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Porvair plc, UK
April 2007
Filtration Industry Analyst
Porvair plc, UK
Lydall Inc, USA
2006
2005
Revenue Of Which: Metals Filtration Microfiltration Advanced Materials
46.2
44.9
19.1 26.4 0.7
18.9 25.4 0.6
Cost of Goods Sold
31.4
31.0
0.1
Gross Profit
14.8
13.9
1.0
Operating Profit/(Loss) Of Which: Metals Filtration Microfiltration Advanced Materials
3.7
3.2
0.4 5.5 (1.3)
1.0 4.8 (1.6)
Profit before Taxation
3.1
2.7
Profit for the Year
2.1
1.3
2006
2005
Net Sales Of Which: Filtration/Separation
80.6
77.5
19.2
15.5
Cost of Sales
62.2
63.6
Operating Income/(Loss) Of Which: Filtration/Separation
3.5
0.2
0.8
Net Income/(Loss)
2.1 Year ended 31.12 2006
2005
Net Sales Of Which: Filtration/Separation
326.4
306.5
74.9
68.2
Cost of Sales
253.6
242.6
Operating Income Of Which: Filtration/Separation
15.3
7.7
4.6
4.9
Net Income/(Loss)
10.2
5.1
COMMENT Lydall’s Filtration/Separation segment enjoyed a strong finish to fiscal 2006 with net sales for its final quarter up 23.9% on a year earlier to reach US$19.2 million. Similarly, operating income jumped to US$792 000 from US$94 000 in 2005. Higher air and liquid filtration net sales, and to a lesser extent improved net sales for Vital Fluids’ bioprocessing, blood and OEM products, contributed to the segment’s growth. The company said that its air filtration business, which faced an increasingly price competitive environment during 2005 and early 2006, began to regain market share in the fourth quarter. Lydall said the Filtration/Separation business strengthened its marketing team during
the year and worked closely with its customers both domestically and abroad to deliver value-added products to meet their specific needs. Operating income for the Filtration/Separation segment benefited from the higher sales, as well as improved gross margin performance throughout all businesses in the segment. For the full year, segment sales were up 9.8% on 2005 at US$74.9 million, although operating income dipped 5.9% to US$4.6 million. Overall, Lydall’s total net sales for 2006 rose 6.5% to US$362.4 million, while net income doubled to US$10.2 million. This strong cash flow has allowed Lydall to pay down more than US$20 million of debt. ■
* Continuing operations
COMMENT Porvair enjoyed good growth in fiscal 2006 with its operating profit up 11% on the year earlier to £3.7 million on the back of a 2.9% revenue growth to £46.2 million. Porvair’s Microfiltration division, which comprises the Porvair Filtration Group and Porvair Sciences, had an excellent year with operating profit growth of 14% to £5.5 million (2005: £4.8 million) on sales up 4% to £26.4 million (2005: £25.4 million). Aviation sales were particularly strong during the year. In contrast, the Metals Filtration division had a more challenging year. Although sales grew slightly compared with 2005, up 1.1% to £19.1 million, operating profits more than halved dropping from £1.0 million to £0.4 million. This prompted Porvair to undertake a strategic review of the division that led to cost reductions and the passing on to customers
of input cost rises, which did see an improvement in performance in the second half of the year. The same strategic review has seen the company’s Advanced Materials division restructured to concentrate on its two most promising development projects – diesel exhaust substrates and bipolar plates. The division saw its revenue grow 17% year-on-year to reach £0.7 million, while its operating losses were reduced from £1.6 million to £1.3 million. In January 2007, Porvair announced the acquisition of OmniFilter based in Richmond, Virginia, USA. With its complementary product range, OmniFilter is being incorporated into the Porvair Filtration Group. Its US location is expected to help the unit to expand its customer base in this territory, which has been growing for the last few years. ■
13
COMPANY WATCH
Key Figures* (£ million) Year ended 30.11
Key Figures (US$ million) Fourth quarter ended 31.12
Filtration Industry Analyst
Porvair plc, UK
Lydall Inc, USA
2006
2005
Revenue Of Which: Metals Filtration Microfiltration Advanced Materials
46.2
44.9
19.1 26.4 0.7
18.9 25.4 0.6
Cost of Goods Sold
31.4
31.0
0.1
Gross Profit
14.8
13.9
1.0
Operating Profit/(Loss) Of Which: Metals Filtration Microfiltration Advanced Materials
3.7
3.2
0.4 5.5 (1.3)
1.0 4.8 (1.6)
Profit before Taxation
3.1
2.7
Profit for the Year
2.1
1.3
2006
2005
Net Sales Of Which: Filtration/Separation
80.6
77.5
19.2
15.5
Cost of Sales
62.2
63.6
Operating Income/(Loss) Of Which: Filtration/Separation
3.5
0.2
0.8
Net Income/(Loss)
2.1 Year ended 31.12 2006
2005
Net Sales Of Which: Filtration/Separation
326.4
306.5
74.9
68.2
Cost of Sales
253.6
242.6
Operating Income Of Which: Filtration/Separation
15.3
7.7
4.6
4.9
Net Income/(Loss)
10.2
5.1
COMMENT Lydall’s Filtration/Separation segment enjoyed a strong finish to fiscal 2006 with net sales for its final quarter up 23.9% on a year earlier to reach US$19.2 million. Similarly, operating income jumped to US$792 000 from US$94 000 in 2005. Higher air and liquid filtration net sales, and to a lesser extent improved net sales for Vital Fluids’ bioprocessing, blood and OEM products, contributed to the segment’s growth. The company said that its air filtration business, which faced an increasingly price competitive environment during 2005 and early 2006, began to regain market share in the fourth quarter. Lydall said the Filtration/Separation business strengthened its marketing team during
the year and worked closely with its customers both domestically and abroad to deliver value-added products to meet their specific needs. Operating income for the Filtration/Separation segment benefited from the higher sales, as well as improved gross margin performance throughout all businesses in the segment. For the full year, segment sales were up 9.8% on 2005 at US$74.9 million, although operating income dipped 5.9% to US$4.6 million. Overall, Lydall’s total net sales for 2006 rose 6.5% to US$362.4 million, while net income doubled to US$10.2 million. This strong cash flow has allowed Lydall to pay down more than US$20 million of debt. ■
* Continuing operations
COMMENT Porvair enjoyed good growth in fiscal 2006 with its operating profit up 11% on the year earlier to £3.7 million on the back of a 2.9% revenue growth to £46.2 million. Porvair’s Microfiltration division, which comprises the Porvair Filtration Group and Porvair Sciences, had an excellent year with operating profit growth of 14% to £5.5 million (2005: £4.8 million) on sales up 4% to £26.4 million (2005: £25.4 million). Aviation sales were particularly strong during the year. In contrast, the Metals Filtration division had a more challenging year. Although sales grew slightly compared with 2005, up 1.1% to £19.1 million, operating profits more than halved dropping from £1.0 million to £0.4 million. This prompted Porvair to undertake a strategic review of the division that led to cost reductions and the passing on to customers
of input cost rises, which did see an improvement in performance in the second half of the year. The same strategic review has seen the company’s Advanced Materials division restructured to concentrate on its two most promising development projects – diesel exhaust substrates and bipolar plates. The division saw its revenue grow 17% year-on-year to reach £0.7 million, while its operating losses were reduced from £1.6 million to £1.3 million. In January 2007, Porvair announced the acquisition of OmniFilter based in Richmond, Virginia, USA. With its complementary product range, OmniFilter is being incorporated into the Porvair Filtration Group. Its US location is expected to help the unit to expand its customer base in this territory, which has been growing for the last few years. ■
13
COMPANY WATCH
Key Figures* (£ million) Year ended 30.11
Key Figures (US$ million) Fourth quarter ended 31.12