Forward-looking statements in Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") are not guarantees of future
performance and involve risks and uncertainties that could cause actual results
to materially differ from those projected. Refer to the "Forward-Looking
Statements" section of this MD&A, Part II, Item 1A - Risk Factors of this Form
10-Q, and Part I, Item IA - Risk Factors of the Company's Annual Report on Form
10-K for the year ended
OVERVIEW AND OUTLOOK Business
The Performance Materials segment is a worldwide leader in delivering innovative specialty filtration, sealing, and advanced materials solutions for demanding applications. Specifically, the segment's offerings include: (1) specialty filtration media solutions for a variety of applications in the global air and liquid filtration market such as personal protective equipment ("PPE"), indoor air quality, life sciences, transportation, and industrial applications; (2) gasket materials and parts for a broad range of applications in the global sealing market for parts in large/heavy duty equipment for commercial, industrial, agriculture and construction end markets; and (3) advanced materials that include highly engineered insulation solutions for cryogenic storage of liquid hydrogen/nitrogen, energy storage, and advanced composite materials for aerospace and defense applications.
The Technical Nonwovens segment is a global leader in engineered nonwoven materials for industrial filtration applications and advanced materials products. The primary industrial filtration markets include air pollution and emissions control, power generation, and liquid filtration solutions. Advanced materials products include geotextile felts for separation, reinforcement, filtration, drainage, and protection; thermal and acoustic insulation for transportation and automotive applications; and highly customized and technical solutions for acoustic media, medical, building & construction, and safety apparel. Specifically, the segment's offerings include needle punched nonwoven and highly engineered felts made from a variety of synthetic fibers. Automotive media is provided to Tier 1 and Tier 2 suppliers as well as the Company's Thermal Acoustical Solutions segment.
The Thermal Acoustical Solutions segment offers a full range of innovative engineered products tailored for the transportation and industrial sectors to shield sensitive components from high heat, improve exhaust gas treatment and lower harmful emissions as well as assist in the reduction of noise, vibration, and harshness (NVH).
Recent Developments Merger Agreement
As previously announced, on
Subject to the terms and conditions of the Merger Agreement, each share of
common stock, par value
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converted into the right to receive
The completion of the Merger is subject to customary closing conditions,
including, among others, (i) the approval of the Company's stockholders holding
a majority of the outstanding shares of common stock and (ii) the expiration or
termination of any waiting period applicable to the consummation of the Merger
under the Hart-Scott Rodino Antitrust Improvements Act of 1976, and the
expiration of applicable waiting periods or clearances of the Merger, as
applicable, under the antitrust and foreign investment laws of certain other
jurisdictions. Subject to the satisfaction or (to the extent permissible) waiver
of such conditions, the Merger is currently expected to close in the second half
of 2021. However, the Company cannot assure completion of the Merger by any
particular date, if at all or that, if completed, it will be completed on the
terms set forth in the Merger Agreement. The Company's Condensed Consolidated
Financial Statements and related disclosures for the three and six-month periods
ended
COVID-19 Pandemic
In early 2020, the
Among other factors, a strong rebound in demand in many end markets in conjunction with supply disruptions is causing higher commodity prices for certain of the Company's primary raw material inputs including, but not limited to, aluminum, aluminized steel, polypropylene, and microfiber glass. Supply chain issues, including transportation and logistics problems, are causing periodic supply chain disruptions, and in selected cases, material shortages in various markets served by the Company. These issues have caused an adverse impact on the Company's financial performance. Given the dynamic nature of the situations, we cannot estimate with certainty the future impacts from higher commodity prices, supply chain issues and the COVID-19 pandemic on our financial condition, results of operations or cash flows.
Performance Materials Developments
Market Trends
Demand for the Performance Materials segment's filtration and sealing and advance solutions products continue to be strong. However, in the second quarter of 2021, the segment experienced some supply chain challenges for select raw materials used in sealing products, and higher commodity prices for polypropylene and other fibers used in filtration products. Although the Company expects this trend to continue through 2021, the Company is working to mitigate inflationary costs through customer pricing where contracts allow for such increases to be passed on to customers.
Other
As previously disclosed, the Performance Materials segment undertook actions to
exit underperforming facilities in
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Technical Nonwovens Developments
Market Trends
Demand for the Technical Nonwovens segment's geosynthetic, medical, and
filtration products is strong. The segment has experienced lower demand in
Thermal Acoustical Solutions Developments
Market Trends
Customer demand continues to be strong for the Thermal Acoustical Solutions segment. However, customer orders from month to month have been volatile as certain automotive customers temporarily slow or halt production of certain vehicle models due to a global semiconductor chip shortage negatively impacting the automotive industry and its supply chain. As a result, customer orders have been delayed adversely impacting the segment's financial performance during the second quarter. Raw material shortages affecting the automotive industry could continue to have a negative impact on the segment's financial performance for the remainder of 2021.
Consistent with the Company's other segments, the Thermal Acoustical Solutions segment is experiencing higher commodity pricing, primarily for aluminum, aluminized steel, and polyester fiber. The segment is able to pass through the higher commodity costs for certain customers; however, commodity price increases have had, and could continue to have, an adverse impact on the segment's financial performance in 2021 to the extent these costs cannot be passed on to customers.
SECOND QUARTER 2021 HIGHLIGHTS
Below are financial performance highlights for the three-month period ended
The chart below reflects the change in consolidated net sales by segment:
[[Image Removed: ldl-20210630_g1.jpg]]
Consolidated net sales were
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an increase in sales of
[[Image Removed: ldl-20210630_g2.jpg]]
(1) Includes Parts volume and pricing change of
Consolidated operating income was
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The chart below reflects the change in consolidated operating income by segment:
[[Image Removed: ldl-20210630_g3.jpg]]
Consolidated net income was
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