Boston, MA 05/13/2014 (wallstreetpr) – Lydall, Inc. (NYSE:LDL) reported positive growth in the first quarter ended March 31, 2014. Lydall’s net sales grew by 26.5% to $125.2 million compared to $99.0 million a year’s ego.
The organic growth of 7.3% was due to positive growth in sales across all business segments – Performance Materials (+5%), Thermal Metals (+5.6%), Thermal Fibers (+16.4%) and other products and services (+9.7%). In addition, the acquisition of Industrial Filtration further increased the overall net sales by $17.7 million (~18% increase in net sales).
The acquisition related expenses had an impact over the cost of sales, but, the organic increase in net sales improved the gross margin by 170 basis points to 21.9% (1Q2013: 20.2%). Sales growth across segment improved the segment operating income. Adjusted operating margin, as a result improved significantly by 410 basis points to 9% (1Q2013: 4.9%). Consequently, adjusted EPS was up by 135% to $0.40 versus $0.17 same period last year.
Yet to generate positive cash flow
Lydall, Inc. (NYSE:LDL) failed to generate positive operating cash flow due to higher change in working capital. Cash used in operating activities was $2.9 million with capital expenditure of $2.8 million. The acquisition related expenses compressed the net cash flow and ended with $51.1 million of cash as of March 31, 2014.
Lydall funded the acquisition through external borrowings of $60 million that raised the leverage ratio to 1.4x, significantly below the benchmark of 3.0x.
Lydall is financially sound with shareholders’ equity of $204.3 million and total debt of $61.6 million. So, the debt to capitalization ratio was 23.2%.
Final take
Lydall, Inc. (NYSE:LDL) continues to develop and deploy next generation product offerings to support organic growth in the Automotive segment. But, the Company keeps on investing in Filtration & Engineered Materials to evaluate the opportunity to expand that will help to drive revenue and improve the margins.
