Lydall reports near stable hike in Q4 sales

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.

Lydall Inc