 53,892 shares of Common Stock were excluded from the diluted per share computation for the nine-month period ended September 30, 2019, as the Company reported a net loss during that period and, therefore, the effect of including these options would be antidilutive.

For each of the three-month periods ended September 30, 2020 and 2019, stock options for 658,654 shares and 584,725 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

For each of the nine-month periods ended September 30, 2020 and 2019, stock options for 722,006 shares and 542,669 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

Segment Information

As of September 30, 2020, the Company’s reportable segments were Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions primarily for air, fluid power, life science and industrial applications (“Filtration”), and sealing and gasket solutions, thermal insulation, energy storage, and other engineered products (“Sealing and Advanced Solutions”).

Filtration products include LydAir® MG (Micro-Glass) Air Filtration Media, LydAir® MB (Melt Blown) Air Filtration Media, LydAir® SC (Synthetic Composite) Air Filtration Media, and Arioso® Membrane Composite Media. These high efficiency specialty filtration products constitute the critical filtration media component of clean-air systems for applications in Indoor Air Quality (commercial, residential, and specialized HVAC applications such as cleanrooms and hospital environments), respiratory Personal Protective Equipment (N95 respirators and surgical masks), power generation, and specialty industrial process applications. Lydall has leveraged its extensive technical expertise and applications knowledge into a suite of media products covering the vast liquid filtration landscape across the transportation and industrial fields. The LyPore® Liquid Filtration Media series address a variety of application needs in fluid power including hydraulic filters, air-water and air-oil

coalescing, industrial fluid processes and diesel fuel filtration. LyPore® media and Solupor® ultra-high molecular weight polyethylene membranes also serve critical liquid filtration/separation applications such as biopharmaceutical pre-filtration and clarification, lateral flow diagnostic and analytical testing, potable water filtration and high purity process filtration such as those found in food and beverage and medical applications.

Sealing and Advanced Solutions products include nonwoven specialty engineered materials for a multitude of applications. Interface fiber-reinforced gasket materials serve the heavy-duty diesel, automobile, small engine, transmission and compressor markets. These products handle demanding sealing challenges with a diverse range of metallic, non-metallic, rubber-coated and laminate materials that comprise the extensive Sealing materials portfolio. Interface Engineered Components are ready-to-use soft and hard gasket parts sold directly to OEMs and aftermarket applications. An example is Select-a-Seal® rubber-edged composite (REC) technology that provides robust sealing, compression, adhesion, and shear strength for driveline applications. Advanced Solutions’ nonwoven veils, papers, and specialty composites for the building products, appliance, energy, and industrial markets include Manniglas® Thermal Insulation Papers, and Lytherm® Insulation Media for high temperature technology applications. The Company's Cryotherm® Super-Insulating Media, CRS-Wrap® Super-Insulating Media and Cryo-Lite® Cryogenic Insulation products are industry standards for state-of-the-art cryogenic insulation designs used by manufacturers of cryogenic equipment for liquid gas storage, piping, and transportation. Additional specialty composite materials include specialty fiber calendar bowl products to service the printing and textile industries and press pad materials for industrial lamination processes.

Technical Nonwovens Segment

The Technical Nonwovens segment primarily produces needle punch nonwoven solutions for a multitude of industries and applications. Products are manufactured and sold globally under the leading brands of Lydall Industrial Filtration, Southern Felt, Gutsche, and Texel. Industrial Filtration products include nonwoven rolled-good felt media and filter bags used primarily in industrial air and liquid filtration applications. Nonwoven filter media is an effective solution to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, mining, food, and pharmaceutical. Advanced Materials products include nonwoven rolled-good media used in commercial applications and predominantly serves the geosynthetics, automotive, industrial, medical, and safety apparel markets. Automotive media is provided to Tier I/II suppliers as well as the Company's Thermal Acoustical Solutions segment.

Technical Nonwovens segment products include air and liquid filtration media sold under the brand names Fiberlox® high performance filtration felts, Checkstatic™ conductive filtration felts, Microfelt® high efficiency filtration felts, Pleatlox® pleatable filtration felts, Ultratech™ PTFE filtration felts, Powertech® and Powerlox® power generation filtration felts, Microcap® high efficiency liquid filtration felts, Duotech membrane composite filtration felts, along with the porotex® family of high temperature filtration felts including microvel® and optivel® products. Technical Nonwovens Advanced Materials products are sold under the brand names Thermofit® thermo-formable products, Ecoduo® recycled content materials, Duotex® floor protection products, and Versaflex® composite molding materials. Technical Nonwovens also offers extensive finishing and coating capabilities which provide custom engineered properties tailored to meet the most demanding applications. The business leverages a wide range of fiber types and extensive technical capabilities to provide products that meet customers’ needs across a variety of applications providing both high performance and durability.

Thermal Acoustical Solutions Segment 

The Thermal Acoustical Solutions segment offers a full range of innovative engineered products tailored for the transportation and industrial sectors to thermally shield sensitive components from high heat, improve exhaust gas treatment and lower harmful emissions as well as assist in the reduction of noise, vibration, and harshness (NVH). Within the transportation sector, the Company’s products are found in the interior (dash insulators, cabin flooring), underbody (wheel well, aerodynamic belly pan, fuel tank, exhaust, tunnel, spare tire) and under hood (engine compartment, outer dash, powertrain, catalytic converter, turbo charger, manifolds) of cars, trucks, SUVs, heavy duty trucks, and recreational vehicles.

Thermal Acoustical Solutions segment products offer thermal and acoustical insulating solutions comprised of organic and inorganic fiber composites that provide weight reduction, superior noise suppression and increased durability over conventional designs, as well as products that efficiently combine multiple layers of metal and thermal - acoustical insulation media to provide an engineered shielding solution for an array of application areas. Lydall’s dBCore® is a lightweight acoustical composite that emphasizes absorption principles over heavy-mass type systems. Lydall’s dBLyte® is a high-performance acoustical barrier with sound absorption and blocking properties and can be used throughout a vehicle’s interior to minimize intrusive noise from an engine compartment and road. Lydall’s ZeroClearance® is an innovative thermal solution that utilizes an adhesive backing for attachment and is used to protect vehicle components from excessive heat. Lydall’s flux® product family includes several patented or IP-rich products that address applications which include: Direct Exhaust Mount heat shields, which are assembled to high temperature components like catalytic converters, turbochargers or exhaust manifolds using

aluminized and stainless steel and high performance and high temperature heat insulating materials; Powertrain heat shields that absorb noise at the source and do not contribute to the engine's noise budget; and durable, thermally robust solutions for temperature sensitive plastic components such as fuel tanks that are in proximity to high temperature heat sources.

The tables below present net sales and operating income by segment for the three-month and nine-month periods ended September 30, 2020 and 2019, and also a reconciliation of total segment net sales and operating income to total consolidated net sales and operating income.

Consolidated net sales by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials Segment:
Filtration	$	30,899	$	22,427	$	86,422	$	71,093
Sealing and Advanced Solutions	36,918		37,573		105,088		118,589
Performance Materials Segment net sales	67,817		60,000		191,510		189,682
Technical Nonwovens Segment (1):
Industrial Filtration	29,643		32,935		90,425		114,005
Advanced Materials (2)	28,866		30,977		77,494		84,591
Technical Nonwovens Segment net sales	58,509		63,912		167,919		198,596
Thermal Acoustical Solutions Segment:
Parts	79,687		80,309		189,456		250,591
Tooling	5,836		7,617		17,276		24,920
Thermal Acoustical Solutions Segment net sales	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 (loss) by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials (3)	$	(6,759)	$	712	$	(58,257)	$	5,474
Technical Nonwovens (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 Income	$	(9,281)	$	7,447	$	(66,595)	$	29,676

(1)The Technical Nonwovens segment includes 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 of intercompany sales to the Thermal Acoustical Solutions segment for the three-month periods ended September 30, 2020 and 2019, respectively.

•$10.2 million and $13.6 million of intercompany sales to the Thermal Acoustical Solutions segment for the nine-month periods 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-month periods ended September 30, 2020 and 2019, respectively.

•$3.5 million and $3.8 million of intangible assets amortization for the nine-month periods ended September 30, 2020 and 2019, respectively.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Environmental Remediation

In the fourth quarter of 2016, as part of a groundwater discharging permitting process, water samples collected from wells and process water basins at the Company’s Rochester New Hampshire manufacturing facility, within the Performance Materials segment, showed concentrations of Per and Polyfluorinated Substances (“PFAS”) in excess of state ambient groundwater quality standards. In January 2017, the Company received a notification from the State of New Hampshire Department of Environmental Services (“NHDES”) naming Lydall Performance Materials, Inc. a responsible party with respect to the discharge of regulated contaminants and, as such, is required to take action to investigate and remediate the impacts in accordance with standards established by the NHDES. The Company conducted a site investigation, the scope of which was reviewed by the NHDES, in order to assess the extent of potential soil and groundwater contamination and develop a remedial action. Based on input received from NHDES in March 2017 with regard to the scope of the site investigation, the Company recorded $0.2 million of expense. In 2018, the Company received a response from the NHDES to the site investigation report outlining proposed remedial actions. The Company recorded an additional $0.1 million of expense in 2018 associated with the expected costs to remediate the impacts of the discharge of regulated contaminants in accordance with standards established by the NHDES. During 2018 the environmental liability was fully reduced reflecting payments made to vendors, resulting in no balance at December 31, 2018. Additionally, the Company incurred $0.2 million of capital expenditures in 2018, in relation to the lining of the Company's fresh water lagoons. The site investigation and remedial action plan are ongoing. The Company cannot be sure that costs will not exceed the current estimates until this matter is closed with the NHDES, nor that any future corrective action at this location would not have a material effect on the Company’s financial condition, results of operations or cash flows.

In December 2018, the New York State Department of Environmental Conservation (“NYDEC”) informed the Company that the newly acquired Interface site located at Hoosick Falls, NY will be the subject of an investigation in to the possibility of it being an inactive hazardous disposable waste site.  The letter specifically references PFAS that have been detected in a nearby water supply, soil and/or surface water.  Notably, the PFAS contamination has been identified in the Hoosick Falls area for some time and other large manufacturers in the area have previously been identified as a source.  The NYDEC approved a site characterization plan in December 2019. The Company recorded expense of $0.3 million in the fourth quarter of 2019 as a result of the site characterization plan preparation and site characterization activities. Additional site characterization activities are planned for the fourth quarter of 2020. The Company does not know the scope or extent of its future obligations, if any, that may arise from the site investigation and therefore is unable to estimate the cost of any corrective action. Accordingly, the Company cannot assure that the costs of any future corrective at this location would not have a material effect on the Company's financial condition, results of operations or cash flows.

Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly impact any estimates of environmental remediation costs.

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Stockholders' Equity and Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Stockholders' Equity and Accumulated Other Comprehensive Income

Stockholders' Equity and Accumulated Other Comprehensive Income

Changes in stockholders' equity for the three and nine-month periods ended September 30, 2020 were as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Beginning Balance	$	253,262	$	387,105	$	318,420	$	369,275
Comprehensive (loss) income, net of tax	(5,477)		(5,849)		(72,474)		10,773
Stock repurchased	(23)		(7)		(31)		(62)
Stock issued under employee plans	—		5		4		5
Stock-based compensation expense	551		417		2,006		1,611
Stock issued to directors	—		—		388		252
Adoption of ASC 606 (1)	—		—		—		(183)
Ending Balance	$	248,313	$	381,671	$	248,313	$	381,671

The components of accumulated other comprehensive (loss) income are shown below:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In Thousands	2020		2019		2020		2019
Foreign currency translation:
Beginning balance	$	(22,833)	$	(16,128)	$	(18,022)	$	(18,458)
Net gain (loss) on foreign currency translation	8,245		(8,726)		3,434		(6,396)
Other comprehensive income (loss), net of tax	8,245		(8,726)		3,434		(6,396)
Ending balance	(14,588)		(24,854)		(14,588)		(24,854)
Pension and other postretirement benefit plans:
Beginning balance	(2,749)		(2,879)		(3,080)		(22,253)
Amounts reclassified from accumulated other comprehensive (loss) income (2)	(49)		21		282		19,395
Other comprehensive (loss) income, net of tax	(49)		21		282		19,395
Ending balance	(2,798)		(2,858)		(2,798)		(2,858)
Unrealized gain/(loss) on derivative instruments:
Beginning balance	(5,116)		(4,000)		(4,877)		(1,974)
Net loss on derivative instruments (3)	(2,669)		(148)		(3,306)		(2,174)
Amounts reclassified from accumulated other comprehensive income (4)	706		—		1,104		—
Other comprehensive loss, net of tax	(1,963)		(148)		(2,202)		(2,174)
Ending balance	(7,079)		(4,148)		(7,079)		(4,148)
Total accumulated other comprehensive loss	$	(24,465)	$	(31,860)	$	(24,465)	$	(31,860)

(1) During the three-month period ended March 31, 2019, the Company recorded an adjustment reducing retained earnings and contract assets by $0.2 million to correct an error in the adoption of ASC 606.

(2) For the three-months ended September 30, 2020 and 2019, amount represents routine amortization of actuarial gains and losses in net periodic benefit cost and other activity of less than $0.1 million, net of less than $0.1 million tax benefit. For the nine-months ended September 30, 2020, amount represents the settlement of the ISS Pension Plan in the first quarter of 2020 of $0.4 million, net of $0.1 million tax benefit, and routine amortization of actuarial gains and losses in net periodic benefit cost and other activity of less than $0.1 million, net of less than $0.1 million tax benefit. For the nine-months ended September 30, 2019, amount represents the settlement of the Lydall Pension Plan in the second quarter of 2019 of $19.0 million, net of $11.5 million tax benefit, and routine amortization of actuarial losses in net periodic benefit cost during the first five months of fiscal year 2019 prior to the plan termination of $0.4 million, net of $0.1 million tax benefit.

(3) Amount represents unrealized losses on the fair value of hedging activities, net of tax benefits of $0.8 million and less than $0.1 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $1.0 million and $0.7 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

(4) Amounts represents the impact of de-designation of the interest rate swap agreement, net of tax expenses of $0.2 million and $0.3 million, for the three-month and nine-month periods ended September 30, 2020, respectively.

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Subsequent Events	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn October 14, 2020, the Company amended its 2018 Credit Agreement to allow certain restructuring and other charges, as defined by the amendment, to be excluded from EBITDA in the calculation of the Company's modified financial covenants.

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Basis of Financial Statement Presentation (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of PresentationThe accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The year-end Condensed Consolidated Balance Sheet was derived from the audited financial statements for the year ended December 31, 2019, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the condensed consolidated financial information reflects all adjustments necessary for a fair statement of the Company’s consolidated financial position, results of operations, and cash flows for the interim periods reported, but do not include all the disclosures required by U.S. GAAP. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations, and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including the result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods. Actual results could differ from those estimates.

Recent Accounting Pronouncements Adopted & Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Adopted

Effective January 1, 2020, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-13, "Financial Instruments - Credit Losses (Topic 326)." The new standard amends guidance on reporting credit losses for assets held at amortized cost basis. The Company has determined the only financial assets subject to the new standard are its trade receivables and contract assets. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

Effective January 1, 2020, the Company adopted the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement," which adds, amends, and removes certain disclosure requirements related to fair value measurements.  Among other changes, this standard requires certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements.  Please refer to Note 5, “Impairments of Goodwill and Other Long-Lived Assets”, for discussion of the inputs used in the quantitative impairment assessments for the three-month period ended March 31, 2020.

Effective January 1, 2020, the Company adopted FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract."  The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider.  The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848); Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments in this update are elective, and provide optional expedients and exceptions in accounting for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance in this update is effective for transactions entered into between March 12, 2020 and December 31, 2022. The Company adopted this ASU upon issuance and notes no impact to the Company's consolidated financial statements and disclosures as of September 30, 2020.

Recent Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)." The amendments in this update are intended to simplify the accounting for convertible debt instruments and convertible preferred stock. This ASU is effective for fiscal years and interim periods beginning after December 15, 2021 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)." The amendments in this update are intended to reduce diversity in practice and increase comparability of the accounting for interaction of equity securities, investments accounted for under the equity method of accounting, and the accounting for certain forward contracts and purchased options accounted for under Topic 815. This ASU is effective for fiscal years and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The new standard is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740, and by clarifying and amending existing guidance in other areas of the same topic. This ASU is effective for fiscal years and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU requires entities to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. This ASU also requires entities to disclose an explanation for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for fiscal years beginning after December 15, 2020

with early adoption permitted.  The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and disclosures.

Risks and Uncertainties

Risks and Uncertainties

Worldwide economic cycles, political changes, and the COVID-19 pandemic affect the markets that the Company’s businesses serve and affect demand for the Company's products and could impact profitability. Among other factors, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, swings in consumer confidence and spending, and unstable economic growth and fluctuations in unemployment rates has caused economic instability and can have a negative impact on the Company’s results of operations, financial condition, and liquidity.

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Basis of Financial Statement Presentation (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the Condensed Consolidated Statements of Comprehensive Income for the nine-month period ended September 30, 2019 as follows:

	Nine Months Ended September 30, 2019
In thousands	As reported		As revised
Pension liability adjustment, net of tax	$	379	$	19,395
Comprehensive (loss) income	$	(8,243)	$	10,773

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Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Contract Assets and Liabilities

Contract assets and liabilities consisted of the following:

In thousands	September 30, 2020		December 31, 2019		Dollar Change
Contract assets	$	27,186	$	28,245	$	(1,059)
Contract liabilities	$	3,414	$	1,441	$	1,973

Schedule of Disaggregation of Revenue by Geographical Region

Disaggregated revenue by geographical region for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

	For the Three Months Ended September 30, 2020								For the Three Months Ended September 30, 2019
In thousands	North America		Europe		Asia		Total Net Sales		North America		Europe		Asia		Total Net Sales
Performance Materials	$	45,759	$	18,776	$	3,282	$	67,817	$	42,693	$	15,203	$	2,104	$	60,000
Technical Nonwovens	34,727		17,318		6,464		58,509		42,128		16,544		5,240		63,912
Thermal Acoustical Solutions	57,841		22,861		4,821		85,523		61,315		22,208		4,403		87,926
Eliminations and Other	(4,569)		(195)		—		(4,764)		(6,405)		(159)		—		(6,564)
Total Net Sales	$	133,758	$	58,760	$	14,567	$	207,085	$	139,731	$	53,796	$	11,747	$	205,274

	For the Nine Months Ended September 30, 2020								For the Nine Months Ended September 30, 2019
In thousands	North America		Europe		Asia		Total Net Sales		North America		Europe		Asia		Total Net Sales
Performance Materials	$	131,866	$	52,552	$	7,092	$	191,510	$	136,892	$	47,589	$	5,201	$	189,682
Technical Nonwovens	101,694		49,674		16,551		167,919		121,984		53,384		23,228		198,596
Thermal Acoustical Solutions	137,517		57,825		11,390		206,732		189,152		73,853		12,506		275,511
Eliminations and Other	(11,914)		(475)		—		(12,389)		(19,139)		(540)		—		(19,679)
Total Net Sales	$	359,163	$	159,576	$	35,033	$	553,772	$	428,889	$	174,286	$	40,935	$	644,110

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Inventories (Tables)

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories as of September 30, 2020 and December 31, 2019 were as follows:

In thousands	September 30, 2020		December 31, 2019
Raw materials	$	31,442	$	36,322
Work in process	14,228		14,873
Finished goods	25,497		29,349
Total inventories	$	71,167	$	80,544

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill by Segment

The changes in the carrying amount of goodwill by segment as of and for the nine-month period ended September 30, 2020 were as follows:

In thousands	December 31, 2019		Currency translation adjustments		Impairment		September 30, 2020
Performance Materials	$	80,658	$	(22)	$	(48,671)	$	31,965
Technical Nonwovens	53,254		166		—		53,420
Total goodwill	$	133,912	$	144	$	(48,671)	$	85,385

Schedule of Impaired Intangible Assets

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019:

	September 30, 2020				December 31, 2019
In thousands	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer Relationships	$	141,784	$	(44,636)	$	142,400	$	(30,648)
Patents	791		(670)		759		(607)
Technology	2,500		(1,102)		2,500		(977)
Trade Names	7,322		(6,544)		7,293		(5,143)
License Agreements	629		(629)		610		(610)
Other	570		(570)		551		(551)
Total other intangible assets	$	153,596	$	(54,151)	$	154,113	$	(38,536)

As a result of these impairment tests, the Company recorded the following impairment charges during the three-month period ended March 31, 2020:

In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Totals
Impairment of goodwill	$	48,671	$	—	$	—	$	48,671
Impairment of other long-lived assets	12,438		—		—		12,438
Total impairments	$	61,109	$	—	$	—	$	61,109

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Impairments of Goodwill and Other Long-Lived Assets (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Impairment Charges

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019:

	September 30, 2020				December 31, 2019
In thousands	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer Relationships	$	141,784	$	(44,636)	$	142,400	$	(30,648)
Patents	791		(670)		759		(607)
Technology	2,500		(1,102)		2,500		(977)
Trade Names	7,322		(6,544)		7,293		(5,143)
License Agreements	629		(629)		610		(610)
Other	570		(570)		551		(551)
Total other intangible assets	$	153,596	$	(54,151)	$	154,113	$	(38,536)

As a result of these impairment tests, the Company recorded the following impairment charges during the three-month period ended March 31, 2020:

In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Totals
Impairment of goodwill	$	48,671	$	—	$	—	$	48,671
Impairment of other long-lived assets	12,438		—		—		12,438
Total impairments	$	61,109	$	—	$	—	$	61,109

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Long-term Debt and Financing Arrangements (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

Total outstanding debt consists of:

In thousands	Effective Rate		Maturity	September 30, 2020		December 31, 2019
Revolver loan	5.25	%	8/31/2023	$	144,500	$	126,500
Term loan, net of debt issuance costs	5.25	%	8/31/2023	138,536		146,106
Finance leases	1.60	%	10/31/2020	3		35
				283,039		272,641
Less portion due within one year				(9,844)		(9,928)
Total long-term debt, net of debt issuance costs				$	273,195	$	262,713

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Assets at Fair Value

The following table sets forth the fair value amounts of derivative instruments held by the Company presented in the Condensed Consolidated Balance Sheets as Other current assets and Other accrued liabilities:

	September 30, 2020				December 31, 2019
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Interest rate contracts	$	—	$	5,967	$	2	$	4,538
Cross-currency swaps	—		3,310		—		1,817
Total derivatives	$	—	$	9,277	$	2	$	6,355

Schedule of Derivative Liabilities at Fair Value

The following table sets forth the fair value amounts of derivative instruments held by the Company presented in the Condensed Consolidated Balance Sheets as Other current assets and Other accrued liabilities:

	September 30, 2020				December 31, 2019
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Interest rate contracts	$	—	$	5,967	$	2	$	4,538
Cross-currency swaps	—		3,310		—		1,817
Total derivatives	$	—	$	9,277	$	2	$	6,355

Schedule of Cash Flow Hedges included in Accumulated Other Comprehensive Income (Loss)

The following table sets forth the (loss) income recorded in accumulated other comprehensive (loss) income, net of tax, for the three and nine-month periods ended September 30, 2020 and 2019 for derivatives held by the Company and designated as hedging instruments:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Cash flow hedges:
Interest rate contracts	$	706	$	(148)	$	(1,059)	$	(2,174)
Cross-currency swaps	(2,669)		—		(1,143)		—
Total derivatives	$	(1,963)	$	(148)	$	(2,202)	$	(2,174)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Carrying Values and Fair Values of Financial Instruments

The following table presents the carrying value and fair value of financial instruments that are not carried at fair value:

	September 30, 2020				December 31, 2019
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt	$	283,500	$	288,891	$	273,000	$	269,434

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Equity Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Outstanding and Exercisable Options

The following table is a summary of outstanding and exercisable options for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020			For the Nine Months Ended September 30, 2020
In thousands except per share amounts	Shares	Weighted- Average Exercise Price		Shares	Weighted- Average Exercise Price
Stock Options outstanding at the beginning of the period	748	$	25.36	683	$	27.15
Granted	11	$	16.27	180	$	17.37
Exercised	—	$	—	(4)	$	8.67
Forfeited or Expired	(71)	$	26.25	(171)	$	25.46
Stock Options outstanding at September 30, 2020	688	$	25.11	688	$	25.11
Exercisable at September 30, 2020	305	$	32.54	305	$	32.54
Unvested at September 30, 2020	383	$	19.20	383	$	19.20

Schedule of Restricted Shares Activity

The following is a summary of the Company's unvested time-based restricted shares for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	220	159
Granted	—	77
Vested	(5)	(8)
Forfeited or Expired	(12)	(25)
Unvested at September 30, 2020	203	203

The following is a summary of the Company's unvested performance-based restricted shares for the three and nine-month periods ended September 30, 2020:

	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	161	129
Granted	5	71
Vested	—	—
Forfeited or Expired	(18)	(52)
Unvested at September 30, 2020	148	148

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Employer Sponsored Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Schedule of Components of Net Periodic Benefit Cost

The following is a summary of the components of net periodic benefit cost for the domestic defined benefit pension plans for

the three-month and nine-month periods ended September 30, 2020 and 2019:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Components of employer benefit cost
Service cost	$	40	$	30	$	120	$	90
Interest cost	428		530		1,285		2,356
Expected return on assets	(532)		(488)		(1,597)		(2,105)
Amortization of actuarial loss	—		—		2		464
Net periodic benefit cost	$	(64)	$	72	$	(190)	$	805
Settlement loss	—		186		385		25,701
Total employer benefit plan cost	$	(64)	$	258	$	195	$	26,506

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Restructuring (Tables)

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Charges by Cost Type

The following table summarizes the total restructuring charges by cost type:

In Thousands	Severance and Related Expenses		Facility Exit and Asset Write-Off Expenses		Total
Expense incurred during quarter ended:
September 30, 2020	$	9,484	$	5,500	$	14,984
Total pre-tax expense incurred	$	9,484	$	5,500	$	14,984

Schedule of Accrued Restructuring Liability by Cost Type

The following table summarizes the accrued liability balance by cost type for the restructuring actions:

In Thousands	Total
Balance as of December 31, 2019	$	—
Pre-tax restructuring expenses, excluding asset write-off expenses	9,485
Cash paid	(203)
Currency translation adjustments	(119)
Balance as of September 30, 2020	$	9,163

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(Loss) Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of Reconciliation of Weighted Average Shares Used to Determine Basic and Diluted Earnings Per Share

The following table provides a reconciliation of weighted-average shares used to determine basic and diluted earnings per share:

	For the Three Months Ended   September 30,		For the Nine Months Ended   September 30,
In thousands	2020	2019	2020	2019
Basic weighted-average common shares outstanding	17,384	17,270	17,364	17,264
Effect of dilutive options and restricted stock awards	—	60	—	—
Diluted weighted-average common shares outstanding	17,384	17,330	17,364	17,264

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of Consolidated Net Sales and Operating Income by Segment

Consolidated net sales by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials Segment:
Filtration	$	30,899	$	22,427	$	86,422	$	71,093
Sealing and Advanced Solutions	36,918		37,573		105,088		118,589
Performance Materials Segment net sales	67,817		60,000		191,510		189,682
Technical Nonwovens Segment (1):
Industrial Filtration	29,643		32,935		90,425		114,005
Advanced Materials (2)	28,866		30,977		77,494		84,591
Technical Nonwovens Segment net sales	58,509		63,912		167,919		198,596
Thermal Acoustical Solutions Segment:
Parts	79,687		80,309		189,456		250,591
Tooling	5,836		7,617		17,276		24,920
Thermal Acoustical Solutions Segment net sales	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 (loss) by segment:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Performance Materials (3)	$	(6,759)	$	712	$	(58,257)	$	5,474
Technical Nonwovens (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 Income	$	(9,281)	$	7,447	$	(66,595)	$	29,676

(1)The Technical Nonwovens segment includes 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 of intercompany sales to the Thermal Acoustical Solutions segment for the three-month periods ended September 30, 2020 and 2019, respectively.

•$10.2 million and $13.6 million of intercompany sales to the Thermal Acoustical Solutions segment for the nine-month periods 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-month periods ended September 30, 2020 and 2019, respectively.

•$3.5 million and $3.8 million of intangible assets amortization for the nine-month periods ended September 30, 2020 and 2019, respectively.

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Stockholders' Equity and Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Schedule of Stockholders' Equity and Accumulated Other Comprehensive Income

Changes in stockholders' equity for the three and nine-month periods ended September 30, 2020 were as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended   September 30,
In thousands	2020		2019		2020		2019
Beginning Balance	$	253,262	$	387,105	$	318,420	$	369,275
Comprehensive (loss) income, net of tax	(5,477)		(5,849)		(72,474)		10,773
Stock repurchased	(23)		(7)		(31)		(62)
Stock issued under employee plans	—		5		4		5
Stock-based compensation expense	551		417		2,006		1,611
Stock issued to directors	—		—		388		252
Adoption of ASC 606 (1)	—		—		—		(183)
Ending Balance	$	248,313	$	381,671	$	248,313	$	381,671

The components of accumulated other comprehensive (loss) income are shown below:

	For the Three Months Ended   September 30,				For the Nine Months Ended   September 30,
In Thousands	2020		2019		2020		2019
Foreign currency translation:
Beginning balance	$	(22,833)	$	(16,128)	$	(18,022)	$	(18,458)
Net gain (loss) on foreign currency translation	8,245		(8,726)		3,434		(6,396)
Other comprehensive income (loss), net of tax	8,245		(8,726)		3,434		(6,396)
Ending balance	(14,588)		(24,854)		(14,588)		(24,854)
Pension and other postretirement benefit plans:
Beginning balance	(2,749)		(2,879)		(3,080)		(22,253)
Amounts reclassified from accumulated other comprehensive (loss) income (2)	(49)		21		282		19,395
Other comprehensive (loss) income, net of tax	(49)		21		282		19,395
Ending balance	(2,798)		(2,858)		(2,798)		(2,858)
Unrealized gain/(loss) on derivative instruments:
Beginning balance	(5,116)		(4,000)		(4,877)		(1,974)
Net loss on derivative instruments (3)	(2,669)		(148)		(3,306)		(2,174)
Amounts reclassified from accumulated other comprehensive income (4)	706		—		1,104		—
Other comprehensive loss, net of tax	(1,963)		(148)		(2,202)		(2,174)
Ending balance	(7,079)		(4,148)		(7,079)		(4,148)
Total accumulated other comprehensive loss	$	(24,465)	$	(31,860)	$	(24,465)	$	(31,860)

(1) During the three-month period ended March 31, 2019, the Company recorded an adjustment reducing retained earnings and contract assets by $0.2 million to correct an error in the adoption of ASC 606.

(2) For the three-months ended September 30, 2020 and 2019, amount represents routine amortization of actuarial gains and losses in net periodic benefit cost and other activity of less than $0.1 million, net of less than $0.1 million tax benefit. For the nine-months ended September 30, 2020, amount represents the settlement of the ISS Pension Plan in the first quarter of 2020 of $0.4 million, net of $0.1 million tax benefit, and routine amortization of actuarial gains and losses in net periodic benefit cost and other activity of less than $0.1 million, net of less than $0.1 million tax benefit. For the nine-months ended September 30, 2019, amount represents the settlement of the Lydall Pension Plan in the second quarter of 2019 of $19.0 million, net of $11.5 million tax benefit, and routine amortization of actuarial losses in net periodic benefit cost during the first five months of fiscal year 2019 prior to the plan termination of $0.4 million, net of $0.1 million tax benefit.

(3) Amount represents unrealized losses on the fair value of hedging activities, net of tax benefits of $0.8 million and less than $0.1 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $1.0 million and $0.7 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

(4) Amounts represents the impact of de-designation of the interest rate swap agreement, net of tax expenses of $0.2 million and $0.3 million, for the three-month and nine-month periods ended September 30, 2020, respectively.

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Basis of Financial Statement Presentation - Narrative (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Dec. 31, 2019 USD ($) arrangement	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2020 production_line	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Number of new production lines | production_line				2
Net cash provided by operating activities					$ 74,613	$ 62,964
Social cost reimbursements related to COVID-19					2,000
Limit on monthly payments for production of medical supplies, COVID-19					13,500
Cash on hand	$ 51,331	$ 122,043			122,043		$ 51,331
Number of arrangements to sell accounts receivable | arrangement	2
Proportion of trade receivables in cash at time of sale (as a percent)	90.00%
Proportion of trade receivables in cash when customer pays (as a percent)	10.00%
Trade receivables sold during period		21,300			64,300
Cash received for trade receivables sold		59,100			59,100
Fees related to trade receivables sold		200
Comprehensive (loss) income		$ (5,477)	$ (5,849)		$ (72,474)	10,773
Maximum
Debt Instrument [Line Items]
Proportion of investment in facility funded by French government (as a percent)		30.00%			30.00%
Revision of Prior Period, Adjustment
Debt Instrument [Line Items]
Comprehensive (loss) income			$ 19,000			$ 19,000	$ 19,000
Performance Materials
Debt Instrument [Line Items]
Increase (decrease) in revenue (as a percent)				(4.60%)
Performance Materials | Filtration
Debt Instrument [Line Items]
Increase (decrease) in revenue (as a percent)		37.80%
Performance Materials | Sealing and Advanced Solutions
Debt Instrument [Line Items]
Increase (decrease) in revenue (as a percent)		(1.70%)
Technical Nonwovens
Debt Instrument [Line Items]
Increase (decrease) in revenue (as a percent)		12.50%		(18.80%)	(8.50%)
Technical Nonwovens | Industrial Filtration
Debt Instrument [Line Items]
Increase (decrease) in revenue (as a percent)		(10.00%)
Technical Nonwovens | Advanced Materials
Debt Instrument [Line Items]
Increase (decrease) in revenue (as a percent)		(6.80%)
Thermal Acoustical Solutions
Debt Instrument [Line Items]
Increase (decrease) in revenue (as a percent)		(0.80%)		(35.40%)
Revolving Credit Facility | Amended Credit Facility
Debt Instrument [Line Items]
Draw on credit facility					$ 20,000

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Basis of Financial Statement Presentation - Revisions for Errors (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reclassification [Line Items]
Pension liability adjustment, net of tax	$ (49)	$ 21	$ 282	$ 19,395
Comprehensive (loss) income	$ (5,477)	$ (5,849)	$ (72,474)	10,773
As reported
Reclassification [Line Items]
Pension liability adjustment, net of tax				379
Comprehensive (loss) income				$ (8,243)

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Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Contract assets	$ 27,186	$ 28,245
Contract liabilities	3,414	$ 1,441
Increase (decrease) in contract assets	(1,059)
Increase (decrease) in contract liabilities	$ 1,973

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Revenue from Contracts with Customers - Narrative (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Revenue from Contract with Customer [Abstract]
Increase (decrease) in contract assets	$ (1,059)
Increase (decrease) in contract liabilities	1,973
Revenue recognized from contracts with customers	$ 1,100

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Revenue from Contracts with Customers - Disaggregation of Revenue by Geographical Location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Net sales	$ 207,085	$ 205,274	$ 553,772	$ 644,110
North America
Disaggregation of Revenue [Line Items]
Net sales	133,758	139,731	359,163	428,889
Europe
Disaggregation of Revenue [Line Items]
Net sales	58,760	53,796	159,576	174,286
Asia
Disaggregation of Revenue [Line Items]
Net sales	14,567	11,747	35,033	40,935
Operating Segments | Performance Materials
Disaggregation of Revenue [Line Items]
Net sales	67,817	60,000	191,510	189,682
Operating Segments | Performance Materials | North America
Disaggregation of Revenue [Line Items]
Net sales	45,759	42,693	131,866	136,892
Operating Segments | Performance Materials | Europe
Disaggregation of Revenue [Line Items]
Net sales	18,776	15,203	52,552	47,589
Operating Segments | Performance Materials | Asia
Disaggregation of Revenue [Line Items]
Net sales	3,282	2,104	7,092	5,201
Operating Segments | Technical Nonwovens
Disaggregation of Revenue [Line Items]
Net sales	58,509	63,912	167,919	198,596
Operating Segments | Technical Nonwovens | North America
Disaggregation of Revenue [Line Items]
Net sales	34,727	42,128	101,694	121,984
Operating Segments | Technical Nonwovens | Europe
Disaggregation of Revenue [Line Items]
Net sales	17,318	16,544	49,674	53,384
Operating Segments | Technical Nonwovens | Asia
Disaggregation of Revenue [Line Items]
Net sales	6,464	5,240	16,551	23,228
Operating Segments | Thermal Acoustical Solutions
Disaggregation of Revenue [Line Items]
Net sales	85,523	87,926	206,732	275,511
Operating Segments | Thermal Acoustical Solutions | North America
Disaggregation of Revenue [Line Items]
Net sales	57,841	61,315	137,517	189,152
Operating Segments | Thermal Acoustical Solutions | Europe
Disaggregation of Revenue [Line Items]
Net sales	22,861	22,208	57,825	73,853
Operating Segments | Thermal Acoustical Solutions | Asia
Disaggregation of Revenue [Line Items]
Net sales	4,821	4,403	11,390	12,506
Eliminations and Other
Disaggregation of Revenue [Line Items]
Net sales	(4,764)	(6,564)	(12,389)	(19,679)
Eliminations and Other | North America
Disaggregation of Revenue [Line Items]
Net sales	(4,569)	(6,405)	(11,914)	(19,139)
Eliminations and Other | Europe
Disaggregation of Revenue [Line Items]
Net sales	(195)	(159)	(475)	(540)
Eliminations and Other | Asia
Disaggregation of Revenue [Line Items]
Net sales	$ 0	$ 0	$ 0	$ 0

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Inventories - Summary (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Inventory, Net [Abstract]
Raw materials	$ 31,442	$ 36,322
Work in process	14,228	14,873
Finished goods	25,497	29,349
Total inventories	$ 71,167	$ 80,544

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Inventories - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Net tooling inventory	$ 2.0	$ 1.8

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Goodwill and Other Intangible Assets - Changes in Carrying Amount of Goodwill by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2020
Goodwill [Roll Forward]
Balance at beginning of period	$ 133,912		$ 133,912
Currency translation adjustments			144
Impairment	(48,671)		(48,671)
Balance at end of period		$ 133,912	85,385
Performance Materials
Goodwill [Roll Forward]
Balance at beginning of period	80,658		80,658
Currency translation adjustments			(22)
Impairment	(48,671)	(63,000)	(48,671)
Balance at end of period	31,900	80,658	31,965
Technical Nonwovens
Goodwill [Roll Forward]
Balance at beginning of period	53,254		53,254
Currency translation adjustments			166
Impairment	$ 0		0
Balance at end of period		$ 53,254	$ 53,420

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Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2020
Goodwill [Line Items]
Goodwill impairment	$ 48,671		$ 48,671
Performance Materials
Goodwill [Line Items]
Goodwill impairment	$ 48,671	$ 63,000	$ 48,671

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Goodwill and Other Intangible Assets - Amortization of the Acquired Intangible Assets Other than Goodwill (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Amortized intangible assets
Gross Carrying Amount	$ 153,596	$ 154,113
Accumulated Amortization	(54,151)	(38,536)
Customer Relationships
Amortized intangible assets
Gross Carrying Amount	141,784	142,400
Accumulated Amortization	(44,636)	(30,648)
Patents
Amortized intangible assets
Gross Carrying Amount	791	759
Accumulated Amortization	(670)	(607)
Technology
Amortized intangible assets
Gross Carrying Amount	2,500	2,500
Accumulated Amortization	(1,102)	(977)
Trade Names
Amortized intangible assets
Gross Carrying Amount	7,322	7,293
Accumulated Amortization	(6,544)	(5,143)
License Agreements
Amortized intangible assets
Gross Carrying Amount	629	610
Accumulated Amortization	(629)	(610)
Other
Amortized intangible assets
Gross Carrying Amount	570	551
Accumulated Amortization	$ (570)	$ (551)

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Impairments of Goodwill and Other Long-Lived Assets - Summary (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Impairment of goodwill		$ 48,671			$ 48,671
Impairment of other long-lived assets		12,438
Total impairments	$ 0	61,109		$ 0	61,109	$ 0
Performance Materials
Segment Reporting Information [Line Items]
Impairment of goodwill		48,671	$ 63,000		48,671
Impairment of other long-lived assets		12,438	$ 1,200
Total impairments		61,109
Technical Nonwovens
Segment Reporting Information [Line Items]
Impairment of goodwill		0			$ 0
Impairment of other long-lived assets		0
Total impairments		0
Thermal Acoustical Solutions
Segment Reporting Information [Line Items]
Impairment of goodwill		0
Impairment of other long-lived assets		0
Total impairments		$ 0

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Impairments of Goodwill and Other Long-Lived Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2020
Segment Reporting Information [Line Items]
Impairment of goodwill	$ 48,671		$ 48,671
Goodwill		$ 133,912	85,385
Impairment of other long-lived assets	$ 12,438
Performance Materials
Segment Reporting Information [Line Items]
Weighted-average cost of capital (as a percent)	11.50%	9.20%
Impairment of goodwill	$ 48,671	$ 63,000	48,671
Goodwill	31,900	80,658	$ 31,965
Impairment of other long-lived assets	$ 12,438	$ 1,200
Thermal Acoustical Solutions
Segment Reporting Information [Line Items]
Weighted-average cost of capital (as a percent)	10.80%	9.20%
Impairment of goodwill	$ 0
Impairment of other long-lived assets	$ 0

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Long-term Debt and Financing Arrangements - Narrative (Details)			9 Months Ended	12 Months Ended
	May 11, 2020 USD ($)	Aug. 31, 2018 USD ($) lender	Sep. 30, 2020 USD ($)	Sep. 30, 2021	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2022	May 10, 2020 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Weighted-average interest rate (as a percent)			5.20%						4.30%
Amended Credit Facility
Debt Instrument [Line Items]
Borrowings outstanding under term loan		$ 250,000,000
Term Loan Due August 31, 2023
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 144,000,000							$ 200,000,000
Borrowings outstanding under term loan		200,000,000	$ 138,500,000
Amount of quarterly repayments of term commitment		2,500,000
Debt issuance costs			500,000
Amended Credit Facility - 2020
Debt Instrument [Line Items]
Outstanding standby letters of credit			$ 1,800,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	314,000,000	$ 175,000,000
Number of additional lenders | lender		3
Revolving Credit Facility | Amended Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	314,000,000	$ 450,000,000
Credit facility fixed charge coverage ratio (not less than)			1.25
Required consolidated leverage ratio as of end of each fiscal quarter (no greater than)			3.5
Revolving Credit Facility | Amended Credit Facility | Minimum
Debt Instrument [Line Items]
Quarterly unused line commitment fee (as a percent)			0.15%
Revolving Credit Facility | Amended Credit Facility | Maximum
Debt Instrument [Line Items]
Quarterly unused line commitment fee (as a percent)			0.275%
Revolving Credit Facility | Amended Credit Facility | Federal Funds Effective Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			0.50%
Revolving Credit Facility | Amended Credit Facility | Eurocurrency Rate
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			1.00%
Revolving Credit Facility | Amended Credit Facility | Eurocurrency Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			0.75%
Revolving Credit Facility | Amended Credit Facility | Eurocurrency Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			2.00%
Revolving Credit Facility | Amended Credit Facility | Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			0.00%
Revolving Credit Facility | Amended Credit Facility | Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			1.25%
Revolving Credit Facility | Amended Credit Facility - 2020
Debt Instrument [Line Items]
Maximum borrowing capacity	170,000,000	$ 450,000,000						$ 250,000,000
Credit facility fixed charge coverage ratio (not less than)						1.10
Minimum cash and cash equivalents balances	$ 40,000,000
Outstanding borrowings			$ 283,500,000
Remaining borrowing capacity			23,700,000						$ 121,600,000
Revolving Credit Facility | Amended Credit Facility - 2020 | Forecast
Debt Instrument [Line Items]
Credit facility fixed charge coverage ratio (not less than)				1.25	1.25
Required consolidated leverage ratio as of end of each fiscal quarter (no greater than)				4.50	6.5		3.50
Revolving Credit Facility | Amended Credit Facility - 2020 | Minimum
Debt Instrument [Line Items]
Quarterly unused line commitment fee (as a percent)	0.375%
Revolving Credit Facility | Amended Credit Facility - 2020 | Eurocurrency Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	3.00%
Revolving Credit Facility | Amended Credit Facility - 2020 | Eurocurrency Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	4.25%
Revolving Credit Facility | Amended Credit Facility - 2020 | Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	2.00%
Revolving Credit Facility | Amended Credit Facility - 2020 | Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	3.25%
Revolving Credit Facility | Amended Credit Facility - 2020 | Base and Eurocurrency Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	1.00%
Foreign Credit Facility
Debt Instrument [Line Items]
Outstanding borrowings			200,000
Outstanding standby letters of credit			1,300,000
Remaining borrowing capacity			$ 9,400,000

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Long-term Debt and Financing Arrangements - Maturities of Long-term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term debt	$ 283,039	$ 272,641
Less portion due within one year	(9,844)	(9,928)
Total long-term debt, net of debt issuance costs	$ 273,195	262,713
Term loan, net of debt issuance costs
Debt Instrument [Line Items]
Debt instrument, effective interest rate (as a percent)	5.25%
Long-term debt	$ 138,536	146,106
Finance leases
Debt Instrument [Line Items]
Debt instrument, effective interest rate (as a percent)	1.60%
Long-term debt	$ 3	35
Revolving Credit Facility | Revolver loan
Debt Instrument [Line Items]
Debt instrument, effective interest rate (as a percent)	5.25%
Long-term debt	$ 144,500	$ 126,500

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Derivatives - Narrative (Details) € in Millions	1 Months Ended		3 Months Ended	9 Months Ended	12 Months Ended
	Nov. 30, 2018 USD ($)	Apr. 30, 2017 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	May 11, 2020	Nov. 30, 2019 USD ($) derivative_contract	Nov. 30, 2019 EUR (€) derivative_contract
Derivative [Line Items]
Number of derivative instruments held | derivative_contract							3	3
Eurocurrency Rate
Derivative [Line Items]
Derivative floor interest rate (as a percent)						1.00%
Total accumulated other comprehensive loss
Derivative [Line Items]
Net income (loss)				$ 4,500,000
Reclassification out of Accumulated Other Comprehensive Income
Derivative [Line Items]
Net income (loss)			$ 900,000	$ 1,400,000
Reclassification out of Accumulated Other Comprehensive Income | Forecast
Derivative [Line Items]
Net income (loss)					$ 3,100,000
Interest rate contracts
Derivative [Line Items]
Derivative agreement term	5 years	3 years
Derivative notional amount	$ 139,000,000.0	$ 60,000,000.0
Fixed rate of derivatives (as a percent)	3.09%	1.58%
Quarterly reduction to notional amount			$ 5,000,000.0
Cross-currency swaps
Derivative [Line Items]
Derivative notional amount							$ 25,000,000	€ 22.6
Aggregate derivative notional amount							$ 75,000,000	€ 67.8

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Derivatives - Fair Value Amounts of Derivative Instruments (Details) - Derivatives designated as hedging instruments - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 0	$ 2
Liability Derivatives	9,277	6,355
Interest rate contracts
Derivatives, Fair Value [Line Items]
Asset Derivatives	0	2
Liability Derivatives	5,967	4,538
Cross-currency swaps
Derivatives, Fair Value [Line Items]
Asset Derivatives	0	0
Liability Derivatives	$ 3,310	$ 1,817

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Derivatives - Income (Loss) Recorded in Accumulated Other Comprehensive (Loss) Income (Details) - Derivatives designated as hedging instruments - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income	$ (1,963)	$ (148)	$ (2,202)	$ (2,174)
Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income	706	(148)	(1,059)	(2,174)
Cross-currency swaps
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income	$ (2,669)	$ 0	$ (1,143)	$ 0

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Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Goodwill impairment	$ 48,671		$ 48,671
Performance Materials
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Goodwill impairment	48,671	$ 63,000	$ 48,671
Fair Value, Nonrecurring | Performance Materials
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Goodwill impairment	48,700
Asset impairment charge	$ 12,400

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Fair Value Measurements - Carrying Value and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Debt	$ 283,500	$ 273,000
Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Debt	$ 288,891	$ 269,434

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Equity Compensation Plans - Narrative (Details)		3 Months Ended			9 Months Ended
	Apr. 24, 2020 shares	Sep. 30, 2020 USD ($) shares	Dec. 31, 2019 individual shares	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) shares	Sep. 30, 2019 USD ($)	Jun. 30, 2020 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense		$ 700,000		$ 600,000	$ 2,500,000	$ 2,100,000
Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense		200,000		$ 200,000	$ 500,000	$ 500,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award, term					10 years
Cash received from exercise of stock option (less than)		0			$ 100,000
Intrinsic value of options exercised (less than)					100,000
Intrinsic value of stock options exercised, tax benefit (less than)					100,000
Total unrecognized compensation cost		2,100,000			$ 2,100,000
Weighted average expected amortization period					2 years 8 months 12 days
Stock Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period					3 years
Stock Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period					4 years
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost		$ 4,400,000			$ 4,400,000
Weighted average expected amortization period					2 years 1 month 6 days
Unvested restricted stock awards (shares) | shares		350,348			350,348
Time-Based Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested restricted stock awards (shares) | shares		203,000	159,000		203,000		220,000
Time-Based Restricted Stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period					2 years
Time-Based Restricted Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period					4 years
Performance-Based Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award performance period					3 years
Unvested restricted stock awards (shares) | shares		148,000	129,000		148,000		161,000
Stock Option Plan 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share options and restricted shares authorized (shares) | shares	3,000,000.0
Additional shares authorized under the plan (shares) | shares	19,720
Inducement Grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of grantees | individual			2

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Equity Compensation Plans - Outstanding and Exercisable Options and Restricted Stock (Details) shares in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020 $ / shares shares	Sep. 30, 2020 $ / shares shares
Stock Options
Shares
Outstanding at beginning of period (shares)	748	683
Granted (shares)	11	180
Exercised (shares)	0	(4)
Forfeited or Expired (shares)	(71)	(171)
Outstanding at end of period (shares)	688	688
Exercisable (shares)	305	305
Unvested (shares)	383	383
Weighted- Average Exercise Price
Outstanding at beginning of period (USD per share) | $ / shares	$ 25.36	$ 27.15
Granted (USD per share) | $ / shares	16.27	17.37
Exercised (USD per share) | $ / shares	0	8.67
Forfeited or Expired (USD per share) | $ / shares	26.25	25.46
Outstanding at end of period (USD per share) | $ / shares	25.11	25.11
Exercisable (USD per share) | $ / shares	32.54	32.54
Unvested (USD per share) | $ / shares	$ 19.20	$ 19.20
Time-Based Restricted Stock
Restricted Stock
Unvested at beginning of period (shares)	220	159
Granted (shares)	0	77
Vested (shares)	(5)	(8)
Forfeited or Expired (shares)	(12)	(25)
Unvested at end of period (shares)	203	203
Performance-Based Restricted Stock
Restricted Stock
Unvested at beginning of period (shares)	161	129
Granted (shares)	5	71
Vested (shares)	0	0
Forfeited or Expired (shares)	(18)	(52)
Unvested at end of period (shares)	148	148

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Stock Repurchases - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2020 USD ($) shares
Equity [Abstract]
Stock repurchased during period (shares) | shares	2,340
Aggregate purchase price of shares repurchased (less than) | $	$ 0.1

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Employer Sponsored Benefit Plans - Narrative (Details) - United States - Pension plan - USD ($)	1 Months Ended		3 Months Ended			9 Months Ended
	Jul. 31, 2020	Apr. 30, 2020	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
IPM Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Expected employer contributions during remainder of fiscal year			$ 1,200,000			$ 1,200,000
Contributions made by company to domestic pension plan			$ 0		$ 300,000	$ 400,000	$ 1,100,000
Delayed contributions to plan	$ 300,000	$ 300,000
ISS Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Pre-tax settlement loss				$ 400,000

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Employer Sponsored Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Components of employer benefit cost
Service cost	$ 40	$ 30	$ 120	$ 90
Interest cost	428	530	1,285	2,356
Expected return on assets	(532)	(488)	(1,597)	(2,105)
Amortization of actuarial loss	0	0	2	464
Net periodic benefit cost	(64)	72	(190)	805
Settlement loss	0	186	385	25,701
Total employer benefit plan cost	$ (64)	$ 258	$ 195	$ 26,506

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Restructuring - Narrative (Details) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2020 USD ($) production_line facility	Mar. 31, 2020 USD ($) facility	Dec. 31, 2019 USD ($) facility	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) production_line facility	Sep. 30, 2019 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 14,984			$ 0	$ 14,984	$ 0
Impairment of other long-lived assets		$ 12,438
Cash outflows for restructuring program	200				203
Corporate Office Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	200				200
Performance Materials
Restructuring Cost and Reserve [Line Items]
Non-cash restructuring expenditures					5,500
Impairment of other long-lived assets		$ 12,438	$ 1,200
Performance Materials | Operating Segments
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 14,800				$ 14,800
Performance Materials | Sealing and Advanced Solutions
Restructuring Cost and Reserve [Line Items]
Number of facilities operating | facility		4	5
Impairment of other long-lived assets		$ 12,400	$ 1,200
Performance Materials | North America
Restructuring Cost and Reserve [Line Items]
Number of production lines closed | production_line	2				2
Restructuring expenses					$ 5,400
Performance Materials | Europe
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					$ 9,600
Number of facilities closed | facility	2				2
Performance Materials | Minimum
Restructuring Cost and Reserve [Line Items]
Estimated pre-tax restructuring expense	$ 17,000				$ 17,000
Restructuring, expected costs resulting in future cash expenditures	11,500				11,500
Performance Materials | Minimum | Europe
Restructuring Cost and Reserve [Line Items]
Estimated pre-tax restructuring expense	2,000				2,000
Performance Materials | Maximum
Restructuring Cost and Reserve [Line Items]
Estimated pre-tax restructuring expense	20,000				20,000
Restructuring, expected costs resulting in future cash expenditures	14,500				14,500
Performance Materials | Maximum | Europe
Restructuring Cost and Reserve [Line Items]
Estimated pre-tax restructuring expense	$ 5,000				$ 5,000

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Restructuring - Charges by Cost (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2020 USD ($)
Restructuring Cost and Reserve [Line Items]
Total pre-tax expense incurred	$ 14,984
Severance and Related Expenses
Restructuring Cost and Reserve [Line Items]
Total pre-tax expense incurred	9,484
Facility Exit and Asset Write-Off Expenses
Restructuring Cost and Reserve [Line Items]
Total pre-tax expense incurred	$ 5,500

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Restructuring - Accrued Liability Balance by Cost Type (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Restructuring Reserve [Roll Forward]
Balance at beginning of period		$ 0
Pre-tax restructuring expenses, excluding asset write-off expenses		9,485
Cash paid	$ (200)	(203)
Currency translation adjustments		(119)
Balance at end of period	$ 9,163	$ 9,163

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Contingency [Line Items]
Effective tax rate (as a percent)	16.60%		35.10%	6.30%	97.00%
Valuation allowance activity	$ 2,000			$ 2,700	$ 1,800
Income tax benefit	2,334		$ (1,574)	4,944	5,519
Tax benefit related to employee benefit plan settlement expenses					$ 10,500
Effective tax rate excluding pension plan settlement (as a percent)					25.20%
Impairment charges	0	$ 61,109	$ 0	61,109	$ 0
Goodwill impairment		$ 48,671		$ 48,671
Foreign Tax Authority
Income Tax Contingency [Line Items]
Withholding tax liability benefit	$ 800

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(Loss) Earnings Per Share - Summary (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Basic weighted-average common shares outstanding (shares)	17,384	17,270	17,364	17,264
Effect of dilutive options and restricted stock awards (shares)	0	60	0	0
Diluted weighted-average common shares outstanding (shares)	17,384	17,330	17,364	17,264

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(Loss) Earnings Per Share - Narrative (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Dilutive stock options excluded from computation of diluted earnings per share (shares)	77,707		28,085	53,892
Stock excluded from computation of diluted earnings per share (shares)	658,654	584,725	722,006	542,669

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Segment Information - Summary (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	$ 207,085		$ 205,274	$ 553,772	$ 644,110
Operating income	(9,281)		7,447	(66,595)	29,676
Impairment of goodwill and other long-lived assets	0	$ 61,109	0	61,109	0
Restructuring expenses	14,984		0	14,984	0
Performance Materials
Segment Reporting, Revenue Reconciling Item [Line Items]
Impairment of goodwill and other long-lived assets		61,109
Technical Nonwovens
Segment Reporting, Revenue Reconciling Item [Line Items]
Impairment of goodwill and other long-lived assets		0
Thermal Acoustical Solutions
Segment Reporting, Revenue Reconciling Item [Line Items]
Impairment of goodwill and other long-lived assets		$ 0
Operating Segments | Performance Materials
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	67,817		60,000	191,510	189,682
Operating income	(6,759)		712	(58,257)	5,474
Impairment of goodwill and other long-lived assets				61,100
Restructuring expenses	14,800			14,800
Amortization of intangible assets	4,000		4,100	11,900	12,200
Operating Segments | Performance Materials | Filtration
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	30,899		22,427	86,422	71,093
Operating Segments | Performance Materials | Sealing and Advanced Solutions
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	36,918		37,573	105,088	118,589
Operating Segments | Technical Nonwovens
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	58,509		63,912	167,919	198,596
Operating income	5,061		7,165	15,558	19,743
Amortization of intangible assets	1,200		1,300	3,500	3,800
Operating Segments | Technical Nonwovens | Industrial Filtration
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	29,643		32,935	90,425	114,005
Operating Segments | Technical Nonwovens | Advanced Materials
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	28,866		30,977	77,494	84,591
Intercompany sales	3,900		4,300	10,200	13,600
Operating Segments | Thermal Acoustical Solutions
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	85,523		87,926	206,732	275,511
Operating income	1,174		5,022	517	21,870
Operating Segments | Thermal Acoustical Solutions | Parts
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	79,687		80,309	189,456	250,591
Operating Segments | Thermal Acoustical Solutions | Tooling
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	5,836		7,617	17,276	24,920
Eliminations and Other
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	(4,764)		(6,564)	(12,389)	(19,679)
Corporate Office Expenses
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating income	(8,757)		$ (5,452)	(24,413)	$ (17,411)
Restructuring expenses	$ 200			$ 200

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Commitments and Contingencies - Narrative (Details) - Rochester, New Hampshire - USD ($)	3 Months Ended		12 Months Ended
	Dec. 31, 2019	Mar. 31, 2017	Dec. 31, 2018
Loss Contingencies [Line Items]
Expense associated with expected costs of site investigation	$ 300,000	$ 200,000	$ 100,000
Capital expenditures			200,000
Environmental Contamination
Loss Contingencies [Line Items]
Accrual for environmental liability, including revision (fully offset)			$ 0

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Stockholders' Equity and Accumulated Other Comprehensive Income - Summary (Details) - USD ($) $ in Thousands	3 Months Ended					5 Months Ended	9 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	May 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	$ 253,262	$ 318,420	$ 387,105		$ 369,275	$ 369,275	$ 318,420	$ 369,275
Comprehensive (loss) income, net of tax	(5,477)		(5,849)				(72,474)	10,773
Stock repurchased	(23)		(7)				(31)	(62)
Stock issued under employee plans	0		5				4	5
Stock-based compensation expense	551		417				2,006	1,611
Stock issued to directors	0		0				388	252
Balance at end of period	248,313		381,671	$ 387,105			248,313	$ 381,671
Accounting Standards Update								us-gaap:AccountingStandardsUpdate201409Member
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	253,262	318,420	387,105		369,275	369,275	318,420	$ 369,275
Net gain (loss) on foreign currency translation	8,245		(8,726)				3,434	(6,396)
Balance at end of period	248,313		381,671	387,105			248,313	381,671
Decrease in contract assets							1,059
Taxes on unrealized losses on the fair value of hedging activities	800		100				1,000	700
Impact of de-designation of interest rate swap agreement	200						300
Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	0	0	0		(183)	(183)	0	(183)
Balance at end of period				0
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	0	0	0		(183)	(183)	0	(183)
Balance at end of period				0
Cumulative Effect, Period of Adoption, Adjustment | Revision of Prior Period, Error Correction, Adjustment | Accounting Standards Update 2014-09
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period					(200)	(200)		(200)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period					(200)	(200)		(200)
Decrease in contract assets					200
Total accumulated other comprehensive loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at end of period	(24,465)		(31,860)				(24,465)	(31,860)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at end of period	(24,465)		(31,860)				(24,465)	(31,860)
Foreign currency translation
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(22,833)	(18,022)	(16,128)		(18,458)	(18,458)	(18,022)	(18,458)
Balance at end of period	(14,588)		(24,854)	(16,128)			(14,588)	(24,854)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	(22,833)	(18,022)	(16,128)		(18,458)	(18,458)	(18,022)	(18,458)
Net gain (loss) on foreign currency translation	8,245		(8,726)				3,434	(6,396)
Other comprehensive income (loss), net of tax	8,245		(8,726)				3,434	(6,396)
Balance at end of period	(14,588)		(24,854)	(16,128)			(14,588)	(24,854)
Pension and other postretirement benefit plans
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(2,749)	(3,080)	(2,879)		(22,253)	(22,253)	(3,080)	(22,253)
Balance at end of period	(2,798)		(2,858)	(2,879)			(2,798)	(2,858)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	(2,749)	(3,080)	(2,879)		(22,253)	(22,253)	(3,080)	(22,253)
Amounts reclassified from accumulated other comprehensive income	(49)		21				282	19,395
Other comprehensive income (loss), net of tax	(49)		21				282	19,395
Balance at end of period	(2,798)		(2,858)	(2,879)			(2,798)	(2,858)
Loss reclassified from AOCI for defined benefit pension plans	100		100			400	100	100
Tax benefit reclassified from AOCI for defined benefit pension plans	100		100			100	100	100
Settlement reclassified from AOCI before tax		400		19,000
Tax benefit from settlement reclassified from AOCI		100		11,500
Unrealized gain/(loss) on derivative instruments
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(5,116)	(4,877)	(4,000)		(1,974)	(1,974)	(4,877)	(1,974)
Balance at end of period	(7,079)		(4,148)	(4,000)			(7,079)	(4,148)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	(5,116)	$ (4,877)	(4,000)		$ (1,974)	$ (1,974)	(4,877)	(1,974)
Net loss on derivative instruments	(2,669)		(148)				(3,306)	(2,174)
Amounts reclassified from accumulated other comprehensive income	706		0				1,104	0
Other comprehensive income (loss), net of tax	(1,963)		(148)				(2,202)	(2,174)
Balance at end of period	$ (7,079)		$ (4,148)	$ (4,000)			$ (7,079)	$ (4,148)