Lydall Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2012

Tue Feb 26, 2013 7:00am EST

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MANCHESTER, Conn., Feb. 26, 2013 (GLOBE NEWSWIRE) -- LYDALL, INC. (NYSE:LDL) today announced
financial results for the fourth quarter and year ended December 31, 2012.

Fourth Quarter 2012 ("Q4 2012") compared to Fourth Quarter 2011 ("Q4 2011")

* Net sales were $90.5 million, including unfavorable foreign currency translation of $1.3
million, or 1.4%, compared to $89.3 million
* Operating income of $2.0 million, or 2.2%, compared to $4.4 million, or 4.9%

- Q4 2012 operating income included an asset impairment charge of $1.8 million

  - Q4 2011 operating income included income of $0.8 million from a completed pricing negotiation
and $0.4 million of income from a license agreement

* Net income of $2.4 million, or $0.14 per share, compared to $2.7 million, or $0.16 per share

- Income tax benefit of $0.5 million included a reversal of valuation allowance on a foreign tax
credit carryover of $1.3 million, or $0.08 per share

2012 Year Highlights

* Net sales were $378.9 million, including unfavorable foreign currency translation impact of
$10.6 million, or 2.8%, compared to $383.6 million in 2011
* Gross margin of 20.5%, an improvement of 290 basis points from 2011, primarily from operational
efficiency improvements in the Thermal/Acoustical Fibers segment
* Operating income of $21.4 million, or 5.6%, compared to $16.2 million, or 4.2% in 2011

- 2012 operating income included the asset impairment charge of $1.8 million and $0.8 million of
income from a license agreement

  - 2011 operating income included $1.6 million of income from a license agreement

* Effective tax rate for 2012 of 19.9%, primarily as a result of reversal of valuation allowance
on a foreign tax credit carryover of $3.9 million, or $0.23 per share, compared to an effective
tax rate of 41.3% in 2011
* Income from continuing operations in 2012 was $16.8 million, or $0.99 per share, compared to
$9.1 million, or $0.54 per share in 2011
* Net income of $16.8 million, or $0.99 per share, compared to net income in 2011 of $13.8
million, or $0.82 per share

Liquidity

* Cash provided by operations of $15.2 million in Q4 2012 ($34.4 million in full year 2012)
compared to cash provided by operations of $12.6 million in Q4 2011 ($14.7 million in full year
2011)
* Cash and short-term investments of $63.6 million at December 31, 2012 compared to $42.9 million
at December 31, 2011

Net sales of $90.5 million in Q4 2012 were $1.1 million greater than Q4 2011. Increased sales
volume from the Thermal/Acoustical Fibers ("T/A Fibers") segment of $3.3 million and the Life
Sciences Vital Fluids business ("VF business") of $0.8 million, included in Other Products and
Services, were partially offset by lower net sales from the Performance Materials ("PM") and
Thermal/Acoustical Metals ("T/A Metals") segments of $2.1 million and $0.7 million, respectively.
Higher consumer demand in North America for vehicles on Lydall's existing platforms and new
platform awards contributed to the increased net sales for the T/A Fibers segment. Lower net sales
for the Performance Materials segment were primarily due to decreased volumes of Industrial
Thermal Insulation products of $1.4 million, specifically with lower sales of electrical papers
products, as the product line was sold to a customer in a prior year. 

The Company reported operating income of $2.0 million, or 2.2% of net sales, in the fourth quarter
of 2012 compared to $4.4 million, or 4.9% of net sales, in the fourth quarter of 2011.  The T/A
Fibers segment reported operating income of $3.8 million in Q4 2012, an improvement of $3.1
million compared to Q4 2011, due to improved gross profit as a result of increased net sales,
improved manufacturing processes and a lower cost structure. The VF business reported operating
income of $0.3 million in Q4 2012, an improvement of $0.6 million compared to Q4 2011, primarily
due to increased net sales in blood filtration and bioprocessing products and a lower cost
structure. The PM segment broke even during the fourth quarter of 2012, a decrease in operating
income of $3.0 million compared to Q4 2011, primarily due to lower gross profit in Q4 2012. Lower
net sales of $2.1 million in Q4 2012, unfavorable mix of product sales and under-absorption of
fixed overhead costs contributed to lower gross profit in the PM segment. Also, Q4 2012 included
an asset impairment charge of $0.3 million, while Q4 2011 included $0.4 million of gain from
services provided under a licensing agreement. T/A Metals operating income in the current quarter
was lower by $1.7 million compared to Q4 2011, primarily due to lower gross profit as a result of
unfavorable mix in sales between parts and tooling. Also, the fourth quarter of 2011 included $0.8
million of gross profit associated with a completed pricing negotiation with a customer that was
related to shipments during the first nine months of 2011.  

The Company previously announced a change to its information technology software and systems
strategy from a project involving an ERP reimplementation to a project involving an ERP upgrade
and some additional applications software. As a result of this change in IT strategy, the Company
recorded a non-cash $1.8 million asset impairment charge in the quarter ended December 31, 2012
($1.5 million in corporate office expenses and $0.3 million in the Performance Materials segment).


Income tax benefit of $0.5 million in Q4 2012 included a reversal of valuation allowance against
foreign tax credit carryovers of $1.3 million, or $0.08 per share, as these credits will be used
to offset 2012 or future U.S. taxable income. 

Dale Barnhart, President and Chief Executive Officer, stated, "Lydall reported mixed results for
the fourth quarter of 2012. Our Thermal/Acoustical Fibers segment continued to benefit from strong
consumer demand for vehicles in the U.S. and sustainable operating improvements. However, our
Performance Materials segment was negatively impacted by lower demand and mix of products sold to
our customers. Overall, I am pleased with 2012, as all segments and OPS generated operating income
in a volatile global economic environment.

"Entering 2013, we remain cautiously optimistic despite the continued uncertainty in the
macro-economic environment. Instability of the global economy, particularly in Europe and Asia,
provides an element of risk and uncertainty in the Company's near term outlook for the Performance
Materials and Thermal/Acoustical Metals segments. However, in the Performance Materials segment,
we are beginning to see positive signs in certain markets for Industrial Thermal Insulation
products in the U.S. and Industrial Filtration products in Asia.  As always, we remain focused on
increasing margins in all operations and are dedicated to improving operating efficiency through
Lean Six Sigma programs."

Conference Call

Lydall will host a conference call today at 11:00 a.m. ET to discuss results for its fourth
quarter and year ended December 31, 2012 as well as general matters related to its businesses and
markets. The call may be accessed at (877) 303-3204 and will be webcast live on the Company's web
site www.lydall.com
http://www.globenewswire.com/newsroom/ctr?d=10023009&l=17&a=www.lydall.com&u=http%3A%2F%2Fwww.lydall.com%2F
 under the Investor Relations' section. A recording of the call will be available from 2:00 p.m.
ET on February 26, 2013 through midnight on March 5, 2013 at (855) 859-2056 or (404) 537-3406,
pass code 14364921. Also, additional information including a presentation outlining key financial
data supporting today's conference call can be found on the Company's website www.lydall.com
http://www.globenewswire.com/newsroom/ctr?d=10023009&l=17&a=www.lydall.com&u=http%3A%2F%2Fwww.lydall.com%2F
 under the Investor Relations' section.

Lydall, Inc. is a New York Stock Exchange listed company, headquartered in Manchester,
Connecticut. The Company, with operations in the U.S., France, the Netherlands and Germany and
sales offices in the U.S., Europe, and Asia, focuses on manufacturing specialty engineered
products for the thermal/acoustical, filtration/separation and bio/medical markets. Lydall(R) is a
registered trademark of Lydall, Inc. in the U.S. and other countries. All product names are
trademarks of Lydall, Inc. or Charter Medical, Ltd.

Cautionary Note Concerning Factors That May Affect Future Results

This press release contains "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. Any statements contained in this press release that
are not statements of historical fact may be deemed to be forward-looking statements. All such
forward-looking statements are intended to provide management's current expectations for the
future operating and financial performance of the Company based on current expectations and
assumptions relating to the Company's business, the economy and other future conditions.
Forward-looking statements generally can be identified through the use of the words "believes,"
"anticipates," "may," "plans," "projects," "expects," "estimates," "forecasts," "predicts,"
"targets," and other similar expressions in connection with the discussion of future operating or
financial performance. Because forward-looking statements relate to the future, they are subject
to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such
risks and uncertainties include, among others, worldwide economic cycles that affect the markets
which the businesses serve could affect demand for the Company's products and impact the Company's
profitability, disruptions in the global credit and financial markets, including diminished
liquidity and credit availability, swings in consumer confidence and spending, unstable economic
growth, fluctuations in unemployment rates, and increases in fuel prices, which could cause
economic instability and could have a negative impact on the Company's results of operations and
financial condition. Accordingly, the Company's actual results may differ materially from those
contemplated by these forward-looking statements. Therefore, investors are cautioned against
relying on any of these forward-looking statements. They are neither statements of historical fact
nor guarantees or assurances of future performance. Additional information regarding the factors
that may cause actual results to differ materially from these forward-looking statements is
available in our filings with the Securities and Exchange Commission, including the risks and
uncertainties identified in Part I, Item 1A - Risk Factors of Lydall's Annual Report on Form 10-K
for the year ended December 31, 2012. 

These forward-looking statements speak only as of the date of this press release, and Lydall does
not assume any obligation to update or revise any forward-looking statement made in this press
release or that may from time to time be made by or on behalf of the Company. Information may also
be obtained from the Company Contact:  David D. Glenn, Director of Business Development and
Investor Relations, One Colonial Road, Manchester, CT 06042; Telephone 860-646-1233, email:
investor@lydall.com
http://www.globenewswire.com/newsroom/ctr?d=10023009&l=21&a=investor%40lydall.com&u=mailto%3Ainvestor%40lydall.com
.

 Summary of Operations                                                                                       
 In thousands except per share data                                                                          
 (Unaudited)                                                                                             
                                                             Quarter Ended        Twelve Months Ended      
                                                             December 31,         December 31,             
                                                             2012      2011      2012        2011        
                                                                                                         
 Net sales                                                   $ 90,468  $ 89,343  $ 378,924   $ 383,588   
 Cost of sales                                               73,164    72,411    301,117     316,082     
 Gross profit                                                17,304    16,932    77,807      67,506      
                                                                                                         
 Selling, product development and administrative expenses    15,271    12,946    57,239      52,937      
 Gain on sale of product line, net                           --        (405)     (810)       (1,619)     
 Operating income                                            2,033     4,391     21,378      16,188      
                                                                                                         
 Interest expense                                            92        94        365         880         
 Other expense (income), net                                 34        (107)     31          (94)        
 Income from continuing operations before income taxes       1,907     4,404     20,982      15,402      
                                                                                                         
 Income tax (benefit) expense                                (520)     1,736     4,176       6,355       
 Income from continuing operations                           2,427     2,668     16,806      9,047       
 Income from discontinued operations, net of tax             --        --        --          4,732       
 Net income                                                  $ 2,427   $ 2,668   $ 16,806    $ 13,779    
                                                                                                         
 Basic earnings per share:                                                                               
 Continuing operations                                       $ 0.15    $ 0.16    $ 1.01      $ 0.54      
 Discontinued operations                                     $ --      $ --      $ --        $ 0.28      
 Net Income                                                  $ 0.15    $ 0.16    $ 1.01      $ 0.82      
                                                                                                         
 Diluted earnings per share:                                                                             
 Continuing operations                                       $ 0.14    $ 0.16    $ 0.99      $ 0.54      
 Discontinued operations                                     $ --      $ --      $ --        $ 0.28      
 Net Income                                                  $ 0.14    $ 0.16    $ 0.99      $ 0.82      
                                                                                                         
 Weighted average common shares outstanding                  16,641    16,779    16,717      16,753      
 Weighted average common shares and equivalents outstanding  16,938    16,918    16,973      16,896      
                                                                                                         
                                                                                                         
 Summary of Segment Information and Other Products and Services                                              
 In thousands                                                                                            
                                                             Quarter Ended        Twelve Months Ended      
                                                             December 31,         December 31,             
                                                             2012      2011      2012        2011        
 Net Sales                                                                                               
                                                                                                         
 Performance Materials Segment                               $ 25,614  $ 27,699  $ 118,035   $ 134,059   
 Thermal/Acoustical Metals Segment                           37,527    38,207    153,921     155,936     
 Thermal/Acoustical Fibers Segment                           23,724    20,406    94,436      81,747      
 Other Products and Services:                                                                            
 Life Sciences Vital Fluids                                  4,547     3,711     16,853      14,670      
 Reconciling Items                                           (944)     (680)     (4,321)     (2,824)     
 Consolidated Totals                                         $ 90,468  $ 89,343  $ 378,924   $ 383,588   
                                                                                                         
 Operating Income                                                                                        
                                                                                                         
 Performance Materials Segment                               $ (27)    $ 2,961   $ 10,400    $ 18,194    
 Thermal/Acoustical Metals Segment                           2,979     4,671     14,708      15,915      
 Thermal/Acoustical Fibers Segment                           3,795     673       12,851      (3,055)     
 Other Products and Services:                                                                            
 Life Sciences Vital Fluids                                  316       (287)     1,190       (1,040)     
 Corporate Office Expenses                                   (5,030)   (3,627)   (17,771)    (13,826)    
 Consolidated Totals                                         $ 2,033   $ 4,391   $ 21,378    $ 16,188    


                                                                                                                     
                                                                                                                     
 Financial Position                                                                                                  
                                                                                                                     
 In thousands except ratio data                        December 31, 2012  December 31, 2011                          
 (Unaudited)                                                                                                         
 Cash and cash equivalents                             $ 63,623           $ 30,905                                   
 Short-term investments                                $ --               $ 12,015                                   
 Working capital                                       $ 105,451          $ 86,021                                   
 Total debt                                            $ 2,411            $ 3,296                                    
 Stockholders' equity                                  $ 174,496          $ 160,852                                  
 Total capitalization                                  $ 176,907          $ 164,148                                  
 Current ratio                                         3.3                2.9                                        
 Total debt to total capitalization                    1.4%               2.0%                                       
                                                                                                                     
                                                                                                                     
 Cash Flows                                                                                                          
 In thousands                                                                                                          
 (Unaudited)                                           Quarter Ended                          Twelve Months Ended      
                                                       December 31,                           December 31,             
                                                       2012               2011               2012        2011        
                                                                                                                     
 Net cash provided by operating activities             $ 15,194           $ 12,583           $ 34,405    $ 14,657    
 Net cash (used for) provided by investing activities  $ (3,459)          $ (2,277)          $ 1,611     $ (6,309)   
 Net cash used for financing activities                $ (320)            $ (622)            $ (3,871)   $ (1,621)   
 Depreciation and amortization                         $ 3,309            $ 3,434            $ 13,572    $ 14,478    
 Capital expenditures                                  $ (3,459)          $ (2,939)          $ (11,404)  $ (8,884)   
                                                                                                                     
                                                                                                                     
 Common Stock Data                                                                                                   
 Quarter Ended December 31,                            2012               2011                                       
                                                                                                                     
 High                                                  $ 14.65            $ 11.70                                    
 Low                                                   $ 11.68            $ 7.75                                     
 Close                                                 $ 14.34            $ 9.49                                     
                                                                                                                     
 During the fourth quarter of 2012, 3,123,621 shares of Lydall common stock (LDL) were traded on the New York Stock Exchange. 


CONTACT: Lydall, Inc.
         One Colonial Road    
         Manchester, CT 06042-2378

         Telephone 860-646-1233
         Facsimile 860-646-4917
         www.lydall.com