Investor Presentation - July, 2021 - Lydall Inc.
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Investor Presentation
July, 2021
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 AND/OR ITS AFFILIATE (COLLECTIVELY, “LYDALL”), IS AN UNPUBLISHED WORK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. 2021
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USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE
Forward Looking Statement
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.
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Transforming and accelerating actions
to unlock shareholder value
POSITIONING EXECUTION GROWTH LIQUIDITY DISCIPLINED
Innovative bespoke Operational Strong secular Strong balance Capital allocation to
solutions in diverse excellence to trends in attractive sheet provides fund additional
segments enhance margins end markets flexibility while growth
and cash flow funding strategic
growth
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Lydall solves some of the worlds most pressing challenges thru deep
materials science and engineering expertise
Specialty Filtration: 2020 Sales $239M Advanced Materials Solutions: 2020 Sales $542M
Indoor Air Quality Filtration Media for PPE Thermal Management
Sealing Solutions
Solutions
Outdoor Air Quality Liquid Filtration Media Advanced Lightweight Automotive Acoustical
Composite Materials Solutions
Reference Appendix for reconciliation to segment reporting;
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Lydall at a Glance (NYSE:LDL)
Financial Highlights | 2020 Global Footprint | 2020 Revenue by Region & Locations
Adjusted EBITDA 1 ($M)
38%
Sales ($M)
$764
34%
$67 29%
Adj.
28%
EBITDA
Margin1
8.7% 65%
EMEA
N. America
6%
Net Debt Leverage Ratio 3 Free Cash Flow 2 ($M) Asia
(December 31, 2020)
2.5x 3.1x $41 2.8x 2.5x
Performance Materials
~3,500 employees globally
Technical Nonwovens Thermal Acoustical Solutions
1 Reference Appendix for reconciliation between adjusted financials and GAAP financials;
2 FCF = Cash flow from operations less capex; reference Appendix for 2020 data
3 Net Debt = (Total Debt less cash and equivalents at end of period) / (Trailing Twelve Month Adjusted EBITDA)
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 5
Delivering Stable, Profitable Growth
EXECUTION PRIORITIES
• Consistently evolving portfolio towards
Specialty Filtration and Advanced Materials
Solutions
• Leveraging installed base and global footprint
to pursue new adjacencies and innovation
• Investing in highest ROIC activities
6
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Long-Term Roadmap to Value Creation
1. 2. 3.
Clear,
Fix and Grow and Accelerate Value
Focus Differentiate Creation
Consistent 2020 - 2021 2021 - 2023 2023 - Forward
Strategy for Fixing the core and
optimizing the
Leveraging our optimized
portfolio to further expand
Delivering enhanced
shareholder returns
Profitable portfolio into high-growth areas over long-term
Growth
OPTIMIZING LYDALL’S PORTFOLIO TO DRIVE
LONG-TERM GROWTH AND ACCELERATE
DELIVERY OF SHAREHOLDER VALUE
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 7
Global Megatrends underpinning Lydall’s Strategy
AWARENESS OF DOMESTIC VEHICLE
INDOOR AIR SUPPLY ELECTRIFICATION
QUALITY CHAIN REDEFINING
GOES COMMANDS SAFETY
MAINSTREAM ATTENTION AND SOUND
Driving demand for specialty filtration Sustained, localized demand for PPE Increased demand for advanced
across industrial, commercial, even as vaccination efforts ramp materials that meet changing
residential and medical/health sectors customer expectations
Embedded Partnerships
Ford Europe Goes All-In on EVs on
Road to Sustainable Profitability
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 8
Performance Materials (PM) at a Glance
Business Highlights Financial Performance1 2020 Sales by Region
Decades of applications engineering ($M)
experience to address the most rigorous $297
performance specifications $245 $265 3%
Complete portfolio of specialty filtration $169 28% North America
media for high performance residential, $111 $117 25%
commercial, and industrial/clean room
15% 14% 14% 12%
21% $265M EMEA
applications 69% Asia
Actively engaged in the ever-increasing air 2016 2017 2018 2019 2020 TTM
quality regulatory requirements and Revenue Adj. EBITDA Margin Q2-2021
standards globally
Materials science expertise for high
performance fiber-based sealing solutions Estimated Share of Segment Served 2020 Sales by Application
and specialty high temperature and
cryogenic insulation applications Air Filtration2 Sealing & Advanced Solutions3
Global scale and expertise in wet-laid and
fine fiber meltblown media production 10% 6% Filtration
Strong customer partnerships fostered by 45%
55% $265M
technical expertise and customized $2.3B $1.8B Sealing & Advanced
solutions Solutions
1 Reference Appendix for reconciliation between adjusted and GAAP financials;
2 Competitors: Hollingsworth & Vose, Ahlstrom Munksjo, Hokuetsu, and Neenah Paper;
3 Competitors: Unifrax, Owens Corning, Neenah Paper, EnPro, and Frenzelit
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 9
Technical Nonwovens (TNW) at a Glance
Business Highlights Financial Performance1 2020 Sales by Region
Global brands renowned for quality and ($M) $269 $277 $255 $247
innovation $222
10%
$156
North America
16% 15% 14% 14% 14% 14% 29% $222M EMEA
60%
Manufacturing scale and operational Asia
resiliency to address diversified end 2016 2017 2018 2019 2020 TTM
markets and geographic demand trends Revenue Adj. EBITDA Margin Q2-2021
Deep expertise in technical needle-woven
felt fabrics to address demanding filtration
media for industrial dust and pollution Estimated Share of Segment Served 2020 Sales by Application
control
Industrial Filtration2 Advanced Materials3
Extension of core capability to address
adjacent markets for medical, acoustical, 5% Industrial Filtration
46%
heat, and safety applications
20%
$222M 54%
$0.7B $2.7B Advanced Materials
1 Reference Appendix for reconciliation between adjusted and GAAP financials;
2 Competitors: BWF Envirotec, Savings, and Testori;
3 Competitors: Propex, TexTech, TenCate, and Sandler.
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 10Thermal Acoustical Solutions (TAS) at a Glance
Business Highlights Financial Performance1 2020 Sales by Region
($M)
Highly engineered solutions to address $321 $342
$365 $362 $342
demanding thermal, acoustical, and $295
6%
electromagnetic interference
28% North America
Leverage strong customer relationships 20% 19%
13% $295M EMEA
10%
and experience to succeed in the 4% 4% 66% Asia
transition to xEV platforms globally
2016 2017 2018 2019 2020 TTM
Growth aligned with secular trends toward Revenue Adj. EBITDA Margin Q2-2021
vehicle light-weighting, transition to xEV
and regulatory requirements
Vertical integration of fibers and insulation Estimated Share of Segment Served Customers
material to capture value Light Vehicle Heavy Truck/Other
2 3
Heat Shield (Global) Acoustical (U.S.)
Sole source awards with global OEMs on
platforms drives long term sales 12% 10%
$2.1B $1.4B
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.
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 11Where we are today and tomorrow
TTM Q2-2021 2023 2025
ADJUSTED EBITDA1 $84M $110M - $120M $140M - $160M
FCF CONVERSION2 63% ~65% 75%+
ROIC3 10.5% ~15% 20%+
ACCELERATING
SHAREHOLDER RETURNS
1 Reference appendix for reconciliation between adjusted and GAAP financials
2 Free Cash Flow Conversion (Trailing Twelve Months)= (Adj. EBITDA less Capital Expenditures) / Adj. EBITDA; reference Appendix for data
3 ROIC (Trailing Twelve Months) = (Adjusted EBITA after pro-forma tax) / Average (Net PP&E plus Net Working Capital); reference Appendix for data
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 12Clear Path to Nearly Doubling Adjusted EBITDA by 2023
$140M -
$160M
$110M -
$120M
Near-Term Execution Actions
• Solidify global leadership in specialty filtration
• Deploy new specialty filtration assets
• Rationalize manufacturing footprint & focus on high ROIC
$67M $5 - $6 million
t opportunities
• Continue to optimize proven product lines to enhance
margins
Long-Term Optimization Priorities
• Rapidly develop next generation filtration capabilities
GROW &
DIFFERENTIATE • Differentiate & grow in attractive markets
2020 2023 ACCELERATE 2025
FIX & VALUE • Direct capital towards high-margin engineered solutions
FOCUS CREATION
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 13Capital Allocation Strategy
2015 – 2019 FCF 2020 – 2023 FCF Net Debt and Net Debt Leverage1
DEPLOYMENT CASH DEPLOYMENT ($M)
PRIORITIES 276
M&A
Disciplined
Share Repurchase 221
Reinvestment to 168 158
Drive Organic Growth
Debt
M&A
Paydown 57 17
Target Debt / EBITDA
Leverage ofDelivering on our Corporate Responsibility Commitments
ENVIRONMENTAL SOCIAL GOVERNANCE
• Create a cleaner, quieter and • Robust supply chain oversight to • Independent, involved and
safer world ensure responsible sourcing experienced Board of Directors
• Addressing global • Freedom of Association Policy • Strong Board diversity
sustainability megatrends • Ethics and Business Conduct Code • Anonymous, non-retaliatory
• Strong corporate • Strengthened focus on employee whistleblower program
environmental policy safety initiatives
• Expanding D&I Initiatives Beyond
Executive Team and BOD
LYDALL IS FOCUSED ON CREATING A
CLEANER, QUIETER AND SAFER WORLD
FOR PEOPLE EVERYWHERE
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE
15USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 16
Segment Results - Sales and EBITDA Summary
Performance Technical Thermal Acoustical
Materials Nonwovens Solutions
($M)
361.6 341.5
297.5 Tooling 35.1 294.8 21.1
245.5 264.6 255.3 247.1
Sales 132.9 Advanced
222.3 22.4
Filtration 93.3 120.0 111.0
Materials 103.0 116.7
Parts 326.4 320.4
272.4
Sealing & Adv 152.2 144.7 164.6 Industrial 144.3
Solutions 119.4 130.4
Filtration
FY-2019 FY-2020 TTM FY-2019 FY-2020 TTM FY-2019 FY-2020 TTM
Q2-2021 Q2-2021 Q2-2021
($M)
73.6
Adjusted 54.4
EBITDA and 36.8
31.3 35.1 35.1
29.8 24.7%
Margin1 20.5%
9.7% 11.1 12.5
14.4% 14.1% 14.2%
12.1% 3.7%
3.8%
FY-2019 FY-2020 TTM FY-2019 FY-2020 TTM FY-2019 FY-2020 TTM
Q2-2021 Q2-2021 Q2-2021
1 Reference Appendix for reconciliation between adjusted and GAAP financials
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 17$5.3 Billion Global Filtration Market for Nonwoven Media
2019 Global Market Air Filtration 2019 Global Market
by Technology by Application by Geography
HVAC (IAQ)
Air Filtration 28% 34%
43% PPE/Healthcare 43% Americas
Liquid Filtration EMEA
57% 62% Other *
APAC
10%
23%
• IAQ and PPE markets
exceeding 10% CAGR
~10% 50%
Lydall’s current share of air Percent of Air Filtration market driven
filtration media segment by high-performance filters
demanding specialty filtration media
*Includes Cabin Air and Industrial filtration
Source: Internal estimates; Freedonia, BCC, Frost & Sullivan, and INDA
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE 18Strong Corporate Governance - Compensation
Base Salary Annual Incentive Long Term Incentive
Payout based on relative
total shareholder return
50%
(TSR) over three-year
performance period
23% 23% 54% 50th percentile required
for target payout
Vest over 3 years
Payout based on return
APPROXIMATELY 77% VARIABLE 50% on invested capital
AND AT –RISK COMPENSATION (ROIC) over three-year
performance period
19
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDEStrong Corporate Governance – Board Composition
Gender and Diversity Director Tenure Director Independence
43% 6 88%
Diverse year average Independent
3 Diverse 5 Newer Directors 6 Independent
4 Other (5 yrs or less) 1 Not Independent
2 Experienced Directors
(5+ years)
AN EXPERIENCED, DIVERSE
GROUP OF LEADERS WITH DEEP
BUSINESS KNOWLEDGE
* In addition to gender, which is identified separately, diversity is the representation of ethnic, geographic, cultural and other perspectives
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USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDEReconciliation of Sales, Free Cash Flow, and ROIC
Sales Free Cash Flow / Conversion ROIC
($M) TTM Q2-21 FY-2020 ($M) TTM Q2-21 TTM Q2-20 ($M) TTM Q2-21 TTM Q2-20
PM Filtration $ 132.9 $ 120.0 Net cash provided by operating activities $ 52.2 $ 91.1 Adjusted EBITDA $ 84.3 $ 64.7
TNW Industrial Filtration 130.4 119.4 Less: Capital expenditures (31.2) (31.0) Depreciation 28.7 27.5
Specialty Filtration $ 263.3 $ 239.3 Free cash flow $ 21.0 $ 60.0 Adjusted EBITA $ 55.5 $ 37.2
Pro-forma Tax Rate 25% 25%
PM Sealing & Advanced Solutions $ 164.6 $ 144.7 Adjusted EBITDA $ 84.3 $ 64.7 EBITA After Tax $ 41.6 $ 27.9
TNW Advanced Materials 116.7 103.0 Capital expenditures 31.2 31.0
Thermal Acoustical 341.5 294.8 FCF Conversion 63% 52% PP&E, Net $ 211.5 $ 206.4
Advanced Material Solutions $ 622.8 $ 542.4 Operating Lease Right-of-Use Assets 25.8 21.4
Other Assets, Net 6.9 7.4
Eliminations (19.9) (17.7) Current Assets 368.9 316.8
Current Liabilities (189.5) (144.4)
Total $ 866.2 $ 764.0 Long-Term Lease Liability (21.0) (17.2)
Specialty Filtration 30% 31% Invested Capital $ 402.6 $ 390.5
Advanced Material Solutions 70% 69%
Return on Invested Capital 10.5% 6.9%
Definition of Metrics:
Free Cash Flow = Net Cash provided by operations less Capital Expenditures
Free Cash Flow Conversion = (Adj. EBITDA less Capital Expenditures) / Adj. EBITDA;
ROIC = (Adjusted EBITA after pro-forma tax) / Average (Net PP&E plus Net Working Capital);
21
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THESegment Details - Reported
YTD YTD
($ in 000) Q2 2021 Q2 2020 Var $ Var % Q2 2021 Q2 2020 Var $ Var %
Net sales
Filtration $ 34,066 $ 29,636 $ 4,430 14.9 % $ 68,412 $ 55,523 $ 12,889 23.2 %
Sealing and Advanced Solutions 43,120 28,837 14,283 49.5 % 88,107 68,170 19,937 29.2 %
Performance Materials Segment 77,186 58,473 18,713 32.0 % 156,519 123,693 32,826 26.5 %
Industrial Filtration 35,411 29,413 5,998 20.4 % 71,812 60,782 11,030 18.1 %
Advanced Materials 37,068 22,594 14,474 64.1 % 62,342 48,628 13,714 28.2 %
Technical Nonwovens Segment 72,479 52,007 20,472 39.4 % 134,154 109,410 24,744 22.6 %
Parts 71,222 32,448 38,774 119.5 % 157,716 109,769 47,947 43.7 %
Tooling 5,636 5,000 636 12.7 % 10,186 11,440 (1,254) (11.0)%
Thermal Acoustical Solutions Segment $ 76,858 $ 37,448 $ 39,410 105.2 % $ 167,902 $ 121,209 $ 46,693 38.5 %
Operating income
Performance Materials $ 14,853 5,443 $ 9,410 $ 30,149 (51,498) $ 81,647
% of net sales 19.2 % 9.3 % 19.3 % (41.6)%
Technical Nonwovens $ 8,765 6,684 $ 2,081 $ 13,869 10,497 $ 3,372
% of net sales 12.1 % 12.9 % 10.3 % 9.6 %
Thermal Acoustical Solutions $ (1,500) (6,285) $ 4,785 $ 174 (657) $ 831
% of net sales (2.0)% (16.8)% 0.1 % (0.5)%
Segment EBITDA
Performance Materials $ 19,914 11,397 $ 8,517 $ 40,176 (39,290) $ 79,466
% of net sales 25.8 % 19.5 % 25.7 % (31.8)%
Technical Nonwovens $ 12,012 9,795 $ 2,217 $ 20,313 16,602 $ 3,711
% of net sales 16.6 % 18.8 % 15.1 % 15.2 %
Thermal Acoustical Solutions $ 1,617 (3,571) $ 5,188 $ 6,393 4,774 $ 1,619
% of net sales 2.1 % (9.5)% 3.8 % 3.9 %
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USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THESegment Details - Adjusted
YTD YTD
($ in 000) Q2 2021 Q2 2020 Var $ Var % Q2 2021 Q2 2020 Var $ Var %
Net sales
Filtration $ 34,066 $ 29,636 $ 4,430 14.9 % $ 68,412 $ 55,523 $ 12,889 23.2 %
Sealing and Advanced Solutions 43,120 28,837 14,283 49.5 % 88,107 68,170 19,937 29.2 %
Performance Materials Segment 77,186 58,473 18,713 32.0 % 156,519 123,693 32,826 26.5 %
Industrial Filtration 35,411 29,413 5,998 20.4 % 71,812 60,782 11,030 18.1 %
Advanced Materials 37,068 22,594 14,474 64.1 % 62,342 48,628 13,714 28.2 %
Technical Nonwovens Segment 72,479 52,007 20,472 39.4 % 134,154 109,410 24,744 22.6 %
Parts 71,222 32,448 38,774 119.5 % 157,716 109,769 47,947 43.7 %
Tooling 5,636 5,000 636 12.7 % 10,186 11,440 (1,254) (11.0)%
Thermal Acoustical Solutions Segment $ 76,858 $ 37,448 $ 39,410 105.2 % $ 167,902 $ 121,209 $ 46,693 38.5 %
Operating income
Performance Materials $ 14,958 5,443 $ 9,515 $ 30,999 9,611 $ 21,388
% of net sales 19.4 % 9.3 % 19.8 % 7.8 %
Technical Nonwovens $ 8,765 6,684 $ 2,081 $ 13,869 10,497 $ 3,372
% of net sales 12.1 % 12.9 % 10.3 % 9.6 %
Thermal Acoustical Solutions $ (1,500) (6,028) $ 4,528 $ 174 (400) $ 574
% of net sales (2.0)% (16.1)% 0.1 % (0.3)%
Segment EBITDA
Performance Materials $ 20,019 11,397 $ 8,622 $ 41,026 21,819 $ 19,207
% of net sales 25.9 % 19.5 % 26.2 % 17.6 %
Technical Nonwovens $ 12,012 9,795 $ 2,217 $ 20,313 16,602 $ 3,711
% of net sales 16.6 % 18.8 % 15.1 % 15.2 %
Thermal Acoustical Solutions $ 1,617 (3,314) $ 4,931 $ 6,393 5,031 $ 1,362
% of net sales 2.1 % (8.8)% 3.8 % 4.2 %
1Reference Appendix for reconciliation between adjusted and GAAP financials
23
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THEReconciliation Between Adjusted and Reported GAAP Financials
For the Three Months Ended June 30, 2021 For the Three Months Ended June 30, 2020
As Reported, As Reported,
In thousands except per share data Lydall, Inc Adjustments Adjusted Results Lydall, Inc Adjustments Adjusted Results
Net sales $ 221,744 $ — $ 221,744 $ 146,160 — $ 146,160
Cost of sales 173,958 — 173,958 117,742 (127) (e) 117,615
Gross profit 47,786 — 47,786 28,418 127 28,545
Gross margin 21.6 % 21.6 % 19.4 % 19.5 %
Selling, product development and administrative expenses 38,182 (3,693) (a) 34,489 30,164 (1,360) (f) 28,804
Restructuring expenses 190 (190) (b) — — — —
Operating income (loss) 9,414 3,883 13,297 (1,746) 1,487 (259)
Operating margin 4.2 % 6.0 % (1.2)% (0.2)%
(Gain) loss on the sale of a business 266 (266) (c) — — — —
Interest expense 2,414 — 2,414 4,476 — 4,476
Other (income) expense, net 206 — 206 248 — 248
Income (loss) before income taxes 6,528 4,149 10,677 (6,470) 1,487 (4,983)
Income tax expense (benefit) 905 960 (d) 1,865 (595) 355 (g) (240)
(Income) loss from equity method investment (157) — (157) (18) — (18)
Net income (loss) $ 5,780 $ 3,189 $ 8,969 $ (5,857) 1,132 $ (4,725)
Earnings (loss) per share:
Basic $ 0.33 $ 0.51 $ (0.34) $ (0.27)
Diluted $ 0.32 $ 0.50 $ (0.34) $ (0.27)
Weighted average number of common shares outstanding:
Basic 17,575 17,575 17,372 17,372
Diluted 17,977 17,977 17,372 17,372
(a) Exclude the corporate strategic initiatives expenses of $3.7M.
(b) Exclude the restructuring expenses of $0.2M related to the Performance Materials segment.
(c) Exclude the $0.3M loss on the sale of a business.
(d) Exclude the tax benefits realized on the adjustments in (a), (b) and (c) of $1.0M.
(e) Exclude the reduction-in-force severance expenses of $0.1M related to the Thermal Acoustical Solutions segment.
(f) Exclude the corporate strategic initiatives expenses of $1.2M and reduction-in-force severance expenses of $0.1M related to the Thermal Acoustical Solutions segment.
(g) Excludes the tax benefits and expenses realized on the adjustments in (e) and (f) of $0.4 million.
24
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THEReconciliation Between Adjusted and Reported GAAP Financials
For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020
As Reported, As Reported,
In thousands except per share data Lydall, Inc Adjustments Adjusted Results Lydall, Inc Adjustments Adjusted Results
Net sales $ 448,843 $ — $ 448,843 $ 346,687 — $ 346,687
Cost of sales 352,508 — 352,508 279,701 (127) (e) 279,574
Gross profit 96,335 — 96,335 66,986 127 67,113
Gross margin 21.5 % 21.5 % 19.3 % 19.4 %
Selling, product development and administrative
expenses 73,815 (3,843) (a) 69,972 63,191 (3,268) (f) 59,923
Impairment of goodwill and other long-lived assets — — — 61,109 (61,109) (g) —
Restructuring expenses 967 (967) (b) — — — —
Operating income (loss) 21,553 4,810 26,363 (57,314) 64,504 7,190
Operating margin 4.8 % 5.9 % (16.5)% 2.1 %
(Gain) loss on the sale of a business 964 (964) (c) — — — —
Employee benefit plans settlement expenses — — — 385 (385) (h) —
Interest expense 5,862 — 5,862 7,333 — 7,333
Other (income) expense, net 292 — 292 (170) — (170)
Income (loss) before income taxes 14,435 5,774 20,209 (64,862) 64,889 27
Income tax expense (benefit) 3,726 1,343 (d) 5,069 (2,610) 3,849 (i) 1,239
(Income) loss from equity method investment (165) — (165) 26 — 26
Net income (loss) $ 10,874 $ 4,431 $ 15,305 $ (62,278) 61,040 $ (1,238)
Earnings (loss) per share:
Basic $ 0.62 $ 0.87 $ (3.59) $ (0.07)
Diluted $ 0.61 $ 0.85 $ (3.59) $ (0.07)
Weighted average number of common shares
outstanding:
Basic 17,560 17,560 17,354 17,354
Diluted 17,923 17,923 17,354 17,354
(a) Exclude the corporate strategic initiatives expenses of $3.8M.
(b) Exclude the restructuring expenses of $1.0M related to the Performance Materials segment.
(c) Exclude the $1.0M loss on the sale of a business.
(d) Exclude the tax benefits realized on the adjustments in (a), (b) and (c) of $1.4M.
(e) Exclude the reduction-in-force severance expenses of $0.1M related to the Thermal Acoustical Solutions segment.
(f) 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.
(g) Exclude the impairment of goodwill and other long lived assets expense of $61.1 million.
(h)Exclude the employee benefit plans settlement expense of $0.4 million.
(i) Excludes the tax benefits and expenses realized on the adjustments in (e), (f), (g) and (h) of $3.8 million.
25
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THEReconciliation Between Adjusted and Reported GAAP Financials
Q2-2021 EBITDA
For the Three Months Ended June 30, 2021
Segments
($ in 000) Performance Technical Thermal Acoustical Consolidated
Materials Nonwovens Solutions Total Corporate Office Lydall
Net income $ 5,780
(Gain) loss on the sale of a business 266
Interest expense 2,414
Income tax expense 905
Other expense, net 206
Income from equity method investment (157)
Operating income (loss) $ 14,853 $ 8,765 $ (1,500) $ 22,118 $ (12,704) $ 9,414
Depreciation and amortization 5,061 3,090 3,117 11,268 160 11,428
(Gain) loss on the sale of a business — — — — 266 266
Other expense, net — — — — 206 206
Income from equity method investment — (157) — (157) — (157)
EBITDA $ 19,914 $ 12,012 $ 1,617 $ 33,543 $ (13,016) $ 20,527
% of net sales 25.8 % 16.6 % 2.1 % 14.8 % 9.3 %
Strategic initiatives expenses $ — $ — $ — $ — $ 3,693 $ 3,693
PM restructuring expenses 105 — — 105 85 190
(Gain) loss on the sale of a business — — — — 266 266
EBITDA, adjusted $ 20,019 $ 12,012 $ 1,617 $ 33,648 $ (8,972) $ 24,676
% of net sales 25.9 % 16.6 % 2.1 % 14.9 % 11.1 %
EBITDA is reported for Consolidated Lydall data and defined as Net Income before interest, taxes, depreciation, and amortization
Segment EBITDA is reported for each operating segment (Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions) and is defined as Operating Income net of depreciation and
amortization expenses, plus income/loss from equity method investments
26
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THEReconciliation Between Adjusted and Reported GAAP Financials
YTD Q2-2021 EBITDA
For the Six Months Ended June 30, 2021
Segments
($ in 000) Performance Technical Thermal Acoustical Consolidated
Materials Nonwovens Solutions Total Corporate Office Lydall
Net income (loss) $ 10,874
(Gain) loss on the sale of a business 964
Interest expense 5,862
Income tax expense (benefit) 3,726
Other (income) expense, net 292
(Income) loss from equity method investment (165)
Operating income (loss) $ 30,149 $ 13,869 $ 174 $ 44,192 $ (22,639) $ 21,553
Depreciation and amortization 10,027 6,279 6,219 22,525 269 22,794
(Gain) loss on the sale of a business — — — — 964 964
Other (income) expense, net — — — — 292 292
(Income) loss from equity method investment — (165) — (165) — (165)
EBITDA $ 40,176 $ 20,313 $ 6,393 $ 66,882 $ (23,626) $ 43,256
% of net sales 25.7 % 15.1 % 3.8 % 14.6 % 9.6 %
Strategic initiatives expenses $ — $ — $ — $ — $ 3,843 $ 3,843
PM restructuring expenses 850 — — 850 117 967
(Gain) loss on the sale of a business — — — — 964 964
EBITDA, adjusted $ 41,026 $ 20,313 $ 6,393 $ 67,732 $ (18,702) $ 49,030
% of net sales 26.2 % 15.1 % 3.8 % 14.8 % 10.9 %
EBITDA is reported for Consolidated Lydall data and defined as Net Income before interest, taxes, depreciation, and amortization
Segment EBITDA is reported for each operating segment (Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions) and is defined as Operating Income net of depreciation and
amortization expenses, plus income/loss from equity method investments
27
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THEReconciliation Between Adjusted and Reported GAAP Financials
Q2-2020 EBITDA
For the Three Months Ended June 30, 2020
Segments
($ in 000) Performance Technical Thermal Acoustical Consolidated
Materials Nonwovens Solutions Total Corporate Office Lydall
Net income (loss) $ (5,857)
Interest expense 4,476
Income tax expense (benefit) (595)
Other (income) expense, net 248
(Income) loss from equity method investment (18)
Operating income (loss) $ 5,443 $ 6,684 $ (6,285) $ 5,842 $ (7,588) $ (1,746)
Depreciation and amortization 5,954 3,093 2,714 11,761 130 11,891
Other (income) expense, net — — — — 248 248
(Income) loss 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 $ 1,230
Reduction-in-force severance expenses — — 257 257 — 257
EBITDA, 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 %
EBITDA is reported for Consolidated Lydall data and defined as Net Income before interest, taxes, depreciation, and amortization
Segment EBITDA is reported for each operating segment (Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions) and is defined as Operating Income net of depreciation and
amortization expenses, plus income/loss from equity method investments
28
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
ON THEReconciliation Between Adjusted and Reported GAAP Financials
YTD Q2-2020 EBITDA
For the Six Months Ended June 30, 2020
Segments
($ in 000) Performance Technical Thermal Acoustical Corporate Consolidated
Materials Nonwovens Solutions Total Office Lydall
Net loss $ (62,278)
Employee benefits plans settlement expense 385
Interest expense 7,333
Income tax benefit (2,610)
Other income, net (170)
Loss from equity method investment 26
Operating (loss) income $ (51,498) $ 10,497 $ (657) $ (41,658) $ (15,656) $ (57,314)
Depreciation and amortization 12,208 6,131 5,431 23,770 265 24,035
Employee benefits plans settlement expense — — — — 385 385
Other income, net — — — — (170) (170)
Loss from equity method investment — 26 — 26 — 26
EBITDA $ (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 $ 3,138
Impairment of goodwill and long-lived assets 61,109 — — 61,109 — 61,109
Reduction-in-force severance expenses — — 257 257 — 257
Employee benefit plans settlement expenses — — — — 385 385
EBITDA, 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 %
EBITDA is reported for Consolidated Lydall data and defined as Net Income before interest, taxes, depreciation, and amortization
Segment EBITDA is reported for each operating segment (Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions) and is defined as Operating Income net of depreciation and
amortization expenses, plus income/loss from equity method investments
29
USE OR DISCLOSURE
USE OR DISCLOSURE OF INFORMATION
OF INFORMATION CONTAINED
CONTAINED ONONTHIS
THIS SHEET
SHEET ISIS
SUBJECT TO THE
SUBJECT TO RESTRICTIONS ON THE TITLE
THE RESTRICTIONS SLIDETITLE SLIDE
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