Lydall Acquires Industrial Filtration Business of Andrew Industries Limited

Company Release - 02/20/2014 16:15

- Strengthens Lydall's position as an industry leader in filtration and engineered materials
- Diversifies Lydall's end-markets and geographic revenue base
- Provides attractive financial returns with significant EPS accretion

 MANCHESTER, Conn., Feb. 20, 2014 (GLOBE NEWSWIRE) -- Lydall, Inc. ("Lydall" or the "Company") (NYSE:LDL), today announced that it has acquired the industrial filtration businesses ("Andrew Filtration") of Andrew Industries Limited ("Andrew"), an Altham, United Kingdom-based corporation, for $83 million in cash. The transaction strengthens Lydall's position as an industry-leading, global provider of filtration and engineered materials products and diversifies the Company's end markets and geographic revenue base.

Andrew Filtration is a leading global manufacturer and supplier of non-woven felt filtration media and filter bags used primarily in industrial air filtration applications. Andrew Filtration's products are highly regarded and are sold under the brands SOUTHERN FELTTM in the United States, ANDREW WEBRONTM in Europe and CHINA FELT COMPANYTM in Asia. Non-woven filter media is the most commonly used filter technology to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, food, and pharmaceutical. The acquired business consists of operations in the United States, the United Kingdom, and China, and approximately 500 employees.

For the 12 months ended December 31, 2013, Andrew Filtration's unaudited revenue was approximately $127 million and unaudited EBITDA was approximately $14 million, excluding non-recurring items. Once the business is fully integrated, the Company expects to leverage its operating discipline and support functions to generate anticipated annual cost savings of approximately $4 million by 2016.

The acquisition is expected to be accretive to Lydall's 2014 full-year earnings and free cash flow, inclusive of transaction expenses, the effect of inventory step-up, and incremental amortization of intangible assets. Lydall's financial results for the Fourth Quarter 2013 will include approximately $1 million of transaction expenses and it is estimated that approximately $3 million of transaction expenses will be incurred in the First Quarter 2014.

The acquisition is being financed through a combination of cash-on-hand and $60 million of borrowings from the Company's recently expanded $100 million revolving credit facility.

Dale Barnhart, Lydall's President and Chief Executive Officer, stated, "The acquisition of Andrew Filtration expands our global footprint, adds complementary and new technologies, as well as substantial scale that provides a platform for long-term growth, and better positions us to deliver meaningful shareholder value." Barnhart added, "With this acquisition, Lydall's filtration and engineered materials segments are expected to contribute approximately 50 percent of Lydall's consolidated revenue. We expect that new growth opportunities will result from manufacturing and selling complementary products and leveraging Andrew Filtration's well-established presence in faster-growing Asian markets. We also expect to apply Lydall Lean Six Sigma principles to the acquired businesses and achieve margin and working capital improvements as we have previously demonstrated in our existing operations."

Ted Andrew, Andrew's Chairman, commented, "I could not be more pleased to have Andrew's industrial filtration business become a part of the Lydall family. I know Lydall, like Andrew Industries, prides itself on upholding the highest standards of commercial and technical integrity, innovation, and quality so the businesses fit extremely well together. I wish Lydall and all the employees working within the filtration business every success."

C. W. Downer & Co., an independent global middle-market investment bank based in Boston, MA, acted as exclusive financial advisor to Lydall, Inc., on this acquisition.

Conference Call and Webcast

Lydall will host a conference call on February 21, 2014 at 9:00 a.m. ET to discuss this announcement. Pre-registration for this call, as well as a live webcast can be found at the Company's website www.lydall.com under the Investor Relations' Section. The call may be accessed at (888) 317-6016, from within the U.S., or (412) 317-6016, internationally. A recording of the call will be available from 11:00 a.m. ET on February 21, 2014 through 9:00 a.m. ET on March 3, 2014 at (877) 344-7529 or (412) 317-0088, passcode 10040444. Also, additional information, including a presentation supporting the conference call, can be found on the Company's website www.lydall.com under the Investor Relations' Section.

About Lydall

Lydall, Inc. (NYSE:LDL) is a New York Stock Exchange listed company, headquartered in Manchester, Connecticut. The Company, with operations in the U.S., France, the Netherlands, Germany, and China, 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® 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.

About Andrew

Andrew Industries Limited is a multi‑national manufacturing business founded in 1894 and headquartered in the UK. The company is privately owned and has three divisions being Filtration, Engineering, and Laundry. Each division comprises several wholly owned subsidiary companies strategically located around the world to service markets which offer opportunities for growth and profitability. Following the sale of the industrial filtration businesses to Lydall, the ongoing annual revenue of the retained Andrew's Engineering and Laundry divisions will be approximately $110 million.

Cautionary Note Concerning Factors That May Affect Future Results

This press release contains "forward-looking statements" within the meaning of the U.S. federal securities laws. Any statements contained in this press release that are not statements of historical fact, including statements regarding margin and working capital improvement results from application of Six Sigma principles, statements regarding anticipated cost synergies by 2016, statements regarding anticipated transaction expenses, and statements about the expected impact of the acquisition on Lydall's future financial and operational performance and positioning 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," "signs," "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 that could affect demand for the Company's products and impact the Company's profitability, challenges encountered by Lydall in the integration of the acquired businesses, 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.

 CONTACT: For further information:

David D. Glenn
Director of Business Development and Investor Relations
Telephone 860-646-1233
Facsimile 860-646-4917
info@lydall.com
www.lydall.com