Nonwovens / Technical Textiles


Lydall announces significant growth across focused portfolio drives margin expansion

LYDALL, INC. (NYSE: LDL) today announced financial results for the second quarter ended June 30, 2021. “Over the past year, Lydall has gone through an incredible transformation proving our flexibility and responsiveness in the face of the COVID pandemic. The Lydall team continued to deliver strong results in the second quarter, executing on our strategic roadmap and leveraging our focused portfolio to take advantage of a period of broader economic confidence.” said Sara A. Greenstein, President and Chief Executive Officer.

“Our Performance Materials (“PM”) business saw continued strong demand in specialty filtration led by higher sales of fine fiber meltblown media as well as sealing solutions which benefited from favorable trends in transportation, agricultural, and construction end markets,” commented Ms. Greenstein. PM sealing and advanced solutions products were up 49.5% and specialty filtration sales grew 14.9%. “The PM team commissioned additional fine fiber meltblown capacity at our Rochester, New Hampshire and St. Rivalain, France facilities, ahead of schedule and under budget."

In the Thermal Acoustical Solutions (“TAS”) segment, parts sales grew 119.5% from prior year which was heavily impacted by COVID related automotive facility shutdowns. Compared to the first quarter parts sales were down 17.7%. TAS volumes were impacted by semiconductor shortages affecting global automotive production, but the team rapidly adjusted to changing customer requirements to mitigate the profitability impacts.

Lydall’s Technical Nonwovens (“TNW”) segment saw sales growth of 39.4% from prior year as industrial end markets continued to recover from COVID-19 related slowdowns last year. Ms. Greenstein added, “The TNW business continues to build healthy backlog as industrial activity strengthens, delivering sequential sales growth of 17.5% while expanding adjusted EBITDA over 40%."

  • Net sales of $221.7 million, up 51.7% compared to prior year on strong demand across all three segments; up 47.4% organically
  • Gross margin of 21.6%, up 220 bps; adjusted gross margin of 21.6%, up 210 bps
  • Net income of $5.8 million or $0.32 per diluted share compared to operating loss per share of ($0.34) in Q2-2020; Adjusted earnings per diluted share of $0.50 compared to adjusted loss per share of ($0.27)
  • EBITDA of $20.5 million or 9.3% of sales; Adjusted EBITDA up 116.4% to $24.7 million, or 11.1% of sales and up 40 bps sequentially from Q1-2021
  • Total debt net of cash of $157.5 million, compared to $193.0 million at June 30, 2020; net debt leverage ratio of 1.9x

Q2 2021 Consolidated Results

Net sales of $221.7 million increased by $75.6 million, or 51.7% from the second quarter of 2020. Net of $9.8 million of favorable FX and $3.8 million related to divestitures, sales were up 47.4% organically compared to prior year. Sales were down $5.4 million sequentially, primarily on weaker sales in TAS partially offset by seasonal strength in TNW geosynthetics sales.

Operating income of $9.4 million improved by $11.2 million dollars from the second quarter 2020 operating loss of $1.7 million dollars, which included significant impacts from COVID-19 related shutdowns. Second quarter results include $3.7 million of strategic initiatives expense for merger-related costs.

Consolidated adjusted EBITDA of $24.7 million increased $13.3 million or 116.4% from the second quarter of 2020 with adjusted EBITDA margin of 11.1% expanding 330 basis points from prior year on favorable mix and volume in PM and TNW, and the absence of COVID related shutdowns in TAS. Sequentially, consolidated adjusted EBITDA margin was essentially flat from first quarter 2021 as margin from higher sales in TNW was offset by lower sales in TAS. Higher volumes of sealing and insulation products combined with favorable mix of specialty filtration products contributed to adjusted EBITDA margin of 25.9% in the PM segment, an expansion of 640 basis points from prior year. In the TNW business, strong volume growth in industrial filtration, particularly in China combined with stronger demand for geosynthetics yielded adjusted EBITDA of $12.0 million or a margin of 16.6%, up 310 basis points sequentially. The TAS business delivered adjusted EBITDA of $1.6 million, an improvement of $4.9 million compared to prior year which was heavily impacted by COVID related shutdowns.

Randall B. Gonzales, Chief Financial Officer, commented, “One year after the pandemic induced trough, Lydall continues to drive strong financial results, benefiting from cost reduction and efficiency opportunities to deliver profitability well in excess of top line growth as strong demand continues in our key end markets. The team has proven our ability to flex the cost structure through the entire business cycle to meet our customer’s diverse needs.”


Net cash provided by operations in the second quarter was $18.3 million driven by higher net income, and continued focus on working capital management. At June 30, 2021, the Company’s total debt was $260.1 million, or $157.5 million net of $102.5 million of cash, including $2.2 million of debt repayment in the second quarter. Net debt decreased by $35.4 million and net debt leverage ratio of 1.9x improved 1.1 turns compared to the same period in 2020.


As previously announced, Unifrax, a leading global provider of high performance specialty materials focused on thermal management, specialty filtration, battery materials, emission control and fire protection applications, signed definitive agreements to acquire Lydall, Inc. Under the terms of these agreements, Lydall shareholders will receive $62.10 per share. The transaction, which has been approved by the boards of directors of both companies, is expected to close in the second half of 2021 subject to the receipt of required regulatory approvals, approvals of Lydall stockholders and other customary closing conditions.

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, Lydall's ability to consummate the proposed merger transaction, the expected benefits of the proposed mergers, the expected impact of the coronavirus pandemic (COVID-19) on the Company's businesses, optimizing profit and cash flow generation, and the timing, expected completion and impacts of the proposed merger and the potential impacts should the merger not be consummated 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), cyber-security vulnerabilities, 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, the timing, expected completion and impacts of the proposed merger and the potential impacts should the merger not be consummated, and the risk that a closing condition to the merger agreement may not be satisfied. Accordingly, the Company’s actual results may differ materially from those contemplated by these forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in Lydall’s filings with the Securities and Exchange Commission, including the risks and uncertainties identified in Part I, Item 1A - Risk Factors of Lydall’s Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, Item 1A - Risk Factors of Lydall’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

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 Lydall® is a registered trademark of Lydall, Inc. in the U.S. and other countries.

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