Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Albany International Reports Third-Quarter 2023 Results By: Albany International Corp. via Business Wire November 06, 2023 at 16:20 PM EST Albany International Corp. (NYSE:AIN) today reported operating results for its third quarter of 2023, which ended September 30, 2023. "We are reporting another strong quarter," said President and CEO, Gunnar Kleveland. "Revenue of $281 million, was up $20 million or 7.9% year-over-year primarily due to sales growth in Engineered Composites and one month of Heimbach results in the Machine Clothing segment. Both business segments are continuing to deliver on their long-term plans for profitable growth. "In Machine Clothing, we closed on our acquisition of Heimbach on August 31 and welcome the Heimbach employees and customers to Albany. We are focused on integrating the operations and expect the acquisition to be accretive to earnings and cash flow in 2025. Machine Clothing delivered excellent results, particularly in light of the macroeconomic conditions in both Europe and China. "Engineered Composites is executing on its long-term growth strategy delivering top-line growth across commercial, defense and space markets. The new business pipeline is robust, and I am excited about the opportunities it represents. "Our revised guidance takes into account our year-to-date performance, anticipated market conditions, and the modestly dilutive impact of the Heimbach acquisition," concluded Kleveland. For the third quarter ended September 30, 2023: Net revenues were $281.1 million, up 7.9%, or 7.1% after adjusting for currency translation, when compared to the prior year. MC's net revenues increased 8.6%, driven by Heimbach Net revenues and, to a lesser extent, higher Net revenues in tissue and packaging grades, offset by lower Net revenues in pulp and engineered fabrics. AEC's Net revenues increased 6.9%, primarily driven by growth on LEAP programs, the Boeing Frames program, and other commercial programs, offset by lower CH-53K sales. Gross profit of $101.8 million was 1.3% higher than the $100.5 million reported for the same period of 2022; overall gross margin declined by more than 200 basis points, driven by lower margins at Heimbach and by an unfavorable shift in program revenue mix at AEC. Selling, Technical, General, and Research (STG&R) expenses were $61.7 million, compared to $46.8 million in the same period of 2022; the increase was driven by executive transition costs, acquisition-related expenses, higher personnel-related costs, and unfavorable changes to currency translation rates. Operating income was $40.1 million, compared to $53.6 million in the prior year, the result of higher STG&R expenses as described. Effective tax rate for the quarter was 25.3%, compared to -41.7% for the third quarter of 2022. The prior year tax rate was driven by the release of residual taxes as a result of the pension settlement at that time; excluding the effect of the pension settlement and related adjustments, the effective tax rate for the third quarter of 2022 was 24.6%. Net income attributable to the Company was $27.1 million ($0.87 per share), compared to $10.7 million ($0.34 per share) in the third quarter of 2022; Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.02 per share, compared to $1.15 per share for the same period last year. Adjusted EBITDA (a non-GAAP measure) was $64.7 million, compared to $68.1 million in the third quarter of 2022, a decrease of 4.9%. Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures. Outlook for Full-Year 2023 The Company has updated its guidance for the full year of 2023 as follows: Total company revenue between $1.100 and $1.130 billion, up $60 million; Effective income tax rate, including tax adjustments, between 32% and 33%, implying an effective tax rate between 28% and 30% for the fourth quarter of 2023; Total company depreciation and amortization approximately $75 million; Capital expenditures in the range of $85 to $95 million; GAAP earnings per share between $3.02 and $3.37, taking into account $0.14 to $0.18 of dilution from the Heimbach acquisition; largely the result of purchase accounting; Adjusted earnings per share between $3.35 and $3.70, up $0.08 per share at the midpoint, and includes $0.02 to $0.06 of dilution from Heimbach; Total company Adjusted EBITDA between $238 and $254 million; Machine Clothing revenue between $660 and $670 million, increasing approximately $50 million, including the estimated contribution from Heimbach; Machine Clothing Adjusted EBITDA between $215 and $225 million, inclusive of approximately $2 million from the Heimbach acquisition; Albany Engineered Composites (AEC) revenue between $440 and $460 million, up $10 million; and Albany Engineered Composites Adjusted EBITDA between $85 and $90 million, up modestly at the midpoint. ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net revenues $ 281,106 $ 260,563 $ 824,325 $ 766,101 Cost of goods sold 179,271 160,070 520,468 473,411 Gross profit 101,835 100,493 303,857 292,690 Selling, general, and administrative expenses 51,975 36,873 147,214 119,325 Technical and research expenses 9,708 9,934 30,303 29,984 Restructuring expenses, net 82 42 227 268 Operating income 40,070 53,644 126,113 143,113 Interest expense/(income), net 3,653 3,794 10,049 11,336 Pension settlement expense — 49,128 — 49,128 Other (income)/expense, net 56 (6,918 ) (4,910 ) (17,891 ) Income before income taxes 36,361 7,640 120,974 100,540 Income tax expense/(benefit) 9,207 (3,183 ) 39,908 22,273 Net income 27,154 10,823 81,066 78,267 Net income attributable to the noncontrolling interest 45 129 396 635 Net income attributable to the Company $ 27,109 $ 10,694 $ 80,670 $ 77,632 Earnings per share attributable to Company shareholders - Basic $ 0.87 $ 0.34 $ 2.59 $ 2.47 Earnings per share attributable to Company shareholders - Diluted $ 0.87 $ 0.34 $ 2.58 $ 2.46 Shares of the Company used in computing earnings per share: Basic 31,185 31,111 31,163 31,416 Diluted 31,283 31,223 31,256 31,518 Dividends declared per Class A share $ 0.25 $ 0.21 $ 0.75 $ 0.63 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) September 30, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 171,506 $ 291,776 Accounts receivable, net 270,487 200,018 Contract assets, net 165,833 148,695 Inventories 180,991 139,050 Income taxes prepaid and receivable 6,402 7,938 Prepaid expenses and other current assets 61,155 50,962 Total current assets $ 856,374 $ 838,439 Property, plant and equipment, net 566,974 445,658 Intangibles, net 44,636 33,811 Goodwill 177,398 178,217 Deferred income taxes 15,284 15,196 Noncurrent receivables, net 25,300 27,913 Other assets 104,284 103,021 Total assets $ 1,790,250 $ 1,642,255 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 70,105 $ 69,707 Accrued liabilities 135,343 126,385 Current maturities of long-term debt 27,246 — Income taxes payable 10,103 15,224 Total current liabilities 242,797 211,316 Long-term debt 463,339 439,000 Other noncurrent liabilities 141,620 108,758 Deferred taxes and other liabilities 20,861 15,638 Total liabilities 868,617 774,712 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued — — Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,856,910 issued in 2023 and 40,785,434 in 2022 41 41 Additional paid in capital 446,470 441,540 Retained earnings 988,602 931,318 Accumulated items of other comprehensive income: Translation adjustments (151,177 ) (146,851 ) Pension and postretirement liability adjustments (17,389 ) (15,783 ) Derivative valuation adjustment 12,957 17,707 Treasury stock (Class A), at cost; 9,661,845 shares in 2023 and 9,674,542 shares in 2022 (364,665 ) (364,923 ) Total Company shareholders' equity 914,839 863,049 Noncontrolling interest 6,794 4,494 Total equity 921,633 867,543 Total liabilities and shareholders' equity $ 1,790,250 $ 1,642,255 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 OPERATING ACTIVITIES Net income $ 81,066 $ 78,267 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 50,164 46,864 Amortization 4,614 5,044 Change in deferred taxes and other liabilities (1,264 ) (15,582 ) Impairment of property, plant, equipment, and inventory 577 2,610 Non-cash interest expense 1,148 840 Non-cash portion of pension settlement expense — 42,657 Compensation and benefits paid or payable in Class A Common Stock 5,189 3,282 Provision for credit losses from uncollected receivables and contract assets 641 885 Foreign currency remeasurement (gain) on intercompany loans (4,704 ) (6,629 ) Fair value adjustment on foreign currency options 581 (409 ) Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition: Accounts receivable (18,172 ) (20,260 ) Contract assets (16,550 ) (37,201 ) Inventories (293 ) (24,895 ) Prepaid expenses and other current assets (3,030 ) (2,733 ) Income taxes prepaid and receivable 1,597 (2,179 ) Accounts payable (6,661 ) 5,081 Accrued liabilities (16,454 ) (12,624 ) Income taxes payable (5,810 ) 2,639 Noncurrent receivables 2,276 2,976 Other noncurrent liabilities (3,602 ) (5,960 ) Other, net 2,499 4,634 Net cash provided by operating activities 73,812 67,307 INVESTING ACTIVITIES Purchase of business, net of cash acquired (133,470 ) — Purchases of property, plant and equipment (48,850 ) (50,948 ) Purchased software (276 ) (1,884 ) Net cash used in investing activities (182,596 ) (52,832 ) FINANCING ACTIVITIES Proceeds from borrowings 71,249 145,000 Principal payments on debt (51,479 ) (48,000 ) Principal payments on finance lease liabilities — (654 ) Debt acquisition costs (4,108 ) — Purchase of Treasury shares — (84,780 ) Taxes paid in lieu of share issuance (3,136 ) (770 ) Proceeds from options exercised — 17 Dividends paid (23,365 ) (19,932 ) Net cash used in financing activities (10,839 ) (9,119 ) Effect of exchange rate changes on cash and cash equivalents (647 ) (30,910 ) Decrease in cash and cash equivalents (120,270 ) (25,554 ) Cash and cash equivalents at beginning of period 291,776 302,036 Cash and cash equivalents at end of period $ 171,506 $ 276,482 The following table presents the reconciliation of Net revenues to net revenues excluding the effect of changes in currency translation rates, a non-GAAP measure: (in thousands, except percentages) Net revenues as reported, Q3 2023 Increase due to changes in currency translation rates Q3 2023 revenues on same basis as Q3 2022 currency translation rates Net revenues as reported, Q3 2022 % Change compared to Q3 2022, excluding currency rate effects Machine Clothing $ 166,588 $ 662 $ 165,926 $ 153,389 8.2 % Albany Engineered Composites 114,518 1,275 113,243 107,174 5.7 % Consolidated total $ 281,106 $ 1,937 $ 279,169 $ 260,563 7.1 % (in thousands, except percentages) Net revenues as reported, YTD 2023 (Decrease)/ increase due to changes in currency translation rates YTD 2023 revenues on same basis as 2022 currency translation rates Net revenues as reported, YTD 2022 % Change compared to 2022, excluding currency rate effects Machine Clothing $ 479,027 $ (3,684 ) $ 482,711 $ 459,121 5.1 % Albany Engineered Composites 345,298 851 344,447 306,980 12.2 % Consolidated total $ 824,325 $ (2,833 ) $ 827,158 $ 766,101 8.0 % The following table presents Gross profit and Gross profit margin: (in thousands, except percentages) Gross profit, Q3 2023 Gross profit margin, Q3 2023 Gross profit, Q3 2022 Gross profit margin, Q3 2022 Machine Clothing $ 79,257 47.6 % $ 79,232 51.7 % Albany Engineered Composites 22,578 19.7 % 21,261 19.8 % Consolidated total $ 101,835 36.2 % $ 100,493 38.6 % (in thousands, except percentages) Gross profit, YTD 2023 Gross profit margin, YTD 2023 Gross profit, YTD 2022 Gross profit margin, YTD 2022 Machine Clothing $ 238,031 49.7 % $ 237,434 51.7 % Albany Engineered Composites 65,826 19.1 % 55,256 18.0 % Consolidated total $ 303,857 36.9 % $ 292,690 38.2 % A reconciliation from Net income/(loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the current-year and comparable prior-year periods has been calculated as follows: Three months ended September 30, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 50,710 $ 9,374 $ (32,930 ) $ 27,154 Interest expense/(income), net — — 3,653 3,653 Income tax expense — — 9,207 9,207 Depreciation and amortization expense 5,976 12,510 975 19,461 EBITDA (non-GAAP) 56,686 21,884 (19,095 ) 59,475 Restructuring expenses, net 82 — — 82 Foreign currency revaluation (gains)/losses (a) (656 ) 19 516 (121 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold 1,370 — — 1,370 Acquisition/integration costs — 273 1,642 1,915 Pre-tax (income) attributable to noncontrolling interest — (73 ) — (73 ) Adjusted EBITDA (non-GAAP) $ 57,482 $ 22,103 $ (14,885 ) $ 64,700 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.5 % 19.3 % — 23.0 % Three months ended September 30, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 57,247 $ 9,958 $ (56,382 ) $ 10,823 Interest expense/(income), net — — 3,794 3,794 Income tax benefit — — (3,183 ) (3,183 ) Depreciation and amortization expense 4,913 11,303 818 17,034 EBITDA (non-GAAP) 62,160 21,261 (54,953 ) 28,468 Restructuring expenses, net 42 — — 42 Foreign currency revaluation (gains)/losses (a) (2,931 ) 122 (6,633 ) (9,442 ) Dissolution of business relationships in Russia (214 ) — — (214 ) Pension settlement expense — — 49,128 49,128 Acquisition/integration costs — 255 — 255 Pre-tax (income) attributable to noncontrolling interest — (176 ) — (176 ) Adjusted EBITDA (non-GAAP) $ 59,057 $ 21,462 $ (12,458 ) $ 68,061 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 38.5 % 20.0 % — 26.1 % Nine months ended September 30, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 153,400 $ 27,460 $ (99,794 ) $ 81,066 Interest expense/(income), net — — 10,049 10,049 Income tax expense — — 39,908 39,908 Depreciation and amortization expense 15,682 36,246 2,850 54,778 EBITDA (non-GAAP) 169,082 63,706 (46,987 ) 185,801 Restructuring expenses, net 227 — — 227 Foreign currency revaluation (gains)/losses (a) 1,870 19 (3,609 ) (1,720 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold 1,370 — — 1,370 Acquisition/integration costs — 813 2,005 2,818 Pre-tax (income) attributable to noncontrolling interest — (474 ) — (474 ) Adjusted EBITDA (non-GAAP) $ 172,549 $ 64,064 $ (46,539 ) $ 190,074 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP) 36.0 % 18.6 % — 23.1 % Nine months ended September 30, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 161,752 $ 20,688 $ (104,173 ) $ 78,267 Interest expense/(income), net — — 11,336 11,336 Income tax expense — — 22,273 22,273 Depreciation and amortization expense 14,716 34,792 2,400 51,908 EBITDA (non-GAAP) 176,468 55,480 (68,164 ) 163,784 Restructuring expenses, net 255 — 13 268 Foreign currency revaluation (gains)/losses (a) (3,690 ) 755 (17,644 ) (20,579 ) Dissolution of business relationships in Russia 1,573 — 781 2,354 Pension settlement expense — — 49,128 49,128 Acquisition/integration costs — 806 — 806 Pre-tax (income) attributable to noncontrolling interest — (633 ) — (633 ) Adjusted EBITDA (non-GAAP) $ 174,606 $ 56,408 $ (35,886 ) $ 195,128 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP) 38.0 % 18.4 % — 25.5 % Per share impact of the adjustments to earnings per share are as follows: Three months ended September 30, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 82 $ 21 $ 61 $ 0.00 Foreign currency revaluation (gains)/losses (a) (121 ) (35 ) (86 ) 0.00 CEO transition expenses 2,052 — 2,052 0.07 Inventory step-up impacting Cost of goods sold 1,370 411 959 0.03 Acquisition/integration costs 1,915 476 1,439 0.05 Three months ended September 30, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 42 $ 6 $ 36 $ 0.00 Foreign currency revaluation (gains)/losses (a) (9,442 ) (2,694 ) (6,748 ) (0.22 ) Dissolution of business relationships in Russia (214 ) (18 ) (196 ) (0.01 ) Pension settlement expense 49,128 11,947 37,181 1.20 Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — 5,217 (5,217 ) (0.17 ) Acquisition/integration costs 255 77 178 0.01 Nine months ended September 30, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 227 $ 68 $ 159 $ 0.01 Foreign currency revaluation (gains)/losses (a) (1,720 ) (504 ) (1,216 ) (0.04 ) CEO transition expenses 2,052 — 2,052 0.07 Withholding tax related to internal restructuring — (3,026 ) 3,026 0.10 Inventory step-up impacting Cost of goods sold 1,370 411 959 0.03 Acquisition/integration costs 2,818 725 2,093 0.07 Nine months ended September 30, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 268 $ 75 $ 193 $ 0.01 Foreign currency revaluation (gains)/losses (a) (20,579 ) (5,829 ) (14,750 ) (0.47 ) Dissolution of business relationships in Russia 2,354 314 2,040 0.06 Pension settlement expense 49,128 11,947 37,181 1.20 Tax impact of stranded OCI benefit from TCJA for pension liability (b) — 5,217 (5,217 ) (0.17 ) Acquisition/integration costs 806 241 565 0.03 The following table provides a reconciliation of Earnings per share to Adjusted Earnings per share: Three months ended September 30, Nine months ended September 30, Per share amounts (Basic) 2023 2022 2023 2022 Earnings per share (GAAP) $ 0.87 $ 0.34 $ 2.59 $ 2.47 Adjustments, after tax: Restructuring expenses, net — — 0.01 0.01 Foreign currency revaluation (gains)/losses (a) — (0.22 ) (0.04 ) (0.47 ) Dissolution of business relationships in Russia — (0.01 ) — 0.06 Pension settlement charge — 1.20 — 1.20 Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — (0.17 ) — (0.17 ) CEO transition expenses 0.07 — 0.07 — Withholding tax related to internal restructuring — — 0.10 — Inventory step-up impacting Cost of goods sold 0.03 — 0.03 — Acquisition/integration costs 0.05 0.01 0.07 0.03 Adjusted Earnings per share (non-GAAP) $ 1.02 $ 1.15 $ 2.83 $ 3.13 The calculations of net debt are as follows: (in thousands) September 30, 2023 December 31, 2022 September 30, 2022 Current maturities of long-term debt $ 27,246 $ — $ — Long-term debt 463,339 439,000 447,000 Total debt 490,585 439,000 447,000 Cash and cash equivalents 171,506 291,776 276,482 Net debt (non-GAAP) $ 319,079 $ 147,224 $ 170,518 The calculation of net leverage ratio as of September 30, 2023 is as follows: Total Company Twelve months ended Nine months ended Trailing twelve months ended (in thousands) December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2023 (non-GAAP) (c) Net income/(loss) (GAAP) $ 96,508 $ 78,267 $ 81,066 $ 99,307 Interest expense/(income), net 14,000 11,336 10,049 12,713 Income tax expense 35,472 22,273 39,908 53,107 Depreciation and amortization expense 69,049 51,908 54,778 71,919 EBITDA (non-GAAP) 215,029 163,784 185,801 237,046 Restructuring expenses, net 106 268 227 65 Foreign currency revaluation (gains)/losses (a) (9,829 ) (20,579 ) (1,720 ) 9,030 Dissolution of business relationships in Russia 2,275 2,354 — (79 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold — — 1,370 1,370 Pension settlement expense 49,128 49,128 — — IP address sales (3,420 ) — — (3,420 ) Acquisition/integration costs 1,057 806 2,818 3,069 Pre-tax (income) attributable to noncontrolling interest (817 ) (633 ) (474 ) (658 ) Adjusted EBITDA (non-GAAP) $ 253,529 $ 195,128 $ 190,074 $ 248,475 (in thousands, except for net leverage ratio) September 30, 2023 Net debt (non-GAAP) $ 319,079 Trailing twelve months Adjusted EBITDA (non-GAAP) 248,475 Net leverage ratio (non-GAAP) 1.28 (a) Foreign currency revaluation (gains)/losses represent unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies on the balance sheet date. (b) Our Adjusted EPS excluded the benefit from the reclassification of stranded income tax effects caused by the TCJA associated with the US pension plan liability that was eliminated in September 2022, a one-time event that would not recur in the future. Such stranded income tax effect represented a one-time benefit that distorted the effective tax rate for the quarter and year-to-date ended September 30, 2022, and would not be indicative of ongoing or expected future income tax rate at the Company. Management believes excluding pension settlement expense and its income tax impact, including the stranded income tax effects, from its Adjusted EBITDA and Adjusted EPS for the quarter and year-to-date ended September 30, 2022 would provide investors a transparent view and enhanced ability to better assess the Company’s ongoing operational and financial performance. (c) Calculated as amounts incurred during the twelve months ended December 31, 2022, less those incurred during the nine months ended September 30, 2022, plus those incurred during the nine months ended September 30, 2023. The tables below provide a reconciliation of forecasted full-year 2023 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures. Forecast of Full Year 2023 Adjusted EBITDA Machine Clothing AEC (in millions) Low High Low High Net income attributable to the Company (GAAP) (d) $ 185 $ 195 $ 36 $ 40 Income attributable to the noncontrolling interest — — — — Interest expense/(income), net — — — — Income tax expense — — — — Depreciation and amortization 23 23 48 49 EBITDA (non-GAAP) 208 218 84 89 Restructuring expenses, net (e) — — — — Foreign currency revaluation (gains)/losses (e) 2 2 — — Acquisition/integration costs (e) — — 1 1 Cost of goods sold adjustment due to acquisition 5 5 — — Pre-tax (income)/loss attributable to non-controlling interest — — — — Adjusted EBITDA (non-GAAP) $ 215 $ 225 $ 85 $ 90 (d) Interest, Other income/expense and Income taxes are not allocated to the business segments Forecast of Full Year 2023 Adjusted EBITDA Total Company (in millions) Low High Net income attributable to the Company (GAAP) $ 95 $ 105 Income attributable to the noncontrolling interest — — Interest expense/(income), net 14 14 Income tax expense 46 52 Depreciation and amortization 75 75 EBITDA (non-GAAP) 230 246 Restructuring expenses, net (e) — — Foreign currency revaluation (gains)/losses (e) (2 ) (2 ) Acquisition/integration costs (e) 3 3 CEO transition expenses 2 2 Inventory step-up impacting Cost of goods sold 5 5 Pre-tax (income)/loss attributable to non-controlling interest — — Adjusted EBITDA (non-GAAP) $ 238 $ 254 Total Company Forecast of Full Year 2023 Earnings per share (basic) (f) Low High Net income attributable to the Company (GAAP) $ 3.02 $ 3.37 Restructuring expenses, net (e) 0.01 0.01 Foreign currency revaluation (gains)/losses (e) (0.04 ) (0.04 ) Withholding tax related to internal restructuring 0.10 0.10 CEO transition expenses 0.07 0.07 Inventory step-up impacting Cost of goods sold 0.12 0.12 Acquisition/integration costs (e) 0.07 0.07 Adjusted Earnings per share (non-GAAP) $ 3.35 $ 3.70 (e) Due to the uncertainty of these items, we are unable to forecast these items for 2023 (f) Calculations based on weighted average shares outstanding estimate of approximately 31.2 million About Albany International Corp. Albany International is a leading developer and manufacturer of engineered components, using advanced materials processing and automation capabilities, with two core businesses. Machine Clothing is the world’s leading producer of fabrics and process belts used in the manufacture of all grades of paper products. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for jet engine and airframe applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 32 plants in 14 countries, employs approximately 5,400 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com. Non-GAAP Measures This release, including the conference call commentary associated with this release, contains certain non-GAAP measures, that should not be considered in isolation or as a substitute for the related GAAP measures. Such non-GAAP measures include net revenues and percent change in net revenues, excluding the impact of currency translation effects; EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin; Net debt; Net leverage ratio; and Adjusted earnings per share (or Adjusted EPS). Management believes that these non-GAAP measures provide additional useful information to investors regarding the Company’s operational performance. Presenting Net revenues and change in Net revenues, after currency effects are excluded, provides management and investors insight into underlying revenues trends. Net revenues, or percent changes in net revenues, excluding currency rate effects, are calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. These amounts are then compared to the U.S. dollar amount as reported in the current period. EBITDA (calculated as net income excluding interest, income taxes, depreciation and amortization), Adjusted EBITDA, and Adjusted EPS are performance measures that relate to the Company’s continuing operations. The Company defines Adjusted EBITDA as EBITDA excluding costs or benefits that are not reflective of the Company’s ongoing or expected future operational performance. Such excluded costs or benefits do not consist of normal, recurring cash items necessary to generate revenues or operate our business. Adjusted EBITDA margin represents Adjusted EBITDA expressed as a percentage of net revenues. The Company defines Adjusted EPS as basic earnings per share (GAAP), adjusted by the after tax per share amount of costs or benefits not reflective of the Company’s ongoing or expected future operational performance. The income tax effects are calculated using the applicable statutory income tax rate of the jurisdictions where such costs or benefits were incurred or the effective tax rate applicable to total company results. The Company’s Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS may not be comparable to similarly titled measures of other companies. Net debt aids investors in understanding the Company’s debt position if all available cash were applied to pay down indebtedness. Net leverage ratio informs the investors of the Company's financial leverage at the end of the reporting period, providing an indicator of the Company's ability to repay its debt. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Forward-Looking Statements This press release may contain statements, estimates, guidance or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “look for,” “guidance,” “guide,” and similar expressions identify forward-looking statements, which generally are not historical in nature. Because forward-looking statements are subject to certain risks and uncertainties (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q), actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic conditions, including inflationary cost pressures, as well as global events, which include but are not limited to geopolitical events; paper-industry trends and conditions during 2023 and in future years; expectations in 2023 and in future periods of revenues, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net revenues), Adjusted EPS, income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, and for the Company as a whole; the timing and impact of production and development programs in the Company’s AEC business segment and the revenues growth potential of key AEC programs, as well as AEC as a whole; the amount and timing of capital expenditures, future tax rates and cash paid for taxes, depreciation and amortization; future debt and net debt levels and debt covenant ratios; and changes in currency rates and their impact on future revaluation gains and losses. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period. Such statements are based on current expectations, and the Company undertakes no obligation to publicly update or revise any forward-looking statements. Statements expressing management’s assessments of the growth potential of its businesses, or referring to earlier assessments of such potential, are not intended as forecasts of actual future growth, and should not be relied on as such. While management believes such assessments to have a reasonable basis, such assessments are, by their nature, inherently uncertain. This release and earlier releases set forth a number of assumptions regarding these assessments, including historical results, independent forecasts regarding the markets in which these businesses operate, and the timing and magnitude of orders for our customers’ products. Historical growth rates are no guarantee of future growth, and such independent forecasts and assumptions could prove materially incorrect in some cases. View source version on businesswire.com: https://www.businesswire.com/news/home/20231106556007/en/Contacts John Hobbs 603-330-5897 john.hobbs@albint.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Albany International Reports Third-Quarter 2023 Results By: Albany International Corp. via Business Wire November 06, 2023 at 16:20 PM EST Albany International Corp. (NYSE:AIN) today reported operating results for its third quarter of 2023, which ended September 30, 2023. "We are reporting another strong quarter," said President and CEO, Gunnar Kleveland. "Revenue of $281 million, was up $20 million or 7.9% year-over-year primarily due to sales growth in Engineered Composites and one month of Heimbach results in the Machine Clothing segment. Both business segments are continuing to deliver on their long-term plans for profitable growth. "In Machine Clothing, we closed on our acquisition of Heimbach on August 31 and welcome the Heimbach employees and customers to Albany. We are focused on integrating the operations and expect the acquisition to be accretive to earnings and cash flow in 2025. Machine Clothing delivered excellent results, particularly in light of the macroeconomic conditions in both Europe and China. "Engineered Composites is executing on its long-term growth strategy delivering top-line growth across commercial, defense and space markets. The new business pipeline is robust, and I am excited about the opportunities it represents. "Our revised guidance takes into account our year-to-date performance, anticipated market conditions, and the modestly dilutive impact of the Heimbach acquisition," concluded Kleveland. For the third quarter ended September 30, 2023: Net revenues were $281.1 million, up 7.9%, or 7.1% after adjusting for currency translation, when compared to the prior year. MC's net revenues increased 8.6%, driven by Heimbach Net revenues and, to a lesser extent, higher Net revenues in tissue and packaging grades, offset by lower Net revenues in pulp and engineered fabrics. AEC's Net revenues increased 6.9%, primarily driven by growth on LEAP programs, the Boeing Frames program, and other commercial programs, offset by lower CH-53K sales. Gross profit of $101.8 million was 1.3% higher than the $100.5 million reported for the same period of 2022; overall gross margin declined by more than 200 basis points, driven by lower margins at Heimbach and by an unfavorable shift in program revenue mix at AEC. Selling, Technical, General, and Research (STG&R) expenses were $61.7 million, compared to $46.8 million in the same period of 2022; the increase was driven by executive transition costs, acquisition-related expenses, higher personnel-related costs, and unfavorable changes to currency translation rates. Operating income was $40.1 million, compared to $53.6 million in the prior year, the result of higher STG&R expenses as described. Effective tax rate for the quarter was 25.3%, compared to -41.7% for the third quarter of 2022. The prior year tax rate was driven by the release of residual taxes as a result of the pension settlement at that time; excluding the effect of the pension settlement and related adjustments, the effective tax rate for the third quarter of 2022 was 24.6%. Net income attributable to the Company was $27.1 million ($0.87 per share), compared to $10.7 million ($0.34 per share) in the third quarter of 2022; Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.02 per share, compared to $1.15 per share for the same period last year. Adjusted EBITDA (a non-GAAP measure) was $64.7 million, compared to $68.1 million in the third quarter of 2022, a decrease of 4.9%. Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures. Outlook for Full-Year 2023 The Company has updated its guidance for the full year of 2023 as follows: Total company revenue between $1.100 and $1.130 billion, up $60 million; Effective income tax rate, including tax adjustments, between 32% and 33%, implying an effective tax rate between 28% and 30% for the fourth quarter of 2023; Total company depreciation and amortization approximately $75 million; Capital expenditures in the range of $85 to $95 million; GAAP earnings per share between $3.02 and $3.37, taking into account $0.14 to $0.18 of dilution from the Heimbach acquisition; largely the result of purchase accounting; Adjusted earnings per share between $3.35 and $3.70, up $0.08 per share at the midpoint, and includes $0.02 to $0.06 of dilution from Heimbach; Total company Adjusted EBITDA between $238 and $254 million; Machine Clothing revenue between $660 and $670 million, increasing approximately $50 million, including the estimated contribution from Heimbach; Machine Clothing Adjusted EBITDA between $215 and $225 million, inclusive of approximately $2 million from the Heimbach acquisition; Albany Engineered Composites (AEC) revenue between $440 and $460 million, up $10 million; and Albany Engineered Composites Adjusted EBITDA between $85 and $90 million, up modestly at the midpoint. ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net revenues $ 281,106 $ 260,563 $ 824,325 $ 766,101 Cost of goods sold 179,271 160,070 520,468 473,411 Gross profit 101,835 100,493 303,857 292,690 Selling, general, and administrative expenses 51,975 36,873 147,214 119,325 Technical and research expenses 9,708 9,934 30,303 29,984 Restructuring expenses, net 82 42 227 268 Operating income 40,070 53,644 126,113 143,113 Interest expense/(income), net 3,653 3,794 10,049 11,336 Pension settlement expense — 49,128 — 49,128 Other (income)/expense, net 56 (6,918 ) (4,910 ) (17,891 ) Income before income taxes 36,361 7,640 120,974 100,540 Income tax expense/(benefit) 9,207 (3,183 ) 39,908 22,273 Net income 27,154 10,823 81,066 78,267 Net income attributable to the noncontrolling interest 45 129 396 635 Net income attributable to the Company $ 27,109 $ 10,694 $ 80,670 $ 77,632 Earnings per share attributable to Company shareholders - Basic $ 0.87 $ 0.34 $ 2.59 $ 2.47 Earnings per share attributable to Company shareholders - Diluted $ 0.87 $ 0.34 $ 2.58 $ 2.46 Shares of the Company used in computing earnings per share: Basic 31,185 31,111 31,163 31,416 Diluted 31,283 31,223 31,256 31,518 Dividends declared per Class A share $ 0.25 $ 0.21 $ 0.75 $ 0.63 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) September 30, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 171,506 $ 291,776 Accounts receivable, net 270,487 200,018 Contract assets, net 165,833 148,695 Inventories 180,991 139,050 Income taxes prepaid and receivable 6,402 7,938 Prepaid expenses and other current assets 61,155 50,962 Total current assets $ 856,374 $ 838,439 Property, plant and equipment, net 566,974 445,658 Intangibles, net 44,636 33,811 Goodwill 177,398 178,217 Deferred income taxes 15,284 15,196 Noncurrent receivables, net 25,300 27,913 Other assets 104,284 103,021 Total assets $ 1,790,250 $ 1,642,255 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 70,105 $ 69,707 Accrued liabilities 135,343 126,385 Current maturities of long-term debt 27,246 — Income taxes payable 10,103 15,224 Total current liabilities 242,797 211,316 Long-term debt 463,339 439,000 Other noncurrent liabilities 141,620 108,758 Deferred taxes and other liabilities 20,861 15,638 Total liabilities 868,617 774,712 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued — — Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,856,910 issued in 2023 and 40,785,434 in 2022 41 41 Additional paid in capital 446,470 441,540 Retained earnings 988,602 931,318 Accumulated items of other comprehensive income: Translation adjustments (151,177 ) (146,851 ) Pension and postretirement liability adjustments (17,389 ) (15,783 ) Derivative valuation adjustment 12,957 17,707 Treasury stock (Class A), at cost; 9,661,845 shares in 2023 and 9,674,542 shares in 2022 (364,665 ) (364,923 ) Total Company shareholders' equity 914,839 863,049 Noncontrolling interest 6,794 4,494 Total equity 921,633 867,543 Total liabilities and shareholders' equity $ 1,790,250 $ 1,642,255 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 OPERATING ACTIVITIES Net income $ 81,066 $ 78,267 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 50,164 46,864 Amortization 4,614 5,044 Change in deferred taxes and other liabilities (1,264 ) (15,582 ) Impairment of property, plant, equipment, and inventory 577 2,610 Non-cash interest expense 1,148 840 Non-cash portion of pension settlement expense — 42,657 Compensation and benefits paid or payable in Class A Common Stock 5,189 3,282 Provision for credit losses from uncollected receivables and contract assets 641 885 Foreign currency remeasurement (gain) on intercompany loans (4,704 ) (6,629 ) Fair value adjustment on foreign currency options 581 (409 ) Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition: Accounts receivable (18,172 ) (20,260 ) Contract assets (16,550 ) (37,201 ) Inventories (293 ) (24,895 ) Prepaid expenses and other current assets (3,030 ) (2,733 ) Income taxes prepaid and receivable 1,597 (2,179 ) Accounts payable (6,661 ) 5,081 Accrued liabilities (16,454 ) (12,624 ) Income taxes payable (5,810 ) 2,639 Noncurrent receivables 2,276 2,976 Other noncurrent liabilities (3,602 ) (5,960 ) Other, net 2,499 4,634 Net cash provided by operating activities 73,812 67,307 INVESTING ACTIVITIES Purchase of business, net of cash acquired (133,470 ) — Purchases of property, plant and equipment (48,850 ) (50,948 ) Purchased software (276 ) (1,884 ) Net cash used in investing activities (182,596 ) (52,832 ) FINANCING ACTIVITIES Proceeds from borrowings 71,249 145,000 Principal payments on debt (51,479 ) (48,000 ) Principal payments on finance lease liabilities — (654 ) Debt acquisition costs (4,108 ) — Purchase of Treasury shares — (84,780 ) Taxes paid in lieu of share issuance (3,136 ) (770 ) Proceeds from options exercised — 17 Dividends paid (23,365 ) (19,932 ) Net cash used in financing activities (10,839 ) (9,119 ) Effect of exchange rate changes on cash and cash equivalents (647 ) (30,910 ) Decrease in cash and cash equivalents (120,270 ) (25,554 ) Cash and cash equivalents at beginning of period 291,776 302,036 Cash and cash equivalents at end of period $ 171,506 $ 276,482 The following table presents the reconciliation of Net revenues to net revenues excluding the effect of changes in currency translation rates, a non-GAAP measure: (in thousands, except percentages) Net revenues as reported, Q3 2023 Increase due to changes in currency translation rates Q3 2023 revenues on same basis as Q3 2022 currency translation rates Net revenues as reported, Q3 2022 % Change compared to Q3 2022, excluding currency rate effects Machine Clothing $ 166,588 $ 662 $ 165,926 $ 153,389 8.2 % Albany Engineered Composites 114,518 1,275 113,243 107,174 5.7 % Consolidated total $ 281,106 $ 1,937 $ 279,169 $ 260,563 7.1 % (in thousands, except percentages) Net revenues as reported, YTD 2023 (Decrease)/ increase due to changes in currency translation rates YTD 2023 revenues on same basis as 2022 currency translation rates Net revenues as reported, YTD 2022 % Change compared to 2022, excluding currency rate effects Machine Clothing $ 479,027 $ (3,684 ) $ 482,711 $ 459,121 5.1 % Albany Engineered Composites 345,298 851 344,447 306,980 12.2 % Consolidated total $ 824,325 $ (2,833 ) $ 827,158 $ 766,101 8.0 % The following table presents Gross profit and Gross profit margin: (in thousands, except percentages) Gross profit, Q3 2023 Gross profit margin, Q3 2023 Gross profit, Q3 2022 Gross profit margin, Q3 2022 Machine Clothing $ 79,257 47.6 % $ 79,232 51.7 % Albany Engineered Composites 22,578 19.7 % 21,261 19.8 % Consolidated total $ 101,835 36.2 % $ 100,493 38.6 % (in thousands, except percentages) Gross profit, YTD 2023 Gross profit margin, YTD 2023 Gross profit, YTD 2022 Gross profit margin, YTD 2022 Machine Clothing $ 238,031 49.7 % $ 237,434 51.7 % Albany Engineered Composites 65,826 19.1 % 55,256 18.0 % Consolidated total $ 303,857 36.9 % $ 292,690 38.2 % A reconciliation from Net income/(loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the current-year and comparable prior-year periods has been calculated as follows: Three months ended September 30, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 50,710 $ 9,374 $ (32,930 ) $ 27,154 Interest expense/(income), net — — 3,653 3,653 Income tax expense — — 9,207 9,207 Depreciation and amortization expense 5,976 12,510 975 19,461 EBITDA (non-GAAP) 56,686 21,884 (19,095 ) 59,475 Restructuring expenses, net 82 — — 82 Foreign currency revaluation (gains)/losses (a) (656 ) 19 516 (121 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold 1,370 — — 1,370 Acquisition/integration costs — 273 1,642 1,915 Pre-tax (income) attributable to noncontrolling interest — (73 ) — (73 ) Adjusted EBITDA (non-GAAP) $ 57,482 $ 22,103 $ (14,885 ) $ 64,700 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.5 % 19.3 % — 23.0 % Three months ended September 30, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 57,247 $ 9,958 $ (56,382 ) $ 10,823 Interest expense/(income), net — — 3,794 3,794 Income tax benefit — — (3,183 ) (3,183 ) Depreciation and amortization expense 4,913 11,303 818 17,034 EBITDA (non-GAAP) 62,160 21,261 (54,953 ) 28,468 Restructuring expenses, net 42 — — 42 Foreign currency revaluation (gains)/losses (a) (2,931 ) 122 (6,633 ) (9,442 ) Dissolution of business relationships in Russia (214 ) — — (214 ) Pension settlement expense — — 49,128 49,128 Acquisition/integration costs — 255 — 255 Pre-tax (income) attributable to noncontrolling interest — (176 ) — (176 ) Adjusted EBITDA (non-GAAP) $ 59,057 $ 21,462 $ (12,458 ) $ 68,061 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 38.5 % 20.0 % — 26.1 % Nine months ended September 30, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 153,400 $ 27,460 $ (99,794 ) $ 81,066 Interest expense/(income), net — — 10,049 10,049 Income tax expense — — 39,908 39,908 Depreciation and amortization expense 15,682 36,246 2,850 54,778 EBITDA (non-GAAP) 169,082 63,706 (46,987 ) 185,801 Restructuring expenses, net 227 — — 227 Foreign currency revaluation (gains)/losses (a) 1,870 19 (3,609 ) (1,720 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold 1,370 — — 1,370 Acquisition/integration costs — 813 2,005 2,818 Pre-tax (income) attributable to noncontrolling interest — (474 ) — (474 ) Adjusted EBITDA (non-GAAP) $ 172,549 $ 64,064 $ (46,539 ) $ 190,074 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP) 36.0 % 18.6 % — 23.1 % Nine months ended September 30, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 161,752 $ 20,688 $ (104,173 ) $ 78,267 Interest expense/(income), net — — 11,336 11,336 Income tax expense — — 22,273 22,273 Depreciation and amortization expense 14,716 34,792 2,400 51,908 EBITDA (non-GAAP) 176,468 55,480 (68,164 ) 163,784 Restructuring expenses, net 255 — 13 268 Foreign currency revaluation (gains)/losses (a) (3,690 ) 755 (17,644 ) (20,579 ) Dissolution of business relationships in Russia 1,573 — 781 2,354 Pension settlement expense — — 49,128 49,128 Acquisition/integration costs — 806 — 806 Pre-tax (income) attributable to noncontrolling interest — (633 ) — (633 ) Adjusted EBITDA (non-GAAP) $ 174,606 $ 56,408 $ (35,886 ) $ 195,128 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP) 38.0 % 18.4 % — 25.5 % Per share impact of the adjustments to earnings per share are as follows: Three months ended September 30, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 82 $ 21 $ 61 $ 0.00 Foreign currency revaluation (gains)/losses (a) (121 ) (35 ) (86 ) 0.00 CEO transition expenses 2,052 — 2,052 0.07 Inventory step-up impacting Cost of goods sold 1,370 411 959 0.03 Acquisition/integration costs 1,915 476 1,439 0.05 Three months ended September 30, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 42 $ 6 $ 36 $ 0.00 Foreign currency revaluation (gains)/losses (a) (9,442 ) (2,694 ) (6,748 ) (0.22 ) Dissolution of business relationships in Russia (214 ) (18 ) (196 ) (0.01 ) Pension settlement expense 49,128 11,947 37,181 1.20 Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — 5,217 (5,217 ) (0.17 ) Acquisition/integration costs 255 77 178 0.01 Nine months ended September 30, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 227 $ 68 $ 159 $ 0.01 Foreign currency revaluation (gains)/losses (a) (1,720 ) (504 ) (1,216 ) (0.04 ) CEO transition expenses 2,052 — 2,052 0.07 Withholding tax related to internal restructuring — (3,026 ) 3,026 0.10 Inventory step-up impacting Cost of goods sold 1,370 411 959 0.03 Acquisition/integration costs 2,818 725 2,093 0.07 Nine months ended September 30, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 268 $ 75 $ 193 $ 0.01 Foreign currency revaluation (gains)/losses (a) (20,579 ) (5,829 ) (14,750 ) (0.47 ) Dissolution of business relationships in Russia 2,354 314 2,040 0.06 Pension settlement expense 49,128 11,947 37,181 1.20 Tax impact of stranded OCI benefit from TCJA for pension liability (b) — 5,217 (5,217 ) (0.17 ) Acquisition/integration costs 806 241 565 0.03 The following table provides a reconciliation of Earnings per share to Adjusted Earnings per share: Three months ended September 30, Nine months ended September 30, Per share amounts (Basic) 2023 2022 2023 2022 Earnings per share (GAAP) $ 0.87 $ 0.34 $ 2.59 $ 2.47 Adjustments, after tax: Restructuring expenses, net — — 0.01 0.01 Foreign currency revaluation (gains)/losses (a) — (0.22 ) (0.04 ) (0.47 ) Dissolution of business relationships in Russia — (0.01 ) — 0.06 Pension settlement charge — 1.20 — 1.20 Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — (0.17 ) — (0.17 ) CEO transition expenses 0.07 — 0.07 — Withholding tax related to internal restructuring — — 0.10 — Inventory step-up impacting Cost of goods sold 0.03 — 0.03 — Acquisition/integration costs 0.05 0.01 0.07 0.03 Adjusted Earnings per share (non-GAAP) $ 1.02 $ 1.15 $ 2.83 $ 3.13 The calculations of net debt are as follows: (in thousands) September 30, 2023 December 31, 2022 September 30, 2022 Current maturities of long-term debt $ 27,246 $ — $ — Long-term debt 463,339 439,000 447,000 Total debt 490,585 439,000 447,000 Cash and cash equivalents 171,506 291,776 276,482 Net debt (non-GAAP) $ 319,079 $ 147,224 $ 170,518 The calculation of net leverage ratio as of September 30, 2023 is as follows: Total Company Twelve months ended Nine months ended Trailing twelve months ended (in thousands) December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2023 (non-GAAP) (c) Net income/(loss) (GAAP) $ 96,508 $ 78,267 $ 81,066 $ 99,307 Interest expense/(income), net 14,000 11,336 10,049 12,713 Income tax expense 35,472 22,273 39,908 53,107 Depreciation and amortization expense 69,049 51,908 54,778 71,919 EBITDA (non-GAAP) 215,029 163,784 185,801 237,046 Restructuring expenses, net 106 268 227 65 Foreign currency revaluation (gains)/losses (a) (9,829 ) (20,579 ) (1,720 ) 9,030 Dissolution of business relationships in Russia 2,275 2,354 — (79 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold — — 1,370 1,370 Pension settlement expense 49,128 49,128 — — IP address sales (3,420 ) — — (3,420 ) Acquisition/integration costs 1,057 806 2,818 3,069 Pre-tax (income) attributable to noncontrolling interest (817 ) (633 ) (474 ) (658 ) Adjusted EBITDA (non-GAAP) $ 253,529 $ 195,128 $ 190,074 $ 248,475 (in thousands, except for net leverage ratio) September 30, 2023 Net debt (non-GAAP) $ 319,079 Trailing twelve months Adjusted EBITDA (non-GAAP) 248,475 Net leverage ratio (non-GAAP) 1.28 (a) Foreign currency revaluation (gains)/losses represent unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies on the balance sheet date. (b) Our Adjusted EPS excluded the benefit from the reclassification of stranded income tax effects caused by the TCJA associated with the US pension plan liability that was eliminated in September 2022, a one-time event that would not recur in the future. Such stranded income tax effect represented a one-time benefit that distorted the effective tax rate for the quarter and year-to-date ended September 30, 2022, and would not be indicative of ongoing or expected future income tax rate at the Company. Management believes excluding pension settlement expense and its income tax impact, including the stranded income tax effects, from its Adjusted EBITDA and Adjusted EPS for the quarter and year-to-date ended September 30, 2022 would provide investors a transparent view and enhanced ability to better assess the Company’s ongoing operational and financial performance. (c) Calculated as amounts incurred during the twelve months ended December 31, 2022, less those incurred during the nine months ended September 30, 2022, plus those incurred during the nine months ended September 30, 2023. The tables below provide a reconciliation of forecasted full-year 2023 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures. Forecast of Full Year 2023 Adjusted EBITDA Machine Clothing AEC (in millions) Low High Low High Net income attributable to the Company (GAAP) (d) $ 185 $ 195 $ 36 $ 40 Income attributable to the noncontrolling interest — — — — Interest expense/(income), net — — — — Income tax expense — — — — Depreciation and amortization 23 23 48 49 EBITDA (non-GAAP) 208 218 84 89 Restructuring expenses, net (e) — — — — Foreign currency revaluation (gains)/losses (e) 2 2 — — Acquisition/integration costs (e) — — 1 1 Cost of goods sold adjustment due to acquisition 5 5 — — Pre-tax (income)/loss attributable to non-controlling interest — — — — Adjusted EBITDA (non-GAAP) $ 215 $ 225 $ 85 $ 90 (d) Interest, Other income/expense and Income taxes are not allocated to the business segments Forecast of Full Year 2023 Adjusted EBITDA Total Company (in millions) Low High Net income attributable to the Company (GAAP) $ 95 $ 105 Income attributable to the noncontrolling interest — — Interest expense/(income), net 14 14 Income tax expense 46 52 Depreciation and amortization 75 75 EBITDA (non-GAAP) 230 246 Restructuring expenses, net (e) — — Foreign currency revaluation (gains)/losses (e) (2 ) (2 ) Acquisition/integration costs (e) 3 3 CEO transition expenses 2 2 Inventory step-up impacting Cost of goods sold 5 5 Pre-tax (income)/loss attributable to non-controlling interest — — Adjusted EBITDA (non-GAAP) $ 238 $ 254 Total Company Forecast of Full Year 2023 Earnings per share (basic) (f) Low High Net income attributable to the Company (GAAP) $ 3.02 $ 3.37 Restructuring expenses, net (e) 0.01 0.01 Foreign currency revaluation (gains)/losses (e) (0.04 ) (0.04 ) Withholding tax related to internal restructuring 0.10 0.10 CEO transition expenses 0.07 0.07 Inventory step-up impacting Cost of goods sold 0.12 0.12 Acquisition/integration costs (e) 0.07 0.07 Adjusted Earnings per share (non-GAAP) $ 3.35 $ 3.70 (e) Due to the uncertainty of these items, we are unable to forecast these items for 2023 (f) Calculations based on weighted average shares outstanding estimate of approximately 31.2 million About Albany International Corp. Albany International is a leading developer and manufacturer of engineered components, using advanced materials processing and automation capabilities, with two core businesses. Machine Clothing is the world’s leading producer of fabrics and process belts used in the manufacture of all grades of paper products. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for jet engine and airframe applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 32 plants in 14 countries, employs approximately 5,400 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com. Non-GAAP Measures This release, including the conference call commentary associated with this release, contains certain non-GAAP measures, that should not be considered in isolation or as a substitute for the related GAAP measures. Such non-GAAP measures include net revenues and percent change in net revenues, excluding the impact of currency translation effects; EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin; Net debt; Net leverage ratio; and Adjusted earnings per share (or Adjusted EPS). Management believes that these non-GAAP measures provide additional useful information to investors regarding the Company’s operational performance. Presenting Net revenues and change in Net revenues, after currency effects are excluded, provides management and investors insight into underlying revenues trends. Net revenues, or percent changes in net revenues, excluding currency rate effects, are calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. These amounts are then compared to the U.S. dollar amount as reported in the current period. EBITDA (calculated as net income excluding interest, income taxes, depreciation and amortization), Adjusted EBITDA, and Adjusted EPS are performance measures that relate to the Company’s continuing operations. The Company defines Adjusted EBITDA as EBITDA excluding costs or benefits that are not reflective of the Company’s ongoing or expected future operational performance. Such excluded costs or benefits do not consist of normal, recurring cash items necessary to generate revenues or operate our business. Adjusted EBITDA margin represents Adjusted EBITDA expressed as a percentage of net revenues. The Company defines Adjusted EPS as basic earnings per share (GAAP), adjusted by the after tax per share amount of costs or benefits not reflective of the Company’s ongoing or expected future operational performance. The income tax effects are calculated using the applicable statutory income tax rate of the jurisdictions where such costs or benefits were incurred or the effective tax rate applicable to total company results. The Company’s Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS may not be comparable to similarly titled measures of other companies. Net debt aids investors in understanding the Company’s debt position if all available cash were applied to pay down indebtedness. Net leverage ratio informs the investors of the Company's financial leverage at the end of the reporting period, providing an indicator of the Company's ability to repay its debt. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Forward-Looking Statements This press release may contain statements, estimates, guidance or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “look for,” “guidance,” “guide,” and similar expressions identify forward-looking statements, which generally are not historical in nature. Because forward-looking statements are subject to certain risks and uncertainties (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q), actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic conditions, including inflationary cost pressures, as well as global events, which include but are not limited to geopolitical events; paper-industry trends and conditions during 2023 and in future years; expectations in 2023 and in future periods of revenues, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net revenues), Adjusted EPS, income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, and for the Company as a whole; the timing and impact of production and development programs in the Company’s AEC business segment and the revenues growth potential of key AEC programs, as well as AEC as a whole; the amount and timing of capital expenditures, future tax rates and cash paid for taxes, depreciation and amortization; future debt and net debt levels and debt covenant ratios; and changes in currency rates and their impact on future revaluation gains and losses. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period. Such statements are based on current expectations, and the Company undertakes no obligation to publicly update or revise any forward-looking statements. Statements expressing management’s assessments of the growth potential of its businesses, or referring to earlier assessments of such potential, are not intended as forecasts of actual future growth, and should not be relied on as such. While management believes such assessments to have a reasonable basis, such assessments are, by their nature, inherently uncertain. This release and earlier releases set forth a number of assumptions regarding these assessments, including historical results, independent forecasts regarding the markets in which these businesses operate, and the timing and magnitude of orders for our customers’ products. Historical growth rates are no guarantee of future growth, and such independent forecasts and assumptions could prove materially incorrect in some cases. View source version on businesswire.com: https://www.businesswire.com/news/home/20231106556007/en/Contacts John Hobbs 603-330-5897 john.hobbs@albint.com
Albany International Corp. (NYSE:AIN) today reported operating results for its third quarter of 2023, which ended September 30, 2023. "We are reporting another strong quarter," said President and CEO, Gunnar Kleveland. "Revenue of $281 million, was up $20 million or 7.9% year-over-year primarily due to sales growth in Engineered Composites and one month of Heimbach results in the Machine Clothing segment. Both business segments are continuing to deliver on their long-term plans for profitable growth. "In Machine Clothing, we closed on our acquisition of Heimbach on August 31 and welcome the Heimbach employees and customers to Albany. We are focused on integrating the operations and expect the acquisition to be accretive to earnings and cash flow in 2025. Machine Clothing delivered excellent results, particularly in light of the macroeconomic conditions in both Europe and China. "Engineered Composites is executing on its long-term growth strategy delivering top-line growth across commercial, defense and space markets. The new business pipeline is robust, and I am excited about the opportunities it represents. "Our revised guidance takes into account our year-to-date performance, anticipated market conditions, and the modestly dilutive impact of the Heimbach acquisition," concluded Kleveland. For the third quarter ended September 30, 2023: Net revenues were $281.1 million, up 7.9%, or 7.1% after adjusting for currency translation, when compared to the prior year. MC's net revenues increased 8.6%, driven by Heimbach Net revenues and, to a lesser extent, higher Net revenues in tissue and packaging grades, offset by lower Net revenues in pulp and engineered fabrics. AEC's Net revenues increased 6.9%, primarily driven by growth on LEAP programs, the Boeing Frames program, and other commercial programs, offset by lower CH-53K sales. Gross profit of $101.8 million was 1.3% higher than the $100.5 million reported for the same period of 2022; overall gross margin declined by more than 200 basis points, driven by lower margins at Heimbach and by an unfavorable shift in program revenue mix at AEC. Selling, Technical, General, and Research (STG&R) expenses were $61.7 million, compared to $46.8 million in the same period of 2022; the increase was driven by executive transition costs, acquisition-related expenses, higher personnel-related costs, and unfavorable changes to currency translation rates. Operating income was $40.1 million, compared to $53.6 million in the prior year, the result of higher STG&R expenses as described. Effective tax rate for the quarter was 25.3%, compared to -41.7% for the third quarter of 2022. The prior year tax rate was driven by the release of residual taxes as a result of the pension settlement at that time; excluding the effect of the pension settlement and related adjustments, the effective tax rate for the third quarter of 2022 was 24.6%. Net income attributable to the Company was $27.1 million ($0.87 per share), compared to $10.7 million ($0.34 per share) in the third quarter of 2022; Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.02 per share, compared to $1.15 per share for the same period last year. Adjusted EBITDA (a non-GAAP measure) was $64.7 million, compared to $68.1 million in the third quarter of 2022, a decrease of 4.9%. Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures. Outlook for Full-Year 2023 The Company has updated its guidance for the full year of 2023 as follows: Total company revenue between $1.100 and $1.130 billion, up $60 million; Effective income tax rate, including tax adjustments, between 32% and 33%, implying an effective tax rate between 28% and 30% for the fourth quarter of 2023; Total company depreciation and amortization approximately $75 million; Capital expenditures in the range of $85 to $95 million; GAAP earnings per share between $3.02 and $3.37, taking into account $0.14 to $0.18 of dilution from the Heimbach acquisition; largely the result of purchase accounting; Adjusted earnings per share between $3.35 and $3.70, up $0.08 per share at the midpoint, and includes $0.02 to $0.06 of dilution from Heimbach; Total company Adjusted EBITDA between $238 and $254 million; Machine Clothing revenue between $660 and $670 million, increasing approximately $50 million, including the estimated contribution from Heimbach; Machine Clothing Adjusted EBITDA between $215 and $225 million, inclusive of approximately $2 million from the Heimbach acquisition; Albany Engineered Composites (AEC) revenue between $440 and $460 million, up $10 million; and Albany Engineered Composites Adjusted EBITDA between $85 and $90 million, up modestly at the midpoint. ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net revenues $ 281,106 $ 260,563 $ 824,325 $ 766,101 Cost of goods sold 179,271 160,070 520,468 473,411 Gross profit 101,835 100,493 303,857 292,690 Selling, general, and administrative expenses 51,975 36,873 147,214 119,325 Technical and research expenses 9,708 9,934 30,303 29,984 Restructuring expenses, net 82 42 227 268 Operating income 40,070 53,644 126,113 143,113 Interest expense/(income), net 3,653 3,794 10,049 11,336 Pension settlement expense — 49,128 — 49,128 Other (income)/expense, net 56 (6,918 ) (4,910 ) (17,891 ) Income before income taxes 36,361 7,640 120,974 100,540 Income tax expense/(benefit) 9,207 (3,183 ) 39,908 22,273 Net income 27,154 10,823 81,066 78,267 Net income attributable to the noncontrolling interest 45 129 396 635 Net income attributable to the Company $ 27,109 $ 10,694 $ 80,670 $ 77,632 Earnings per share attributable to Company shareholders - Basic $ 0.87 $ 0.34 $ 2.59 $ 2.47 Earnings per share attributable to Company shareholders - Diluted $ 0.87 $ 0.34 $ 2.58 $ 2.46 Shares of the Company used in computing earnings per share: Basic 31,185 31,111 31,163 31,416 Diluted 31,283 31,223 31,256 31,518 Dividends declared per Class A share $ 0.25 $ 0.21 $ 0.75 $ 0.63 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) September 30, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 171,506 $ 291,776 Accounts receivable, net 270,487 200,018 Contract assets, net 165,833 148,695 Inventories 180,991 139,050 Income taxes prepaid and receivable 6,402 7,938 Prepaid expenses and other current assets 61,155 50,962 Total current assets $ 856,374 $ 838,439 Property, plant and equipment, net 566,974 445,658 Intangibles, net 44,636 33,811 Goodwill 177,398 178,217 Deferred income taxes 15,284 15,196 Noncurrent receivables, net 25,300 27,913 Other assets 104,284 103,021 Total assets $ 1,790,250 $ 1,642,255 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 70,105 $ 69,707 Accrued liabilities 135,343 126,385 Current maturities of long-term debt 27,246 — Income taxes payable 10,103 15,224 Total current liabilities 242,797 211,316 Long-term debt 463,339 439,000 Other noncurrent liabilities 141,620 108,758 Deferred taxes and other liabilities 20,861 15,638 Total liabilities 868,617 774,712 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued — — Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,856,910 issued in 2023 and 40,785,434 in 2022 41 41 Additional paid in capital 446,470 441,540 Retained earnings 988,602 931,318 Accumulated items of other comprehensive income: Translation adjustments (151,177 ) (146,851 ) Pension and postretirement liability adjustments (17,389 ) (15,783 ) Derivative valuation adjustment 12,957 17,707 Treasury stock (Class A), at cost; 9,661,845 shares in 2023 and 9,674,542 shares in 2022 (364,665 ) (364,923 ) Total Company shareholders' equity 914,839 863,049 Noncontrolling interest 6,794 4,494 Total equity 921,633 867,543 Total liabilities and shareholders' equity $ 1,790,250 $ 1,642,255 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 OPERATING ACTIVITIES Net income $ 81,066 $ 78,267 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 50,164 46,864 Amortization 4,614 5,044 Change in deferred taxes and other liabilities (1,264 ) (15,582 ) Impairment of property, plant, equipment, and inventory 577 2,610 Non-cash interest expense 1,148 840 Non-cash portion of pension settlement expense — 42,657 Compensation and benefits paid or payable in Class A Common Stock 5,189 3,282 Provision for credit losses from uncollected receivables and contract assets 641 885 Foreign currency remeasurement (gain) on intercompany loans (4,704 ) (6,629 ) Fair value adjustment on foreign currency options 581 (409 ) Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition: Accounts receivable (18,172 ) (20,260 ) Contract assets (16,550 ) (37,201 ) Inventories (293 ) (24,895 ) Prepaid expenses and other current assets (3,030 ) (2,733 ) Income taxes prepaid and receivable 1,597 (2,179 ) Accounts payable (6,661 ) 5,081 Accrued liabilities (16,454 ) (12,624 ) Income taxes payable (5,810 ) 2,639 Noncurrent receivables 2,276 2,976 Other noncurrent liabilities (3,602 ) (5,960 ) Other, net 2,499 4,634 Net cash provided by operating activities 73,812 67,307 INVESTING ACTIVITIES Purchase of business, net of cash acquired (133,470 ) — Purchases of property, plant and equipment (48,850 ) (50,948 ) Purchased software (276 ) (1,884 ) Net cash used in investing activities (182,596 ) (52,832 ) FINANCING ACTIVITIES Proceeds from borrowings 71,249 145,000 Principal payments on debt (51,479 ) (48,000 ) Principal payments on finance lease liabilities — (654 ) Debt acquisition costs (4,108 ) — Purchase of Treasury shares — (84,780 ) Taxes paid in lieu of share issuance (3,136 ) (770 ) Proceeds from options exercised — 17 Dividends paid (23,365 ) (19,932 ) Net cash used in financing activities (10,839 ) (9,119 ) Effect of exchange rate changes on cash and cash equivalents (647 ) (30,910 ) Decrease in cash and cash equivalents (120,270 ) (25,554 ) Cash and cash equivalents at beginning of period 291,776 302,036 Cash and cash equivalents at end of period $ 171,506 $ 276,482 The following table presents the reconciliation of Net revenues to net revenues excluding the effect of changes in currency translation rates, a non-GAAP measure: (in thousands, except percentages) Net revenues as reported, Q3 2023 Increase due to changes in currency translation rates Q3 2023 revenues on same basis as Q3 2022 currency translation rates Net revenues as reported, Q3 2022 % Change compared to Q3 2022, excluding currency rate effects Machine Clothing $ 166,588 $ 662 $ 165,926 $ 153,389 8.2 % Albany Engineered Composites 114,518 1,275 113,243 107,174 5.7 % Consolidated total $ 281,106 $ 1,937 $ 279,169 $ 260,563 7.1 % (in thousands, except percentages) Net revenues as reported, YTD 2023 (Decrease)/ increase due to changes in currency translation rates YTD 2023 revenues on same basis as 2022 currency translation rates Net revenues as reported, YTD 2022 % Change compared to 2022, excluding currency rate effects Machine Clothing $ 479,027 $ (3,684 ) $ 482,711 $ 459,121 5.1 % Albany Engineered Composites 345,298 851 344,447 306,980 12.2 % Consolidated total $ 824,325 $ (2,833 ) $ 827,158 $ 766,101 8.0 % The following table presents Gross profit and Gross profit margin: (in thousands, except percentages) Gross profit, Q3 2023 Gross profit margin, Q3 2023 Gross profit, Q3 2022 Gross profit margin, Q3 2022 Machine Clothing $ 79,257 47.6 % $ 79,232 51.7 % Albany Engineered Composites 22,578 19.7 % 21,261 19.8 % Consolidated total $ 101,835 36.2 % $ 100,493 38.6 % (in thousands, except percentages) Gross profit, YTD 2023 Gross profit margin, YTD 2023 Gross profit, YTD 2022 Gross profit margin, YTD 2022 Machine Clothing $ 238,031 49.7 % $ 237,434 51.7 % Albany Engineered Composites 65,826 19.1 % 55,256 18.0 % Consolidated total $ 303,857 36.9 % $ 292,690 38.2 % A reconciliation from Net income/(loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the current-year and comparable prior-year periods has been calculated as follows: Three months ended September 30, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 50,710 $ 9,374 $ (32,930 ) $ 27,154 Interest expense/(income), net — — 3,653 3,653 Income tax expense — — 9,207 9,207 Depreciation and amortization expense 5,976 12,510 975 19,461 EBITDA (non-GAAP) 56,686 21,884 (19,095 ) 59,475 Restructuring expenses, net 82 — — 82 Foreign currency revaluation (gains)/losses (a) (656 ) 19 516 (121 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold 1,370 — — 1,370 Acquisition/integration costs — 273 1,642 1,915 Pre-tax (income) attributable to noncontrolling interest — (73 ) — (73 ) Adjusted EBITDA (non-GAAP) $ 57,482 $ 22,103 $ (14,885 ) $ 64,700 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.5 % 19.3 % — 23.0 % Three months ended September 30, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 57,247 $ 9,958 $ (56,382 ) $ 10,823 Interest expense/(income), net — — 3,794 3,794 Income tax benefit — — (3,183 ) (3,183 ) Depreciation and amortization expense 4,913 11,303 818 17,034 EBITDA (non-GAAP) 62,160 21,261 (54,953 ) 28,468 Restructuring expenses, net 42 — — 42 Foreign currency revaluation (gains)/losses (a) (2,931 ) 122 (6,633 ) (9,442 ) Dissolution of business relationships in Russia (214 ) — — (214 ) Pension settlement expense — — 49,128 49,128 Acquisition/integration costs — 255 — 255 Pre-tax (income) attributable to noncontrolling interest — (176 ) — (176 ) Adjusted EBITDA (non-GAAP) $ 59,057 $ 21,462 $ (12,458 ) $ 68,061 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 38.5 % 20.0 % — 26.1 % Nine months ended September 30, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 153,400 $ 27,460 $ (99,794 ) $ 81,066 Interest expense/(income), net — — 10,049 10,049 Income tax expense — — 39,908 39,908 Depreciation and amortization expense 15,682 36,246 2,850 54,778 EBITDA (non-GAAP) 169,082 63,706 (46,987 ) 185,801 Restructuring expenses, net 227 — — 227 Foreign currency revaluation (gains)/losses (a) 1,870 19 (3,609 ) (1,720 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold 1,370 — — 1,370 Acquisition/integration costs — 813 2,005 2,818 Pre-tax (income) attributable to noncontrolling interest — (474 ) — (474 ) Adjusted EBITDA (non-GAAP) $ 172,549 $ 64,064 $ (46,539 ) $ 190,074 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP) 36.0 % 18.6 % — 23.1 % Nine months ended September 30, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 161,752 $ 20,688 $ (104,173 ) $ 78,267 Interest expense/(income), net — — 11,336 11,336 Income tax expense — — 22,273 22,273 Depreciation and amortization expense 14,716 34,792 2,400 51,908 EBITDA (non-GAAP) 176,468 55,480 (68,164 ) 163,784 Restructuring expenses, net 255 — 13 268 Foreign currency revaluation (gains)/losses (a) (3,690 ) 755 (17,644 ) (20,579 ) Dissolution of business relationships in Russia 1,573 — 781 2,354 Pension settlement expense — — 49,128 49,128 Acquisition/integration costs — 806 — 806 Pre-tax (income) attributable to noncontrolling interest — (633 ) — (633 ) Adjusted EBITDA (non-GAAP) $ 174,606 $ 56,408 $ (35,886 ) $ 195,128 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP) 38.0 % 18.4 % — 25.5 % Per share impact of the adjustments to earnings per share are as follows: Three months ended September 30, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 82 $ 21 $ 61 $ 0.00 Foreign currency revaluation (gains)/losses (a) (121 ) (35 ) (86 ) 0.00 CEO transition expenses 2,052 — 2,052 0.07 Inventory step-up impacting Cost of goods sold 1,370 411 959 0.03 Acquisition/integration costs 1,915 476 1,439 0.05 Three months ended September 30, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 42 $ 6 $ 36 $ 0.00 Foreign currency revaluation (gains)/losses (a) (9,442 ) (2,694 ) (6,748 ) (0.22 ) Dissolution of business relationships in Russia (214 ) (18 ) (196 ) (0.01 ) Pension settlement expense 49,128 11,947 37,181 1.20 Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — 5,217 (5,217 ) (0.17 ) Acquisition/integration costs 255 77 178 0.01 Nine months ended September 30, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 227 $ 68 $ 159 $ 0.01 Foreign currency revaluation (gains)/losses (a) (1,720 ) (504 ) (1,216 ) (0.04 ) CEO transition expenses 2,052 — 2,052 0.07 Withholding tax related to internal restructuring — (3,026 ) 3,026 0.10 Inventory step-up impacting Cost of goods sold 1,370 411 959 0.03 Acquisition/integration costs 2,818 725 2,093 0.07 Nine months ended September 30, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 268 $ 75 $ 193 $ 0.01 Foreign currency revaluation (gains)/losses (a) (20,579 ) (5,829 ) (14,750 ) (0.47 ) Dissolution of business relationships in Russia 2,354 314 2,040 0.06 Pension settlement expense 49,128 11,947 37,181 1.20 Tax impact of stranded OCI benefit from TCJA for pension liability (b) — 5,217 (5,217 ) (0.17 ) Acquisition/integration costs 806 241 565 0.03 The following table provides a reconciliation of Earnings per share to Adjusted Earnings per share: Three months ended September 30, Nine months ended September 30, Per share amounts (Basic) 2023 2022 2023 2022 Earnings per share (GAAP) $ 0.87 $ 0.34 $ 2.59 $ 2.47 Adjustments, after tax: Restructuring expenses, net — — 0.01 0.01 Foreign currency revaluation (gains)/losses (a) — (0.22 ) (0.04 ) (0.47 ) Dissolution of business relationships in Russia — (0.01 ) — 0.06 Pension settlement charge — 1.20 — 1.20 Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — (0.17 ) — (0.17 ) CEO transition expenses 0.07 — 0.07 — Withholding tax related to internal restructuring — — 0.10 — Inventory step-up impacting Cost of goods sold 0.03 — 0.03 — Acquisition/integration costs 0.05 0.01 0.07 0.03 Adjusted Earnings per share (non-GAAP) $ 1.02 $ 1.15 $ 2.83 $ 3.13 The calculations of net debt are as follows: (in thousands) September 30, 2023 December 31, 2022 September 30, 2022 Current maturities of long-term debt $ 27,246 $ — $ — Long-term debt 463,339 439,000 447,000 Total debt 490,585 439,000 447,000 Cash and cash equivalents 171,506 291,776 276,482 Net debt (non-GAAP) $ 319,079 $ 147,224 $ 170,518 The calculation of net leverage ratio as of September 30, 2023 is as follows: Total Company Twelve months ended Nine months ended Trailing twelve months ended (in thousands) December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2023 (non-GAAP) (c) Net income/(loss) (GAAP) $ 96,508 $ 78,267 $ 81,066 $ 99,307 Interest expense/(income), net 14,000 11,336 10,049 12,713 Income tax expense 35,472 22,273 39,908 53,107 Depreciation and amortization expense 69,049 51,908 54,778 71,919 EBITDA (non-GAAP) 215,029 163,784 185,801 237,046 Restructuring expenses, net 106 268 227 65 Foreign currency revaluation (gains)/losses (a) (9,829 ) (20,579 ) (1,720 ) 9,030 Dissolution of business relationships in Russia 2,275 2,354 — (79 ) CEO transition expenses — — 2,052 2,052 Inventory step-up impacting Cost of goods sold — — 1,370 1,370 Pension settlement expense 49,128 49,128 — — IP address sales (3,420 ) — — (3,420 ) Acquisition/integration costs 1,057 806 2,818 3,069 Pre-tax (income) attributable to noncontrolling interest (817 ) (633 ) (474 ) (658 ) Adjusted EBITDA (non-GAAP) $ 253,529 $ 195,128 $ 190,074 $ 248,475 (in thousands, except for net leverage ratio) September 30, 2023 Net debt (non-GAAP) $ 319,079 Trailing twelve months Adjusted EBITDA (non-GAAP) 248,475 Net leverage ratio (non-GAAP) 1.28 (a) Foreign currency revaluation (gains)/losses represent unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies on the balance sheet date. (b) Our Adjusted EPS excluded the benefit from the reclassification of stranded income tax effects caused by the TCJA associated with the US pension plan liability that was eliminated in September 2022, a one-time event that would not recur in the future. Such stranded income tax effect represented a one-time benefit that distorted the effective tax rate for the quarter and year-to-date ended September 30, 2022, and would not be indicative of ongoing or expected future income tax rate at the Company. Management believes excluding pension settlement expense and its income tax impact, including the stranded income tax effects, from its Adjusted EBITDA and Adjusted EPS for the quarter and year-to-date ended September 30, 2022 would provide investors a transparent view and enhanced ability to better assess the Company’s ongoing operational and financial performance. (c) Calculated as amounts incurred during the twelve months ended December 31, 2022, less those incurred during the nine months ended September 30, 2022, plus those incurred during the nine months ended September 30, 2023. The tables below provide a reconciliation of forecasted full-year 2023 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures. Forecast of Full Year 2023 Adjusted EBITDA Machine Clothing AEC (in millions) Low High Low High Net income attributable to the Company (GAAP) (d) $ 185 $ 195 $ 36 $ 40 Income attributable to the noncontrolling interest — — — — Interest expense/(income), net — — — — Income tax expense — — — — Depreciation and amortization 23 23 48 49 EBITDA (non-GAAP) 208 218 84 89 Restructuring expenses, net (e) — — — — Foreign currency revaluation (gains)/losses (e) 2 2 — — Acquisition/integration costs (e) — — 1 1 Cost of goods sold adjustment due to acquisition 5 5 — — Pre-tax (income)/loss attributable to non-controlling interest — — — — Adjusted EBITDA (non-GAAP) $ 215 $ 225 $ 85 $ 90 (d) Interest, Other income/expense and Income taxes are not allocated to the business segments Forecast of Full Year 2023 Adjusted EBITDA Total Company (in millions) Low High Net income attributable to the Company (GAAP) $ 95 $ 105 Income attributable to the noncontrolling interest — — Interest expense/(income), net 14 14 Income tax expense 46 52 Depreciation and amortization 75 75 EBITDA (non-GAAP) 230 246 Restructuring expenses, net (e) — — Foreign currency revaluation (gains)/losses (e) (2 ) (2 ) Acquisition/integration costs (e) 3 3 CEO transition expenses 2 2 Inventory step-up impacting Cost of goods sold 5 5 Pre-tax (income)/loss attributable to non-controlling interest — — Adjusted EBITDA (non-GAAP) $ 238 $ 254 Total Company Forecast of Full Year 2023 Earnings per share (basic) (f) Low High Net income attributable to the Company (GAAP) $ 3.02 $ 3.37 Restructuring expenses, net (e) 0.01 0.01 Foreign currency revaluation (gains)/losses (e) (0.04 ) (0.04 ) Withholding tax related to internal restructuring 0.10 0.10 CEO transition expenses 0.07 0.07 Inventory step-up impacting Cost of goods sold 0.12 0.12 Acquisition/integration costs (e) 0.07 0.07 Adjusted Earnings per share (non-GAAP) $ 3.35 $ 3.70 (e) Due to the uncertainty of these items, we are unable to forecast these items for 2023 (f) Calculations based on weighted average shares outstanding estimate of approximately 31.2 million About Albany International Corp. Albany International is a leading developer and manufacturer of engineered components, using advanced materials processing and automation capabilities, with two core businesses. Machine Clothing is the world’s leading producer of fabrics and process belts used in the manufacture of all grades of paper products. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for jet engine and airframe applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 32 plants in 14 countries, employs approximately 5,400 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com. Non-GAAP Measures This release, including the conference call commentary associated with this release, contains certain non-GAAP measures, that should not be considered in isolation or as a substitute for the related GAAP measures. Such non-GAAP measures include net revenues and percent change in net revenues, excluding the impact of currency translation effects; EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin; Net debt; Net leverage ratio; and Adjusted earnings per share (or Adjusted EPS). Management believes that these non-GAAP measures provide additional useful information to investors regarding the Company’s operational performance. Presenting Net revenues and change in Net revenues, after currency effects are excluded, provides management and investors insight into underlying revenues trends. Net revenues, or percent changes in net revenues, excluding currency rate effects, are calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. These amounts are then compared to the U.S. dollar amount as reported in the current period. EBITDA (calculated as net income excluding interest, income taxes, depreciation and amortization), Adjusted EBITDA, and Adjusted EPS are performance measures that relate to the Company’s continuing operations. The Company defines Adjusted EBITDA as EBITDA excluding costs or benefits that are not reflective of the Company’s ongoing or expected future operational performance. Such excluded costs or benefits do not consist of normal, recurring cash items necessary to generate revenues or operate our business. Adjusted EBITDA margin represents Adjusted EBITDA expressed as a percentage of net revenues. The Company defines Adjusted EPS as basic earnings per share (GAAP), adjusted by the after tax per share amount of costs or benefits not reflective of the Company’s ongoing or expected future operational performance. The income tax effects are calculated using the applicable statutory income tax rate of the jurisdictions where such costs or benefits were incurred or the effective tax rate applicable to total company results. The Company’s Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS may not be comparable to similarly titled measures of other companies. Net debt aids investors in understanding the Company’s debt position if all available cash were applied to pay down indebtedness. Net leverage ratio informs the investors of the Company's financial leverage at the end of the reporting period, providing an indicator of the Company's ability to repay its debt. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Forward-Looking Statements This press release may contain statements, estimates, guidance or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “look for,” “guidance,” “guide,” and similar expressions identify forward-looking statements, which generally are not historical in nature. Because forward-looking statements are subject to certain risks and uncertainties (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q), actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic conditions, including inflationary cost pressures, as well as global events, which include but are not limited to geopolitical events; paper-industry trends and conditions during 2023 and in future years; expectations in 2023 and in future periods of revenues, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net revenues), Adjusted EPS, income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, and for the Company as a whole; the timing and impact of production and development programs in the Company’s AEC business segment and the revenues growth potential of key AEC programs, as well as AEC as a whole; the amount and timing of capital expenditures, future tax rates and cash paid for taxes, depreciation and amortization; future debt and net debt levels and debt covenant ratios; and changes in currency rates and their impact on future revaluation gains and losses. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period. Such statements are based on current expectations, and the Company undertakes no obligation to publicly update or revise any forward-looking statements. Statements expressing management’s assessments of the growth potential of its businesses, or referring to earlier assessments of such potential, are not intended as forecasts of actual future growth, and should not be relied on as such. While management believes such assessments to have a reasonable basis, such assessments are, by their nature, inherently uncertain. This release and earlier releases set forth a number of assumptions regarding these assessments, including historical results, independent forecasts regarding the markets in which these businesses operate, and the timing and magnitude of orders for our customers’ products. Historical growth rates are no guarantee of future growth, and such independent forecasts and assumptions could prove materially incorrect in some cases. View source version on businesswire.com: https://www.businesswire.com/news/home/20231106556007/en/