He comes from the world of injection molding. But the injection they seek is one of new blood.
Later this month, Dale G. Barnhart takes the reins as CEO of Manchester-based manufacturer Lydall Inc., he’ll find himself at the helm of a company with dragging profits and a downwardly spiraling stock that’s dropped 45 percent since April.
Barnhart’s appointment — and the retirement of Lydall’s CEO, David Freeman — came barely a week after Lydall posted second quarter results that disappointed Wall Street.
Despite profits climbing 42 percent from the year ago quarter to $3.5 million, sales growth at Lydall increased only 5 percent to $88 million.
In filings released with those results, however, Lydall warned that a possible slowdown in the auto manufacturing industry could impact its sales and bottom line in the latter half of the year.
Lydall, among other things, makes sound and heat shields that are used in cars, products which account for slightly more than half of its sales.
Cost increases in materials and labor ate into profitability of the company’s temperature-control equipment division, the company also said. Outgoing CEO Freeman said the earnings for the remainder of the year, and particularly the fourth quarter, would likely be lower than those seen in 2006.
Barnhart takes over the CEO job on Aug. 27, but will have until October to pick Freeman’s brain about where Lydall’s gone wrong and right.
Freeman, 61, is the former chairman and CEO of Loctite Corp., from which he retired in 2000. He took over the top job at Lydall — where he had been a director since 1998 — after teaching international business at Central Connecticut State University.
In 2004, Freeman’s first full year on the job, the company lost $530,000, after two years of profitability. In short order, Freeman led an effort to pare Lydall’s manufacturing processes and improve management at the firm. Profits climbed back up to $5 million in 2005, and doubled to over $10 million in 2006.
But with profits poised to slip again, Freeman may have decided he’d been at the helm of one too many turnarounds.
“The board and I have been discussing the next phase of Lydall’s strategic growth for several months,” Freeman said. “I believe that whoever crafts the plan should be around to implement the plan, and I was not able to commit to this time frame.”
Pay Parity
Barnhart, 55, comes to Lydall from Synventive Molding Corp., a Peabody, Mass.-based firm that builds manufacturing equipment for injection molding plastics where he served as CEO since 2004. Before Synventive, Barnhart held executive positions with a number of other industrial and manufacturing companies, including B.F. Goodrich, WolverineTube and Invensys Climate Control. He has also worked as a consultant to several private equity groups.
Barnhart is credited with expanding the Synventive footprint in Asia. Synventive recently opened a factory, sales and service unit in eastern China. That overseas experience could prove invaluable for Lydall, which is seeking to bolster its presence among Asian automakers.
Barnhart’s base salary for the year will be $450,000, just slightly above the $420,000 Freeman earned in 2006. He will also be eligible to receive bonuses, options and restricted stock awards, the amounts of which would be decided by the board of directors.
If his package is on part with Freeman’s, Barnhart could receive a compensation nearing $900,000. In 2006, Freeman earned approximately $822,000, including $120,000 in bonuses, and stock and option awards worth roughly $170,000.
