- Email: [email protected]
Osmonics INC, USA
May 1999
Filtration Industry Analyst
Lydall Inc, USA
Osmonics Inc, USA
Key Figures (US$ million) Fourth quarter ended 31.12
Key Figures (US$ million) 1 Fourth quarter ended 31.12
1998
1997
Net Sales
57.7
58.9
Cost of Sales
42.8
Gross Margin
14.9
Operating Income/(Loss) Net Income/(Loss)
1998
1997
Net Sales
43.7
38.4
39.5
Cost of Sales
28.7
23.5
19.5
Gross Profit
15.0
14.9
(9.6)
7.1
Net Income
(6.4)
5.1
Net Income per Share
1.1
2.1
US$0.08
US$0.15
Twelve months ended 31.12
Twelve months ended 31.12 1998
1997
1998
1997
Net Sales
230.0
244.3
Net Sales
177.8
164.9
Cost of Sales
165.2
166.6
Cost of Sales
114.72
99.9
Gross Margin
64.8
77.6
Gross Profit
63.1
65.0
Operating Income
6.3
32.8
Net Income/(Loss)
(1.1)
9.8
Net Income
4.2
21.9
Net Income/(Loss) per Share US$(0.08)
US$0.68
1 Exceptper share data (fullydiluted). Earningsper share, excludinga special charge, would have been US$0.47 basic and US$0.46fully diluted. 2 Includesspecial charge of US$8.0 million,which relatesto in-process research and development,corporate restructuringand SAP/re-engineering cost.
Fiscal 1.998 was a difficult period for Lydall Inc, but it culminated in an eventful fourth quarter. The company encountered higher than expected costs, associated with a record number of automotive product launches and a contiauing softness in its filtration markets. The results from several of the company's mature businesses, which operated in a difficult environment for most of the year, were also disappointing, For the fourth quarter ended 31 December 1998, sales amounted to US$57.7 million, compared with US$58.9 million reported for the same period of 1997. Net income: would have been US$2.3 million before nonrecurring charges and impaimaent losses. After these adjustments, the cornpany posted a net loss of US$6.,1 million. For the year ended 31 December, sales
totalled US$230.0 million, compared with US$244.3 million in 1997. Net income would have been US$12.9 million, before fourth quarter non-recurring charges and impairment losses totalling US$8.7 million. The company's net income after these adjustments was US$4.2 raillion, compared with US$21.9 million posted for 1997. Sales to the filtration markets were 3 per cent lower in 1998 than in 1997. The lingering sluggishness of the air filtration market continued throughout 1998, but Lydall says that it is seeing improvements in the first quarter of 1999. An expanded line of ASHRAE media, an addition to the company's meltblown products, and enhanced activated carbon media are a few growth initiatives in this market that should strengthen results in the short-term. •
Osmonics Inc's sales for the fourth quarter ended 31 December 1998 rose 14 per cent from US$38.4 million, recorded for the same period of 1997, to US$43,7 million. At US$177.8 million, the company's sales for the year ended 3l December were 8 per cent higher than the figure of US$164.9 million recorded for 1997. For the fourth quarter of 1998 net income amounted to US$1.1 million. For fiscal 1998, the company made a loss of US$1.1 million, if the second quarter 1998 special charges are taken into account. The fourth quarter lower gross margin was caused mainly by most of the manufacturing facilities operating under capacity for part or all of the quarter. In addition, product mix, selected reduced pricing, and equipment start-up expenses were higher than anticipated.
Facility consolidation efforts during the third and fourth quarters of 1998. and product rationalisation are expected to improve gross margin in 1999. Extra effort is also being made to improve capacity usage through increased sales. The Jol'ms Manville fibreglass cartridge filter business which was acquired late last year has taken longer than expected to become operational in Minnetonka, and it has increased manufacturing costs. However, Osmonics is pleased with the increased sales opportunities that this addition is bringing to the company. Osmonics says that it continues to see weak sales activity' in Asi a, Latin America, and Eastern Europe. Western Europe is reasonably good, and the USA is a challenge, especially in the larger equipment area. •
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Filtration Industry Analyst
Lydall Inc, USA
Osmonics Inc, USA
Key Figures (US$ million) Fourth quarter ended 31.12
Key Figures (US$ million) 1 Fourth quarter ended 31.12
1998
1997
Net Sales
57.7
58.9
Cost of Sales
42.8
Gross Margin
14.9
Operating Income/(Loss) Net Income/(Loss)
1998
1997
Net Sales
43.7
38.4
39.5
Cost of Sales
28.7
23.5
19.5
Gross Profit
15.0
14.9
(9.6)
7.1
Net Income
(6.4)
5.1
Net Income per Share
1.1
2.1
US$0.08
US$0.15
Twelve months ended 31.12
Twelve months ended 31.12 1998
1997
1998
1997
Net Sales
230.0
244.3
Net Sales
177.8
164.9
Cost of Sales
165.2
166.6
Cost of Sales
114.72
99.9
Gross Margin
64.8
77.6
Gross Profit
63.1
65.0
Operating Income
6.3
32.8
Net Income/(Loss)
(1.1)
9.8
Net Income
4.2
21.9
Net Income/(Loss) per Share US$(0.08)
US$0.68
1 Exceptper share data (fullydiluted). Earningsper share, excludinga special charge, would have been US$0.47 basic and US$0.46fully diluted. 2 Includesspecial charge of US$8.0 million,which relatesto in-process research and development,corporate restructuringand SAP/re-engineering cost.
Fiscal 1.998 was a difficult period for Lydall Inc, but it culminated in an eventful fourth quarter. The company encountered higher than expected costs, associated with a record number of automotive product launches and a contiauing softness in its filtration markets. The results from several of the company's mature businesses, which operated in a difficult environment for most of the year, were also disappointing, For the fourth quarter ended 31 December 1998, sales amounted to US$57.7 million, compared with US$58.9 million reported for the same period of 1997. Net income: would have been US$2.3 million before nonrecurring charges and impaimaent losses. After these adjustments, the cornpany posted a net loss of US$6.,1 million. For the year ended 31 December, sales
totalled US$230.0 million, compared with US$244.3 million in 1997. Net income would have been US$12.9 million, before fourth quarter non-recurring charges and impairment losses totalling US$8.7 million. The company's net income after these adjustments was US$4.2 raillion, compared with US$21.9 million posted for 1997. Sales to the filtration markets were 3 per cent lower in 1998 than in 1997. The lingering sluggishness of the air filtration market continued throughout 1998, but Lydall says that it is seeing improvements in the first quarter of 1999. An expanded line of ASHRAE media, an addition to the company's meltblown products, and enhanced activated carbon media are a few growth initiatives in this market that should strengthen results in the short-term. •
Osmonics Inc's sales for the fourth quarter ended 31 December 1998 rose 14 per cent from US$38.4 million, recorded for the same period of 1997, to US$43,7 million. At US$177.8 million, the company's sales for the year ended 3l December were 8 per cent higher than the figure of US$164.9 million recorded for 1997. For the fourth quarter of 1998 net income amounted to US$1.1 million. For fiscal 1998, the company made a loss of US$1.1 million, if the second quarter 1998 special charges are taken into account. The fourth quarter lower gross margin was caused mainly by most of the manufacturing facilities operating under capacity for part or all of the quarter. In addition, product mix, selected reduced pricing, and equipment start-up expenses were higher than anticipated.
Facility consolidation efforts during the third and fourth quarters of 1998. and product rationalisation are expected to improve gross margin in 1999. Extra effort is also being made to improve capacity usage through increased sales. The Jol'ms Manville fibreglass cartridge filter business which was acquired late last year has taken longer than expected to become operational in Minnetonka, and it has increased manufacturing costs. However, Osmonics is pleased with the increased sales opportunities that this addition is bringing to the company. Osmonics says that it continues to see weak sales activity' in Asi a, Latin America, and Eastern Europe. Western Europe is reasonably good, and the USA is a challenge, especially in the larger equipment area. •
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