Manchester manufacturer Lydall Inc. upped its first-quarter profit despite lower sales, while signaling its days churning out fiber inserts for auto air and oil filters may be numbered.
Lydall also says it will buy up to 1 million shares, or about 6 percent of its outstanding common, to bolster shareholder value. Based on Lydall's late-morning Thursday stock price of $11.31 a share, that expenditure would top $11.3 million.
For three months ended March 31, Lydall netted $3.9 million, or 23 cents a share, up from $2.9 million, or 6 cents a share, netted the same period last year.
First-quarter revenues fell 4.8 percent to $96.8 million vs. $101.7 million last year.
CEO Dale E. Barnhart said Lydall's higher sales of fibers and metals used for heat and sound insulation and vibration dampeners in Ford, Chrysler and other vehicles built for the booming U.S. auto market kept overall first-quarter revenue from sliding further.
Moreover, higher margins from those products, plus rising demand for blood bags and tissue containers from its life science/vital fluids unit, contributed to Lydall's profitability in the period, Barnhart said.
Barnhart also disclosed that the company is shopping its automotive-fibers business that produces air- and oil-filter inserts.
Though the business contributed about $2 million operating profit in the first quarter and almost one of every four dollars in revenue, he said it contributed just one in five of its revenue dollars and generated an operating loss of some $3 million last year.
Barnhart was careful to declare that Lydall lacks any tentative or firm buyout or disposal offers for the business, nor has the board voted on any transaction or strategic move involving the business.
Last June, Lydall sold its high-performance industrial chillers and heat exchangers division for $14 million to a Massachusetts manufacturer.
As for the share buyback, the CEO said Lydall intends to dip into its cash kitty and credit line to finance open-market purchases from time to time.