LDL Lydall Inc

Management Discussion

• Cash was $48.9 million at September 30, 2019, compared to $49.2 million at December 31, 2018. Net cash provided by operations was $26.7 million in the third quarter of 2019 and $63.0 million in the nine months ended September 30, 2019, compared to $6.5 million in the third quarter of 2018 and $14.5 million in the nine months ended September 30, 2018. Improved cash flow, principally through working capital management, has allowed the Company to repay outstanding borrowings of approximately $38.0 million in 2019 and fund capital expenditures. As of September 30, 2019, there was approximately $110 million of availability under the Company's credit facility.
• The Company believes the weakness seen in both the Technical Nonwovens and Performance Materials segments is not expected to improve in the fourth quarter and may further deteriorate. As a result, the Company is aggressively adjusting its cost structure, and will record one-time severance related expenses of $2.0 million to $2.5 million in the fourth quarter, with savings of $4.0 million to $5.0 million anticipated in 2020. Further, the Company will be negatively impacted by the General Motors strike in the fourth quarter, and continues to focuss on reducing manufacturing costs in the Thermal Acoustical Solutions segment. As 2019 closes out, the Company expects strong cash generations that will allow the Company to continue to reduce its outstanding debt.
• On October 15, 2019, the Company announced that Sara A. Greenstein has been appointed President and Chief Executive Officer of Lydall, Inc., effective upon the commencement of her employment with Lydall, which will be on or before November 18, 2019. Ms. Greenstein will succeed Dale G. Barnhart, who will be retiring. In connection with these actions, the Company expects to incur one-time expense in the fourth quarter of 2019 of approximately $1.8 million.