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 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
In early 2020, the
Stronger demand in the auto and industrial markets is causing higher commodity prices for aluminum, aluminized steel, polypropylene, and microfiber glass. Supply chain issues, including transportation and logistics problems, are causing periodic
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supply chain disruptions, and in selected cases, material shortages in various markets served by the Company. Although the Company does not foresee a material adverse impact on the Company's financial performance for the remainder of 2021, given the dynamic nature of this situation, we cannot estimate with certainty the future impacts from higher commodity prices and the COVID-19 pandemic on our financial condition, results of operations or cash flows.
Performance Materials Developments
COVID-19
The Performance Materials segment did not experience significant business disruption as a result of the COVID-19 pandemic during the first quarter of 2021. The segment's facilities remain open in all regions in which the segment operates.
Market Trends
Demand for the Performance Materials segment's filtration and sealing and advance solutions products continue to be strong, however, the segment is experiencing supply chain challenges for key raw materials, primarily impacting sealings products. In addition, the segment is seeing significant commodity price increases for polypropylene and other fibers used in its filtration products. Although the Company expects this trend to continue through 2021, the Company anticipates the ability to pass through most of the higher costs in customer pricing.
Other
As previously disclosed, the Performance Materials segment undertook actions to
exit underperforming facilities in
Technical Nonwovens Developments
COVID-19
The Technical Nonwovens segment did not experience significant business disruptions as a result of the COVID-19 pandemic during the first quarter of 2021. The segment's facilities remain open in all regions in which the segment operates. A small number of suppliers have issued force majeure notifications, however, the impact on the segment's financial results have not been material.
Market Trends
Demand for the Technical Nonwovens segment's geosynthetic, medical and
filtration products are strong. The segment has experienced lower demand in
Thermal Acoustical Solutions Developments
COVID-19
As previously disclosed, the Thermal Acoustical Solutions segment's
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 OEM customers temporarily slow or halt production of certain vehicle
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models due to material supply shortages. Consistent with the Company's other segments, the Thermal Acoustical Solutions segment is experiencing higher commodity pricing, specifically 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 could have a moderate adverse impact on the segment's financial performance in 2021 to the extent these costs cannot be passed on to customers.
FIRST 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-20210331_g1.jpg]]
Consolidated net sales were
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(1)Parts volume and pricing change includes a
Consolidated operating income was
The chart below reflects the change in consolidated operating income by segment:
[[Image Removed: ldl-20210331_g3.jpg]]
Consolidated net income was
25
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