Investor Presentation
February 2020
Performance Materials | Technical Nonwovens | Thermal Acoustical Solutions |
THIS DOCUMENT, OR AN EMBODIMENT OF IT IN ANY MEDIA, DISCLOSES INFORMATION THAT IS PROPRIETARY, IS THE PROPERTY OF LYDALL, INC. AND/OR ITS AFFILIATE (COLLECTIVELY, "LYDALL"), IS AN UNPUBLISHED WORK PROTECTED UNDER APPLICABLE COPYRIGHT LAWS AND IS DELIVERED ON THE EXPRESS CONDITION THAT IT IS NOT TO BE USED, DISCLOSED, OR REPRODUCED, IN WHOLE OR IN PART (INCLUDING REPRODUCTION AS A DERIVATIVE WORK), OR USED FOR MANUFACTURE FOR ANYONE OTHER THAN LYDALL WITHOUT ITS WRITTEN CONSENT. NO RIGHT IS GRANTED TO DISCLOSE OR SO USE ANY INFORMATION CONTAINED HEREIN. ALL RIGHTS RESERVED. © LYDALL, INC. 2019
Forward-Looking Statements
This presentation contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These 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, and generally can be identified through the use of words such as "believes," "anticipates," "may," "should," "will," "plans," "projects," "expects," "estimates," "forecasts," "predicts," "targets," "prospects," "strategy," "signs," and other words of similar meaning. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially and adversely from those expressed in any forward-looking statement. Investors, therefore, are cautioned against relying on any of these forward-looking statements. Lydall's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other Securities and Exchange Commission filings discuss important risk factors that could affect the Company's business, results of operations and financial condition.
These forward-looking statements speak only as of the date of this presentation, and Lydall does not assume any obligation to update or revise any forward-looking statement made in this presentation.
This presentation contains non-GAAP financial measures as defined by SEC regulations. The Appendix of this presentation includes a reconciliation to the most comparable GAAP measures.
2
Leading Provider of Engineered Customer Solutions
EXECUTION | LIQUIDITY | |||||||||
Operational excellence | Strong balance | |||||||||
to enhance margins | sheet provides | |||||||||
and cash flow | flexibility | |||||||||
POSITIONING | GROWTH | DISCIPLINED |
Niche solutions in | Clear, consistent | Capital allocation to |
diverse segments | strategy for profitable | fund additional |
growth | strategic opportunities |
Serving Attractive End Markets Driven by Strong Secular Trends
3
Lydall at a Glance (NYSE: LDL)
Key Statistics | |
Founded | 1869 |
Headquarters | Manchester, CT |
Regions Served | Global |
Global Employees | ~3,300 |
2019 Financial Highlights | |
Revenue | $837M |
Technical Nonwovens | 30% |
Performance Materials | 28% |
Thermal Acoustical Solutions | 42% |
Adj. EBITDA Margin1 | 9.6% |
Free Cash Flow2 | $51.0M |
Global Footprint | 2019 Revenue by Region & Locations
27%
EMEA
63% | 10% |
N. America | |
Asia | |
Filtration & Engineered Materials | Automotive |
Technical Nonwovens Performance Materials | Thermal Acoustical Solutions |
Global Manufacturer of Specialty Engineered Products
1 Reference Appendix for reconciliation between adjusted financials and GAAP financials; 2 FCF = Cash flow from operations less capex. | 4 |
Vision for Profitable Growth1
Filtration & Engineered Materials Automotive
2012 | |
12.9% | |
Sales | $362M |
EBITDA Margin | 10.0% |
14.2% |
Vision
2019
13.3%GDP+
$837MMargin
14% CAGR | Expansion |
9.6% | |
9.7% |
CLEAR PRIORITIES
- Margin expansion driven by Lean, innovation, and scale
- Expansion into new verticals through innovation
- Focused on adjacent markets and strategic acquisitions in Filtration and Engineered Materials
Focused on Profitable Expansion and Diversifying Automotive Exposure
1 Reflects continuing operations; reference Appendix for reconciliation between adjusted financials and GAAP financials. | 5 |
Technical Nonwovens at a Glance
Business Highlights
- Leading industrial air filtration media for dust and pollution control
- Advanced materials serves a broad set of applications and multiple sectors
- Combination of 3 market leading businesses
- Andrew Filtration (Feb 2014)
- Texel (Jul 2016)
- Gutsche (Dec 2016)
Competitive Advantages
- Global brands renowned for quality and innovation
- Manufacturing scale and operational efficiency
- Diversified end markets and geographies
($M) | Financial Performance1 | 2019 Sales by Region | ||||||||||||||||||||||||||||||
$269 | $277 | |||||||||||||||||||||||||||||||
$255 | ||||||||||||||||||||||||||||||||
$156 | 11% | |||||||||||||||||||||||||||||||
$139 | North America | |||||||||||||||||||||||||||||||
$112 | ||||||||||||||||||||||||||||||||
16% | ||||||||||||||||||||||||||||||||
12% | 13% | 15% | 14% | 14% | 27% | EMEA | ||||||||||||||||||||||||||
62% | Asia | |||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||||||||||||
Revenue | EBITDA Margin | |||||||||||||||||||||||||||||||
Estimated Share of Segment Served | 2019 Sales by Application | |||
Industrial Filtration2 | Advanced Materials3 | |||
25% | 9% | Industrial Filtration | ||
43% | ||||
57% | Advanced Materials | |||
1 Reference Appendix for reconciliation between adjusted and GAAP financials; 2 Competitors: BWF Envirotec, Savings, and Testori; 3 Competitors: Propex, TexTech, TenCate, and Sandler. | 6 |
Performance Materials at a Glance
Business Highlights
- Comprehensive filtration media portfolio serving air, liquid, and life sciences sectors
- Complete sealing solutions with preeminent fiber technology
- New product development in air and liquid filtration is a key element to profitable growth
Competitive Advantages
- Expertise in organic, polymer, and nano-fibers
- Providing complete portfolio of filtration media from residential to high efficiency HEPA/ULPA clean room applications
- Flexibility to accommodate various run sizes providing technical solutions and niche innovation
- Leadership in fiber-based wetlaid production
Financial Performance1 | 2019 Sales by Region |
($M)
$245 | |||||||||||||||||||||||||||||||||
$169 | 16% | ||||||||||||||||||||||||||||||||
$116 | $102 | $111 | $117 | North America | |||||||||||||||||||||||||||||
13% | 13% | 15% | 14% | 14% | 12% | 26% | 58% | EMEA | |||||||||||||||||||||||||
Asia | |||||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||
Revenue | EBITDA Margin | ||||||||||||||||||||||||||||||||
Estimated Share of Segment Served | 2019 Sales by Application | ||||
Filtration2 | Sealing & Advanced | ||||
Solutions3 | |||||
21% | 6% | 38% | Filtration | ||
62% | Sealing & | ||||
Advanced Solutions | |||||
1 Reference Appendix for reconciliation between adjusted and GAAP financials; 2 Competitors: Hollingsworth & Vose, Ahlstrom Munksjo, Hokuetsu, and Neenah Paper; 3 Competitors: Unifrax, Owens Corning, | 7 |
Neenah Paper, EnPro, and Frenzelit |
Thermal Acoustical Solutions at a Glance
Business Highlights
- Fabricated thermal and acoustical barriers
- Margin enhancement with dual wall encapsulation applications
- Expanding product portfolio and geographic diversity
- Sole sourced for awarded applications; material pass through exists for approximately half of heat shield business
Competitive Advantages
- Highly engineered solutions for customer requirements
- Vertical integration (insulation material and fibers)
- Rapid solution provider with global presence
- World-classmanufacturing
($M) | Financial Performance1 | 2019 Sales by Region | |||||||||||||||||||||||||||||||
$365 | $362 | ||||||||||||||||||||||||||||||||
$321 | $342 | ||||||||||||||||||||||||||||||||
$292 | $298 | ||||||||||||||||||||||||||||||||
5% | |||||||||||||||||||||||||||||||||
20% | 20% | 19% | 27% | North America | |||||||||||||||||||||||||||||
18% | 13% | 10% | EMEA | ||||||||||||||||||||||||||||||
68% | Asia | ||||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||
Revenue | EBITDA Margin | ||||||||||||||||||||||||||||||||
Estimated Share of Segment Served | Customers | ||
Heat Shield (Global)2 | Acoustical (U.S.)3 | Light Vehicle | Heavy Truck/Other |
12%15%
1 Reference Appendix for reconciliation between adjusted and GAAP financials; 2 Competitors: ElringKlinger, Federal Mogul, Dana, and Autoneum; 3 Competitors: Autoneum, Borgers, HP Pelzer Group, and IAC. | 8 |
Key Products and Applications by Business
PRODUCTS
APPLICATIONS
TECHNICAL NONWOVENS | PERFORMANCE MATERIALS | THERMAL ACOUSTICAL SOLUTIONS |
Nonwoven needled felt designed and manufactured | Wide range of nonwoven engineered materials for | Portfolio of engineered heat shields providing heat |
for Industrial Filtration and a diverse selection of | Filtration, Insulation, and Sealing Solution markets | and noise abatement to sensitive components and |
demanding material applications | passengers in high temp transportation applications | |
Full range of engineered nonwoven products to | ||
assist in noise, heat management, and weight | ||
reduction within the transportation sector | ||
Industrial Filtration | Filtration | Thermal Acoustical Solutions |
Fabrics and filter bags for filtration of particulate | Media specifically designed for its properties in air, | Shielding for heat and component protection |
and emission control for incineration, food/ | liquid, and life sciences | including turbocharger wrap, fuel tank, hybrid |
pharma/chemical, power generation, and | Sealing and Advanced Solutions | electric accessories, and EV motor |
cement/asphalt/steel | Acoustic components for sound attenuation and | |
Sealing material used in equipment to keep fluids | ||
Advanced Materials | ||
thermal protection including aero shield, battery, | ||
in and contaminants out, applications include | ||
integrated floor liners, and wheel arch liners | ||
High performance for demanding applications | drivetrain, transmission, axels, compressors | |
including geosynthetics, acoustics, and pipe | Advanced solutions are materials in niche areas | |
rehabilitation | ||
such as cryogenic insulation, thermal insulation, | ||
electrical papers, and aerospace papers | ||
9
Attractive End Markets with Secular Growth Drivers
FILTRATION & ENGINEERED MATERIALS
HOW LYDALL CAPITALIZES
Sustainability & Regulation
Global air and water standards improving
Infrastructure
Aging systems in US, EU, and Asia
Energy
Availability, management, and efficiency
- Conversion to higher efficiency particulate capture technologies
-
Filtration in industrial, commercial, and residential growing at 2x
GDP - Increased civil construction repair and replace projects
- Increasingly converting waste to energy and reducing landfills
Filtration solutions in all markets |
positioned for improved standards |
Leading position in geosynthetics and |
growth position in pipe rehabilitation |
Best-in-class thermal insulation |
Wide installed based for incineration |
filtration |
AUTOMOTIVE
Emission & Noise Regulation
Increasing global standards
Electrification
Growth of hybrid and battery vehicles
Connected Vehicles
Continuous electronics introductions
- Lightweighting secular themes
- Smaller engines with turbochargers for economy, weight, and performance
- Material technology shifts: metal plastic and plastic fiber
- Higher use of Noise, Vibration, and Harshness (NVH) products
- Battery and electric motors creating new types of thermal, electrical, and noise requirements
- Increased content (hybrids and electrical components) driving need for thermal shielding
Suite of thermal shields that can be |
acoustically tuned |
Battery insulators to manage thermal |
environments |
Turbo wraps designed to reduce noise |
and improve performance |
Fiber technology displacing plastics in |
multiple locations |
RF Shields to protect sensitive electronics |
Well Positioned to Take Advantage of Multiple Trends Driving Above GDP Growth
10
Clear, Consistent Strategy for Profitable Growth
Develop and quickly deploy next generation product offerings
Execute disciplined M&A for Filtration & Engineered Materials
Drive revenue and margin expansion through operational excellence
Evaluate opportunities to further strengthen global footprint
11
Key Competitive Differentiators
Providing Complete | Lydall Lean Six Sigma | ||
Engineered Solutions | Embraced by All | ||
to Solve Customer | Businesses | ||
Problems | |||
| Robust design, testing, | | Improved quality, service, |
and simulation capabilities | and on-time delivery | ||
| Quick turnaround on new | | Capacity optimization |
product deployment | | Significant opportunity to | |
Quality is a cornerstone | |||
| improve acquired | ||
businesses | |||
Synergistic
Segments
- Engineered materials expertise enables innovative automotive products and vertical integration
- Polyester rolled good media converted to acoustical barriers
- Microglass insulation media dual wall heat shields
Market
Leadership
- Top 10 global nonwovens company
- #1 industrial air filtration media globally
- #1 geotextile producer in Canada
- Only filtration media company providing industrial, commercial, and residential solutions
Unmatched
Technologies
- Suite of nonwoven technologies
- Deep materials science expertise in both design and production
- Engineering and R&D expertise to deliver innovation
Continuous Improvement Mindset with Deep Customer Relationships
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Execution of Strategy Driving Solid Financial Performance1
Revenue Growth ($M) | Gross Margin Profile | EBITDA Growth ($M) |
6-yr CAGR: 14% Overall, 4% Organic | Commodity Headwinds in 2018 and | 6-yr CAGR: 11% |
Operational Issues in 2019 | ||
$786 | $837 | 24.8% | 23.7% | $95 | ||||||||||||||||
23.3% | ||||||||||||||||||||
$90 | ||||||||||||||||||||
$698 | 20.7% 21.5% | $85 | ||||||||||||||||||
19.9% | $80 | |||||||||||||||||||
18.3% | $72 | |||||||||||||||||||
$567 | ||||||||||||||||||||
$516 | $523 | $64 | ||||||||||||||||||
$378 | $42 | |||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Strong Long-term Growth Profile
1 Reflects continuing operations; reference Appendix for reconciliation between adjusted and GAAP financials. | 13 |
Clear Capital Allocation Strategy and Strong Liquidity Position
Capital Allocation Strategy
- Support organic growth programs with capital investments
- Pursue attractive acquisitions fueled by operating cash flows and paydown debt to ensure appropriate leverage
- Long term leverage ratio target <2.5x
- Buyback is secondary consideration to offset dilution
Summary Balance Sheet1 ($M)
Total Current Assets | $284 |
Working Capital | $154 |
PPE, Net | $222 |
Total Assets | $786 |
Long-term Debt | $263 |
Debt to Total Capitalization | 46% |
Liquidity Position ($M)
Cash/ST Investments | $325 | $318 | $300 | $287 | ||||
Debt | $273 | |||||||
$76 | $129 | $60$77 | ||||||
$62$41 | $72 | $49 | $48 | $43 | $49 | $51 | ||
$21 | ||||||||
2014 | 2015 | 2016 | 2017 | 2018 | Q1-19Q2-19Q3-19 | Q4-19 | ||
Net Leverage: | 0.7x | 0.2x | 2.8x | 3.0x | 2.9x | 2.8x | 3.0x | |
Acquisitions: |
Flexible Balance Sheet Provides Opportunity to Fund Organic Growth and Strategic Acquisitions
1 As of December 31, 2019. | 14 |
Strategic Approach to M&A | Recent Acquisitions
Date | 2018 | 2016 | 2016 | ||||
Purchase Price | $265M | $58M | $96M | ||||
EBITDA Acquisition Multiple (Pre | Post | 9.0x | 8.0x | 9.5x | 6.5x | 8.3x | 6.9x | ||||
Synergies) | |||||||
Adjacent to Existing Products and Markets | | | | ||||
Provides Complementary/New Technologies | | | | ||||
Deepens Focus on Engineered Materials | | | | ||||
| | ||||||
Expands Global Footprint | |||||||
Meaningful Scale | | | | ||||
Accretive to Shareholders | | | | ||||
KEY RATIONALE | |||||||
| Strengthens engineered materials | | Strengthens position as an industry | Solidifies Lydall as a global leader in | |||
offering with a leading globally- | leader in engineered materials | industrial filtration markets | |||||
Background Information | recognized brand | | Further diversifies into attractive | Further diversifies into complementary | |||
| Leverages existing manufacturing | adjacent markets with a leading brand | geographies and attractive adjacent | ||||
Strategic Filters | capabilities and know-how | | Provides opportunity to leverage | markets with a leading brand | |||
| Enhances portfolio with meaningful | Combination creates further scale and | |||||
existing manufacturing capabilities and | |||||||
scale and margin profile | expertise | unlocks operational synergies | |||||
15
Strategic Portfolio Management
Technical Nonwovens
- Profitable growth opportunities in advance materials supported by scale and operational efficiency
Performance Materials
- Profitable growth opportunities with new product development in air/liquid filtration and adjacent markets
Thermal Acoustical
- Consistent cash flow generation to support organic activity and power strategic transformation at group level
($M)
DIVESTITURESACQUISITIONS
$900
$800
$700
$600
$500
$400
$300
$200
$100
$-
Business Segment
Est. Sales1
Lydall Transport | Electrical Papers2 | Affinity |
Trucking | Insulation | Chillers |
$30M | $12M | $25M |
Perf. Matl. | ||
TNW | $150M | |
$70M | ||
Andrew Filtration | TNW | |
$50M | ||
TNW | ||
$130M |
Charter Medical Life Sciences $20M
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
Transform Business by Growing Filtration & Engineered Materials Segment
1 Reflects estimated pro-forma impact in year of acquisition; 2 Reflects sale of a product line. | 16 |
Strong Corporate Governance
Performance-based Incentives Support Long-term Objectives1
BOARD COMPOSITION
Long-term incentive awards in the form of performance- based (50%) and stock
options (50%) | 54% |
Annual incentive awards tied to the achievement of financial targets - evenly split between revenue, gross
11% margin, operating income and working capital
- Independent Chairman
- Outside Directors: 8
- Diversity: 33% Female
- Average Age: 60 Years
- Average Tenure: 10 Years
GOVERNANCE HIGHLIGHTS
35%
Annual Incentive Salary Long-term Incentive
- Proxy Access
- Annual Say-on-Pay Vote
- Majority Voting Standard
- Code of Ethics and Business Conduct
- Directors/Senior Executive Ownership Guidelines (CEO: Min. 4x Base Salary)
1 2018 Compensation for Named Executive Officers (Lydall 2019 Proxy Statement). | 17 |
Looking Ahead | Execute and Deliver on Our Long-term Strategic Initiatives
Clear, Consistent Strategy for
Profitable Growth
POSITIONING
Niche solutions in diverse segments
EXECUTION
Operational excellence to enhance margin growth and cash flow
GROWTH
Strong secular trends in attractive end markets
LIQUIDITY
Strong balance sheet to fuel profitable growth
DISCIPLINED
Capital allocation to fund additional growth
18
Appendix
EBITDA Reconciliation to Reported Financials
Year to date 2019 EBITDA | Year to Date 2018 EBITDA |
For the Twelve Months Ended December 31, 2019 | |||||||||||||||||||||||
Segments | |||||||||||||||||||||||
($ in 000) | Performance | Technical | Thermal Acoustical | Total | Corporate | Consolidated | |||||||||||||||||
Materials | Nonwovens | Solutions | Office | 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 | $ | (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) | $ | 34,817 | $ | (48,861) | |||||||||||||||||
$ | 35,745 | $ | 33,758 | $ | (14,044) | ||||||||||||||||||
% of net sales | (14.1)% | 14.0% | 9.3% | 4.0% | (1.7)% | ||||||||||||||||||
Strategic initiatives expenses | $ | - | $ | - | $ | - | $ | - | $ | 1,456 | $ | 1,456 | |||||||||||
TNW restructuring expenses | - | 767 | - | 767 | - | 767 | |||||||||||||||||
Impairment of long-lived assets | 64,206 | - | - | 64,206 | - | 64,206 | |||||||||||||||||
CEO transition expenses | - | - | - | - | 2,259 | 2,259 | |||||||||||||||||
Reduction-in-force severance expenses | 295 | 253 | 1,386 | 1,934 | 9 | 1,943 | |||||||||||||||||
Employee benefit plans settlement expenses | - | - | - | - | 25,247 | 25,247 | |||||||||||||||||
Gain on sale from a divestiture | - | - | - | - | (1,459) | (1,459) | |||||||||||||||||
EBITDA, adjusted | $ | 29,815 | $ | 36,765 | $ | 35,144 | $ | 101,724 | $ | (21,349) | $ | 80,375 | |||||||||||
% of net sales | 14.4% | 11.8% | |||||||||||||||||||||
12.1% | 9.7% | 9.6% |
For the Twelve Months Ended December 31, 2018 | |||||||||||||||||||||||
Segments | |||||||||||||||||||||||
($ in 000) | Performance | Technical | Thermal Acoustical | Total | Corporate | Consolidated | |||||||||||||||||
Materials | Nonwovens | Solutions | Office | Lydall | |||||||||||||||||||
Net income | $ | 34,944 | |||||||||||||||||||||
Interest expense | 6,212 | ||||||||||||||||||||||
Income tax expense | 8,453 | ||||||||||||||||||||||
Other income, net | (289) | ||||||||||||||||||||||
Income from equity method investment | (132) | ||||||||||||||||||||||
Operating income | $ | 13,139 | $ | 21,323 | $ | 38,085 | $ | 72,547 | $ | (23,359) | $ | 49,188 | |||||||||||
Depreciation and amortization | 9,006 | 13,877 | 9,190 | 32,073 | 658 | 32,731 | |||||||||||||||||
Other income, net | - | - | - | - | (289) | (289) | |||||||||||||||||
Income from equity method investment | - | (132) | - | (132) | - | (132) | |||||||||||||||||
EBITDA | $ | 35,332 | $ | 104,752 | $ | (22,412) | $ | 82,340 | |||||||||||||||
$ | 22,145 | $ | 47,275 | ||||||||||||||||||||
% of net sales | 13.1% | 12.8% | 12.9% | 12.9% | 10.5% | ||||||||||||||||||
Strategic initiatives expenses | $ | 233 | $ | - | $ | - | $ | 233 | $ | 3,398 | $ | 3,631 | |||||||||||
TNW restructuring expenses | - | 2,296 | - | 2,296 | - | 2,296 | |||||||||||||||||
Inventory step-up purchase accounting adjustments | 1,975 | - | - | 1,975 | - | 1,975 | |||||||||||||||||
EBITDA, adjusted | $ | 24,353 | $ | 37,628 | |||||||||||||||||||
$ | 47,275 | $ | 109,256 | ||||||||||||||||||||
$ | (19,014) | $ | 90,242 | ||||||||||||||||||||
% of net sales | 14.4% | 13.6% | 12.9% | 13.5% | 11.5% |
EBITDAis reported for Consolidated Lydall data and defined as Net Income before interest, taxes, depreciation, and amortization
Segment EBITDAis reported for each operating segment (Thermal Acoustical Solutions, Technical Nonwovens, and Performance Materials) and is defined as Operating Income net of depreciation and amortization expenses, plus income/loss from equity method investments
20
Reconciliation Between Adjusted and Reported GAAP Financials
For the Twelve Months Ended December 31, 2019 | For the Twelve Months Ended December 31, 2018 | |||||||||||||||
In thousands except per share data | As Reported, | Adjustments | Adjusted | As Reported, | Adjustments | Adjusted | ||||||||||
Lydall, Inc | Results | Lydall, Inc | Results | |||||||||||||
Net sales | $ | 837,398 | $ | - | $ | 837,398 | $ | 785,897 | - | $ | 785,897 | |||||
Cost of sales | 685,608 | (1,617) | (a) | 683,991 | 633,252 | (3,869) | (g) | 629,383 | ||||||||
Gross profit | 151,790 | 1,617 | 153,407 | 152,645 | 3,869 | 156,514 | ||||||||||
Gross margin | 18.1% | 18.3% | 19.4% | 19.9% | ||||||||||||
Selling, product development and | 126,409 | (4,808) | (b) | 121,601 | 103,457 | (4,033) | (h) | 99,424 | ||||||||
administrative expenses | ||||||||||||||||
Impairment of goodwill and other long- | 64,206 | (64,206) | (c) | - | - | - | - | |||||||||
lived assets | ||||||||||||||||
Operating (loss) income | (38,825) | 70,631 | 31,806 | 49,188 | 7,902 | 57,090 | ||||||||||
Operating margin | (4.6)% | 3.8% | 6.3% | 7.3% | ||||||||||||
Employee benefit plans settlement | 25,247 | (25,247) | (d) | - | - | - | ||||||||||
expenses | ||||||||||||||||
Interest expense | 14,262 | - | 14,262 | 6,212 | - | 6,212 | ||||||||||
Other (income) expense, net | (1,257) | 1,459 | (e) | 202 | (289) | - | (289) | |||||||||
(Loss) income before income taxes | (77,077) | 94,419 | 17,342 | 43,265 | 7,902 | 51,167 | ||||||||||
Income tax (benefit) expense | (6,416) | 11,451 | (f) | 5,035 | 8,453 | 694 | (i) | 9,147 | ||||||||
Income from equity method investment | (148) | - | (148) | (132) | - | (132) | ||||||||||
Net (loss) income | $ | (70,513) | $ | 82,968 | $ | 12,455 | $ | 34,944 | 7,208 | $ | 42,152 | |||||
(Loss) earnings per share: | (4.08) | $ | 0.72 | $ | 2.03 | $ | 2.45 | |||||||||
Basic | $ | |||||||||||||||
Diluted | $ | (4.08) | $ | 0.72 | $ | 2.02 | $ | 2.43 | ||||||||
Weighted average number of common | ||||||||||||||||
shares outstanding: | 17,271 | 17,271 | 17,204 | 17,204 | ||||||||||||
Basic | ||||||||||||||||
Diluted | 17,271 | 17,326 | 17,330 | 17,330 |
- Exclude the reduction-in-force severance expenses of $1.0 million across all segments and restructuring expenses of $0.6 million related to the Technical Nonwovens segment.
- Exclude the CEO transition expenses of $2.3 million, corporate strategic initiatives expenses of $1.5 million, reduction-in-force severance expenses of $1.0 million across all segments and restructuring expenses of $0.1 million related to the Technical Nonwovens segment.
- Exclude the impairment of goodwill and other long-lived assets expense of $64.2 million.
- Exclude the employee benefit plans settlement expense of $25.2 million.
- Exclude the gain on sale from divestiture of $1.5 million.
- Excludes the tax benefits and expenses realized on the adjustments in (a), (b), (d) and (e) of $11.5 million.
- Excludes the inventory step-up purchase accounting adjustment of $2.0 million related to the Interface acquisition and the restructuring expenses of $1.9 million related to the Technical Nonwovens segment.
- Excludes the corporate strategic initiatives expenses of $3.6 million and the restructuring expenses of $0.4 million related to the Technical Nonwovens segment.
- Excludes the tax benefits realized on the adjustments in (g) and (h) of $1.0 million and discrete tax benefits of $0.3 million.
21
Reconciliation Between Adjusted and Reported GAAP Financials
($ in 000)
Thermal Acoustical Solutions Operating income, as reported Reduction-in-forceseverance expenses Operating income, adjusted
Operating margin, as reported Operating margin, adjusted
Performance Materials Operating income, as reported Strategic initiatives expenses Inventory step-uppurchase accounting adjustments
Impairment of long-lived assets Reduction-in-force severance expenses Operating income, adjusted
Operating margin, as reported Operating margin, adjusted
Technical Nonwovens Operating income, as reported TNW restructuring expenses Reduction-in-forceseverance expenses Operating income, adjusted
Operating margin, as reported Operating margin, adjusted
$
$
$
$
$
$
Quarter Ended | Twelve Months Ended | |||||||
December 31, | December 31, | |||||||
2019 | 2018 | 2019 | 2018 | |||||
1,720 | $ | 8,728 | $ | 23,590 | $ | 38,085 | ||
1,386 | - | 1,386 | - | |||||
3,106 | $ | 8,728 | $ | 24,976 | $ | 38,085 | ||
2.0% | 10.2% | 6.5% | 10.4% | |||||
3.6% | 10.2% | 6.9% | 10.4% | |||||
(65,278) | $ | 5,096 | $ | (59,804) | $ | 13,139 | ||
- | - | - | 233 | |||||
- | 585 | - | 1,975 | |||||
64,206 | - | 64,206 | - | |||||
295 | - | 295 | - | |||||
(777) | $ | 5,681 | $ | 4,697 | $ | 15,347 | ||
(117.0)% | 7.8% | (24.4)% | 7.8% | |||||
(1.4)% | 8.7% | 1.9% | 9.1% | |||||
3,152 | $ | 3,928 | $ | 22,895 | $ | 21,323 | ||
177 | 358 | 767 | 2,296 | |||||
253 | - | 253 | - | |||||
3,582 | $ | 4,286 | $ | 23,915 | $ | 23,619 | ||
5.6% | 6.1% | 9.0% | 7.7% | |||||
6.3% | 6.6% | 9.4% | 8.5% | |||||
22
Reconciliation Between Adjusted and Reported GAAP Financials
For the year ended December 31, | ||||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | Q1-19 | Q2-19 | Q3-19 | Q4-19 | FY-2019 | ||||||||||||||||||
Reported EPS | $ | 1.14 | $ | 1.28 | $ | 2.71 | $ | 2.16 | $ | 2.85 | $ | 2.02 | $ | 0.22 | $ | (0.40) | $ | 0.17 | $ | (4.07) | $ | (4.08) | ||||||
Gain on sale of divested business | $ | - | $ | - | $ | (0.69) | $ | - | $ | - | $ | - | $ | - | $ | (0.07) | $ | - | $ | - | $ | (0.07) | ||||||
Long-lived asset impairment charge | $ | - | $ | - | $ | 0.08 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 3.71 | $ | 3.71 | ||||||
Divested business | $ | (0.03) | $ | (0.06) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Pension settlement expense | $ | - | $ | 0.18 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 0.86 | $ | 0.01 | $ | (0.02) | $ | 0.85 | ||||||
Sales commission settlement expense | $ | - | $ | 0.12 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Strategic initiatives expenses | $ | 0.05 | $ | 0.14 | $ | - | $ | 0.17 | $ | 0.03 | $ | 0.19 | $ | 0.04 | $ | 0.01 | $ | - | $ | 0.01 | $ | 0.07 | ||||||
Inventory step-up purchase accounting adjustment | $ | - | $ | 0.08 | $ | - | $ | 0.08 | $ | 0.04 | $ | 0.09 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Discrete tax adjustments | $ | (0.10) | $ | - | $ | - | $ | - | $ | (0.04) | $ | 0.02 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Non-recurring customer project | $ | (0.07) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
German Cartel settlement | $ | - | $ | - | $ | - | $ | 0.20 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Severance expenses | $ | - | $ | - | $ | - | $ | - | $ | 0.05 | $ | - | $ | - | $ | - | $ | - | $ | 0.09 | $ | 0.09 | ||||||
Restructuring expenses | $ | - | $ | - | $ | - | $ | - | $ | 0.03 | $ | 0.11 | $ | 0.02 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.04 | ||||||
CEO Transition Expenses | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 0.10 | $ | 0.10 | ||||||
Automotive segments consolidation expenses | $ | - | $ | - | $ | - | $ | - | $ | 0.06 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Tax reform adjustments | $ | - | $ | - | $ | - | $ | - | $ | (0.22) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Adjusted EPS | $ | 0.99 | $ | 1.74 | $ | 2.10 | $ | 2.61 | $ | 2.80 | $ | 2.43 | $ | 0.28 | $ | 0.41 | $ | 0.19 | $ | (0.17) | $ | 0.72 |
23
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Lydall Inc. published this content on 04 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2020 20:57:06 UTC