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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lydall Inc | NYSE:LDL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 62.09 | 0 | 01:00:00 |
|
|
Delaware
|
06-0865505
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
|
|
One Colonial Road, Manchester, Connecticut
|
06042
|
(Address of principal executive offices)
|
(zip code)
|
Total Shares outstanding July 18 , 2017
|
17,233,972
|
|
|
|
|
Page
Number
|
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|
|
|
Cautionary Note Concerning Forward – Looking Statements
|
|||
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|
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Part I.
|
Financial Information
|
|
|
|
|
|
|
|
Item 1.
|
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Item 2.
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Item 3.
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Item 4.
|
||
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Part II.
|
Other Information
|
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
|
|
Item 1A.
|
||
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Item 2.
|
||
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Item 6.
|
||
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|
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Signature
|
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|
Exhibit Index
|
|
|
•
|
Overall economic and business conditions and the effects on the Company’s markets;
|
•
|
Outlook for the third quarter and remainder of
2017
;
|
•
|
Expected vehicle production in the North American, European or Asian markets;
|
•
|
Growth opportunities in markets served by the Company;
|
•
|
Expected future financial and operating performance of Texel and Gutsche;
|
•
|
Ability to integrate the Texel and Gutsche businesses;
|
•
|
Expected costs and future savings associated with restructuring programs;
|
•
|
Expected gross margin, operating margin and working capital improvements from the application of Lean Six Sigma;
|
•
|
Product development and new business opportunities;
|
•
|
Future strategic transactions, including but not limited to: acquisitions, joint ventures, alliances, licensing agreements and divestitures;
|
•
|
Pension plan funding;
|
•
|
Future cash flow and uses of cash;
|
•
|
Future amounts of stock-based compensation expense;
|
•
|
Future earnings and other measurements of financial performance;
|
•
|
Ability to meet cash operating requirements;
|
•
|
Future levels of indebtedness and capital spending;
|
•
|
Ability to meet financial covenants in the Company's amended revolving credit facility;
|
•
|
Future impact of the variability of interest rates and foreign currency exchange rates;
|
•
|
Expected future impact of recently issued accounting pronouncements upon adoption;
|
•
|
Future effective income tax rates and realization of deferred tax assets;
|
•
|
Estimates of fair values of reporting units and long-lived assets used in assessing goodwill and long-lived assets for possible impairment; and
|
•
|
The expected outcomes of legal proceedings and other contingencies, including environmental matters.
|
|
Quarter Ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
|
(Unaudited)
|
||||||
Net sales
|
$
|
174,879
|
|
|
$
|
137,235
|
|
Cost of sales
|
131,626
|
|
|
101,245
|
|
||
Gross profit
|
43,253
|
|
|
35,990
|
|
||
Selling, product development and administrative expenses
|
23,409
|
|
|
20,468
|
|
||
Operating income
|
19,844
|
|
|
15,522
|
|
||
Interest expense
|
795
|
|
|
110
|
|
||
Other expense (income), net
|
599
|
|
|
(499
|
)
|
||
Income before income taxes
|
18,450
|
|
|
15,911
|
|
||
Income tax expense
|
5,303
|
|
|
5,098
|
|
||
Loss from equity method investment
|
22
|
|
|
—
|
|
||
Net income
|
$
|
13,125
|
|
|
$
|
10,813
|
|
Earnings per share:
|
|
|
|
||||
Basic
|
$
|
0.77
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.76
|
|
|
$
|
0.63
|
|
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic
|
17,044
|
|
|
16,864
|
|
||
Diluted
|
17,262
|
|
|
17,074
|
|
|
Six Months Ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
|
(Unaudited)
|
||||||
Net sales
|
$
|
340,366
|
|
|
$
|
266,935
|
|
Cost of sales
|
256,689
|
|
|
198,568
|
|
||
Gross profit
|
83,677
|
|
|
68,367
|
|
||
Selling, product development and administrative expenses
|
48,878
|
|
|
39,166
|
|
||
Operating income
|
34,799
|
|
|
29,201
|
|
||
Interest expense
|
1,401
|
|
|
254
|
|
||
Other expense (income), net
|
739
|
|
|
(666
|
)
|
||
Income before income taxes
|
32,659
|
|
|
29,613
|
|
||
Income tax expense
|
7,797
|
|
|
9,631
|
|
||
Loss from equity method investment
|
68
|
|
|
—
|
|
||
Net income
|
$
|
24,794
|
|
|
$
|
19,982
|
|
Earnings per share:
|
|
|
|
||||
Basic
|
$
|
1.46
|
|
|
$
|
1.19
|
|
Diluted
|
$
|
1.44
|
|
|
$
|
1.17
|
|
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic
|
17,014
|
|
|
16,844
|
|
||
Diluted
|
17,272
|
|
|
17,036
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Net income
|
$
|
13,125
|
|
|
$
|
10,813
|
|
|
$
|
24,794
|
|
|
$
|
19,982
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
11,784
|
|
|
(4,026
|
)
|
|
14,513
|
|
|
(1,268
|
)
|
||||
Pension liability adjustment, net of tax
|
172
|
|
|
139
|
|
|
344
|
|
|
285
|
|
||||
Unrealized loss on hedging activities, net of tax
|
(44
|
)
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
||||
Comprehensive income
|
$
|
25,037
|
|
|
$
|
6,926
|
|
|
$
|
39,607
|
|
|
$
|
18,999
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(Unaudited)
|
||||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
63,542
|
|
|
$
|
71,934
|
|
Accounts receivable, less allowances (2017 - $1,421; 2016 - $1,429)
|
114,708
|
|
|
103,316
|
|
||
Inventories
|
81,989
|
|
|
66,146
|
|
||
Taxes receivable
|
6,854
|
|
|
3,883
|
|
||
Prepaid expenses
|
4,780
|
|
|
4,085
|
|
||
Other current assets
|
7,105
|
|
|
6,242
|
|
||
Total current assets
|
278,978
|
|
|
255,606
|
|
||
Property, plant and equipment, at cost
|
377,226
|
|
|
359,961
|
|
||
Accumulated depreciation
|
(213,032
|
)
|
|
(199,166
|
)
|
||
Net, property, plant and equipment
|
164,194
|
|
|
160,795
|
|
||
Goodwill
|
66,854
|
|
|
63,606
|
|
||
Other intangible assets, net
|
41,273
|
|
|
41,447
|
|
||
Other assets, net
|
6,464
|
|
|
5,575
|
|
||
Total assets
|
$
|
557,763
|
|
|
$
|
527,029
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
250
|
|
|
$
|
634
|
|
Accounts payable
|
69,429
|
|
|
56,346
|
|
||
Accrued payroll and other compensation
|
13,832
|
|
|
14,016
|
|
||
Accrued taxes
|
5,882
|
|
|
6,460
|
|
||
Other accrued liabilities
|
13,663
|
|
|
12,988
|
|
||
Total current liabilities
|
103,056
|
|
|
90,444
|
|
||
Long-term debt
|
107,048
|
|
|
128,141
|
|
||
Deferred tax liabilities
|
16,993
|
|
|
15,849
|
|
||
Benefit plan liabilities
|
12,354
|
|
|
14,729
|
|
||
Other long-term liabilities
|
5,146
|
|
|
4,410
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 14)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock
|
249
|
|
|
249
|
|
||
Capital in excess of par value
|
84,987
|
|
|
82,387
|
|
||
Retained earnings
|
350,260
|
|
|
325,466
|
|
||
Accumulated other comprehensive loss
|
(33,137
|
)
|
|
(47,950
|
)
|
||
Treasury stock, at cost
|
(89,193
|
)
|
|
(86,696
|
)
|
||
Total stockholders’ equity
|
313,166
|
|
|
273,456
|
|
||
Total liabilities and stockholders’ equity
|
$
|
557,763
|
|
|
$
|
527,029
|
|
|
Six Months Ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
|
(Unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
24,794
|
|
|
$
|
19,982
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
12,778
|
|
|
8,634
|
|
||
Long-lived asset impairment charge
|
772
|
|
|
—
|
|
||
Inventory step-up amortization
|
1,025
|
|
|
—
|
|
||
Deferred income taxes
|
157
|
|
|
(553
|
)
|
||
Stock-based compensation
|
2,287
|
|
|
2,074
|
|
||
Loss from equity method investment
|
68
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(8,197
|
)
|
|
(11,294
|
)
|
||
Inventories
|
(14,202
|
)
|
|
(704
|
)
|
||
Accounts payable
|
15,479
|
|
|
8,226
|
|
||
Accrued payroll and other compensation
|
(729
|
)
|
|
2,859
|
|
||
Accrued taxes
|
(977
|
)
|
|
492
|
|
||
Other, net
|
(5,460
|
)
|
|
3,691
|
|
||
Net cash provided by operating activities
|
27,795
|
|
|
33,407
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Business acquisitions, net of cash acquired
|
(353
|
)
|
|
—
|
|
||
Capital expenditures
|
(15,068
|
)
|
|
(15,549
|
)
|
||
Net cash used for investing activities
|
(15,421
|
)
|
|
(15,549
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Debt repayments
|
(21,566
|
)
|
|
(10,297
|
)
|
||
Common stock issued
|
313
|
|
|
404
|
|
||
Common stock repurchased
|
(2,497
|
)
|
|
(710
|
)
|
||
Net cash used for financing activities
|
(23,750
|
)
|
|
(10,603
|
)
|
||
Effect of exchange rate changes on cash
|
2,984
|
|
|
(449
|
)
|
||
(Decrease) Increase in cash and cash equivalents
|
(8,392
|
)
|
|
6,806
|
|
||
Cash and cash equivalents at beginning of period
|
71,934
|
|
|
75,909
|
|
||
Cash and cash equivalents at end of period
|
$
|
63,542
|
|
|
$
|
82,715
|
|
1.
|
Basis of Financial Statement Presentation
|
2.
|
Acquisitions
|
In thousands
|
|
Texel
|
|
Gutsche
|
||||
Cash and cash equivalents
|
|
$
|
1,610
|
|
|
$
|
9,400
|
|
Accounts receivable
|
|
13,355
|
|
|
7,736
|
|
||
Inventories
|
|
17,525
|
|
|
6,417
|
|
||
Prepaid expenses and other current assets
|
|
2,469
|
|
|
1,125
|
|
||
Non-current environmental indemnification receivable (Note 14)
|
|
925
|
|
|
—
|
|
||
Property, plant and equipment, net
|
|
31,525
|
|
|
7,969
|
|
||
Investment in joint venture
|
|
616
|
|
|
—
|
|
||
Goodwill (Note 4)
|
|
28,655
|
|
|
19,759
|
|
||
Other intangible assets, net (Note 4)
|
|
22,887
|
|
|
15,622
|
|
||
Other long term assets
|
|
—
|
|
|
1,545
|
|
||
Total assets acquired
|
|
$
|
119,567
|
|
|
$
|
69,573
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
(8,520
|
)
|
|
$
|
(8,376
|
)
|
Long-term environmental remediation liability (Note 14)
|
|
(925
|
)
|
|
—
|
|
||
Deferred tax liabilities
|
|
(7,413
|
)
|
|
(470
|
)
|
||
Other long-term liabilities
|
|
—
|
|
|
(2,742
|
)
|
||
Total liabilities assumed
|
|
(16,858
|
)
|
|
(11,588
|
)
|
||
Net assets acquired
|
|
$
|
102,709
|
|
|
$
|
57,985
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
(Actual)
|
|
(Unaudited Pro Forma)
|
|
(Actual)
|
|
(Unaudited Pro Forma)
|
||||||||
In thousands
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net sales
|
|
$
|
174,879
|
|
|
$
|
173,834
|
|
|
$
|
340,366
|
|
|
$
|
329,982
|
|
Net income
|
|
$
|
13,125
|
|
|
$
|
13,537
|
|
|
$
|
24,794
|
|
|
$
|
23,239
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.77
|
|
|
$
|
0.80
|
|
|
$
|
1.46
|
|
|
$
|
1.38
|
|
Diluted
|
|
$
|
0.76
|
|
|
$
|
0.79
|
|
|
$
|
1.44
|
|
|
$
|
1.36
|
|
In thousands
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
|
$
|
31,131
|
|
|
$
|
24,518
|
|
Work in process
|
|
28,185
|
|
|
17,161
|
|
||
Finished goods
|
|
24,524
|
|
|
25,360
|
|
||
|
|
83,840
|
|
|
67,039
|
|
||
Less: Progress billings
|
|
(1,851
|
)
|
|
(893
|
)
|
||
Total inventories
|
|
$
|
81,989
|
|
|
$
|
66,146
|
|
|
|
December 31,
2016 |
|
Currency
translation adjustments
|
|
Additions
|
|
June 30, 2017
|
||||||||
In thousands
|
|
|
|
|
||||||||||||
Performance Materials
|
|
$
|
12,777
|
|
|
$
|
324
|
|
|
$
|
—
|
|
|
$
|
13,101
|
|
Technical Nonwovens
|
|
50,829
|
|
|
2,571
|
|
|
353
|
|
|
53,753
|
|
||||
Total goodwill
|
|
$
|
63,606
|
|
|
$
|
2,895
|
|
|
$
|
353
|
|
|
$
|
66,854
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
In thousands
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Amortized intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer Relationships
|
|
$
|
38,036
|
|
|
$
|
(2,822
|
)
|
|
$
|
36,131
|
|
|
$
|
(1,284
|
)
|
Patents
|
|
4,319
|
|
|
(3,602
|
)
|
|
4,028
|
|
|
(3,300
|
)
|
||||
Technology
|
|
2,500
|
|
|
(560
|
)
|
|
2,500
|
|
|
(477
|
)
|
||||
Trade Names
|
|
4,131
|
|
|
(909
|
)
|
|
3,912
|
|
|
(394
|
)
|
||||
License Agreements
|
|
618
|
|
|
(618
|
)
|
|
583
|
|
|
(583
|
)
|
||||
Other
|
|
564
|
|
|
(384
|
)
|
|
536
|
|
|
(205
|
)
|
||||
Total amortized intangible assets
|
|
$
|
50,168
|
|
|
$
|
(8,895
|
)
|
|
$
|
47,690
|
|
|
$
|
(6,243
|
)
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|||||
In thousands
|
|
Effective Rate
|
|
Maturity
|
|
2017
|
|
2016
|
|||||
Revolver Loan, due July 7, 2021
|
|
2.48
|
%
|
|
2021
|
|
$
|
106,600
|
|
|
$
|
126,600
|
|
Commerzbank Loan, due January 2, 2017
|
|
3.40
|
%
|
|
2017
|
|
—
|
|
|
400
|
|
||
Sparkasse Loan, due December 31, 2024
|
|
0.80
|
%
|
|
2024
|
|
—
|
|
|
1,030
|
|
||
Capital Leases
|
|
1.65% - 2.08%
|
|
|
2019 - 2020
|
|
698
|
|
|
745
|
|
||
|
|
|
|
|
|
|
107,298
|
|
|
128,775
|
|
||
Less portion due within one year
|
|
|
|
|
|
|
(250
|
)
|
|
(634
|
)
|
||
Total long-term debt
|
|
|
|
|
|
|
$
|
107,048
|
|
|
$
|
128,141
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
In thousands
|
Asset Derivatives
|
|
Liability Derivatives
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Interest rate contract
|
$
|
—
|
|
|
$
|
(69
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Total derivatives
|
$
|
—
|
|
|
$
|
(69
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Interest rate contract
|
$
|
(44
|
)
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
|
—
|
|
|
$
|
(44
|
)
|
|
$
|
—
|
|
In thousands except per share
amounts and years
|
|
Shares
|
|
Weighted-
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
|
|||||
Outstanding at June 30, 2017
|
|
399
|
|
|
$
|
26.34
|
|
|
$
|
10,588
|
|
Exercisable at June 30, 2017
|
|
219
|
|
|
$
|
16.49
|
|
|
$
|
7,727
|
|
Unvested at June 30, 2017
|
|
179
|
|
|
$
|
38.41
|
|
|
$
|
2,860
|
|
In thousands
|
Severance and Related Expenses
|
Contract Termination Expenses
|
Facility Exit, Move and Set-up Expenses
|
Total
|
||||||||
Expense incurred during quarter ended:
|
|
|
|
|
||||||||
June 30, 2017
|
74
|
|
185
|
|
34
|
|
293
|
|
||||
Total pre-tax expense incurred
|
$
|
74
|
|
$
|
185
|
|
$
|
34
|
|
$
|
293
|
|
Estimated remaining expense at June 30, 2017
|
1,600
|
|
50
|
|
3,050
|
|
4,700
|
|
||||
Total estimated pre-tax expense
|
$
|
1,674
|
|
$
|
235
|
|
$
|
3,084
|
|
$
|
4,993
|
|
In thousands
|
Total
|
||
Balance as of March 31, 2017
|
$
|
—
|
|
Pre-tax restructuring expenses
|
293
|
|
|
Cash paid
|
—
|
|
|
Balance as of June 30, 2017
|
$
|
293
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In thousands
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest cost
|
|
$
|
514
|
|
|
$
|
535
|
|
|
$
|
1,029
|
|
|
$
|
1,070
|
|
Expected return on assets
|
|
(594
|
)
|
|
(605
|
)
|
|
(1,188
|
)
|
|
(1,210
|
)
|
||||
Amortization of actuarial loss
|
|
273
|
|
|
233
|
|
|
546
|
|
|
467
|
|
||||
Net periodic benefit cost
|
|
$
|
193
|
|
|
$
|
163
|
|
|
$
|
387
|
|
|
$
|
327
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
In thousands
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Basic average common shares outstanding
|
|
17,044
|
|
|
16,864
|
|
|
17,014
|
|
|
16,844
|
|
Effect of dilutive options and restricted stock awards
|
|
218
|
|
|
210
|
|
|
258
|
|
|
192
|
|
Diluted average common shares outstanding
|
|
17,262
|
|
|
17,074
|
|
|
17,272
|
|
|
17,036
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In thousands
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Performance Materials Segment:
|
|
|
|
|
|
|
|
|
|
|
||||||
Filtration
|
|
$
|
19,255
|
|
|
$
|
18,657
|
|
|
$
|
38,100
|
|
|
$
|
35,816
|
|
Thermal Insulation
|
|
7,407
|
|
|
7,214
|
|
|
14,833
|
|
|
13,489
|
|
||||
Life Sciences Filtration
|
|
2,639
|
|
|
4,095
|
|
|
5,119
|
|
|
7,044
|
|
||||
Performance Materials Segment net sales
|
|
29,301
|
|
|
29,966
|
|
|
58,052
|
|
|
56,349
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Technical Nonwovens Segment
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Industrial Filtration
|
|
36,325
|
|
|
20,128
|
|
|
70,538
|
|
|
43,722
|
|
||||
Advanced Materials
(2)
|
|
30,773
|
|
|
7,712
|
|
|
55,478
|
|
|
15,325
|
|
||||
Technical Nonwovens net sales
|
|
67,098
|
|
|
27,840
|
|
|
126,016
|
|
|
59,047
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Thermal/Acoustical Metals Segment:
|
|
|
|
|
|
|
|
|
||||||||
Metal parts
|
|
40,827
|
|
|
41,053
|
|
|
82,521
|
|
|
77,836
|
|
||||
Tooling
|
|
2,558
|
|
|
4,192
|
|
|
5,144
|
|
|
9,406
|
|
||||
Thermal/Acoustical Metals Segment net sales
|
|
43,385
|
|
|
45,245
|
|
|
87,665
|
|
|
87,242
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Thermal/Acoustical Fibers Segment:
|
|
|
|
|
|
|
|
|
||||||||
Fiber parts
|
|
40,704
|
|
|
36,934
|
|
|
81,691
|
|
|
72,611
|
|
||||
Tooling
|
|
2,795
|
|
|
3,234
|
|
|
3,180
|
|
|
3,418
|
|
||||
Thermal/Acoustical Fibers Segment net sales
|
|
43,499
|
|
|
40,168
|
|
|
84,871
|
|
|
76,029
|
|
||||
Eliminations and Other
(2)
|
|
(8,404
|
)
|
|
(5,984
|
)
|
|
(16,238
|
)
|
|
(11,732
|
)
|
||||
Consolidated Net Sales
|
|
$
|
174,879
|
|
|
$
|
137,235
|
|
|
$
|
340,366
|
|
|
$
|
266,935
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In thousands
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Performance Materials
|
|
$
|
3,864
|
|
|
$
|
4,681
|
|
|
$
|
5,453
|
|
|
$
|
6,819
|
|
Technical Nonwovens
(1)
|
|
6,535
|
|
|
3,219
|
|
|
11,203
|
|
|
7,145
|
|
||||
Thermal/Acoustical Metals
|
|
3,174
|
|
|
4,082
|
|
|
5,617
|
|
|
7,639
|
|
||||
Thermal/Acoustical Fibers
|
|
12,157
|
|
|
10,630
|
|
|
24,446
|
|
|
20,954
|
|
||||
Corporate Office Expenses
|
|
(5,886
|
)
|
|
(7,090
|
)
|
|
(11,920
|
)
|
|
(13,356
|
)
|
||||
Consolidated Operating Income
|
|
$
|
19,844
|
|
|
$
|
15,522
|
|
|
$
|
34,799
|
|
|
$
|
29,201
|
|
(1)
|
The Technical Nonwovens segment reports results of Texel and Gutsche for the period following the dates of acquisition of July 7, 2016 and December 31, 2016, respectively.
|
(2)
|
Included in the Technical Nonwovens segment and Eliminations and Other is
$6.8 million
and
$4.6 million
in intercompany sales to the T/A Fibers segment for the quarters ended
June 30, 2017
and
2016
, respectively, and
$13.1 million
and
$9.1 million
for the six months ended
June 30, 2017
and
2016
, respectively.
|
In thousands
|
|
Foreign Currency
Translation
Adjustment
|
|
Defined Benefit
Pension
Adjustment
|
|
Gains and Losses
on Cash Flow Hedges
|
|
Total
Accumulated
Other
Comprehensive
(Loss) Income
|
||||||||||
Balance at December 31, 2015
|
|
$
|
(16,920
|
)
|
|
$
|
(17,665
|
)
|
|
|
$
|
—
|
|
|
|
$
|
(34,585
|
)
|
Other Comprehensive loss
|
|
(1,268
|
)
|
|
—
|
|
|
|
—
|
|
|
|
(1,268
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
285
|
|
(a)
|
|
—
|
|
|
|
285
|
|
||||
Balance at June 30, 2016
|
|
(18,188
|
)
|
|
(17,380
|
)
|
|
|
—
|
|
|
|
(35,568
|
)
|
||||
Balance at December 31, 2016
|
|
(27,885
|
)
|
|
(20,065
|
)
|
|
|
—
|
|
|
|
(47,950
|
)
|
||||
Other Comprehensive loss
|
|
14,513
|
|
|
—
|
|
|
|
(44
|
)
|
(b)
|
|
14,469
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
344
|
|
(a)
|
|
—
|
|
|
|
344
|
|
||||
Balance at June 30, 2017
|
|
$
|
(13,372
|
)
|
|
$
|
(19,721
|
)
|
|
|
$
|
(44
|
)
|
|
|
$
|
(33,137
|
)
|
(a)
|
Amount represents amortization of actuarial losses, a component of net periodic benefit cost. This amount was
$0.3 million
, net of
$0.2 million
tax benefit for the six months ended
June 30, 2017
and
2016
.
|
(b)
|
Amount represents unrealized losses on the fair value of hedging activities, net of taxes for the six months ended June 30, 2017.
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Net sales were
$174.9 million
in Q2 2017, compared to
$137.2 million
in Q2 2016, an increase of
$37.6 million
, or
27.4%
. The change in consolidated net sales is summarized in the following table:
|
Components
|
|
Change in Net Sales
|
|
Percent Change
|
|||
Acquisitions
|
|
$
|
32,979
|
|
|
24.0
|
%
|
Parts volume and pricing change
|
|
8,747
|
|
|
6.4
|
%
|
|
Change in tooling sales
|
|
(2,024
|
)
|
|
(1.5
|
)%
|
|
Foreign currency translation
|
|
(2,058
|
)
|
|
(1.5
|
)%
|
|
Total
|
|
$
|
37,644
|
|
|
27.4
|
%
|
•
|
Increase in consolidated net sales was primarily related to the acquisitions of Texel and Gutsche of 24.0%, which occurred on July 7, 2016 and December 31, 2016, respectively, and are included in the Technical Nonwovens segment. The Company also experienced sales growth of 4.6% of consolidated net sales in the legacy businesses of the Technical Nonwovens segment, including 160 basis points of intercompany sales to the T/A Fibers segment, as well as sales growth of 2.4% of consolidated net sales in the T/A Fibers segment. Partially offsetting this sales growth was a decline of 1.4% and 0.5%, of consolidated net sales in the T/A Metals and Performance Materials segments, respectively. These results included the negative impact of foreign currency translation of $2.1 million, or 1.5%, on consolidated net sales in Q2 2017 compared to Q2 2016.
|
•
|
Gross margin decreased 150 basis points to 24.7% in Q2 2017, compared to 26.2% in Q2 2016. The Technical Nonwovens segment negatively impacted consolidated gross margin by approximately 100 basis points, primarily related to unfavorable mix between legacy and acquisition business gross margins as well as approximately 40 basis points of purchase accounting adjustments relating to inventory step up and restructuring expenses. The Performance Materials segment negatively impacted consolidated gross margin by approximately 60 basis points primarily related to unfavorable mix of product sales, mainly associated with a higher margin termination buy in the second quarter of 2016 in advance of product discontinuance in the second half of 2016. Improvements in gross margin by the T/A Fibers segment primarily due to product mix and fixed costs absorption were partially offset by the T/A Metals segment with a marginal decline in gross margin, primarily related to operating inefficiencies in Europe in Q2 2017 compared to Q2 2016.
|
•
|
Operating income was $
19.8 million
, or
11.3%
, of net sales in
Q2 2017
, compared to $
15.5 million
, or
11.3%
of net sales, in
Q2 2016
. Operating margin was flat with Q2 2016 as the negative impact of lower gross margins was offset by decreased selling, product development and administrative expenses as a percentage of net sales of 150 basis points.
|
◦
|
Operating income for Q2 2017 included $0.9 million of amortization of intangibles from TNW segment acquisitions, $0.5 million of inventory step up from acquisitions in the TNW segment and $0.3 million of TNW restructuring expenses.
|
◦
|
Operating income for Q2 2016 included $1.5 million of strategic initiative expenses.
|
•
|
Effective tax rate was 28.7% in Q2 2017 compared to 32.0% in Q2 2016, with the improvement primarily related to a more favorable mix of income in lower taxed jurisdictions during Q2 2017.
|
•
|
Net income was
$13.1 million
, or
$0.76
per diluted share, in Q2 2017, which included $0.02 per share of inventory step-up, $0.02 per share of restructuring expenses and $0.03 per share of negative impact for foreign currency revaluation included in other expense.
|
•
|
Net income was
$10.8 million
, or
$0.63
per diluted share, in Q2 2016, which included $0.07 per share of strategic initiative expenses and $0.02 per share of favorable impact for foreign currency revaluation included in other income.
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||||||||
In thousands
|
|
Q2-17
|
|
Q2-16
|
|
Percent
Change
|
|
YTD-17
|
|
YTD-16
|
|
Percent
Change |
||||||||||
Net sales
|
|
$
|
174,879
|
|
|
$
|
137,235
|
|
|
27.4
|
%
|
|
$
|
340,366
|
|
|
$
|
266,935
|
|
|
27.5
|
%
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||||||||
In thousands of dollars
|
|
Q2-17
|
|
Q2-16
|
|
Percent Change
|
|
YTD-17
|
|
YTD-16
|
|
Percent Change
|
||||||||||
Cost of sales
|
|
$
|
131,626
|
|
|
$
|
101,245
|
|
|
30.0
|
%
|
|
$
|
256,689
|
|
|
$
|
198,568
|
|
|
29.3
|
%
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||||||||
In thousands
|
|
Q2-17
|
|
Q2-16
|
|
Percent
Change |
|
YTD-17
|
|
YTD-16
|
|
Percent
Change |
||||||||||
Gross profit
|
|
$
|
43,253
|
|
|
$
|
35,990
|
|
|
20.2
|
%
|
|
$
|
83,677
|
|
|
$
|
68,367
|
|
|
22.4
|
%
|
Gross margin
|
|
24.7
|
%
|
|
26.2
|
%
|
|
|
|
24.6
|
%
|
|
25.6
|
%
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||||||||
In thousands
|
|
Q2-17
|
|
Q2-16
|
|
Percent
Change |
|
YTD-17
|
|
YTD-16
|
|
Percent
Change |
||||||||||
Selling, product development and administrative expenses
|
|
$
|
23,409
|
|
|
$
|
20,468
|
|
|
14.4
|
%
|
|
$
|
48,878
|
|
|
$
|
39,166
|
|
|
24.8
|
%
|
Percentage of sales
|
|
13.4
|
%
|
|
14.9
|
%
|
|
|
|
14.4
|
%
|
|
14.7
|
%
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||||||||
In thousands
|
|
Q2-17
|
|
Q2-16
|
|
Percent
Change |
|
YTD-17
|
|
YTD-16
|
|
Percent
Change |
||||||||||
Interest expense
|
|
$
|
795
|
|
|
$
|
110
|
|
|
622.7
|
%
|
|
$
|
1,401
|
|
|
$
|
254
|
|
|
451.6
|
%
|
Weighted average interest rate
|
|
2.2
|
%
|
|
1.2
|
%
|
|
|
|
2.0
|
%
|
|
1.4
|
%
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||||||||
In thousands
|
|
Q2-17
|
|
Q2-16
|
|
Dollar Change
|
|
YTD-17
|
|
YTD-16
|
|
Dollar Change
|
||||||||||
Other expense (income), net
|
|
$
|
599
|
|
|
$
|
(499
|
)
|
|
1,098
|
|
|
$
|
739
|
|
|
$
|
(666
|
)
|
|
1,405
|
|
|
|
Quarter Ended
|
||||||||||
In thousands
|
|
Q2-17
|
|
Q2-16
|
|
Dollar Change
|
||||||
Performance Materials Segment:
|
|
|
|
|
|
|
||||||
Filtration
|
|
$
|
19,255
|
|
|
$
|
18,657
|
|
|
$
|
598
|
|
Thermal Insulation
|
|
7,407
|
|
|
7,214
|
|
|
193
|
|
|||
Life Sciences Filtration
|
|
2,639
|
|
|
4,095
|
|
|
(1,456
|
)
|
|||
Performance Materials Segment net sales
|
|
29,301
|
|
|
29,966
|
|
|
(665
|
)
|
|||
|
|
|
|
|
|
|
||||||
Technical Nonwovens Segment
(1)
:
|
|
|
|
|
|
|
||||||
Industrial Filtration
|
|
36,325
|
|
|
20,128
|
|
|
16,197
|
|
|||
Advanced Materials
(2)
|
|
30,773
|
|
|
7,712
|
|
|
23,061
|
|
|||
Technical Nonwovens net sales
|
|
67,098
|
|
|
27,840
|
|
|
39,258
|
|
|||
|
|
|
|
|
|
|
||||||
Thermal/Acoustical Metals Segment:
|
|
|
|
|
|
|
||||||
Metal parts
|
|
40,827
|
|
|
41,053
|
|
|
(226
|
)
|
|||
Tooling
|
|
2,558
|
|
|
4,192
|
|
|
(1,634
|
)
|
|||
Thermal/Acoustical Metals Segment net sales
|
|
43,385
|
|
|
45,245
|
|
|
(1,860
|
)
|
|||
|
|
|
|
|
|
|
||||||
Thermal/Acoustical Fibers Segment:
|
|
|
|
|
|
|
||||||
Fiber parts
|
|
40,704
|
|
|
36,934
|
|
|
3,770
|
|
|||
Tooling
|
|
2,795
|
|
|
3,234
|
|
|
(439
|
)
|
|||
Thermal/Acoustical Fibers Segment net sales
|
|
43,499
|
|
|
40,168
|
|
|
3,331
|
|
|||
Eliminations and Other
(2)
|
|
(8,404
|
)
|
|
(5,984
|
)
|
|
(2,420
|
)
|
|||
Consolidated Net Sales
|
|
$
|
174,879
|
|
|
$
|
137,235
|
|
|
$
|
37,644
|
|
|
|
Six Months Ended
|
||||||||||
In thousands
|
|
YTD-17
|
|
YTD-16
|
|
Dollar Change
|
||||||
Performance Materials Segment:
|
|
|
|
|
|
|
||||||
Filtration
|
|
$
|
38,100
|
|
|
$
|
35,816
|
|
|
$
|
2,284
|
|
Thermal Insulation
|
|
14,833
|
|
|
13,489
|
|
|
1,344
|
|
|||
Life Sciences Filtration
|
|
5,119
|
|
|
7,044
|
|
|
(1,925
|
)
|
|||
Performance Materials Segment net sales
|
|
58,052
|
|
|
56,349
|
|
|
1,703
|
|
|||
|
|
|
|
|
|
|
||||||
Technical Nonwovens Segment
(1)
:
|
|
|
|
|
|
|
||||||
Industrial Filtration
|
|
70,538
|
|
|
43,722
|
|
|
26,816
|
|
|||
Advanced Materials
(2)
|
|
55,478
|
|
|
15,325
|
|
|
40,153
|
|
|||
Technical Nonwovens net sales
|
|
126,016
|
|
|
59,047
|
|
|
66,969
|
|
|||
|
|
|
|
|
|
|
||||||
Thermal/Acoustical Metals Segment:
|
|
|
|
|
|
|
||||||
Metal parts
|
|
82,521
|
|
|
77,836
|
|
|
4,685
|
|
|||
Tooling
|
|
5,144
|
|
|
9,406
|
|
|
(4,262
|
)
|
|||
Thermal/Acoustical Metals Segment net sales
|
|
87,665
|
|
|
87,242
|
|
|
423
|
|
|||
|
|
|
|
|
|
|
||||||
Thermal/Acoustical Fibers Segment:
|
|
|
|
|
|
|
||||||
Fiber parts
|
|
81,691
|
|
|
72,611
|
|
|
9,080
|
|
|||
Tooling
|
|
3,180
|
|
|
3,418
|
|
|
(238
|
)
|
|||
Thermal/Acoustical Fibers Segment net sales
|
|
84,871
|
|
|
76,029
|
|
|
8,842
|
|
|||
Eliminations and Other
(2)
|
|
(16,238
|
)
|
|
(11,732
|
)
|
|
(4,506
|
)
|
|||
Consolidated Net Sales
|
|
$
|
340,366
|
|
|
$
|
266,935
|
|
|
$
|
73,431
|
|
|
|
Quarter Ended
|
||||||||||||||
|
|
Q2-17
|
|
Q2-16
|
|
|
||||||||||
In thousands
|
|
Operating Income
|
|
Operating Margin %
|
|
Operating Income
|
|
Operating Margin %
|
|
Dollar Change
|
||||||
Performance Materials
|
|
$
|
3,864
|
|
|
13.2%
|
|
$
|
4,681
|
|
|
15.6%
|
|
$
|
(817
|
)
|
Technical Nonwovens
(1)
|
|
6,535
|
|
|
9.7%
|
|
3,219
|
|
|
11.6%
|
|
3,316
|
|
|||
Thermal/Acoustical Metals
|
|
3,174
|
|
|
7.3%
|
|
4,082
|
|
|
9.0%
|
|
(908
|
)
|
|||
Thermal/Acoustical Fibers
|
|
12,157
|
|
|
27.9%
|
|
10,630
|
|
|
26.5%
|
|
1,527
|
|
|||
Corporate Office Expenses
|
|
(5,886
|
)
|
|
|
|
(7,090
|
)
|
|
|
|
1,204
|
|
|||
Consolidated Operating Income
|
|
$
|
19,844
|
|
|
11.3%
|
|
$
|
15,522
|
|
|
11.3%
|
|
$
|
4,322
|
|
|
|
Six Months Ended
|
||||||||||||||
|
|
YTD-17
|
|
YTD-16
|
|
|
||||||||||
In thousands
|
|
Operating Income
|
|
Operating Margin %
|
|
Operating Income
|
|
Operating Margin %
|
|
Dollar Change
|
||||||
Performance Materials
|
|
$
|
5,453
|
|
|
9.4%
|
|
$
|
6,819
|
|
|
12.1%
|
|
$
|
(1,366
|
)
|
Technical Nonwovens
(1)
|
|
11,203
|
|
|
8.9%
|
|
7,145
|
|
|
12.1%
|
|
4,058
|
|
|||
Thermal/Acoustical Metals
|
|
5,617
|
|
|
6.4%
|
|
7,639
|
|
|
8.8%
|
|
(2,022
|
)
|
|||
Thermal/Acoustical Fibers
|
|
24,446
|
|
|
28.8%
|
|
20,954
|
|
|
27.6%
|
|
3,492
|
|
|||
Corporate Office Expenses
|
|
(11,920
|
)
|
|
|
|
(13,356
|
)
|
|
|
|
1,436
|
|
|||
Consolidated Operating Income
|
|
$
|
34,799
|
|
|
10.2%
|
|
$
|
29,201
|
|
|
10.9%
|
|
$
|
5,598
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Technical Nonwovens segment reports results of Texel and Gutsche for the period following the dates of acquisition of July 7, 2016 and December 31, 2016, respectively.
|
(2)
|
Included in the Technical Nonwovens segment and Eliminations and Other is
$6.8 million
and
$4.6 million
in intercompany sales to the T/A Fibers segment for the quarters ended
June 30, 2017
and
2016
, respectively and
$13.1 million
and
$9.1 million
for the six months ended
June 30, 2017
and
2016
, respectively.
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Program
|
|
Maximum
Number of
Shares That
May Yet Be
Purchased
Under the
Program
|
|||||
April 1, 2017 - April 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
May 1, 2017 - May 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
June 1, 2017 - June 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
31.1
|
|
|
Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, of principal executive officer, filed herewith.
|
|
|
|
|
31.2
|
|
|
Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, of principal financial officer, filed herewith.
|
|
|
|
|
32.1
|
|
|
Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
LYDALL, INC.
|
|
|
|
|
August 1, 2017
|
By:
|
/s/ Scott M. Deakin
|
|
|
|
|
|
Scott M. Deakin
Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer) |
Exhibit
Number
|
|
Description
|
|
|
|
|
|
31.1
|
|
|
Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, of principal executive officer, filed herewith.
|
|
|
|
|
31.2
|
|
|
Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, of principal financial officer, filed herewith.
|
|
|
|
|
32.1
|
|
|
Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
1 Year Lydall Chart |
1 Month Lydall Chart |
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