Lydall Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2012

Lydall Announces Financial Results for the Fourth Quarter and Year Ended
December 31, 2012

MANCHESTER, Conn., Feb. 26, 2013 (GLOBE NEWSWIRE) -- LYDALL, INC. (NYSE:LDL)
today announced financial results for the fourth quarter and year ended
December 31, 2012.

Fourth Quarter 2012 ("Q4 2012") compared to Fourth Quarter 2011 ("Q4 2011")

  *Net sales were $90.5 million, including unfavorable foreign currency
    translation of $1.3 million, or 1.4%, compared to $89.3 million
  *Operating income of $2.0 million, or 2.2%, compared to $4.4 million, or
    4.9%

   - Q4 2012 operating income included an asset impairment charge of $1.8
  million

   - Q4 2011 operating income included income of $0.8 million from a
  completed pricing negotiation and $0.4 million of income from a license
  agreement

  *Net income of $2.4 million, or $0.14 per share, compared to $2.7 million,
    or $0.16 per share

   - Income tax benefit of $0.5 million included a reversal of valuation
  allowance on a foreign tax credit carryover of $1.3 million, or $0.08 per
  share

2012 Year Highlights

  *Net sales were $378.9 million, including unfavorable foreign currency
    translation impact of $10.6 million, or 2.8%, compared to $383.6 million
    in 2011
  *Gross margin of 20.5%, an improvement of 290 basis points from 2011,
    primarily from operational efficiency improvements in the
    Thermal/Acoustical Fibers segment
  *Operating income of $21.4 million, or 5.6%, compared to $16.2 million, or
    4.2% in 2011

   - 2012 operating income included the asset impairment charge of $1.8
  million and $0.8 million of income from a license agreement

   - 2011 operating income included $1.6 million of income from a license
  agreement

  *Effective tax rate for 2012 of 19.9%, primarily as a result of reversal of
    valuation allowance on a foreign tax credit carryover of $3.9 million, or
    $0.23 per share, compared to an effective tax rate of 41.3% in 2011
  *Income from continuing operations in 2012 was $16.8 million, or $0.99 per
    share, compared to $9.1 million, or $0.54 per share in 2011
  *Net income of $16.8 million, or $0.99 per share, compared to net income in
    2011 of $13.8 million, or $0.82 per share

Liquidity

  *Cash provided by operations of $15.2 million in Q4 2012 ($34.4 million in
    full year 2012) compared to cash provided by operations of $12.6 million
    in Q4 2011 ($14.7 million in full year 2011)
  *Cash and short-term investments of $63.6 million at December 31, 2012
    compared to $42.9 million at December 31, 2011

Net sales of $90.5 million in Q4 2012 were $1.1 million greater than Q4 2011.
Increased sales volume from the Thermal/Acoustical Fibers ("T/A Fibers")
segment of $3.3 million and the Life Sciences Vital Fluids business ("VF
business") of $0.8 million, included in Other Products and Services, were
partially offset by lower net sales from the Performance Materials ("PM") and
Thermal/Acoustical Metals ("T/A Metals") segments of $2.1 million and $0.7
million, respectively.Higher consumer demand in North America for vehicles on
Lydall's existing platforms and new platform awards contributed to the
increased net sales for the T/A Fibers segment.Lower net sales for the
Performance Materials segment were primarily due to decreased volumes of
Industrial Thermal Insulation products of $1.4 million, specifically with
lower sales of electrical papers products, as the product line was sold to a
customer in a prior year.

The Company reported operating income of $2.0 million, or 2.2% of net sales,
in the fourth quarter of 2012 compared to $4.4 million, or 4.9% of net sales,
in the fourth quarter of 2011. The T/A Fibers segment reported operating
income of $3.8 million in Q4 2012, an improvement of $3.1 million compared to
Q4 2011, due to improved gross profit as a result of increased net sales,
improved manufacturing processes and a lower cost structure.The VF business
reported operating income of $0.3 million in Q4 2012, an improvement of $0.6
million compared to Q4 2011, primarily due to increased net sales in blood
filtration and bioprocessing products and a lower cost structure.The PM
segment broke even during the fourth quarter of 2012, a decrease in operating
income of $3.0 million compared to Q4 2011, primarily due to lower gross
profit in Q4 2012.Lower net sales of $2.1 million in Q4 2012, unfavorable mix
of product sales and under-absorption of fixed overhead costs contributed to
lower gross profit in the PM segment.Also, Q4 2012 included an asset
impairment charge of $0.3 million, while Q4 2011 included $0.4 million of gain
from services provided under a licensing agreement.T/A Metals operating
income in the current quarter was lower by $1.7 million compared to Q4 2011,
primarily due to lower gross profit as a result of unfavorable mix in sales
between parts and tooling.Also, the fourth quarter of 2011 included $0.8
million of gross profit associated with a completed pricing negotiation with a
customer that was related to shipments during the first nine months of 2011. 

The Company previously announced a change to its information technology
software and systems strategy from a project involving an ERP reimplementation
to a project involving an ERP upgrade and some additional applications
software.As a result of this change in IT strategy, the Company recorded a
non-cash $1.8 million asset impairment charge in the quarter ended December
31, 2012 ($1.5 million in corporate office expenses and $0.3 million in the
Performance Materials segment).

Income tax benefit of $0.5 million in Q4 2012 included a reversal of valuation
allowance against foreign tax credit carryovers of $1.3 million, or $0.08 per
share, as these credits will be used to offset 2012 or future U.S. taxable
income.

Dale Barnhart, President and Chief Executive Officer, stated, "Lydall reported
mixed results for the fourth quarter of 2012.Our Thermal/Acoustical Fibers
segment continued to benefit from strong consumer demand for vehicles in the
U.S. and sustainable operating improvements.However, our Performance
Materials segment was negatively impacted by lower demand and mix of products
sold to our customers.Overall, I am pleased with 2012, as all segments and
OPS generated operating income in a volatile global economic environment.

"Entering 2013, we remain cautiously optimistic despite the continued
uncertainty in the macro-economic environment.Instability of the global
economy, particularly in Europe and Asia, provides an element of risk and
uncertainty in the Company's near term outlook for the Performance Materials
and Thermal/Acoustical Metals segments.However, in the Performance Materials
segment, we are beginning to see positive signs in certain markets for
Industrial Thermal Insulation products in the U.S. and Industrial Filtration
products in Asia. As always, we remain focused on increasing margins in all
operations and are dedicated to improving operating efficiency through Lean
Six Sigma programs."

Conference Call

Lydall will host a conference call today at 11:00 a.m. ET to discuss results
for its fourth quarter and year ended December 31, 2012 as well as general
matters related to its businesses and markets.The call may be accessed at
(877) 303-3204 and will be webcast live on the Company's web site
www.lydall.com under the Investor Relations' section.A recording of the call
will be available from 2:00 p.m. ET on February 26, 2013 through midnight on
March 5, 2013 at (855) 859-2056 or (404) 537-3406, pass code 14364921.Also,
additional information including a presentation outlining key financial data
supporting today's conference call can be found on the Company's website
www.lydall.com under the Investor Relations' section.

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

Cautionary Note Concerning Factors That May Affect Future Results

This press release contains "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended.Any statements
contained in this press release that are not statements of historical fact 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,"
"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 could affect demand for the Company's
products and impact the Company's profitability, 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.Information may also be obtained
from the Company Contact: David D. Glenn, Director of Business Development
and Investor Relations, One Colonial Road, Manchester, CT 06042; Telephone
860-646-1233, email:investor@lydall.com.

Summary of Operations
In thousands except per share data
(Unaudited)                                                      
                                    Quarter Ended       Twelve Months Ended
                                     December 31,        December 31,
                                    2012      2011      2012       2011
                                                                
Net sales                            $90,468 $89,343 $378,924 $383,588
Cost of sales                        73,164   72,411   301,117   316,082
Gross profit                         17,304   16,932   77,807    67,506
                                                                
Selling, product development and     15,271   12,946   57,239    52,937
administrative expenses
Gain on sale of product line, net    --      (405)    (810)     (1,619)
Operating income                     2,033    4,391    21,378    16,188
                                                                
Interest expense                     92       94       365       880
Other expense (income), net          34       (107)    31        (94)
Income from continuing operations    1,907    4,404    20,982    15,402
before income taxes
                                                                
Income tax (benefit) expense         (520)    1,736    4,176     6,355
Income from continuing operations    2,427    2,668    16,806    9,047
Income from discontinued operations, --      --      --       4,732
net of tax
Net income                           $2,427  $2,668  $16,806  $13,779
                                                                
Basic earnings per share:                                        
Continuing operations                $0.15   $0.16   $1.01    $0.54
Discontinued operations              $--    $--    $--     $0.28
Net Income                           $0.15   $0.16   $1.01    $0.82
                                                                
Diluted earnings per share:                                      
Continuing operations                $0.14   $0.16   $0.99    $0.54
Discontinued operations              $--    $--    $--     $0.28
Net Income                           $0.14   $0.16   $0.99    $0.82
                                                                
Weighted average common shares       16,641    16,779    16,717     16,753
outstanding
Weighted average common shares and   16,938    16,918    16,973     16,896
equivalents outstanding
                                                                
                                                                
Summary of Segment Information and Other Productsand Services
In thousands                                                    
                                    Quarter Ended       Twelve Months Ended
                                     December 31,        December 31,
                                    2012      2011      2012       2011
Net Sales                                                        
                                                                
Performance Materials Segment        $25,614 $27,699 $118,035 $134,059
Thermal/Acoustical Metals Segment    37,527   38,207   153,921   155,936
Thermal/Acoustical Fibers Segment    23,724   20,406   94,436    81,747
Other Products and Services:                                     
Life Sciences Vital Fluids           4,547    3,711    16,853    14,670
Reconciling Items                    (944)    (680)    (4,321)   (2,824)
Consolidated Totals                  $90,468 $89,343 $378,924 $383,588
                                                                
Operating Income                                                 
                                                                
Performance Materials Segment        $(27)   $2,961  $10,400  $18,194
Thermal/Acoustical Metals Segment    2,979    4,671    14,708    15,915
Thermal/Acoustical Fibers Segment    3,795    673      12,851    (3,055)
Other Products and Services:                                     
Life Sciences Vital Fluids           316      (287)    1,190     (1,040)
Corporate Office Expenses            (5,030)  (3,627)  (17,771)  (13,826)
Consolidated Totals                  $2,033  $4,391  $21,378  $16,188

                                                                
                                                                
Financial Position                                               
                                                                
In thousands except ratio  December 31,  December 31,              
data                       2012          2011
(Unaudited)                                                      
Cash and cash equivalents  $63,623     $30,905                 
Short-term investments     $--        $12,015                 
Working capital            $105,451    $86,021                 
Total debt                 $2,411      $3,296                  
Stockholders' equity       $174,496    $160,852                
Total capitalization       $176,907    $164,148                
Current ratio              3.3          2.9                      
Total debt to total        1.4%          2.0%                      
capitalization
                                                                
                                                                
Cash Flows                                                       
In thousands                                          
(Unaudited)                Quarter Ended               Twelve Months Ended
                          December 31,                December 31,
                          2012          2011          2012         2011
                                                                
Net cash provided by       $15,194     $12,583     $34,405    $14,657
operating activities
Net cash (used for)
provided by investing      $(3,459)    $(2,277)    $1,611     $(6,309)
activities
Net cash used for          $(320)      $(622)      $(3,871)   $(1,621)
financing activities
Depreciation and           $3,309      $3,434      $13,572    $14,478
amortization
Capital expenditures       $(3,459)    $(2,939)    $(11,404)  $(8,884)
                                                                
                                                                
Common Stock Data                                                
Quarter Ended December 31, 2012          2011                      
                                                                
High                       $14.65      $11.70                  
Low                        $11.68      $7.75                   
Close                      $14.34      $9.49                   
                                                                
During the fourth quarter of 2012, 3,123,621 shares of Lydall common stock
(LDL) were traded on the New York Stock Exchange.

CONTACT: Lydall, Inc.
         One Colonial Road   
         Manchester, CT 06042-2378

         Telephone 860-646-1233
         Facsimile 860-646-4917
         www.lydall.com

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