Sara Greenstein, CEO of Lydall, told CNBC's Jim Cramer on Friday that the company is working with the White House in Biden to replenish the national supply of personal protective equipment and she expects the demand for specialty filtration products to grow beyond the pandemic will be.
Based in Manchester, Connecticut, the company manufactures specialty filtration material used in N95 respirators and surgical masks. These products are especially important to the healthcare sector and frontline workers during a health crisis.
Greenstein said in a "Mad Money" interview that President Joe Biden's administration is "making active efforts" to build a strategic supply.
As part of his first steps after taking office last month, President Joe Biden invoked the Defense Production Act to strengthen supply chains for PPE and replenish US inventories. Lydall won a federal contract for $ 13.5 million last summer under the previous administration to increase domestic production of meltblown air filter media, a fabric component in N95 respirators made to protect against germs.
The company expanded capacity to meet demand for materials, with one line running at full capacity and selling out "for the foreseeable future," Greenstein said. Two more lines should be in operation by the third quarter, she said.
The increased production allows Lydall to make enough material to make 140 million N95 masks a month, up from about 21 million a month about a year ago. The company has announced that the US will require approximately 2 billion breathing apparatus per year. The demand for surgical masks and other consumer masks is expected to remain elevated beyond the pandemic.
"We assume that national inventories around the world, including here in the US, will need to be rebuilt and replenished, which is why we expect strong demand for well-made PPE at least until the end of 2022," said Greenstein.
Lydall is also a provider of thermal and acoustic products, including for building and auto end markets. The 150-year-old company, with sales of $ 622 million, had sales of $ 764 million in 2020, a decrease of nearly 9% year over year.
PPE manufacturing was Lydall's primary focus last year, but indoor and outdoor air quality products will be a major driver of post-pandemic business, as it was before Covid-19.
Specialty filtration is a key component of the growing indoor air quality market, and a move to higher efficiency filtration is only expected to accelerate as new and stricter standards are introduced around the world, Greenstein said.
Bringing their employees back to the office alone will create an estimated $ 3 billion market alone, Greenstein said, adding that another $ 15 billion market will emerge as buildings get new codes.
"The demand for higher performing specialty filtration solutions will eclipse the demand we see today for PPE," she said.
Prior to the coronavirus pandemic, Lydall sales rose double digits in 2017 and 2018 before rising 6.6% to $ 837.40 million in 2019. The company had net income of more than $ 70 million for the past two years, but had net income of at least $ 20 million going back to 2014.
Lydall stock rose 4% on Friday to $ 34.83 at close of trading. The stock is up 16% in the first two months of the year and has expanded its earnings after rising 46% last year.