Q1 2016 Earnings Conference Call

Quarter endedMarch 31, 2016

THIS DOCUMENT, OR AN EMBODIMENT OF IT IN ANY MEDIA, DISCLOSES INFORMATION WHICH IS PROPRIETARY, IS THE PROPERTY OF LYDALL, INC. AND/OR ITSAFFILIATE (COLLECTIVELY, “LYDALL”), IS AN UNPUBLISHED WORK PROTECTED UNDER APPLICABLE COPYRIGHT LAWS AND IS DELIVERED ON THE EXPRESS CONDITIONTHAT IT IS NOT TO BE USED, DISCLOSED, OR REPRODUCED, IN WHOLE OR IN PART (INCLUDING REPRODUCTION AS A DERIVATIVE WORK), OR USED FOR MANUFACTUREFOR ANYONE OTHER THAN LYDALL WITHOUT ITS WRITTEN CONSENT.  NO RIGHT IS GRANTED TO DISCLOSE OR SO USE ANY INFORMATION CONTAINED HEREIN.  ALLRIGHTS RESERVED.  © LYDALL, INC.

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Forward-looking Statements

This presentation contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, asamended. Any statements contained in this presentation that are not statements of historical fact, including statements about the outlookfor 2016, may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management’scurrent expectations for the future operating and financial performance of the Company based on current expectations and assumptionsrelating to the Company’s business, the economy and other future conditions. Forward-looking statements generally can be identifiedthrough the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “estimates,” “forecasts,”“predicts,” “targets,” “prospects,” “strategy,” “signs,” and other words of similar meaning in connection with the discussion of future operatingor financial performance. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties andchanges in circumstances that are difficult to predict. Such risks and uncertainties which include, among others, worldwide economiccycles that affect the markets that the Company’s businesses serve which could have an effect on demand for the Company’s productsand impact the Company’s profitability, disruptions in the global credit and financial markets, including diminished liquidity and creditavailability, foreign currency volatility, swings in consumer confidence and spending, unstable economic growth, raw material pricing andsupply issues, fluctuations in unemployment rates, retention of key employees, increases in fuel prices, and outcomes of legal proceedings,and including with respect to possible violations of German anti-trust laws by employees in our German operation, could have a negativeimpact on the Company’s results of operations and financial condition. Accordingly, the Company’s actual results may differ materiallyfrom those contemplated by these forward-looking statements. Investors, therefore, 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. Additionalinformation regarding the factors that may cause actual results to differ materially from these forward-looking statements is available inour filings with the Securities and Exchange Commission, including the risks and uncertainties identified in Part II, Item 1A - Risk Factorsof Lydall’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 and Part I, Item 1A - Risk Factors of Lydall’s AnnualReport on Form 10-K for the year ended December 31, 2015.

These forward-looking statements speak only as of the date of this presentation, and Lydall does not assume any obligation to updateor revise any forward-looking statement made in this presentation or that may, from time to time, be made by or on behalf of the Company.

This presentation contains non-GAAP financial measures, including organic sales growth, adjusted earnings per share, adjusted grossmargin, and adjusted operating margin. The Appendix at the end of this presentation includes a reconciliation to the most comparableGAAP measures. We believe that the presentation of these non-GAAP financial measures, among other things, provides enhancedvisibility into our performance. It is important to view each of these non-GAAP financial measures in addition to, rather than as a substitutefor, the comparable GAAP measures.

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Highlights of Q1 2016 vs. Q1 2015

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Growth Profitability Other

▪ Sales up 1.9% to $129.7m

▪ Excludes sales fromdivested business of 1.3%in Q1 2015

▪ Organic sales growth of2.9%

• Unfavorable foreigncurrency translation of 1.0%

▪ Gross margin up 340 bpsto 25.0% compared toadjusted Q1 2015

▪ Operating margin up 260 bps to 10.5%

▪ EPS up 29% to $0.54compared to adjusted Q12015

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1 Reference Appendix for reconciliation between adjusted and GAAP financials

▪ Ongoing Germananti-trust investigation

▪ Strategic capitaldeployment in growth andproductivity

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Clear, Consistent Strategy for Profitable Growth

ProfitableGrowth

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Develop and quickly deploy nextgeneration product offerings

Drive revenue and margin expansionthrough operational excellence

Evaluate opportunities to furtherstrengthen global footprint

Execute disciplined M&A forFiltration & Engineered Materials

New ProductDevelopment

Lean Six Sigma

GeographicExpansion

SelectAcquisitions

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Business Conditions

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Filtration & Engineered MaterialsAutomotive

Thermal / AcousticalFibers

• Growth exceedingmarket in NorthAmerica

• Exploring geographicand customerexpansion

Thermal / AcousticalMetals

• Growth exceedingmarket in NorthAmerica

• Continued growthin Europe

Performance Materials

• Signs of growth in airfiltration, offset bycontinued softnessfor insulationproducts

• Anticipate overalldemand to becommensurate withrecent performance

Industrial Filtration

• Strong pull through ofFibers demand, offsetby weakness in powergenerations marketsand tighteningcompetition

• Solid backlog,experiencing somedelays in China

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Financial Highlights of Q1 2016 vs. Q1 2015

▪ Cash balance of $69.5m as of March 31, 2016

• $10m debt repayment in Q1 2016

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1Reference Appendix for reconciliation between adjusted and GAAP financials

▪ Sales up 1.9% to $129.7m

▪ Organic growth of 2.9%

▪ Sales from divested business of 1.3%in Q1 2015

▪ Unfavorable foreign currencytranslation of 1.0%

▪ Gross margin up 340 bps to 25.0%compared to adjusted Q1 2015

▪ Operating margin up 260 bps to10.5%

▪ EPS up 29% to $0.54 compared toadjusted Q1 2015

Income Statement Balance Sheet

Cash Flows

▪ Capital expenditures for 2016 estimatedat $25m - $30m

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Thermal / Acoustical Metals

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▪ Solid organic growth of 5.6% in Q1 2016▪ Unfavorable foreign currency translation of 1.1%

▪ Increase in tooling sales of $2.1m, or 68.6%, in Q1 2016 vs.Q1 2015

▪ Increased demand in North America and China automotiveoperations

Implementing Best-in-Class Asset to SupportNext Generation Win With Key Customer

Highlights

($ in 000) Q1 2016 Q1 2015 Var $ Var %

Net salesParts 36,783 35,022 1,761 5.0%Tooling 5,214 3,093 2,121 68.6% Metals Segment 41,997 38,115 3,882 10.2%

Operating income 3,557 3,581 (24) % of net sales 8.5% 9.4%

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Thermal / Acoustical Fibers

▪ Strong organic growth of 16.9% in Q1 2016

▪ Increase in operating income primarily due to lower materialcosts, favorable mix of product sales, improved absorption offixed costs and labor efficiencies

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Ford F-150 with Aluminum Body (Photo: Ford)

Highlights

($ in 000) Q1 2016 Q1 2015 Var $ Var %

Net salesParts 35,677 30,411 5,266 17.3 %Tooling 184 706 (522) (73.9)% Fibers Segment 35,861 31,117 4,744 15.2 %

Operating income 10,324 7,093 3,231 % of net sales 28.8% 22.8%

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Performance Materials

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Advanced HD ASHRAE Air Filtration Media

▪ Solid organic growth of 5.9% in Q1 2016

▪ Filtration sales increase due to greater demand in NorthAmerica and share gains in Europe

▪ Thermal Insulation sales decline due to lower global demand forcryogenic insulation products serving the liquid natural gasmarket due to low price of oil

Highlights

($ in 000) Q1 2016 Q1 2015 Var $ Var %

Net salesFiltration 17,159 15,067 2,092 13.9 %Thermal Insulation 6,275 7,485 (1,210) (16.2)%Life Sciences Filtration 2,949 2,506 443 17.7 % Performance MaterialsSegment

26,383 25,058 1,325 5.3 %

Operating income 2,138 1,306 832 % of net sales 8.1% 5.2%

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Industrial Filtration

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Industrial air filter bags & needle felts

▪ Organic sales decline of 6.8% in Q1 2016▪ Decreased demand in North America in the power

generation markets

▪ Unfavorable foreign currency translation of 2.0%

▪ Operating margin increase in Q1 2016 due to favorable mix ofproduct sales, lower material costs and continuousimprovement initiatives

Highlights

($ in 000) Q1 2016 Q1 2015 Var $ Var %

Net salesIndustrial Filtration Segment 31,207 34,200 (2,993) (8.8)%

31,207 34,200 (2,993) (8.8)%

Operating income 3,926 3,154 772 % of net sales 12.6% 9.2%

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Appendix

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Q1 2016 vs. Q1 2015 Summary Statements of Operations

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As Reported

Quarter Ended March 31,($ in 000) 2016 2015 Var $

Net sales 129,700 127,306 2,394

Gross profit 32,377 27,700 4,677

% 25.0% 21.8% 3.2 %

Selling, product development and administrative expenses 18,698 17,622 1,076

% 12.8% 17.0% (4.2)%

Operating income 13,679 10,078 3,601

% 10.5% 7.9% 2.6 %

Gain on sale of business — (18,647) 18,647

Interest expense 144 222 (78)

Other income, net (167) (1,022) 855

Income before income taxes 13,702 29,525 (15,823)

Income tax expense 4,533 10,588 (6,055)

As % of income 33.1% 35.9% (2.8)%

Net income 9,169 18,937 (9,768)

Diluted earnings per share $ 0.54 $ 1.11 $ (0.57)

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Summary Balance Sheets

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($ in 000) Mar. 31, 2016 Dec. 31, 2015 Var $

Cash 69,525 75,909 (6,384)Accounts receivable, net 93,279 82,149 11,130Inventories 51,151 46,530 4,621Prepaids and other current assets 7,600 14,715 (7,115) Total current assets 221,555 219,303 2,252

Property, plant and equipment, net 117,331 114,433 2,898Goodwill and other intangible assets 22,305 22,240 65Other assets, net 1,786 2,284 (498) Total assets 362,977 358,260 4,717

Accounts payable 46,725 42,470 4,255Accrued payroll and other compensation 9,853 10,210 (357)Other current liabilities 11,027 8,320 2,707 Total current liabilities 67,605 61,000 6,605

Long-term debt 10,145 20,156 (10,011)Benefit plan and other long-term liabilities 27,328 31,879 (4,551) Total liabilities 105,078 113,035 (7,957)

Total stockholders' equity 257,899 245,225 12,674

Total liabilities and stockholders' equity 362,977 358,260 4,717

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Summary Statements of Cash Flows

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Three Months Ended  March 31,

2016 2015(Unaudited)

Cash flows from operating activities:Net income $ 9,169 $ 18,937

Adjustments to reconcile net income to net cash provided by (used for) operatingGain on sale of business — (18,647)Depreciation and amortization 4,332 4,362Deferred income taxes (106) (1,746)Stock based compensation 1,132 635Loss on disposition of property, plant and equipment — 106Changes in operating assets and liabilities:

Accounts receivable (10,412) (12,017)Inventories (4,059) (6,465)Accounts payable 7,341 3,644Accrued payroll and other compensation (566) (4,409)Accrued taxes 2,575 8,978Other, net 3,377 5,525

Net cash provided by (used for) operating activities 12,783 (1,097)Cash flows from investing activities:

Proceeds from the sale of business, net — 28,370Capital expenditures (9,616) (7,396)

Net cash (used for) provided by investing activities (9,616) 20,974Cash flows from financing activities:

Debt repayments (10,147) (140)Common stock issued 320 605Common stock repurchased (710) (7,246)Excess tax benefit on stock awards — 286

Net cash used for financing activities (10,537) (6,495)Effect of exchange rate changes on cash 986 (3,330)(Decrease) Increase in cash and cash equivalents (6,384) 10,052Cash and cash equivalents at beginning of period 75,909 62,051Cash and cash equivalents at end of period $ 69,525 $ 72,103

Free Cash Flow (Cash provided by ops - Cap exp) 3,167 (8,493)

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Reconciliation Between Adjusted and Reported GAAP Financials

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(a) Exclude the net sales of the divested business of $1.7 million related to the sale of the Life Sciences Vital Fluids business.(b) Exclude the cost of sales of the divested business of $1.1 million related to the sale of the Life Sciences Vital Fluids business. (c) Exclude the selling, product development and administrative expenses of the divested business of $0.4 million related to the saleof the Life Sciences Vital Fluids business.(d) Exclude the gain of $18.6 million related to the sale of the Life Sciences Vital Fluids business.(e) Exclude the tax expense realized on the adjustments in (a), (b), (c) and (d) of $6.9 million.

For the quarter ended March 31, 2016 For the quarter ended March 31, 2015

In thousands except per share dataAs Reported,

Lydall, Inc AdjustmentsAdjustedResults

As Reported,Lydall, Inc Adjustments

AdjustedResults

Net sales $ 129,700 $ — $ 129,700 $ 127,306 $ (1,671) (a) $ 125,635Cost of sales 97,323 — 97,323 99,606 (1,137) (b) 98,469Gross profit 32,377 — 32,377 27,700 (534) 27,166 Gross margin 25.0% 25.0% 21.8% 21.6%Selling, product development andadministrative expenses 18,698 — 18,698 17,622 (416) (c) 17,206Operating income 13,679 — 13,679 10,078 (118) 9,960 Operating margin 10.5% 10.5% 7.9% 7.9%Gain on sale of business — — — (18,647) 18,647 (d) —Interest expense 144 — 144 222 — 222Other income, net (167) — (167) (1,022) — (1,022)Income before income taxes 13,702 — 13,702 29,525 (18,765) 10,760Income tax expense 4,533 — 4,533 10,588 (6,851) (e) 3,737Net income $ 9,169 $ — $ 9,169 $ 18,937 $ (11,914) $ 7,023Earning per shareBasic $ 0.54 $ 0.54 $ 1.12 $ 0.42Diluted $ 0.54 $ 0.54 $ 1.11 $ 0.42Weighted average number ofcommon shares outstandingBasic 16,825 16,825 16,837 16,837Diluted 17,036 17,036 17,109 17,109