| Lydall, Inc | Telephone 860-646-1233 | ||||
| One Colonial Road | Facsimile 860-646-4917 | ||||
| Manchester, CT 06042-2378 | www.lydall.com | ||||
| NewsRelease | ||
LYDALL ANNOUNCES FOURTH QUARTER 2020 RESULTS;
STRONG SPECIALTY FILTRATION DEMAND DRIVES SIGNIFICANT GROSS MARGIN EXPANSION; NEW FINE FIBER MELTBLOWN PRODUCTION LINE DOUBLES DOMESTIC CAPACITY IN EARLY 2021
FINANCIAL HIGHLIGHTS* - Q4 2020
•Net sales of $210.3 million, up 8.8% compared to prior year on strong specialty filtration sales growth and automotive demand; up 8.9% net of FX and tooling sales
•Gross margin of 19.0%, up 440 bps; Adjusted gross margin of 19.1%, up 400 bps
•Net Income of $0.3 million or $0.01 per diluted share compared to loss per share of ($4.07) in Q4-2019; Adjusted earnings per diluted share of $0.07 compared to adjusted loss per share of ($0.17)
•EBITDA of $15.0 million or 7.2% of sales; Adjusted EBITDA up 42% to $17.7 million, or 8.4% of sales
•Total debt net of cash of $168.3 million, compared to $221.3 million at December 31, 2019; net debt leverage ratio of 2.5x
*Reconciliations of the Non-GAAP financial measures to Lydall’s GAAP financial results are included at the end of this release. See also “Use of Non-GAAP Financial Measures” below.
MANCHESTER, CT - FEBRUARY 23, 2021 - LYDALL, INC. (NYSE: LDL) today announced financial results for the fourth quarter ended December 31, 2020.
“Lydall’s solid financial results in the fourth quarter validate the tenets of our recently announced strategy and the strength of our attractive product portfolio. Adjusted EBITDA grew over 40% from the same period last year and strong cash flow enabled us to fund organic investments in the business while accelerating debt paydown” said Sara A. Greenstein, President and Chief Executive Officer.
“Strong demand continued for Performance Materials (“PM”) specialty filtration products, and we saw a sharp recovery in sealing products,” commented Ms. Greenstein. PM specialty filtration sales grew 51% or $11.3 million, including $5.0 million of one-time purchases related to a previously announced facility closure; sealing and advanced solutions sales grew by 17.9%. Ms. Greenstein added, “In late December we successfully commissioned a new fine fiber meltblown production line in Rochester, New Hampshire and reached full capacity in January. Additional capacity at Rochester and St. Rivalain, France is on schedule for production in early third quarter. All of these projects are expected to be strong profitable growth contributors in 2021."
Parts sales in the Thermal Acoustical Solutions (“TAS”) segment grew 9.4% compared to last year, and 4.1% compared to the third quarter of 2020.
1
While the Technical Nonwovens (“TNW”) segment saw a sales decline of 4.1%, adjusted EBITDA margin remained consistent at 11.8%, down only 20 basis points from prior year. Ms. Greenstein concluded, “The TNW business has done a great job throughout 2020 delivering consistent levels of profitability throughout a very dynamic and challenging market environment.”
Q4 2020 Consolidated Results
Net sales of $210.3 million increased by $17.0 million, or 8.8% compared to the fourth quarter of 2019. Net of foreign exchange and tooling, consolidated sales were up 8.9%, led by 28.3% growth in PM on strong specialty filtration and sealing volumes, and 6.0% growth in TAS on robust automotive demand, partially offset by softer demand in the TNW segment.
Operating income of $4.5 million was up $73.0 million dollars from the fourth quarter 2019, which included impairment charges of $64.2 million.
Consolidated adjusted EBITDA of $17.7 million was up sharply from $12.4 million dollars reported in the fourth quarter of 2019. Adjusted EBITDA margin of 8.4% expanded 200 basis points from prior year. This was led by strong margin gains in PM which delivered adjusted EBITDA margin of 25.5%, up 500 basis points sequentially from third quarter driven by high margin one-time buys of membrane-based filtration media from our Netherlands facility that will be closed in 2021.
Randall B. Gonzales, Chief Financial Officer, commented, “PM continues to drive very strong operating results, and we anticipate further margin expansion in 2021, excluding the one-time purchases, as additional meltblown capacity comes online throughout the year.” Adjusted EBITDA margin of 2.3% in TAS was unfavorably impacted by higher absenteeism in the North America TAS operation related to COVID-19, which resulted in the need for higher cost temporary workforce solutions to meet the elevated customer demand. Mr. Gonzales concluded, “Lydall’s fourth quarter results provide strong momentum into 2021 as we execute our strategy, expand EBITDA margins, drive healthy cash flow, and improve return on invested capital.”
Liquidity
Net cash provided by operations for the full year 2020 was $74.2 million, driving a cash balance of $102.2 million at December 31, 2020. Mr. Gonzales concluded, "Our disciplined focus on cash flow and pragmatic approach to liquidity throughout 2020 has given Lydall the flexibility to navigate unprecedented impacts of the pandemic while investing strategically in fine fiber meltblown capacity to address the sustained demand in the specialty filtration market." At December 31, 2020, the Company’s total debt, net of cash was $168.3 million, down $53.0 million from 2019 ending balance, resulting in a net debt leverage ratio of 2.5, an improvement of 0.3 turns.
Outlook
“In December we communicated our strategy to deliver sustained shareholder value and our fourth quarter results represent the focus and commitment Lydall has to executing on this vision. Over the course of 2020 we navigated a global pandemic, a shutdown of global automotive production, ongoing supply chain disruptions, uncertain economic and political environments, and have emerged a stronger and more agile company. We will continue to execute to ensure we achieve the objectives outlined in our strategy by efficiently deploying capital to profitably grow in specialty filtration and advanced materials solutions."
Ms. Greenstein concluded, "We anticipate continued healthy demand and order activity across all three segments as the end markets we serve recover from a tumultuous 2020. Additionally, elevated demand for specialty filtration solutions are expected to continue beyond 2021 as the structural shift towards better indoor and outdoor air quality drives further demand for these products."
2
Conference Call
Lydall will host a conference call on February 24, 2021 at 10:00 a.m. Eastern Time to discuss results for its fourth quarter ended December 31, 2020 as well as general matters related to its businesses and markets. The call may be accessed at (888) 338-7142, from within the U.S., or (412) 902-4181, internationally. In addition, the audio of the call will be webcast live and will be available for replay on the Company's website at www.lydall.com in the Investor Relations Section. A recording of the call will be available from 12:00 p.m. Eastern Time on February 24, 2021 through 11:59 p.m. Eastern Time on March 3, 2021 at (877) 344-7529, from within the U.S., or (412) 317-0088, internationally, access code 10152279. Additional information, including a presentation outlining key financial data supporting the conference call, can be found on the Company’s website www.lydall.com under the Investors Relations’ section.
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures, including organic sales, adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted operating margin, adjusted earnings per share, consolidated and segment EBITDA and adjusted EBITDA. The attached financial tables address the non-GAAP measures used in this press release and reconcile non-GAAP measures to the most directly comparable GAAP measures. The Company believes that the use of non-GAAP measures helps investors gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the Company's performance, especially when comparing such results to previous periods or forecasts. Adjusted segment EBITDA is used as a basis to internally evaluate the financial performance of the Company's segments because the Company believes it reflects current core operating performance and provides an indicator of the segment's ability to generate cash. Non-GAAP measures should be considered in addition to, and not as a replacement for or superior to, the corresponding GAAP measures, and may not be comparable to similarly titled measures reported by other companies.
Cautionary Note Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not statements of historical fact, including statements about the outlook for 2021, the expected impact of the coronavirus pandemic (COVID-19) on the Company's businesses, and optimizing profit and cash flow generation may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management’s current expectations for the future operating and financial performance of the Company based on current expectations and assumptions relating to the Company’s business, the economy and other future conditions. Forward-looking statements generally can be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “forecasts,” “predicts,” “targets,” “prospects,” “strategy,” “signs,” and other words of similar meaning in connection with the discussion of future operating or financial performance. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such risks and uncertainties which include, among others, worldwide economic or political changes that affect the markets that the Company’s businesses serve which could have an effect on demand for the Company’s products and impact the Company’s profitability, challenges encountered by the Company in the execution of restructuring programs, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, including tariffs and trade restrictions, disruptions in the Company's businesses from the coronavirus pandemic (COVID-19), foreign currency volatility, swings in consumer confidence and spending, raw material pricing and supply issues, retention of key employees, increases in fuel prices, and outcomes of legal proceedings, claims and investigations. Accordingly, the Company’s actual results may differ materially from those contemplated by these forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is
3
available in Lydall’s filings with the Securities and Exchange Commission, including the risks and uncertainties identified in Part I, Item 1A - Risk Factors of Lydall’s Annual Report on Form 10-K for the year ended December 31, 2020.
These forward-looking statements speak only as of the date of this press release, and Lydall does not assume any obligation to update or revise any forward-looking statement made in this press release or that may from time to time be made by or on behalf of the Company.
Headquartered in Manchester, Connecticut with global manufacturing operations, Lydall delivers value-added engineered materials and specialty filtration solutions that promote a cleaner, quieter and safer world. We partner with our customers to develop bespoke, high-performing and efficient solutions that are adaptable and scalable to meet their needs. Lydall is a New York Stock Exchange-listed company. For more information, visit http://www.lydall.com. 
is a registered trademark of Lydall, Inc. in the U.S. and other countries.
is a registered trademark of Lydall, Inc. in the U.S. and other countries.| For further information: | |||||
| Media: | Investors: | ||||
| Danielle Orsino | Brendan Moynihan | ||||
| Vice President, Investor Relations | |||||
| Telephone 949-365-6609 | Telephone 860-646-1233 | ||||
| Facsimile 860-646-4917 | |||||
| danielle@dynamisadvisors.com | info@lydall.com | ||||
| www.lydall.com | |||||
-More-
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| Summary of Operations | |||||||||||||||||||||||
| In thousands except per share data | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net sales | $ | 210,269 | $ | 193,288 | $ | 764,041 | $ | 837,398 | |||||||||||||||
| Cost of sales | 170,310 | 165,035 | 619,166 | 684,978 | |||||||||||||||||||
| Gross profit | 39,959 | 28,253 | 144,875 | 152,420 | |||||||||||||||||||
| Selling, product development and administrative expenses | 34,510 | 32,372 | 129,928 | 126,272 | |||||||||||||||||||
| Impairment of goodwill and other long-lived assets | — | 64,206 | 61,109 | 64,206 | |||||||||||||||||||
| Restructuring expenses | 919 | 176 | 15,903 | 767 | |||||||||||||||||||
| Operating income (loss) | 4,530 | (68,501) | (62,065) | (38,825) | |||||||||||||||||||
| Employee benefit plans settlement (income) expenses | — | (454) | 385 | 25,247 | |||||||||||||||||||
| Interest expense | 4,109 | 3,237 | 15,979 | 14,262 | |||||||||||||||||||
| Other expense (income), net | 2,060 | 102 | 2,166 | (1,257) | |||||||||||||||||||
| Loss before income taxes | (1,639) | (71,386) | (80,595) | (77,077) | |||||||||||||||||||
| Income tax benefit | (1,889) | (897) | (6,833) | (6,416) | |||||||||||||||||||
| Income from equity method investment | (13) | (28) | (37) | (148) | |||||||||||||||||||
| Net income (loss) | $ | 263 | $ | (70,461) | $ | (73,725) | $ | (70,513) | |||||||||||||||
| Earnings (loss) per share: | |||||||||||||||||||||||
| Basic | $ | 0.02 | $ | (4.07) | $ | (4.24) | $ | (4.08) | |||||||||||||||
| Diluted | $ | 0.01 | $ | (4.07) | $ | (4.24) | $ | (4.08) | |||||||||||||||
| Weighted average number of common shares outstanding | 17,426 | 17,293 | 17,379 | 17,271 | |||||||||||||||||||
| Weighted average number of common shares and equivalents outstanding | 17,570 | 17,293 | 17,379 | 17,271 | |||||||||||||||||||
5
| Summary of Segment Information | ||||||||||||||||||||||||||
| and Corporate Office Expenses | ||||||||||||||||||||||||||
| In thousands | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||
| 2020 | 2019 (7) | 2020 | 2019 (7) | |||||||||||||||||||||||
| Net Sales | ||||||||||||||||||||||||||
Performance Materials Segment (1) | $ | 73,135 | $ | 55,798 | $ | 264,645 | $ | 245,480 | ||||||||||||||||||
Technical Nonwovens Segment (1),(2) | 54,421 | 56,750 | 222,340 | 255,346 | ||||||||||||||||||||||
| Thermal Acoustical Solutions | 88,075 | 86,066 | 294,807 | 361,577 | ||||||||||||||||||||||
Eliminations and Other (1) | (5,362) | (5,326) | (17,751) | (25,005) | ||||||||||||||||||||||
| Consolidated Net Sales | $ | 210,269 | $ | 193,288 | $ | 764,041 | $ | 837,398 | ||||||||||||||||||
| Operating Income | ||||||||||||||||||||||||||
Performance Materials Segment (3) | $ | 12,213 | $ | (65,278) | $ | (46,044) | $ | (59,804) | ||||||||||||||||||
Technical Nonwovens Segment (2),(4) | 3,041 | 3,152 | 18,599 | 22,895 | ||||||||||||||||||||||
Thermal Acoustical Solutions (5) | (1,388) | 1,720 | (871) | 23,590 | ||||||||||||||||||||||
Corporate Office Expenses (6) | (9,336) | (8,095) | (33,749) | (25,506) | ||||||||||||||||||||||
| Consolidated Operating Income (Loss) | $ | 4,530 | $ | (68,501) | $ | (62,065) | $ | (38,825) | ||||||||||||||||||
(1)Included in the Performance Materials Segment, Technical Nonwovens Segment and Eliminations and Other are the following:
•Performance Materials segment intercompany sales of $1.2 million and $0.9 million to the Thermal Acoustical Solutions segment for the three-months ended December 31, 2020 and 2019, respectively.
•Performance Materials segment intercompany sales of $3.3 million and $4.0 million to the Thermal Acoustical Solutions segment for the twelve-months ended December 31, 2020 and 2019, respectively.
•Technical Nonwovens segment intercompany sales of $4.2 million and $4.4 million to the Thermal Acoustical Solutions segment for the three-months ended December 31, 2020 and 2019, respectively.
•Technical Nonwovens segment intercompany sales of 14.5 million and 21.0 million to the Thermal Acoustical Solutions segment for the twelve-months ended December 31, 2020 and 2019, respectively.
(2)The Technical Nonwovens segment reports the results of Geosol through the date of disposition of May 9, 2019.
(3)Included in the Performance Materials segment is the following:
•$64.2 million of impairment charges related to goodwill and other long-lived assets for the three-month periods ended December 31, 2019.
•$61.1 million and $64.2 million of impairment charges related to goodwill and other long-lived assets for the twelve-month period ended December 31, 2020 and 2019, respectively.
•$0.7 million and $15.5 million restructuring charges for the three and twelve-month periods ending December 31, 2020.
•$3.9 million and $4.1 million of intangible assets amortization for the three-month periods ended December 31, 2020 and 2019, respectively.
•$15.8 million and $16.2 million of intangible assets amortization for the twelve-month periods ended December 31, 2020 and 2019, respectively.
(4)Included in the Technical Nonwovens segment is the following:
•$1.2 million and $1.3 million of intangible assets amortization for the three-months ended December 31, 2020 and 2019, respectively.
•$4.8 million and $5.1 million of intangible assets amortization for the twelve-month periods ended December 31, 2020 and 2019, respectively.
6
•$0.2 million and $0.8 million restructuring charges for the three and twelve-month periods ending December 31, 2019.
(5)Included in the Thermal Acoustical Solutions segment is $0.3 million and $0.5 million of reduction-in-force costs for the three and twelve-month periods ended December 31, 2020.
(6)Included in the Corporate Office Expenses are the following:
•$2.3 million in CEO transition expenses for the three and twelve-month periods ended December 31, 2019.
•$0.2 million in corporate strategic initiatives for the three-month period ended December 31, 2019.
•$3.1 million and $1.5 million in corporate strategic initiatives for the twelve-month periods ended December 31, 2020 and 2019, respectively.
•$0.2 million and $0.4 million restructuring charges for the three and twelve-month periods ending December 31, 2020.
(7)Included in the operating results across all segments is a total of $1.9 million of reduction-in-force severance expenses for the three and twelve-month periods ended December 31, 2019.
7
| Financial Position | ||||||||||||||
| In thousands except ratio data | ||||||||||||||
| (Unaudited) | ||||||||||||||
| December 31, 2020 | December 31, 2019 | |||||||||||||
| Cash and cash equivalents | $ | 102,176 | $ | 51,331 | ||||||||||
| Working capital | $ | 161,763 | $ | 153,739 | ||||||||||
| Total debt | $ | 270,438 | $ | 272,641 | ||||||||||
| Stockholders' equity | $ | 257,696 | $ | 318,420 | ||||||||||
| Total capitalization | $ | 528,134 | $ | 591,061 | ||||||||||
| Total debt to total capitalization | 51.2 | % | 46.1 | % | ||||||||||
| Cash Flows | ||||||||||||||||||||||||||
| In thousands | For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||||||||||||
| (Unaudited) | December 31, | December 31, | ||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| Net cash (used for) provided by operating activities | $ | (446) | $ | 23,898 | $ | 74,167 | $ | 86,862 | ||||||||||||||||||
| Net cash used for investing activities | $ | (11,364) | $ | (8,613) | $ | (27,633) | $ | (32,385) | ||||||||||||||||||
| Net cash used for financing activities | $ | (10,803) | $ | (13,697) | $ | (95) | $ | (51,927) | ||||||||||||||||||
| Depreciation and amortization | $ | 12,638 | $ | 12,318 | $ | 54,987 | $ | 49,000 | ||||||||||||||||||
| Capital expenditures | $ | (12,909) | $ | (8,614) | $ | (33,449) | $ | (35,850) | ||||||||||||||||||
| Common Stock Data | ||||||||||||||
| For the Three Months Ended December 31, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| High | $ | 33.47 | $ | 25.84 | ||||||||||
| Low | $ | 16.10 | $ | 17.93 | ||||||||||
| Close | $ | 30.03 | $ | 20.52 | ||||||||||
During the fourth quarter of 2020, 7,610,941 shares of Lydall common stock (LDL) were traded on the New York Stock Exchange.
8
Non-GAAP Measures
In thousands except ratio and per share data
(Unaudited)
The following tables address the non-GAAP measures used in this press release and reconcile the non-GAAP measures to the most directly comparable GAAP measures:
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||||||||||||
| In thousands | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
| Net sales | $ | 210,269 | $ | 193,288 | $ | 764,041 | $ | 837,398 | ||||||||||||||||||
| Net sales, adjusted | $ | 210,269 | $ | 193,288 | $ | 764,041 | $ | 837,398 | ||||||||||||||||||
| Gross profit, as reported | $ | 39,959 | $ | 28,253 | $ | 144,875 | $ | 152,420 | ||||||||||||||||||
| Reduction-in-force severance expenses | 102 | 987 | 229 | 987 | ||||||||||||||||||||||
| Gross profit, adjusted | $ | 40,061 | $ | 29,240 | $ | 145,104 | $ | 153,407 | ||||||||||||||||||
| Gross margin, as reported | 19.0 | % | 14.6 | % | 19.0 | % | 18.2 | % | ||||||||||||||||||
| Gross margin, adjusted | 19.1 | % | 15.1 | % | 19.0 | % | 18.3 | % | ||||||||||||||||||
| Operating income (loss), as reported | $ | 4,530 | $ | (68,501) | $ | (62,065) | $ | (38,825) | ||||||||||||||||||
| Strategic initiatives expenses | — | 210 | 3,138 | 1,456 | ||||||||||||||||||||||
| TNW restructuring expenses | — | 177 | — | 767 | ||||||||||||||||||||||
| Impairment of goodwill and long-lived assets | — | 64,206 | 61,109 | 64,206 | ||||||||||||||||||||||
| CEO transition expenses | — | 2,259 | — | 2,259 | ||||||||||||||||||||||
| Reduction-in-force severance expenses | 263 | 1,943 | 520 | 1,943 | ||||||||||||||||||||||
| PM restructuring expenses | 919 | — | 15,903 | — | ||||||||||||||||||||||
| Operating income, adjusted | $ | 5,712 | $ | 294 | $ | 18,605 | $ | 31,806 | ||||||||||||||||||
| Operating margin, as reported | 2.2 | % | (35.4) | % | (8.1) | % | (4.6) | % | ||||||||||||||||||
| Operating margin, adjusted | 2.7 | % | 0.2 | % | 2.4 | % | 3.8 | % | ||||||||||||||||||
| Earnings (loss) per share, as reported | $ | 0.01 | $ | (4.07) | $ | (4.24) | $ | (4.08) | ||||||||||||||||||
| Strategic initiatives expenses | — | 0.01 | 0.18 | 0.09 | ||||||||||||||||||||||
| TNW restructuring expenses | — | 0.01 | — | 0.04 | ||||||||||||||||||||||
| Impairment of goodwill and long-lived assets | — | 3.71 | 3.52 | 3.71 | ||||||||||||||||||||||
| CEO transition expenses | — | 0.13 | — | 0.13 | ||||||||||||||||||||||
| Reduction-in-force severance expenses | 0.02 | 0.11 | 0.03 | 0.11 | ||||||||||||||||||||||
| PM restructuring expenses | 0.05 | — | 0.92 | — | ||||||||||||||||||||||
| Employee benefit plans settlement expenses | — | (0.03) | 0.02 | 1.46 | ||||||||||||||||||||||
| Gain on sale from a divestiture | — | — | — | (0.08) | ||||||||||||||||||||||
| Tax effect of above adjustments | (0.01) | (0.04) | (0.45) | (0.66) | ||||||||||||||||||||||
| Diluted earnings (loss) per share, adjusted | $ | 0.07 | $ | (0.17) | $ | (0.02) | $ | 0.72 | ||||||||||||||||||
This press release reports adjusted results for the three and twelve months ended December 31, 2020 and 2019, which excludes strategic initiatives expenses, restructuring expenses in the Technical Nonwovens and Performance Materials segments, impairment charges in the Performance Materials segment, corporate office CEO transition expenses, reduction-in-force severance expenses, employee benefit plans settlement expenses, and gain on sale from a divestiture.
9
CONSOLIDATED AND SEGMENT EBITDA/ADJUSTED EBITDA
In thousands except ratio data
(Unaudited)
The following tables report consolidated and segment earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA for the three and twelve months ended December 31, 2020 and 2019. The Company uses segment operating income (loss) for the purpose of calculating segment EBITDA and adjusted EBITDA. Adjusted EBITDA excludes strategic initiatives expenses, restructuring expenses, non-cash impairment charges, CEO transition expenses, reduction-in-force severance expenses, employee benefit plans settlement expenses, and gain on sale from a divestiture.
| For the Three Months Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||||
| Segments | ||||||||||||||||||||||||||||||||||||||
| Performance Materials | Technical Nonwovens | Thermal Acoustical Solutions | Total | Corporate Office | Consolidated Lydall | |||||||||||||||||||||||||||||||||
| Net income | $ | 263 | ||||||||||||||||||||||||||||||||||||
| Interest expense | 4,109 | |||||||||||||||||||||||||||||||||||||
| Income tax benefit | (1,889) | |||||||||||||||||||||||||||||||||||||
| Other expense, net | 2,060 | |||||||||||||||||||||||||||||||||||||
| Income from equity method investment | (13) | |||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 12,213 | $ | 3,041 | $ | (1,388) | $ | 13,866 | $ | (9,336) | $ | 4,530 | ||||||||||||||||||||||||||
| Depreciation and amortization | 5,775 | 3,358 | 3,137 | 12,270 | 294 | 12,564 | ||||||||||||||||||||||||||||||||
| Other expense, net | — | — | — | — | 2,060 | 2,060 | ||||||||||||||||||||||||||||||||
| Income from equity method investment | — | (13) | — | (13) | — | (13) | ||||||||||||||||||||||||||||||||
| EBITDA | $ | 17,988 | $ | 6,412 | $ | 1,749 | $ | 26,149 | $ | (11,102) | $ | 15,047 | ||||||||||||||||||||||||||
| % of net sales | 24.6 | % | 11.8 | % | 2.0 | % | 12.1 | % | 7.2 | % | ||||||||||||||||||||||||||||
| Reduction-in-force severance expenses | — | — | 263 | 263 | — | 263 | ||||||||||||||||||||||||||||||||
| PM restructuring expenses | 673 | — | — | 673 | 246 | 919 | ||||||||||||||||||||||||||||||||
| Discrete tax adjustment | — | — | — | — | 1,439 | 1,439 | ||||||||||||||||||||||||||||||||
| EBITDA, adjusted | $ | 18,661 | $ | 6,412 | $ | 2,012 | $ | 27,085 | $ | (9,417) | $ | 17,668 | ||||||||||||||||||||||||||
| % of net sales | 25.5 | % | 11.8 | % | 2.3 | % | 12.6 | % | 8.4 | % | ||||||||||||||||||||||||||||
10
| For the Three Months Ended December 31, 2019 | ||||||||||||||||||||||||||||||||||||||
| Segments | ||||||||||||||||||||||||||||||||||||||
| Performance Materials | Technical Nonwovens | Thermal Acoustical Solutions | Total | Corporate Office | Consolidated Lydall | |||||||||||||||||||||||||||||||||
| Net loss | $ | (70,461) | ||||||||||||||||||||||||||||||||||||
| Employee benefits plans settlement expense | (454) | |||||||||||||||||||||||||||||||||||||
| Interest expense | 3,237 | |||||||||||||||||||||||||||||||||||||
| Income tax benefit | (897) | |||||||||||||||||||||||||||||||||||||
| Other expense, net | 102 | |||||||||||||||||||||||||||||||||||||
| Income from equity method investment | (28) | |||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (65,278) | $ | 3,152 | $ | 1,720 | $ | (60,406) | $ | (8,095) | $ | (68,501) | ||||||||||||||||||||||||||
| Depreciation and amortization | 6,329 | 3,176 | 2,552 | 12,057 | 148 | 12,205 | ||||||||||||||||||||||||||||||||
| Employee benefits plans settlement expense | — | — | — | — | (454) | (454) | ||||||||||||||||||||||||||||||||
| Other expense, net | — | — | — | — | 102 | 102 | ||||||||||||||||||||||||||||||||
| Income from equity method investment | — | (28) | — | (28) | — | (28) | ||||||||||||||||||||||||||||||||
| EBITDA | $ | (58,949) | $ | 6,356 | $ | 4,272 | $ | (48,321) | $ | (7,595) | $ | (55,916) | ||||||||||||||||||||||||||
| % of net sales | (105.6) | % | 11.2 | % | 5.0 | % | (24.3) | % | (28.9) | % | ||||||||||||||||||||||||||||
| Strategic initiatives expenses | $ | — | $ | — | $ | — | $ | — | $ | 210 | $ | 210 | ||||||||||||||||||||||||||
| TNW restructuring expenses | — | 177 | — | 177 | — | 177 | ||||||||||||||||||||||||||||||||
| Impairment of goodwill and long-lived assets | 64,206 | — | — | 64,206 | — | 64,206 | ||||||||||||||||||||||||||||||||
| CEO transition expenses | — | — | — | — | 2,259 | 2,259 | ||||||||||||||||||||||||||||||||
| Reduction-in-force severance expenses | 295 | 253 | 1,386 | 1,934 | 9 | 1,943 | ||||||||||||||||||||||||||||||||
| Employee benefit plans settlement income | — | — | — | — | (454) | (454) | ||||||||||||||||||||||||||||||||
| EBITDA, adjusted | $ | 5,552 | $ | 6,786 | $ | 5,658 | $ | 17,996 | $ | (5,571) | $ | 12,425 | ||||||||||||||||||||||||||
| % of net sales | 10.0 | % | 12.0 | % | 6.6 | % | 9.1 | % | 6.4 | % | ||||||||||||||||||||||||||||
| For the Twelve Months Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||||
| Segments | ||||||||||||||||||||||||||||||||||||||
| Performance Materials | Technical Nonwovens | Thermal Acoustical Solutions | Total | Corporate Office | Consolidated Lydall | |||||||||||||||||||||||||||||||||
| Net loss | $ | (73,725) | ||||||||||||||||||||||||||||||||||||
| Employee benefit plans settlement expenses | 385 | |||||||||||||||||||||||||||||||||||||
| Interest expense | 15,979 | |||||||||||||||||||||||||||||||||||||
| Income tax benefit | (6,833) | |||||||||||||||||||||||||||||||||||||
| Other expense, net | 2,166 | |||||||||||||||||||||||||||||||||||||
| Income from equity method investment | (37) | |||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (46,044) | $ | 18,599 | $ | (871) | $ | (28,316) | $ | (33,749) | $ | (62,065) | ||||||||||||||||||||||||||
| Depreciation and amortization (1) | 23,830 | 12,704 | 11,460 | 47,994 | 683 | 48,677 | ||||||||||||||||||||||||||||||||
| Employee benefit plans settlement expenses | — | — | — | — | 385 | 385 | ||||||||||||||||||||||||||||||||
| Other expense, net | — | — | — | — | 2,166 | 2,166 | ||||||||||||||||||||||||||||||||
| Income from equity method investment | — | (37) | — | (37) | — | (37) | ||||||||||||||||||||||||||||||||
| EBITDA | $ | (22,214) | $ | 31,340 | $ | 10,589 | $ | 19,715 | $ | (35,617) | $ | (15,902) | ||||||||||||||||||||||||||
| % of net sales | (8.4) | % | 14.1 | % | 3.6 | % | 2.5 | % | (2.1) | % | ||||||||||||||||||||||||||||
| Strategic initiatives expenses | $ | — | $ | — | $ | — | $ | — | $ | 3,138 | $ | 3,138 | ||||||||||||||||||||||||||
| Impairment of goodwill and long-lived assets | 61,109 | — | — | 61,109 | — | 61,109 | ||||||||||||||||||||||||||||||||
| Reduction-in-force severance expenses | — | — | 520 | 520 | — | 520 | ||||||||||||||||||||||||||||||||
| PM restructuring expenses (1) | 15,463 | — | — | 15,463 | 440 | 15,903 | ||||||||||||||||||||||||||||||||
| Employee benefit plans settlement expenses | — | — | — | — | 385 | 385 | ||||||||||||||||||||||||||||||||
| Discrete tax adjustment | — | — | — | — | 1,439 | 1,439 | ||||||||||||||||||||||||||||||||
| EBITDA, adjusted | $ | 54,358 | $ | 31,340 | $ | 11,109 | $ | 96,807 | $ | (30,215) | $ | 66,592 | ||||||||||||||||||||||||||
| % of net sales | 20.5 | % | 14.1 | % | 3.8 | % | 12.4 | % | 8.7 | % | ||||||||||||||||||||||||||||
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| For the Twelve Months Ended December 31, 2019 | ||||||||||||||||||||||||||||||||||||||
| Segments | ||||||||||||||||||||||||||||||||||||||
| Performance Materials | Technical Nonwovens | Thermal Acoustical Solutions | Total | Corporate Office | Consolidated Lydall | |||||||||||||||||||||||||||||||||
| Net loss | $ | (70,513) | ||||||||||||||||||||||||||||||||||||
| Employee benefit plans settlement expenses | 25,247 | |||||||||||||||||||||||||||||||||||||
| Interest expense | 14,262 | |||||||||||||||||||||||||||||||||||||
| Income tax benefit | (6,416) | |||||||||||||||||||||||||||||||||||||
| Other income, net | (1,257) | |||||||||||||||||||||||||||||||||||||
| Income from equity method investment | (148) | |||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (59,804) | $ | 22,895 | $ | 23,590 | $ | (13,319) | $ | (25,506) | $ | (38,825) | ||||||||||||||||||||||||||
| Depreciation and amortization | 25,118 | 12,702 | 10,168 | 47,988 | 635 | 48,623 | ||||||||||||||||||||||||||||||||
| Employee benefit plans settlement expenses | — | — | — | — | 25,247 | 25,247 | ||||||||||||||||||||||||||||||||
| Other income, net | — | — | — | — | (1,257) | (1,257) | ||||||||||||||||||||||||||||||||
| Income from equity method investment | — | (148) | — | (148) | — | (148) | ||||||||||||||||||||||||||||||||
| EBITDA | $ | (34,686) | $ | 35,745 | $ | 33,758 | $ | 34,817 | $ | (48,861) | $ | (14,044) | ||||||||||||||||||||||||||
| % of net sales | (14.1) | % | 14.0 | % | 9.3 | % | 4.0 | % | (1.7) | % | ||||||||||||||||||||||||||||
| Strategic initiatives expenses | $ | — | $ | — | $ | — | $ | — | $ | 1,456 | $ | 1,456 | ||||||||||||||||||||||||||
| TNW restructuring expenses | — | 767 | — | 767 | — | 767 | ||||||||||||||||||||||||||||||||
| Impairment of goodwill and long-lived assets | 64,206 | — | — | 64,206 | — | 64,206 | ||||||||||||||||||||||||||||||||
| CEO transition expenses | — | — | — | — | 2,259 | 2,259 | ||||||||||||||||||||||||||||||||
| Reduction-in-force severance expenses | 295 | 253 | 1,386 | 1,934 | 9 | 1,943 | ||||||||||||||||||||||||||||||||
| Employee benefit plans settlement expenses | — | — | — | — | 25,247 | 25,247 | ||||||||||||||||||||||||||||||||
| Gain on sale from a divestiture | — | — | — | — | (1,459) | (1,459) | ||||||||||||||||||||||||||||||||
| EBITDA, adjusted | $ | 29,815 | $ | 36,765 | $ | 35,144 | $ | 101,724 | $ | (21,349) | $ | 80,375 | ||||||||||||||||||||||||||
| % of net sales | 12.1 | % | 14.4 | % | 9.7 | % | 11.8 | % | 9.6 | % | ||||||||||||||||||||||||||||
(1) For purposes of these schedules, the depreciation and amortization expense for the twelve-month period ended December 31, 2020, excludes $5.3 million of accelerated depreciation of property, plant and equipment and other intangible assets in the PM segment since this expense is included in the restructuring expenses of $15.5 million.
12
Organic Sales
(Unaudited)
| Three Months Ended December 31, 2020 | ||||||||||||||||||||||||||
| Performance Materials | Technical Nonwovens | Thermal Acoustical Solutions | Consolidated | |||||||||||||||||||||||
| Sales growth, as reported | 31.1 | % | (4.1) | % | 2.3 | % | 8.8 | % | ||||||||||||||||||
| Acquisitions and divestitures | — | % | — | % | — | % | — | % | ||||||||||||||||||
| Change in tooling sales | (0.2) | % | — | % | (6.1) | % | (2.8) | % | ||||||||||||||||||
| Foreign currency translation | 3.0 | % | 2.5 | % | 2.4 | % | 2.7 | % | ||||||||||||||||||
| Organic sales growth | 28.3 | % | (6.6) | % | 6.0 | % | 8.9 | % | ||||||||||||||||||
| Twelve Months Ended December 31, 2020 | ||||||||||||||||||||||||||
| Performance Materials | Technical Nonwovens | Thermal Acoustical Solutions | Consolidated | |||||||||||||||||||||||
| Sales growth, as reported | 7.8 | % | (12.9) | % | (18.5) | % | (8.8) | % | ||||||||||||||||||
| Acquisitions and divestitures | 0.3 | % | (0.1) | % | — | % | 0.1 | % | ||||||||||||||||||
| Change in tooling sales | — | % | — | % | (3.6) | % | (1.5) | % | ||||||||||||||||||
| Foreign currency translation | 0.6 | % | — | % | 0.6 | % | 0.3 | % | ||||||||||||||||||
| Organic sales growth | 6.9 | % | (12.8) | % | (15.5) | % | (7.7) | % | ||||||||||||||||||
This press release provides information regarding organic sales change, defined as net sales change excluding (1) sales from acquired and divested businesses (2) the impact of foreign currency translation and (3) tooling sales. Management believes that the presentation of organic sales change is useful to investors because it enables them to assess, on a consistent basis, sales trends related to the Company selling products to customers, without the impact of foreign currency rate changes that are not under management's control and do not reflect the performance of the Company and management. Tooling sales are excluded because tooling revenue is not generated from selling the Company's products to customers, but rather is reimbursement from our customers for the design and production of tools used by the Company in our manufacturing processes. Tooling sales can be sporadic and may mask underlying business conditions and obscure business trends.
13