Lydall Announces Financial Results for the First Quarter Ended March 31, 2009

MANCHESTER, CT, Apr 30 (MARKET WIRE) --
LYDALL, INC. (NYSE: LDL) today announced financial results for the first
quarter ended March 31, 2009.

Net sales for the quarter ended March 31, 2009 were $54.3 million compared
with $89.9 million for the quarter ended March 31, 2008. Excluding the
impact of foreign currency translation, net sales decreased by $32.4
million in the first quarter of 2009 compared with the first quarter of
2008. Net loss for the current quarter of ($4.5) million, or ($.27) per
diluted share, included pre-tax restructuring expenses of $2.1 million, or
$.08 per diluted share, related to the consolidation of the North American
automotive operation. Excluding the impact of these restructuring
expenses, net loss was ($3.2) million, or ($.19) per diluted share for the
first quarter of 2009. Net income was $3.2 million, or $.19 per diluted
share, for the first quarter of 2008.

Gross margin as a percent of net sales for the first quarter of 2009 was
11.0% compared with 23.2% for the same quarter of 2008. Gross margin
percentage in the first quarter of 2009 was significantly impacted by the
reduction in consolidated net sales causing fixed costs to be a greater
percentage of net sales. This reduction in gross margin percentage was
primarily attributable to the Company's Thermal/Acoustical segment, and to
a lesser extent, the Company's Performance Materials segment and Other
Products and Services. Restructuring related charges associated with the
consolidation of the North American automotive operation impacted the
Company's gross margin percentage by approximately 380 basis points in the
first quarter of 2009. The Company's gross margin percentage in the first
quarter of 2008 was positively impacted by a short-term replacement part
opportunity at the Company's European automotive operation.

Selling, product development and administrative expenses were $13.1
million for the first quarter ended March 31, 2009 compared with $15.8
million for the same quarter of 2008. Selling, product development and
administrative expenses decreased by $2.7 million primarily due to
decreases in salaries and wages expense, incentive compensation expense
and sales commission expense, as well as reductions in other
discretionary spending. The lower salaries and wages expense was due to
reductions in workforce that occurred during the last half of 2008 and
into the first quarter of 2009. The total number of selling, product
development and administrative employees for the Company has decreased by
approximately 15% since March 31, 2008.

Net cash used for operating activities was $3.7 million in the first
quarter of 2009 compared with net cash provided by operating activities of
$8.2 million in the first quarter of 2008. As of March 31, 2009, the
Company had $7.5 million of cash and no borrowings under its credit
facilities. Other than capital lease obligations, the Company had no
significant debt outstanding at March 31, 2009.

Dale Barnhart, President and Chief Executive Officer, commented,
"Unprecedented global economic conditions impacted all of the markets that
Lydall serves, negatively affecting our financial results for the first
quarter. The Thermal/Acoustical segment continued to be severely impacted
by reductions in automobile production in the U.S. and Europe, while our
Performance Materials segment and Other Products and Services were also
impacted by lower demand.

"We remain focused on aggressively reducing costs and managing cash and
working capital. Our Lean Six Sigma program continues to generate
productivity gains and remove costs from the organization. We expect Lean
Six Sigma will also assist the Company in reducing its working capital,
particularly our inventory levels, resulting in improved cash generation
as we move forward in 2009.

"We continued cost reductions in the first quarter of 2009, including a
further reduction in our global workforce by approximately 7.5%, primarily
from headcount reductions at the Company's Thermal/Acoustical global
automotive operations. We also made the difficult decision to reduce the
annual base salaries by 3% of all executive officers and most domestic
salaried employees of the Company and its subsidiaries, effective as of
March 16, 2009. In addition, the Company's matching contributions to its
sponsored 401(k) plan will be suspended, beginning with the first payroll
of May 2009, for all non-union, domestic employees.

"In our North American automotive business, we were invited by Chrysler
and General Motors to participate in the U.S. Department of Treasury Auto
Supplier Support Program. The intent of the Program is to provide
suppliers of the U.S. automotive industry with access to
government-supported protection for qualified accounts receivable from
domestic automakers participating in the Program. We have completed the
necessary documentation to request participation in the Program with both
Chrysler and General Motors and are waiting to be accepted into the
Program.

"Also in our North American automotive business, we continue to accelerate
the North American automotive consolidation, and now expect it to be
substantially complete during the second quarter of 2009, which will allow
the Company to begin to realize savings from the consolidation earlier
than previously anticipated. We expect annualized savings of
approximately $3.5 million to $4.0 million from the consolidation. In
addition, we now expect restructuring expenses over the consolidation
period to be approximately $7.0 million, a reduction of $0.4 million from
our previous estimate. We are also aggressively working with our
customers to quote on platforms that are being transferred from
competitors due to this challenging economic environment and have started
to be awarded some platforms.

"While we cannot predict when global economic conditions will improve, we
believe that the Company is positioning itself well to be stronger
operationally when conditions improve in the markets that we serve."

Segment Information

Performance Materials - Performance Materials segment net sales were $22.4
million in the current quarter compared with $29.8 million in the same
period last year. Excluding the impact of foreign currency translation,
segment net sales decreased by $6.4 million in the current quarter. Net
sales of filtration products decreased by $3.2 million primarily due to
reductions in air filtration product net sales. Net sales of industrial
thermal insulation products decreased by $3.2 million in the first quarter
of 2009 as compared to the same period of 2008. This decrease was caused
by a reduction in energy and industrial products net sales of $1.6
million, due to lower demand in the electrical and cryogenic markets, and
a reduction in net sales of building and appliance insulation products of
$1.6 million as the Company continues to be impacted by lower construction
of new homes and commercial buildings in the U.S.

For the current quarter, operating income for the segment was $1.3
million, compared to operating income of $4.6 million for the first
quarter 2008. Lower net sales and the resulting lower gross margin, and
to a lesser extent start-up costs at our Solutech operation acquired in
December 2008, caused the reduction in operating income during the first
quarter of 2009.

Thermal/Acoustical - Segment net sales decreased to $26.9 million for the
quarter ended March 31, 2009 compared with $51.3 million for the same
period of 2008. Excluding the impact of foreign currency translation, net
sales decreased in the current quarter by $22.3 million when compared to
the same period a year ago. Automotive parts net sales decreased by $17.8
million and tooling net sales declined by $4.5 million, as the Company's
automotive operations were significantly impacted by lower automobile
production in the U.S. and Europe. According to CSM Worldwide, an
automotive market forecasting service provided to suppliers, in the first
quarter of 2009 production of cars and light trucks in North America and
Europe was estimated to be lower by approximately 45%, as compared to the
same period of 2008. Automotive parts net sales in the first quarter of
2008 included a short-term replacement part opportunity at the Company's
European automotive operation. Excluding this short-term replacement part
opportunity, the Company's automotive parts net sales for the first
quarter of 2009 were lower by approximately 38% compared to the first
quarter of 2008.

For the current quarter, operating loss for the segment was ($4.3) million
compared with operating income of $4.7 million in the first quarter of
2008. The significant decrease in net sales, as well as restructuring
related charges of $2.1 million related to the North American automotive
consolidation, contributed to the operating loss.

Other Products and Services (OPS) - OPS net sales were $5.4 million in the
first quarter of 2009, a decrease of $3.8 million compared to the same
quarter of 2008. This decrease was due to lower net sales from the
Company's Affinity(R) temperature control equipment business of $2.7
million and the vital fluids business of $1.1 million. The decrease in
Affinity net sales during the current quarter was attributable to the
continued reduction in capital equipment spending in the semiconductor
industry that the Company serves. The decrease in vital fluids' products
net sales was primarily attributable to decreased volumes in blood
filtration product net sales and bioprocessing net sales.

Operating loss for OPS was ($0.8) million in the first quarter of 2009,
compared to an operating loss of ($0.2) million for the first quarter
2008. The Affinity business reported an operating loss of ($0.4) million
in the first quarter of 2009, compared to an operating loss of ($0.5)
million in the first quarter of 2008. The operating loss reported by the
vital fluids business was due to lower net sales and lower gross margin
as a percentage of net sales primarily due to product mix.

Conference Call

Lydall will host a conference call today at 10:00 a.m. ET to discuss its
first quarter ended March 31, 2009 results as well as general matters
related to its businesses and markets. The call may be accessed in a
listen-only mode at 877-604-9665 and will be webcast live on the Company's
web site www.lydall.com 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 and filtration/separation markets.

Cautionary Note Concerning Factors That May Affect Future Results

Stockholders are referred to Lydall's 2008 Annual Report on Form 10-K,
"Management's Discussion and Analysis of Financial Condition and Results
of Operations - Cautionary Note Concerning Factors That May Affect Future
Results," and "Risk Factors" which outline certain risks regarding the
Company's forward-looking statements. Such risks include, among others:
the current crisis in the global credit and financial markets and decline
in economic growth may impact the Company's future results. The current
tightening of credit and reduction in economic activity may lead consumers
and businesses to postpone spending which may cause customers to cancel,
decrease or delay their existing or future orders with Lydall. The
continuing disruption in the capital markets could also restrict the
Company's access to credit in the future. The current economic environment
could also result in customers not being able to make payments to the
Company when due or suppliers not being able to supply sufficient levels
of inventory to Lydall when required. In addition, a major downturn of the
automotive market, dependence on large customers, pricing pressures from
OEM automotive customers, and changes in raw material pricing and supply
could impact the Company's financial results. Also, increases in energy
pricing, inherent risks at international operations, including
fluctuations in foreign exchange rates, the timing and performance of
new-product introductions, compliance with environmental laws and
regulations, outcomes of legal contingencies or assertions by or against
the Company relating to intellectual property rights, changes in tax laws
and rates, and strategic transactions, including restructurings, can
impact Lydall's projected results. The Company's strategic transactions,
including the consolidation of the North American automotive operations
and the acquisition of DSM Solutech B.V. also involve risks that could
impact the Company's projected results. For further details on these
risks and other pertinent information on Lydall, copies of the Company's
Forms 10-K, 10-Q and 8-K are available on Lydall's web site,
www.lydall.com. Information may also be obtained from the Company
Contact: Thomas P. Smith, Vice President, Chief Financial Officer and
Treasurer, at One Colonial Road, Manchester, CT 06042; Telephone
860-646-1233, email: investor@lydall.com

Summary of Operations
In thousands except per share data
(Unaudited)

Quarter Ended Quarter Ended
March 31, March 31,
------------- -------------
2009 2008
============= =============

Net sales $ 54,333 $ 89,895
Cost of sales 48,340 69,050
------------- -------------
Gross margin 5,993 20,845
Selling, product development and
administrative expenses 13,082 15,772
Operating (loss) income from continuing
operations (7,089) 5,073
Interest expense 134 115
Other income, net (127) (128)
------------- -------------
(Loss) income from continuing operations
before income taxes (7,096) 5,086
Income tax (benefit) expense from continuing
operations (2,576) 1,882
------------- -------------
(Loss) income from continuing operations (4,520) 3,204
Loss from discontinued operations, net of tax - (9)
------------- -------------
Net (loss) income $ (4,520) $ 3,195
============= =============

Basic (loss) earnings per share:
Continuing operations $ (0.27) $ 0.20
Discontinued operations $ - $ -
Net (loss) income $ (0.27) $ 0.19
============= =============

Diluted (loss) earnings per share:
Continuing operations $ (0.27) $ 0.20
Discontinued operations $ - $ -
Net (loss) income $ (0.27) $ 0.19
============= =============

Weighted average common shares outstanding 16,544 16,403
Weighted average common shares and
equivalents outstanding 16,544 16,416

Summary of Segment Information
In thousands
(Unaudited) Quarter Ended
March 31,
------------------------------
2009 2008
============== ==============
Net Sales

Performance Materials $ 22,377 $ 29,782
Thermal/Acoustical 26,874 51,300
Other Products and Services 5,394 9,177
Reconciling Items (312) (364)
-------------- --------------
Consolidated Totals $ 54,333 $ 89,895
============== ==============

Operating (Loss) Income

Performance Materials $ 1,256 $ 4,612
Thermal/Acoustical (4,309) 4,666
Other Products and Services (800) (228)
Corporate Office Expenses (3,236) (3,977)
-------------- --------------
Consolidated Totals $ (7,089) $ 5,073
============== ==============

Financial Position
In thousands except ratio data
(Unaudited) March 31, December 31,
2009 2008
--------- ------------

Cash and cash equivalents $ 7,534 $ 13,660
Working capital $ 56,551 $ 58,659
Total debt $ 7,338 $ 8,154
Stockholders' equity $ 158,067 $ 166,145
Total capitalization $ 165,405 $ 174,299
Current ratio 2.5 2.6
Total debt to total capitalization 4.4% 4.7%

Cash Flows
In thousands
(Unaudited) Quarter Ended
March 31,
------------------
2009 2008
======== ========

Net cash (used for) provided by operating
activities $ (3,740) $ 8,156
Net cash used for investing activities $ (1,830) $ (2,725)
Net cash used for financing activities $ (413) $ (235)
Depreciation and amortization $ 4,157 $ 3,963
Capital expenditures $ 1,830 $ 2,725

Common Stock Data
Quarter Ended March 31, 2009 2008
======= =======

High $ 6.07 $ 11.66
Low $ 1.93 $ 8.32
Close $ 2.97 $ 11.45

During the first quarter of 2009, 5,188,137 shares of Lydall common stock
(LDL) were traded on the New York Stock Exchange.

For further information:
Thomas P. Smith,
Vice President, CFO and Treasurer
860-646-1233
www.lydall.com
Email: investor@lydall.com

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