Q2 2020 Earnings Conference Call€¦ · 2020-07-28 · despite sales headwinds. 69.1. 52.0. 16.2%. 16.3%. Q2 2019. Q2 2020. Q2 2019. Q2 2020. TNW Sales EBITDA Margin. 2 (25%) Performance

Thermal Acoustical SolutionsPerformance Materials Technical Nonwovens

… delivering value-added engineered materials and specialty filtration solutions that promote a cleaner,

quieter, safer world.

Quarter ended June 30, 2020

Q2 2020 Earnings Conference Call

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 AND/OR ITS AFFILIATE (COLLECTIVELY, “LYDALL”), IS AN UNPUBLISHED WORK PROTECTEDUNDER APPLICABLE COPYRIGHT LAWS AND IS DELIVERED ON THE EXPRESS CONDITION THAT IT IS NOT TO BE USED, DISCLOSED, OR REPRODUCED, IN WHOLE OR IN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 USEDFOR 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. 2020

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

Putting Our Production Capability to Work

3

Specialty filtration is a cornerstone of Lydall’s growth, expansion, and strategy going forward

THE OPPORTUNITY

Immediate demand for life-saving PPE

Emerging demand for filtration products for healthy buildings and indoor spaces

Long-term structural shift in demand for high-performance specialty filtration products

Localization of supply chains for critical materials which are essential for national security and public health

LYDALL’S RESPONSE

Strategic investment in two new fine fiber meltblown production lines for Rochester, NH facility

$13.5 million commitment from the U.S. Department of Defense

Center of Excellence in Rochester to produce superior meltblown media to improve indoor air quality

24.7

29.6

14.8%

19.5%

Q22019

Q22020

Q22019

Q22020

Filtration Sales EBITDA Margin

Q2 2020 Highlights

4

Lydall quickly shifted to meet strong filtration demand, took aggressive cost actions, and flexed our production to address massive shifts in auto markets

Thermal Acoustical SolutionsQ2 global part sales were down (62%) from

prior year but monthly trend shows recovery

1 Reference Appendix for reconciliation between adjusted and GAAP financials2 EBITDA Margin Adjusted for one-time insurance settlement gain in Q2 related to flooding losses incurred in Q1-20

000

(In $Millions except where noted)

Apr May Jun2019 2020

+20%

~10%

~80%

Technical NonwovensCost actions to maintain EBITDA margin

despite sales headwinds

69.1

52.016.2% 16.3%

Q22019

Q22020

Q22019

Q22020

TNW Sales EBITDA Margin2

(25%)

Performance MaterialsSales up for specialty filtration and PPE

applications, driving EBITDA margin expansion

▪ Sales of $146.2, down 34% year over year

▪ Organic sales decline of (31.7%) or ($74.6) driven by auto shutdowns and softer industrial markets

Q2 2020 Highlights

5

Strong operational performance despite significant headwinds

▪ Q2 2020 Adjusted EBITDA of $11.4 and margin of 7.8%

▪ Aggressively flexed costs and managed expenses to mitigate margin deterioration

▪ Successfully redeployed resources to address surging demand for specialty filtration

▪ Adjusted EPS ($0.27), down ($0.68) from Q2 2019

Sales1 Profitability1

1 Reference Appendix for reconciliation between adjusted and GAAP financials

vPY (31.7)% (0.9)% (1.2)% (0.0)% (33.8%)

(In $Millions except EPS)

($74.6)Sales

$146.2(33.8%)

vPY

7.8%(370 bps)

vPY

EBITDA Margin (adj)

$88 $93

Q1-20 Q2 2020

$38

$60

TTM Q2 2019 TTM Q2 2020

Liquidity

6

Disciplined working capital management helps provide liquidity

▪ Cash balance increased by $5 from prior quarter

▪ Including available credit of $24, total liquidity of $116

1 Free Cash Flow = Net Cash provided by Operations less Capital Expenditures

Free Cash Flow1

($ millions, trailing 12 months)

$116

Cash Balance($ millions, end of period)


Available credit

▪ Focused efforts on working capital management arecontributing to cash flow

▪ 1H-20 Capex spend of $15.5, including $4 for meltblown production lines; down from $20.3 in 1H-19

Business Highlights▪ Q2 2020 parts sales down 62% from COVID-19 OEM

shutdowns with N. America and European operations ramping volumes thru the quarter

▪ China parts sales up 18.6% sequentially from Q1 and up 3% organically

▪ Q2 2020 adjusted segment EBITDA down ($13.1)

Thermal Acoustical Solutions

7

1Reference Appendix for reconciliation between adjusted and GAAP financials

$85.7

$32.4

$7.6

$5.0

$93.3

$37.4

2019 2020

ToolingParts

$9.8

$(3.3)

10.5%

-8.8%2019 2020

EBITDA

EBITDAMargin

($55.8)


Q2 Net Sales

Q2 Profitability

Business Highlights▪ Q2 2020 sales down 10.2% with Filtration up 19.8%

offset by lower Sealing & Advanced Solutions volume down 28.6% driven by auto shutdowns

▪ Filtration sales up 14.5% sequentially from Q1

▪ Q2 2020 segment EBITDA margin of 19.5%, up 470 bps driven by specialty filtration volume, mix, cost and expense actions, and productivity improvements

Performance Materials

8


$24.7 $29.6

$40.4 $28.8

$65.1 $58.5

2019 2020

Sealing andAdvancedSolutionsFiltration

$9.6

$11.4

14.8%19.5%

2019 2020

EBITDA

EBITDAMargin

($6.6)


Q2 Net Sales

Q2 ProfitabilityPerformance Materials Rochester, NH facility

groundbreaking ceremony on July 24 for

new meltblown production and specialty

filtration center of excellence

Business Highlights▪ Q2 2020 sales impacted by COVID related shutdowns

▪ Industrial Filtration down 24.0%▪ Advanced Materials down 25.6%

▪ Q2 2020 segment EBITDA margin of 18.8%, includes 250 bps benefit from insurance settlement

Technical Nonwovens

9


$38.7 $29.4

$30.4$22.6

$69.1$52.0

2019 2020

AdvancedMaterialsIndustrialFiltration

$11.2

$9.8

16.2%18.8%

2019 2020

EBITDA

EBITDAMargin

($17.1)


Q2 Net Sales

Q2 ProfitabilityTNW completed a large delivery of nonwoven fabrics used in first

responder medical gowns for the New York City Department of Health

Market Outlook

10

Near-Term Focus Areas

11

Deliver long-term shareholder value through our focus on creating a cleaner, safer, and quieter world

Address strong demand for filtration media for N95 and surgical respirators, driven by the pandemic

(expected through 2022)

Expand product portfolio to new, higher-

performance, clean air applications that address

indoor air quality

Continue to flex cost structure in conjunction with customer demand, while maintaining strong

liquidity

Appendix

Financial Highlights vs. Prior Year

13


▪Cash balance of $92.5 million at quarter end▪ $286 million in total borrowings outstanding▪Net leverage ratio at 3.5x per credit facility

▪Operating cash flow of $40.4 million YTD, up $4.2 million on strong working capital management▪Capital expenditures of $6.3 million in

Q2-20

Income Statement Q2-20 vs Q2-19 YTD vPYNet sales ($millions) $146.2 -33.8 % $346.7 -21.0 %

Organic Growth -31.7 % -18.8 %

Adjusted gross margin 19.5 % -100 bps 19.4 % -60 bps

Adjusted operating margin (0.2) % -640 bps 2.1 % -340 bps

Adjusted EBITDA ($millions) $11.4 -55.0 % $31.4 -33.3 %Adjusted EBITDA Margin 7.8 % -370 bps 9.0 % -170 bps

Adjusted EPS ($0.27) ($0.68) ($0.07) ($0.77)

1

Balance Sheet Cash Flows

Segment Details


1 As reported Adjusted1

($ in 000) Q2 2020 Q2 2019 Var $ Var %YTD

Q2 2020YTD

Q2 2019 Var $ Var %

Net salesParts 32,448 85,705 (53,257) (62.1)% 109,769 170,281 (60,512) (35.5)%Tooling 5,000 7,567 (2,567) (33.9)% 11,440 17,304 (5,864) (33.9)%

Thermal Acoustical Solutions Segment 37,448 93,272 (55,824) (59.9)% 121,209 187,585 (66,376) (35.4)%

Filtration 29,636 24,732 4,904 19.8 % 55,523 48,666 6,857 14.1 %Sealing and Advanced Solutions 28,837 40,370 (11,533) (28.6)% 68,170 81,016 (12,846) (15.9)%

Performance Materials Segment 58,473 65,102 (6,629) (10.2)% 123,693 129,682 (5,989) (4.6)%

Industrial Filtration 29,413 38,706 (9,293) (24.0)% 60,782 81,070 (20,288) (25.0)%Advanced Materials 22,594 30,372 (7,778) (25.6)% 48,628 53,614 (4,986) (9.3)%

Technical Nonwovens Segment 52,007 69,078 (17,071) (24.7)% 109,410 134,684 (25,274) (18.8)%

Operating incomeThermal Acoustical Solutions (6,285) 7,357 (13,642) (657) 16,848 (17,505)

% of net sales (16.8)% 7.9 % (0.5)% 9.0 %

Performance Materials 5,443 3,303 2,140 (51,498) 4,762 (56,260)% of net sales 9.3 % 5.1 % (41.6)% 3.7 %

Technical Nonwovens 6,684 7,844 (1,160) 10,497 12,578 (2,081)% of net sales 12.9 % 11.4 % 9.6 % 9.3 %

Segment EBITDAThermal Acoustical Solutions (3,571) 9,815 (13,386) 4,774 21,738 (16,964)

% of net sales (9.5)% 10.5 % 3.9 % 11.6 %

Performance Materials 11,397 9,632 1,765 (39,290) 17,261 (56,551)% of net sales 19.5 % 14.8 % (31.8)% 13.3 %

Technical Nonwovens 9,795 11,115 (1,320) 16,602 18,965 (2,363)% of net sales 18.8 % 16.1 % 15.2 % 14.1 %

Q2 2020 Q2 2019 Var $ Var %YTD

Q2 2020YTD

Q2 2019 Var $ Var %

32,448 85,705 (53,257) (62.1)% 109,769 170,281 (60,512) (35.5)%5,000 7,567 (2,567) (33.9)% 11,440 17,304 (5,864) (33.9)%

37,448 93,272 (55,824) (59.9)% 121,209 187,585 (66,376) (35.4)%

29,636 24,732 4,904 19.8 % 55,523 48,666 6,857 14.1 % 28,837 40,370 (11,533) (28.6)% 68,170 81,016 (12,846) (15.9)%

58,473 65,102 (6,629) (10.2)% 123,693 129,682 (5,989) (4.6)%

29,413 38,706 (9,293) (24.0)% 60,782 81,070 (20,288) (25.0)% 22,594 30,372 (7,778) (25.6)% 48,628 53,614 (4,986) (9.3)%

52,007 69,078 (17,071) (24.7)% 109,410 134,684 (25,274) (18.8)%

(6,285) 7,357 (13,642) (657) 16,848 (17,505)

(16.8)% 7.9 % (0.5)% 9.0 %

5,443 3,303 2,140 (51,498) 4,762 (56,260) 9.3 % 5.1 % (41.6)% 3.7 %

6,684 7,844 (1,160) 10,497 12,578 (2,081) 12.9 % 11.4 % 9.6 % 9.3 %

(3,571) 9,815 (13,386) 4,774 21,738 (16,964)

(9.5)% 10.5 % 3.9 % 11.6 %

11,397 9,632 1,765 (39,290) 17,261 (56,551) 19.5 % 14.8 % (31.8)% 13.3 %

9,795 11,115 (1,320) 16,602 18,965 (2,363) 18.8 % 16.1 % 15.2 % 14.1 %

Summary Financial Statements

15

Income Statement, As Reported

For the Three Months Ended June 30, For the Six Months Ended June 30,($ in 000) 2020 2019 Var $ 2020 2019 Var $Net sales 146,160 220,811 (74,651) 346,687 438,836 (92,149)Gross profit 28,418 45,275 (16,857) 66,986 87,331 (20,345)% 19.4 % 20.5 % (1.1) % 19.3 % 19.9 % (0.6) %

Selling, product development and administrative expenses 30,164 32,096 (1,932) 63,191 65,102 (1,911)% 20.6 % 14.5 % 6.1 % 18.2 % 14.8 % 3.4 %

Impairment of goodwill and other long-lived assets — — — 61,109 — 61,109% — % — % — % 17.6 % — % 17.6 %Operating (loss) income (1,746) 13,179 (14,925) (57,314) 22,229 (79,543)% (1.2) % 6.0 % (7.2) % (16.5) % 5.1 % (21.6) %

Employee benefit plans settlement expenses — 25,515 (25,515) 385 25,515 (25,130)Interest expense 4,476 3,731 745 7,333 7,359 (26)Other expense (income), net 248 (873) 1,121 (170) (474) 304Loss before income taxes (6,470) (15,194) 8,724 (64,862) (10,171) (54,691)Income tax benefit (595) (8,199) 7,604 (2,610) (7,093) 4,483As % of Net loss (9.2) % (54.0) % 44.8 % (4.0) % (69.7) % 65.7 %(Income) loss from equity method investment (18) (49) 31 26 (22) 48Net loss (5,857) (6,946) 1,089 (62,278) (3,056) (59,222)Diluted loss per share $ (0.34) $ (0.40) $ 0.06 $ (3.59) $ (0.18) $ (3.41)

Summary Financial Statements

16

Balance Sheet Statement of Cash Flows

($ in 000)June 30,

2020December 31,

2019 Var $

Cash 92,546 51,331 41,215Accounts receivable, net 100,767 107,786 (7,019)Contract assets 27,969 28,245 (276)Inventories 80,300 80,544 (244)Prepaids and other current assets 15,186 15,691 (505)Total current assets 316,768 283,597 33,171

Property, plant and equipment, net 206,436 221,642 (15,206)Operating lease right-of-use assets 21,392 23,116 (1,724)Goodwill and other intangible assets 188,546 249,489 (60,943)Other assets, net 7,391 8,093 (702)Total assets 740,533 785,937 (45,404)

Accounts payable 78,108 73,426 4,682Accrued payroll and other compensation 20,130 17,198 2,932Other current liabilities 46,113 39,234 6,879Total current liabilities 144,351 129,858 14,493

Long-term debt 275,655 262,713 12,942Long-term operating lease liabilities 17,157 18,424 (1,267)Benefit plan and other long-term liabilities 50,108 56,522 (6,414)Total liabilities 487,271 467,517 19,754

Total stockholders' equity 253,262 318,420 (65,158)

Total liabilities and stockholders' equity 740,533 785,937 (45,404)

For the Six Months EndedJune 30,

($ in 000) 2020 2019(Unaudited)

Cash flows from operating activities:Net loss $ (62,278) $ (3,056)Adjustments to reconcile net loss to net cash provided by operating activities:

Gain on divestiture — (1,459)Depreciation and amortization 24,842 24,001Impairment of goodwill and long-lived assets 61,109 —Deferred income taxes (6,048) (12,358)Employee benefit plans settlement expenses 385 25,515Stock-based compensation 1,799 1,475Other, net 53 —Loss on disposition of property, plant and equipment 25 —Loss (Income) from equity method investment 26 (22)Changes in operating assets and liabilities:

Accounts receivable 3,063 (1,988)Contract assets 222 1,231Inventories (353) (4,660)Accounts payable 8,342 10,227Accrued payroll and other compensation 2,974 3,000Accrued taxes 5,833 308Other, net 421 (5,995)

Net cash provided by operating activities 40,415 36,219Cash flows from investing activities:

Capital expenditures (15,472) (20,287)Collections of finance receivables 3,390 —Proceeds from divestitures — 2,298Proceeds from the sale of property, plant and equipment 2 295Business acquisitions, net of cash acquired — 869

Net cash used for investing activities (12,080) (16,825)Cash flows from financing activities:

Proceeds from borrowings 20,000 —Debt repayments (7,001) (25,169)Common stock issued 33 —Common stock repurchased (8) (43)

Net cash provided by (used for) financing activities 13,482 (25,212)Effect of exchange rate changes on cash (602) (3)Increase (decrease) in cash and cash equivalents 41,215 (5,821)Cash and cash equivalents at beginning of period 51,331 49,237Cash and cash equivalents at end of period 92,546 43,416

Reconciliation Between Adjusted and Reported GAAP Financials

17

(a) Exclude the reduction-in-force severance expenses of $0.1 million related to the Thermal Acoustical Solutions segment.(b) Exclude the corporate strategic initiatives expenses of $1.2 million and reduction-in-force severance expenses of $0.1 million related to the Thermal

Acoustical Solutions segment.(c) Excludes the tax benefits and expenses realized on the adjustments in (a) and (b) of $0.4 million.(d) Exclude the restructuring expenses of less than $0.1 million related to the Technical Nonwovens segment.(e) Exclude the corporate strategic initiatives expenses of $0.4 million and restructuring expenses of $0.1 million related to the Technical Nonwovens segment.(f) Exclude the employee benefit plan settlement expenses of $25.5 million.(g) Exclude the gain on sale from divestiture of $1.5 million.(h) Exclude the tax benefits realized on the adjustments in (d), (e), (f), and and (g) of $10.4 million.

For the Three Months Ended June 30, 2020 For the Three Months Ended June 30, 2019

In thousands except per share dataAs Reported,

Lydall, Inc AdjustmentsAdjusted Results

As Reported, Lydall, Inc Adjustments

Adjusted Results

Net sales $ 146,160 $ — $ 146,160 $ 220,811 — $ 220,811Cost of sales 117,742 (127) (a) 117,615 175,536 (42) (d) 175,494Gross profit 28,418 127 28,545 45,275 42 45,317Gross margin 19.4 % 19.5 % 20.5 % 20.5 %Selling, product development and administrative expenses 30,164 (1,360) (b) 28,804 32,096 (460) (e) 31,636Impairment of goodwill and other long-lived assets — — — — — —Operating (loss) income (1,746) 1,487 (259) 13,179 502 13,681Operating margin (1.2) % (0.2) % 6.0 % 6.2 %Employee benefit plans settlement expense — — — 25,515 (25,515) (f) —Interest expense 4,476 — 4,476 3,731 — 3,731Other expense (income), net 248 — 248 (873) 1,459 (g) 586(Loss) income before income taxes (6,470) 1,487 (4,983) (15,194) 24,558 9,364Income tax (benefit) expense (595) 355 (c) (240) (8,199) 10,441 (h) 2,242Income from equity method investment (18) — (18) (49) — (49)Net (loss) income $ (5,857) $ 1,132 $ (4,725) $ (6,946) 14,117 $ 7,171(Loss) earnings per share:Basic $ (0.34) $ (0.27) $ (0.40) $ 0.42Diluted $ (0.34) $ (0.27) $ (0.40) $ 0.41Weighted average number of common shares outstanding:Basic 17,372 17,372 17,267 17,267Diluted 17,372 17,372 17,267 17,322


18

For the Six Months Ended June 30, 2020 For the Six Months Ended June 30, 2019

In thousands except per share dataAs Reported,

Lydall, Inc AdjustmentsAdjusted Results

As Reported, Lydall, Inc Adjustments

Adjusted Results

Net sales $ 346,687 $ — $ 346,687 $ 438,836 — $ 438,836Cost of sales 279,701 (127) (a) 279,574 351,505 (372) (f) 351,133Gross profit 66,986 127 67,113 87,331 372 87,703Gross margin 19.3 % 19.4 % 19.9 % 20.0 %Selling, product development and administrative expenses 63,191 (3,268) (b) 59,923 65,102 (1,347) (g) 63,755Impairment of goodwill and other long-lived assets 61,109 (61,109) (c) — — — —Operating (loss) income (57,314) 64,504 7,190 22,229 1,719 23,948Operating margin (16.5) % 2.1 % 5.1 % 5.5 %Employee benefit plans settlement expenses 385 (385) (d) — 25,515 (25,515) (h) —Interest expense 7,333 — 7,333 7,359 — 7,359Other (income) expense, net (170) — (170) (474) 1,459 (i) 985(Loss) income before income taxes (64,862) 64,889 27 (10,171) 25,775 15,604Income tax (benefit) expense (2,610) 3,849 (e) 1,239 (7,093) 10,643 (j) 3,550Loss (Income) from equity method investment 26 — 26 (22) — (22)Net (loss) income $ (62,278) $ 61,040 $ (1,238) $ (3,056) 15,132 $ 12,076(Loss) earnings per share:Basic $ (3.59) $ (0.07) $ (0.18) $ 0.70Diluted $ (3.59) $ (0.07) $ (0.18) $ 0.70Weighted average number of common shares outstanding:Basic 17,354 17,354 17,260 17,260Diluted 17,354 17,354 17,260 17,330(a) Exclude the reduction-in-force severance expenses of $0.1 million related to the Thermal Acoustical Solutions segment.(b) Exclude the corporate strategic initiatives expenses of $3.1 million and reduction-in-force severance expenses of $0.1 million related to the Thermal Acoustical Solutions

segment.(c) Exclude the impairment of goodwill and other long-lived assets expense of $61.1 million.(d) Exclude the employee benefit plan settlement expenses of $0.4 million.(e) Excludes the tax benefits and expenses realized on the adjustments in (a), (b), (c), and (d) of $3.8 million.(f) Exclude the restructuring expenses of $0.4 million related to the Technical Nonwovens segment.(g) Exclude the corporate strategic initiatives expenses of $1.2 million and restructuring expenses of $0.1 million related to the Technical Nonwovens segment.(h) Exclude the employee benefit plan settlement expenses of $25.5 million.(i) Exclude the gain on sale from divestiture of $1.5 million.(j) Exclude the tax benefits realized on the adjustments in (f), (g), (h), and (i) of $10.6 million.


19

($ in 000) Three Months Ended June 30, Six Months Ended June 30,2020 2019 2020 2019

Thermal Acoustical SolutionsOperating income, as reported $ (6,285) $ 7,357 $ (657) $ 16,848Reduction-in-force severance expenses 257 — 257 —Operating income, adjusted $ (6,028) $ 7,357 $ (400) $ 16,848

Operating margin, as reported (16.8) % 7.9 % (0.5) % 9.0 %Operating margin, adjusted (16.1) % 7.9 % (0.3) % 9.0 %

Performance MaterialsOperating income, as reported $ 5,443 $ 3,303 $ (51,498) $ 4,762Impairment of goodwill and long-lived assets — — 61,109 —Operating income, adjusted $ 5,443 $ 3,303 $ 9,611 $ 4,762

Operating margin, as reported 9.3 % 5.1 % (41.6) % 3.7 %Operating margin, adjusted 9.3 % 5.1 % 7.8 % 3.7 %

Technical NonwovensOperating income, as reported $ 6,684 $ 7,844 $ 10,497 $ 12,578TNW restructuring expenses — 97 — 473Operating income, adjusted $ 6,684 $ 7,941 $ 10,497 $ 13,051

Operating margin, as reported 12.9 % 11.4 % 9.6 % 9.3 %Operating margin, adjusted 12.9 % 11.5 % 9.6 % 9.7 %


20

EBITDA is reported for Consolidated Lydall data and defined as Net Income before interest, taxes, depreciation, and amortizationSegment EBITDA is 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

Q2-2020 EBITDA

For the Three Months Ended June 30, 2020Segments

($ in 000) PerformanceMaterials

TechnicalNonwovens

Thermal Acoustical Solutions Total

Corporate Office

Consolidated Lydall

Net loss $ (5,857)Interest expense 4,476Income tax benefit (595)Other expense, net 248Income from equity method investment (18)Operating (loss) income $ 5,443 $ 6,684 $ (6,285) $ 5,842 $ (7,588) $ (1,746)Depreciation and amortization 5,954 3,093 2,714 11,761 130 11,891Other expense, net — — — — 248 248Income from equity method investment — (18) — (18) — (18)EBITDA $ 11,397 $ 9,795 $ (3,571) $ 17,621 $ (7,706) $ 9,915% of net sales 19.5 % 18.8 % (9.5) % 11.9 % 6.8 %

Strategic initiatives expenses $ — $ — $ — $ — $ 1,230 $ 1,230Reduction-in-force severance expenses — — 257 257 — 257EBITDA, adjusted $ 11,397 $ 9,795 $ (3,314) $ 17,878 $ (6,476) $ 11,402% of net sales 19.5 % 18.8 % (8.8) % 12.1 % 7.8 %


21



Q2-2019 EBITDAFor the Three Months Ended June 30, 2019Segments

($ in 000) PerformanceMaterials

TechnicalNonwovens

Thermal Acoustical Solutions Total

Corporate Office

Consolidated Lydall

Net loss $ (6,946)Interest expense 3,731Income tax benefit (8,199)Other income, net (873)Income from equity method investment (49)Operating income (loss) $ 3,303 $ 7,844 $ 7,357 $ 18,504 $ (5,325) $ 13,179Depreciation and amortization 6,329 3,222 2,458 12,009 166 12,175Employee benefits plans settlement expense — — — — 25,515 25,515Other income, net — — — — (873) (873)Income from equity method investment — (49) — (49) — (49)EBITDA $ 9,632 $ 11,115 $ 9,815 $ 30,562 $ (29,801) $ 761% of net sales 14.8 % 16.1 % 10.5 % 13.4 % 0.3 %Strategic initiatives expenses $ — $ — $ — $ — $ 405 $ 405TNW restructuring expenses — 97 — 97 — 97Employee benefit plans settlement expenses — — — — 25,515 25,515Gain on sale from a divestiture — — — — (1,459) (1,459)EBITDA, adjusted $ 9,632 $ 11,212 $ 9,815 $ 30,659 $ (5,340) $ 25,319% of net sales 14.8 % 16.2 % 10.5 % 13.5 % 11.5 %


22



Year to date 2020 EBITDAFor the Six Months Ended June 30, 2020

Segments($ in 000) Performance

MaterialsTechnical

NonwovensThermal Acoustical

Solutions TotalCorporate

OfficeConsolidated

LydallNet loss $ (62,278)Employee benefit plans settlement expenses 385Interest expense 7,333Income tax benefit (2,610)Other income, net (170)Loss from equity method investment 26Operating income (loss) $ (51,498) $ 10,497 $ (657) $ (41,658) $ (15,656) $ (57,314)Depreciation and amortization 12,208 6,131 5,431 23,770 265 24,035Employee benefit plans settlement expenses — — — — 385 385Other income, net — — — — (170) (170)Loss from equity method investment — 26 — 26 — 26EBITDA $ (39,290) $ 16,602 $ 4,774 $ (17,914) $ (15,606) $ (33,520)% of net sales (31.8) % 15.2 % 3.9 % (5.1) % (9.7) %Strategic initiatives expenses $ — $ — $ — $ — $ 3,138 $ 3,138Impairment of goodwill and long-lived assets 61,109 — — 61,109 — 61,109Reduction-in-force severance expenses — — 257 257 — 257Employee benefit plans settlement expenses — — — — 385 385EBITDA, adjusted $ 21,819 $ 16,602 $ 5,031 $ 43,452 $ (12,083) $ 31,369% of net sales 17.6 % 15.2 % 4.2 % 12.3 % 9.0 %


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Year to date 2019 EBITDAFor the Six Months Ended June 30, 2019

Segments($ in 000) Performance

MaterialsTechnical


Solutions TotalCorporate

OfficeConsolidated

LydallNet loss $ (3,056)Employee benefit plans settlement expenses 25,515Interest expense 7,359Income tax benefit (7,093)Other income, net (474)Income from equity method investment (22)Operating income (loss) $ 4,762 $ 12,578 $ 16,848 $ 34,188 $ (11,959) $ 22,229Depreciation and amortization 12,499 6,365 4,890 23,754 338 24,092Employee benefit plans settlement expenses — — — — 25,515 25,515Other income, net — — — — (474) (474)Income from equity method investment — (22) — (22) — (22)EBITDA $ 17,261 $ 18,965 $ 21,738 $ 57,964 $ (36,662) $ 21,302% of net sales 13.3 % 14.1 % 11.6 % 12.8 % 4.9 %Strategic initiatives expenses $ — $ — $ — $ — $ 1,246 $ 1,246TNW restructuring expenses — 473 — 473 — 473Employee benefit plans settlement expenses — — — — 25,515 25,515Gain on sale from a divestiture — — — — (1,459) (1,459)EBITDA, adjusted $ 17,261 $ 19,438 $ 21,738 $ 58,437 $ (11,360) $ 47,077% of net sales 13.3 % 14.4 % 11.6 % 12.9 % 10.7 %


24

The above tables provide information regarding organic sales growth, defined as net sales growth excluding (1) sales from the acquired anddivested businesses (2) the impact of foreign currency translation and (3) change in tooling sales.

Organic Sales

Three Months Ended June 30, 2020Performance

MaterialsTechnical


Solutions ConsolidatedSales growth, as reported (10.2) % (24.7) % (59.9) % (33.8) %

Acquisitions and divestitures — % (0.1) % — % — %Change in tooling sales (0.1) % — % (2.7) % (1.2) %Foreign currency translation (0.6) % (1.9) % (0.4) % (0.9) %

Organic sales growth (9.5) % (22.7) % (56.8) % (31.7) %

Six Months Ended June 30, 2020Performance

MaterialsTechnical


Solutions ConsolidatedSales growth, as reported (4.6) % (18.8) % (35.4) % (21.0) %

Acquisitions and divestitures 0.6 % (0.2) % — % 0.1 %Change in tooling sales — % — % (3.1) % (1.3) %Foreign currency translation (0.8) % (1.6) % (0.6) % (1.0) %

Organic sales growth (4.4) % (17.0) % (31.7) % (18.8) %

Documents

Q2 2020 Earnings Conference Call€¦ · 2020-07-28 · despite sales headwinds. 69.1. 52.0. 16.2%. 16.3%. Q2 2019. Q2 2020. Q2 2019. Q2 2020. TNW Sales EBITDA Margin. 2 (25%) Performance