Lean Six Sigma to remove costs from LYDALL
LYDALL INC 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.