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 Fourth-Quarter 2023 Results By: Albany International Corp. via Business Wire February 26, 2024 at 16:22 PM EST Albany International Corp. (NYSE:AIN) today reported operating results for its full year and fourth quarter of 2023, which ended December 31, 2023. "In 2023, our business remained focused on operational execution and delivered outstanding financial performance," said Gunnar Kleveland, President and Chief Executive Officer. "I am pleased to report record revenues of $1.15 billion in 2023, up 11% from last year. GAAP EPS grew in the mid-teens, and Adjusted EPS of $4.06, was up 4.9% from last year. Importantly the company delivered 2023 free cash flow of $64 million, up significantly from the $32 million generated in 2022. "Fourth quarter results were particularly strong with outstanding contributions from both of our business segments," continued Kleveland. "Our first full quarter of Heimbach integration is complete, and we are on track to deliver on the promise of that acquisition. Meanwhile, our core Machine Clothing operations grew fourth quarter revenue and expanded profit margins despite soft business conditions in Europe. The Engineered Composites segment continues to grow. We have completed another year of growth on our commercial programs, and recent program wins were also important drivers of year-over-year revenue and profit growth in the business. We are well positioned for another strong year in 2024." For the fourth-quarter ended December 31, 2023: Net revenues were $323.6 million, up 20.4%, or 19.6% after adjusting for currency translation, when compared to the prior year, primarily driven by Heimbach's contribution during the fourth quarter and growth in the Engineered Composites segment. Gross profit of $119.9 million was 23.5% higher than the $97.1 million reported for the same period of 2022, mainly due to higher net revenues from the Machine Clothing segment due to the addition of Heimbach and higher net revenues from new programs and commercial programs in the Engineered Composites segment. Selling, General, and Administrative expenses were $67.7 million, compared to $49.4 million in the same period of 2022. The increase was due to the addition of Heimbach. Operating income was $41.8 million, compared to $37.9 million in the prior year, an increase of 10.2%. The effective tax rate for the quarter was 22.6% compared to a 42.0% effective tax rate in the fourth quarter of 2022. Favorable discrete tax items in 2023 vs. unfavorable discrete tax items in 2022 and a shift in taxable income to lower-rate jurisdictions resulted in a lower effective tax rate for the fourth quarter of 2023. Net income attributable to the Company was $30.5 million ($0.97 per share), compared to $18.1 million ($0.58 per share) in the fourth quarter of 2022. Adjusted Diluted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.22 per share, compared to $0.75 per share for the same period of last year. Adjusted EBITDA (a non-GAAP measure) was $75.0 million, compared to $58.4 million in the fourth quarter of 2022, an increase of 28.5%. Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures. "We are on sound financial footing as we enter 2024," said Robert Starr, Chief Financial Officer. "Our businesses continue to deliver outstanding execution that will help sustain solid results and generate healthy cash flow this year. We will continue to invest thoughtfully to drive long-term growth." Outlook for the Full-Year 2024 Albany International's initial financial guidance for the full-year 2024: Total company revenue between $1.26 and $1.33 billion; Effective income tax rate between 29% and 31%; Capital expenditures in the range of $90 to $95 million; Diluted earnings per share between $3.55 and $4.05. This includes: Higher pension expense due to the expiration of the prior service cost benefit (approximately $0.09 per share); Higher Depreciation and Amortization due to the recording of Heimbach-acquired assets at fair value (approximately $0.08 per share); and Higher interest expense resulting from the termination of interest rate swaps in the fourth quarter of 2024 (approximately $0.06 per share, assuming the current interest rate environment). Total company Adjusted EBITDA between $260 to $290 million; Machine Clothing revenue between $760 to $790 million; Machine Clothing Adjusted EBITDA between $230 and $250 million; Albany Engineered Composites (AEC) revenue between $500 to $540 million; and Albany Engineered Composites Adjusted EBITDA between $97 to $107 million. ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Net revenues $ 323,584 $ 268,786 $ 1,147,909 $ 1,034,887 Cost of goods sold 203,723 171,694 724,191 645,105 Gross profit 119,861 97,092 423,718 389,782 Selling, general, and administrative expenses 67,701 49,388 214,915 168,713 Technical and research expenses 10,324 9,957 40,627 39,941 Restructuring expenses, net 55 (162 ) 282 106 Operating income 41,781 37,909 167,894 181,022 Interest expense, net 3,552 2,664 13,601 14,000 Pension settlement expense — — — 49,128 Other (income)/expense, net (1,253 ) 3,805 (6,163 ) (14,086 ) Income before income taxes 39,482 31,440 160,456 131,980 Income tax expense 8,938 13,199 48,846 35,472 Net income 30,544 18,241 111,610 96,508 Net income attributable to the noncontrolling interest 94 111 490 746 Net income attributable to the Company $ 30,450 $ 18,130 $ 111,120 $ 95,762 Earnings per share attributable to Company shareholders - Basic $ 0.98 $ 0.58 $ 3.56 $ 3.06 Earnings per share attributable to Company shareholders - Diluted $ 0.97 $ 0.58 $ 3.55 $ 3.04 Shares of the Company used in computing earnings per share: Basic 31,195 31,111 31,171 31,339 Diluted 31,332 31,267 31,276 31,455 Dividends declared per share, Class A $ 0.26 $ 0.25 $ 1.01 $ 0.88 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) December 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 173,420 $ 291,776 Accounts receivable, net 287,781 200,018 Contract assets, net 182,281 148,695 Inventories 169,567 139,050 Income taxes prepaid and receivable 11,043 7,938 Prepaid expenses and other current assets 53,872 50,962 Total current assets $ 877,964 $ 838,439 Property, plant and equipment, net 601,989 445,658 Intangibles, net 44,646 33,811 Goodwill 180,181 178,217 Deferred income taxes 22,941 15,196 Noncurrent receivables, net 4,392 27,913 Other assets 102,901 103,021 Total assets $ 1,835,014 $ 1,642,255 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 87,104 $ 69,707 Accrued liabilities 142,988 126,385 Current maturities of long-term debt 4,218 — Income taxes payable 14,369 15,224 Total current liabilities 248,679 211,316 Long-term debt 452,667 439,000 Other noncurrent liabilities 139,385 108,758 Deferred taxes and other liabilities 26,963 15,638 Total liabilities 867,694 774,712 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 448,218 441,540 Retained earnings 1,010,942 931,318 Accumulated items of other comprehensive income: Translation adjustments (124,901 ) (146,851 ) Pension and postretirement liability adjustments (17,346 ) (15,783 ) Derivative valuation adjustment 9,079 17,707 Treasury stock (Class A), at cost; 9,661,845 shares in 2023 and 9,674,542 in 2022 (364,665 ) (364,923 ) Total Company shareholders' equity 961,368 863,049 Noncontrolling interest 5,952 4,494 Total equity 967,320 867,543 Total liabilities and shareholders' equity $ 1,835,014 $ 1,642,255 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Twelve Months Ended December 31, 2023 2022 OPERATING ACTIVITIES Net income $ 111,610 $ 96,508 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 70,374 62,480 Amortization 6,359 6,569 Change in deferred taxes and other liabilities (2,046 ) (8,496 ) Impairment of property, plant, equipment, and inventory 1,773 1,808 Non-cash interest expense 1,404 1,118 Non-cash portion of pension settlement expense — 42,657 Compensation and benefits paid or payable in Class A Common Stock 6,936 4,527 Provision/(recovery) for credit losses from uncollected receivables and contract assets 640 1,408 Foreign currency remeasurement (gain)/loss on intercompany loans (2,831 ) (4,434 ) Fair value adjustment on foreign currency options (139 ) (509 ) Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition: Accounts receivable (11,038 ) (14,301 ) Contract assets (32,156 ) (36,434 ) Inventories 15,093 (24,541 ) Prepaid expenses and other current assets 1,530 (4,134 ) Income taxes prepaid and receivable (2,897 ) (6,005 ) Accounts payable (5,672 ) 8,572 Accrued liabilities (10,441 ) 3,226 Income taxes payable (1,988 ) 183 Noncurrent receivables 3,723 3,911 Other noncurrent liabilities (9,783 ) (10,133 ) Other, net 7,605 4,234 Net cash provided by operating activities 148,056 128,214 INVESTING ACTIVITIES Purchase of business, net of cash acquired (133,470 ) — Purchases of property, plant and equipment (83,560 ) (93,675 ) Purchased software (869 ) (2,673 ) Net cash used in investing activities (217,899 ) (96,348 ) FINANCING ACTIVITIES Proceeds from borrowings 78,040 162,000 Principal payments on debt (92,274 ) (73,000 ) 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 (31,163 ) (26,465 ) Net cash used in financing activities (52,641 ) (23,652 ) Effect of exchange rate changes on cash and cash equivalents 4,128 (18,474 ) Increase/(decrease) in cash and cash equivalents (118,356 ) (10,260 ) Cash and cash equivalents at beginning of period 291,776 302,036 Cash and cash equivalents at end of period $ 173,420 $ 291,776 Financial tables and reconciliation of non-GAAP measures to comparable GAAP measures The following tables present Net revenues and the effect of changes in currency translation rates: (in thousands, except percentages) Net revenues as reported, Q4 2023 Increase due to changes in currency translation rates Q4 2023 revenues on same basis as Q4 2022 currency translation rates Net revenues as reported, Q4 2022 % Change compared to Q4 2022, excluding currency rate effects Machine Clothing $ 191,741 $ 1,088 $ 190,653 $ 150,340 26.8 % Albany Engineered Composites 131,843 896 130,947 118,446 10.6 % Consolidated total $ 323,584 $ 1,984 $ 321,600 $ 268,786 19.6 % (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 $ 670,768 $ (2,596 ) $ 673,364 $ 609,461 10.5 % Albany Engineered Composites 477,141 1,747 475,394 425,426 11.7 % Consolidated total $ 1,147,909 $ (849 ) $ 1,148,758 $ 1,034,887 11.0 % The following tables present Gross profit and Gross profit margin: (in thousands, except percentages) Gross profit, Q4 2023 Gross profit margin, Q4 2023 Gross profit, Q4 2022 Gross profit margin, Q4 2022 Machine Clothing $ 93,527 48.8 % $ 74,851 49.8 % Albany Engineered Composites 26,334 20.0 % 22,241 18.8 % Consolidated total $ 119,861 37.0 % $ 97,092 36.1 % (in thousands, except percentages) Gross profit, YTD 2023 Gross profit margin, YTD 2023 Gross profit, YTD 2022 Gross profit margin, YTD 2022 Machine Clothing $ 331,558 49.4 % $ 312,285 51.2 % Albany Engineered Composites 92,160 19.3 % 77,497 18.2 % Consolidated total $ 423,718 36.9 % $ 389,782 37.7 % 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 December 31, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 45,978 $ 14,127 $ (29,561 ) $ 30,544 Interest expense, net — — 3,552 3,552 Income tax expense — — 8,938 8,938 Depreciation and amortization expense 8,209 12,784 962 21,955 EBITDA (non-GAAP) 54,187 26,911 (16,109 ) 64,989 Restructuring expenses, net 55 — — 55 Foreign currency revaluation (gains)/losses (a) 2,247 44 725 3,016 CEO transition expenses — — 667 667 Inventory step-up impacting Cost of goods sold 4,110 — — 4,110 Acquisition/integration costs 984 268 1,124 2,376 Pre-tax (income) attributable to noncontrolling interest (24 ) (167 ) — (191 ) Adjusted EBITDA (non-GAAP) $ 61,559 $ 27,056 $ (13,593 ) $ 75,022 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 32.1 % 20.5 % — 23.2 % Three months ended December 31, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 44,462 $ 10,891 $ (37,112 ) $ 18,241 Interest expense, net — — 2,664 2,664 Income tax expense — — 13,199 13,199 Depreciation and amortization expense 4,767 11,410 964 17,141 EBITDA (non-GAAP) 49,229 22,301 (20,285 ) 51,245 Restructuring expenses, net (163 ) — 1 (162 ) Foreign currency revaluation (gains)/losses (a) 3,170 (83 ) 7,663 10,750 Acquisition/integration costs — 251 — 251 Dissolution of business relationships in Russia (79 ) — — (79 ) IP address sales — — (3,420 ) (3,420 ) Pre-tax (income) attributable to noncontrolling interest — (184 ) — (184 ) Adjusted EBITDA (non-GAAP) $ 52,157 $ 22,285 $ (16,041 ) $ 58,401 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.7 % 18.8 % — 21.7 % Twelve months ended December 31, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 199,378 $ 41,587 $ (129,355 ) $ 111,610 Interest expense, net — — 13,601 13,601 Income tax expense — — 48,846 48,846 Depreciation and amortization expense 23,891 49,030 3,812 76,733 EBITDA (non-GAAP) 223,269 90,617 (63,096 ) 250,790 Restructuring expenses, net 282 — — 282 Foreign currency revaluation (gains)/losses (a) 4,117 63 (2,884 ) 1,296 CEO transition expenses — — 2,719 2,719 Inventory step-up impacting Cost of goods sold 5,480 — — 5,480 Acquisition/integration costs 984 1,081 3,129 5,194 Pre-tax (income) attributable to noncontrolling interest (24 ) (641 ) — (665 ) Adjusted EBITDA (non-GAAP) $ 234,108 $ 91,120 $ (60,132 ) $ 265,096 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.9 % 19.1 % — 23.1 % Twelve months ended December 31, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 206,214 $ 31,579 $ (141,285 ) $ 96,508 Interest expense, net — — 14,000 14,000 Income tax expense — — 35,472 35,472 Depreciation and amortization expense 19,483 46,202 3,364 69,049 EBITDA (non-GAAP) 225,697 77,781 (88,449 ) 215,029 Restructuring expenses, net 92 — 14 106 Foreign currency revaluation (gains)/losses (a) (520 ) 672 (9,981 ) (9,829 ) Dissolution of business relationships in Russia 1,494 — 781 2,275 Pension settlement expense — — 49,128 49,128 IP address sales — — (3,420 ) (3,420 ) Acquisition/integration costs — 1,057 — 1,057 Pre-tax (income) attributable to noncontrolling interest — (817 ) — (817 ) Adjusted EBITDA (non-GAAP) $ 226,763 $ 78,693 $ (51,927 ) $ 253,529 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 37.2 % 18.5 % — 24.5 % Per share impact of the adjustments to diluted earnings per share are as follows: Three months ended December 31, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 55 $ 13 $ 42 $ 0.00 Foreign currency revaluation (gains)/losses (a) 3,016 933 2,083 0.07 CEO transition expenses 667 — 667 0.02 Inventory step-up impacting Cost of goods sold 4,110 908 3,202 0.10 Acquisition/integration costs 2,376 486 1,890 0.06 Three months ended December 31, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ (162 ) $ (41 ) $ (121 ) $ 0.00 Foreign currency revaluation (gains)/losses (a) 10,750 3,247 7,503 0.24 Dissolution of business relationships in Russia (79 ) (9 ) (70 ) 0.00 IP address sales (3,420 ) (872 ) (2,548 ) (0.08 ) Acquisition/integration costs 251 75 176 0.01 Year ended December 31, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 282 $ 70 $ 212 $ 0.01 Foreign currency revaluation (gains)/losses (a) 1,296 416 880 0.03 CEO transition expenses 2,719 — 2,719 0.09 Withholding tax related to internal restructuring — (3,026 ) 3,026 0.10 Inventory step-up impacting Cost of goods sold 5,480 1,211 4,269 0.14 Acquisition/integration costs 5,194 951 4,243 0.14 Year ended December 31, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 106 $ 34 $ 72 $ 0.01 Foreign currency revaluation (gains)/losses (a) (9,829 ) (2,582 ) (7,247 ) (0.23 ) Dissolution of business relationships in Russia 2,275 305 1,970 0.06 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 ) IP address sales (3,420 ) (872 ) (2,548 ) (0.08 ) Acquisition/integration costs 1,057 316 741 0.04 The following table provides a reconciliation of Earnings per share to Adjusted Diluted Earnings per share: Three months ended December 31, Twelve months ended December 31, Per share amounts 2023 2022 2023 2022 Earnings per share attributable to Company shareholders - Basic (GAAP) $ 0.98 $ 0.58 $ 3.56 $ 3.06 Effect of dilutive stock-based compensation plans (0.01 ) — (0.01 ) (0.02 ) Earnings per share attributable to Company shareholders - Diluted (GAAP) $ 0.97 $ 0.58 $ 3.55 $ 3.04 Adjustments, after tax: Restructuring expenses, net — — 0.01 0.01 Foreign currency revaluation (gains)/losses (a) 0.07 0.24 0.03 (0.23 ) CEO transition expenses 0.02 — 0.09 — Inventory step-up impacting Cost of goods sold 0.10 — 0.14 — Dissolution of business relationships in Russia — — — 0.06 Pension settlement charge — — — 1.20 Withholding tax related to internal restructuring — — 0.10 — Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — — — (0.17 ) IP address sales — (0.08 ) — (0.08 ) Acquisition/integration costs 0.06 0.01 0.14 0.04 Adjusted Diluted Earnings per share (non-GAAP) $ 1.22 $ 0.75 $ 4.06 $ 3.87 (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. The calculations of net debt are as follows: (in thousands) December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Current maturities of long-term debt $ 4,218 $ 27,246 $ — $ — $ — Long-term debt 452,667 463,339 487,000 491,000 439,000 Total debt 456,885 490,585 487,000 491,000 439,000 Cash and cash equivalents 173,420 171,506 300,916 304,258 291,776 Net debt (non GAAP) $ 283,465 $ 319,079 $ 186,084 $ 186,742 $ 147,224 The calculation of net leverage ratio as of December 31, 2023 is as follows: Total Company Twelve months ended (in thousands) December 31, 2023 Net income/(loss) (GAAP) $ 111,610 Interest expense, net 13,601 Income tax expense 48,846 Depreciation and amortization expense 76,733 EBITDA (non-GAAP) 250,790 Restructuring expenses, net 282 Foreign currency revaluation (gains)/losses (a) 1,296 CEO transition expenses 2,719 Inventory step-up impacting Cost of goods sold 5,480 Acquisition/integration costs 5,194 Pre-tax (income) attributable to noncontrolling interest (665 ) Adjusted EBITDA (non-GAAP) $ 265,096 (in thousands, except for net leverage ratio) December 31, 2023 Net debt (non-GAAP) $ 283,465 Adjusted EBITDA (non-GAAP) 265,096 Net leverage ratio (non-GAAP) 1.07 The tables below provide a reconciliation of initial outlook for the full-year 2024 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures: Initial Outlook Full Year 2024 Adjusted EBITDA Machine Clothing AEC (in millions) Low High Low High Net income attributable to the Company (GAAP) (c) $ 200 $ 215 $ 47 $ 52 Income attributable to the noncontrolling interest — — (1 ) (1 ) Interest expense, net — — — — Income tax expense — — — — Depreciation and amortization 30 35 50 55 EBITDA (non-GAAP) 230 250 96 106 Restructuring expenses, net (c) — — — — Foreign currency revaluation (gains)/losses (c) — — — — Acquisition/integration costs (c) — — — — Pre-tax (income)/loss attributable to non-controlling interest — — 1 1 Adjusted EBITDA (non-GAAP) $ 230 $ 250 $ 97 $ 107 (c) Interest, Other income/expense and Income taxes are not allocated to the business segments Initial Outlook Full Year 2024 Adjusted EBITDA Total Company (in millions) Low High Net income attributable to the Company (GAAP) (c) $ 111 $ 126 Income attributable to the noncontrolling interest (1 ) (1 ) Interest expense, net 17 18 Income tax expense 47 51 Depreciation and amortization 85 95 EBITDA (non-GAAP) 259 289 Restructuring expenses, net (d) — — Foreign currency revaluation (gains)/losses (d) — — Acquisition/integration costs (d) — — Pre-tax (income)/loss attributable to non-controlling interest 1 1 Adjusted EBITDA (non-GAAP) $ 260 $ 290 Total Company Forecast of Full Year 2024 Earnings per share (diluted) (e) Low High Net income attributable to the Company (GAAP) (c) $ 3.55 $ 4.05 Restructuring expenses, net (d) — — Foreign currency revaluation (gains)/losses (d) — — Acquisition/integration costs (d) — — Adjusted Diluted Earnings per share (non-GAAP) $ 3.55 $ 4.05 (d) Due to the uncertainty of these items, we are unable to forecast these items for 2024. (e) Calculations based on estimated diluted shares outstanding 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 custom-designed, consumable belts essential for the manufacture of paper, paperboard, tissue and towel, pulp, non-wovens and a variety of other industrial applications. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for demanding aerospace applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 32 facilities in 14 countries, employs approximately 5,600 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 Diluted 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 diluted 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/20240226431606/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 Fourth-Quarter 2023 Results By: Albany International Corp. via Business Wire February 26, 2024 at 16:22 PM EST Albany International Corp. (NYSE:AIN) today reported operating results for its full year and fourth quarter of 2023, which ended December 31, 2023. "In 2023, our business remained focused on operational execution and delivered outstanding financial performance," said Gunnar Kleveland, President and Chief Executive Officer. "I am pleased to report record revenues of $1.15 billion in 2023, up 11% from last year. GAAP EPS grew in the mid-teens, and Adjusted EPS of $4.06, was up 4.9% from last year. Importantly the company delivered 2023 free cash flow of $64 million, up significantly from the $32 million generated in 2022. "Fourth quarter results were particularly strong with outstanding contributions from both of our business segments," continued Kleveland. "Our first full quarter of Heimbach integration is complete, and we are on track to deliver on the promise of that acquisition. Meanwhile, our core Machine Clothing operations grew fourth quarter revenue and expanded profit margins despite soft business conditions in Europe. The Engineered Composites segment continues to grow. We have completed another year of growth on our commercial programs, and recent program wins were also important drivers of year-over-year revenue and profit growth in the business. We are well positioned for another strong year in 2024." For the fourth-quarter ended December 31, 2023: Net revenues were $323.6 million, up 20.4%, or 19.6% after adjusting for currency translation, when compared to the prior year, primarily driven by Heimbach's contribution during the fourth quarter and growth in the Engineered Composites segment. Gross profit of $119.9 million was 23.5% higher than the $97.1 million reported for the same period of 2022, mainly due to higher net revenues from the Machine Clothing segment due to the addition of Heimbach and higher net revenues from new programs and commercial programs in the Engineered Composites segment. Selling, General, and Administrative expenses were $67.7 million, compared to $49.4 million in the same period of 2022. The increase was due to the addition of Heimbach. Operating income was $41.8 million, compared to $37.9 million in the prior year, an increase of 10.2%. The effective tax rate for the quarter was 22.6% compared to a 42.0% effective tax rate in the fourth quarter of 2022. Favorable discrete tax items in 2023 vs. unfavorable discrete tax items in 2022 and a shift in taxable income to lower-rate jurisdictions resulted in a lower effective tax rate for the fourth quarter of 2023. Net income attributable to the Company was $30.5 million ($0.97 per share), compared to $18.1 million ($0.58 per share) in the fourth quarter of 2022. Adjusted Diluted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.22 per share, compared to $0.75 per share for the same period of last year. Adjusted EBITDA (a non-GAAP measure) was $75.0 million, compared to $58.4 million in the fourth quarter of 2022, an increase of 28.5%. Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures. "We are on sound financial footing as we enter 2024," said Robert Starr, Chief Financial Officer. "Our businesses continue to deliver outstanding execution that will help sustain solid results and generate healthy cash flow this year. We will continue to invest thoughtfully to drive long-term growth." Outlook for the Full-Year 2024 Albany International's initial financial guidance for the full-year 2024: Total company revenue between $1.26 and $1.33 billion; Effective income tax rate between 29% and 31%; Capital expenditures in the range of $90 to $95 million; Diluted earnings per share between $3.55 and $4.05. This includes: Higher pension expense due to the expiration of the prior service cost benefit (approximately $0.09 per share); Higher Depreciation and Amortization due to the recording of Heimbach-acquired assets at fair value (approximately $0.08 per share); and Higher interest expense resulting from the termination of interest rate swaps in the fourth quarter of 2024 (approximately $0.06 per share, assuming the current interest rate environment). Total company Adjusted EBITDA between $260 to $290 million; Machine Clothing revenue between $760 to $790 million; Machine Clothing Adjusted EBITDA between $230 and $250 million; Albany Engineered Composites (AEC) revenue between $500 to $540 million; and Albany Engineered Composites Adjusted EBITDA between $97 to $107 million. ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Net revenues $ 323,584 $ 268,786 $ 1,147,909 $ 1,034,887 Cost of goods sold 203,723 171,694 724,191 645,105 Gross profit 119,861 97,092 423,718 389,782 Selling, general, and administrative expenses 67,701 49,388 214,915 168,713 Technical and research expenses 10,324 9,957 40,627 39,941 Restructuring expenses, net 55 (162 ) 282 106 Operating income 41,781 37,909 167,894 181,022 Interest expense, net 3,552 2,664 13,601 14,000 Pension settlement expense — — — 49,128 Other (income)/expense, net (1,253 ) 3,805 (6,163 ) (14,086 ) Income before income taxes 39,482 31,440 160,456 131,980 Income tax expense 8,938 13,199 48,846 35,472 Net income 30,544 18,241 111,610 96,508 Net income attributable to the noncontrolling interest 94 111 490 746 Net income attributable to the Company $ 30,450 $ 18,130 $ 111,120 $ 95,762 Earnings per share attributable to Company shareholders - Basic $ 0.98 $ 0.58 $ 3.56 $ 3.06 Earnings per share attributable to Company shareholders - Diluted $ 0.97 $ 0.58 $ 3.55 $ 3.04 Shares of the Company used in computing earnings per share: Basic 31,195 31,111 31,171 31,339 Diluted 31,332 31,267 31,276 31,455 Dividends declared per share, Class A $ 0.26 $ 0.25 $ 1.01 $ 0.88 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) December 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 173,420 $ 291,776 Accounts receivable, net 287,781 200,018 Contract assets, net 182,281 148,695 Inventories 169,567 139,050 Income taxes prepaid and receivable 11,043 7,938 Prepaid expenses and other current assets 53,872 50,962 Total current assets $ 877,964 $ 838,439 Property, plant and equipment, net 601,989 445,658 Intangibles, net 44,646 33,811 Goodwill 180,181 178,217 Deferred income taxes 22,941 15,196 Noncurrent receivables, net 4,392 27,913 Other assets 102,901 103,021 Total assets $ 1,835,014 $ 1,642,255 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 87,104 $ 69,707 Accrued liabilities 142,988 126,385 Current maturities of long-term debt 4,218 — Income taxes payable 14,369 15,224 Total current liabilities 248,679 211,316 Long-term debt 452,667 439,000 Other noncurrent liabilities 139,385 108,758 Deferred taxes and other liabilities 26,963 15,638 Total liabilities 867,694 774,712 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 448,218 441,540 Retained earnings 1,010,942 931,318 Accumulated items of other comprehensive income: Translation adjustments (124,901 ) (146,851 ) Pension and postretirement liability adjustments (17,346 ) (15,783 ) Derivative valuation adjustment 9,079 17,707 Treasury stock (Class A), at cost; 9,661,845 shares in 2023 and 9,674,542 in 2022 (364,665 ) (364,923 ) Total Company shareholders' equity 961,368 863,049 Noncontrolling interest 5,952 4,494 Total equity 967,320 867,543 Total liabilities and shareholders' equity $ 1,835,014 $ 1,642,255 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Twelve Months Ended December 31, 2023 2022 OPERATING ACTIVITIES Net income $ 111,610 $ 96,508 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 70,374 62,480 Amortization 6,359 6,569 Change in deferred taxes and other liabilities (2,046 ) (8,496 ) Impairment of property, plant, equipment, and inventory 1,773 1,808 Non-cash interest expense 1,404 1,118 Non-cash portion of pension settlement expense — 42,657 Compensation and benefits paid or payable in Class A Common Stock 6,936 4,527 Provision/(recovery) for credit losses from uncollected receivables and contract assets 640 1,408 Foreign currency remeasurement (gain)/loss on intercompany loans (2,831 ) (4,434 ) Fair value adjustment on foreign currency options (139 ) (509 ) Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition: Accounts receivable (11,038 ) (14,301 ) Contract assets (32,156 ) (36,434 ) Inventories 15,093 (24,541 ) Prepaid expenses and other current assets 1,530 (4,134 ) Income taxes prepaid and receivable (2,897 ) (6,005 ) Accounts payable (5,672 ) 8,572 Accrued liabilities (10,441 ) 3,226 Income taxes payable (1,988 ) 183 Noncurrent receivables 3,723 3,911 Other noncurrent liabilities (9,783 ) (10,133 ) Other, net 7,605 4,234 Net cash provided by operating activities 148,056 128,214 INVESTING ACTIVITIES Purchase of business, net of cash acquired (133,470 ) — Purchases of property, plant and equipment (83,560 ) (93,675 ) Purchased software (869 ) (2,673 ) Net cash used in investing activities (217,899 ) (96,348 ) FINANCING ACTIVITIES Proceeds from borrowings 78,040 162,000 Principal payments on debt (92,274 ) (73,000 ) 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 (31,163 ) (26,465 ) Net cash used in financing activities (52,641 ) (23,652 ) Effect of exchange rate changes on cash and cash equivalents 4,128 (18,474 ) Increase/(decrease) in cash and cash equivalents (118,356 ) (10,260 ) Cash and cash equivalents at beginning of period 291,776 302,036 Cash and cash equivalents at end of period $ 173,420 $ 291,776 Financial tables and reconciliation of non-GAAP measures to comparable GAAP measures The following tables present Net revenues and the effect of changes in currency translation rates: (in thousands, except percentages) Net revenues as reported, Q4 2023 Increase due to changes in currency translation rates Q4 2023 revenues on same basis as Q4 2022 currency translation rates Net revenues as reported, Q4 2022 % Change compared to Q4 2022, excluding currency rate effects Machine Clothing $ 191,741 $ 1,088 $ 190,653 $ 150,340 26.8 % Albany Engineered Composites 131,843 896 130,947 118,446 10.6 % Consolidated total $ 323,584 $ 1,984 $ 321,600 $ 268,786 19.6 % (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 $ 670,768 $ (2,596 ) $ 673,364 $ 609,461 10.5 % Albany Engineered Composites 477,141 1,747 475,394 425,426 11.7 % Consolidated total $ 1,147,909 $ (849 ) $ 1,148,758 $ 1,034,887 11.0 % The following tables present Gross profit and Gross profit margin: (in thousands, except percentages) Gross profit, Q4 2023 Gross profit margin, Q4 2023 Gross profit, Q4 2022 Gross profit margin, Q4 2022 Machine Clothing $ 93,527 48.8 % $ 74,851 49.8 % Albany Engineered Composites 26,334 20.0 % 22,241 18.8 % Consolidated total $ 119,861 37.0 % $ 97,092 36.1 % (in thousands, except percentages) Gross profit, YTD 2023 Gross profit margin, YTD 2023 Gross profit, YTD 2022 Gross profit margin, YTD 2022 Machine Clothing $ 331,558 49.4 % $ 312,285 51.2 % Albany Engineered Composites 92,160 19.3 % 77,497 18.2 % Consolidated total $ 423,718 36.9 % $ 389,782 37.7 % 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 December 31, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 45,978 $ 14,127 $ (29,561 ) $ 30,544 Interest expense, net — — 3,552 3,552 Income tax expense — — 8,938 8,938 Depreciation and amortization expense 8,209 12,784 962 21,955 EBITDA (non-GAAP) 54,187 26,911 (16,109 ) 64,989 Restructuring expenses, net 55 — — 55 Foreign currency revaluation (gains)/losses (a) 2,247 44 725 3,016 CEO transition expenses — — 667 667 Inventory step-up impacting Cost of goods sold 4,110 — — 4,110 Acquisition/integration costs 984 268 1,124 2,376 Pre-tax (income) attributable to noncontrolling interest (24 ) (167 ) — (191 ) Adjusted EBITDA (non-GAAP) $ 61,559 $ 27,056 $ (13,593 ) $ 75,022 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 32.1 % 20.5 % — 23.2 % Three months ended December 31, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 44,462 $ 10,891 $ (37,112 ) $ 18,241 Interest expense, net — — 2,664 2,664 Income tax expense — — 13,199 13,199 Depreciation and amortization expense 4,767 11,410 964 17,141 EBITDA (non-GAAP) 49,229 22,301 (20,285 ) 51,245 Restructuring expenses, net (163 ) — 1 (162 ) Foreign currency revaluation (gains)/losses (a) 3,170 (83 ) 7,663 10,750 Acquisition/integration costs — 251 — 251 Dissolution of business relationships in Russia (79 ) — — (79 ) IP address sales — — (3,420 ) (3,420 ) Pre-tax (income) attributable to noncontrolling interest — (184 ) — (184 ) Adjusted EBITDA (non-GAAP) $ 52,157 $ 22,285 $ (16,041 ) $ 58,401 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.7 % 18.8 % — 21.7 % Twelve months ended December 31, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 199,378 $ 41,587 $ (129,355 ) $ 111,610 Interest expense, net — — 13,601 13,601 Income tax expense — — 48,846 48,846 Depreciation and amortization expense 23,891 49,030 3,812 76,733 EBITDA (non-GAAP) 223,269 90,617 (63,096 ) 250,790 Restructuring expenses, net 282 — — 282 Foreign currency revaluation (gains)/losses (a) 4,117 63 (2,884 ) 1,296 CEO transition expenses — — 2,719 2,719 Inventory step-up impacting Cost of goods sold 5,480 — — 5,480 Acquisition/integration costs 984 1,081 3,129 5,194 Pre-tax (income) attributable to noncontrolling interest (24 ) (641 ) — (665 ) Adjusted EBITDA (non-GAAP) $ 234,108 $ 91,120 $ (60,132 ) $ 265,096 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.9 % 19.1 % — 23.1 % Twelve months ended December 31, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 206,214 $ 31,579 $ (141,285 ) $ 96,508 Interest expense, net — — 14,000 14,000 Income tax expense — — 35,472 35,472 Depreciation and amortization expense 19,483 46,202 3,364 69,049 EBITDA (non-GAAP) 225,697 77,781 (88,449 ) 215,029 Restructuring expenses, net 92 — 14 106 Foreign currency revaluation (gains)/losses (a) (520 ) 672 (9,981 ) (9,829 ) Dissolution of business relationships in Russia 1,494 — 781 2,275 Pension settlement expense — — 49,128 49,128 IP address sales — — (3,420 ) (3,420 ) Acquisition/integration costs — 1,057 — 1,057 Pre-tax (income) attributable to noncontrolling interest — (817 ) — (817 ) Adjusted EBITDA (non-GAAP) $ 226,763 $ 78,693 $ (51,927 ) $ 253,529 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 37.2 % 18.5 % — 24.5 % Per share impact of the adjustments to diluted earnings per share are as follows: Three months ended December 31, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 55 $ 13 $ 42 $ 0.00 Foreign currency revaluation (gains)/losses (a) 3,016 933 2,083 0.07 CEO transition expenses 667 — 667 0.02 Inventory step-up impacting Cost of goods sold 4,110 908 3,202 0.10 Acquisition/integration costs 2,376 486 1,890 0.06 Three months ended December 31, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ (162 ) $ (41 ) $ (121 ) $ 0.00 Foreign currency revaluation (gains)/losses (a) 10,750 3,247 7,503 0.24 Dissolution of business relationships in Russia (79 ) (9 ) (70 ) 0.00 IP address sales (3,420 ) (872 ) (2,548 ) (0.08 ) Acquisition/integration costs 251 75 176 0.01 Year ended December 31, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 282 $ 70 $ 212 $ 0.01 Foreign currency revaluation (gains)/losses (a) 1,296 416 880 0.03 CEO transition expenses 2,719 — 2,719 0.09 Withholding tax related to internal restructuring — (3,026 ) 3,026 0.10 Inventory step-up impacting Cost of goods sold 5,480 1,211 4,269 0.14 Acquisition/integration costs 5,194 951 4,243 0.14 Year ended December 31, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 106 $ 34 $ 72 $ 0.01 Foreign currency revaluation (gains)/losses (a) (9,829 ) (2,582 ) (7,247 ) (0.23 ) Dissolution of business relationships in Russia 2,275 305 1,970 0.06 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 ) IP address sales (3,420 ) (872 ) (2,548 ) (0.08 ) Acquisition/integration costs 1,057 316 741 0.04 The following table provides a reconciliation of Earnings per share to Adjusted Diluted Earnings per share: Three months ended December 31, Twelve months ended December 31, Per share amounts 2023 2022 2023 2022 Earnings per share attributable to Company shareholders - Basic (GAAP) $ 0.98 $ 0.58 $ 3.56 $ 3.06 Effect of dilutive stock-based compensation plans (0.01 ) — (0.01 ) (0.02 ) Earnings per share attributable to Company shareholders - Diluted (GAAP) $ 0.97 $ 0.58 $ 3.55 $ 3.04 Adjustments, after tax: Restructuring expenses, net — — 0.01 0.01 Foreign currency revaluation (gains)/losses (a) 0.07 0.24 0.03 (0.23 ) CEO transition expenses 0.02 — 0.09 — Inventory step-up impacting Cost of goods sold 0.10 — 0.14 — Dissolution of business relationships in Russia — — — 0.06 Pension settlement charge — — — 1.20 Withholding tax related to internal restructuring — — 0.10 — Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — — — (0.17 ) IP address sales — (0.08 ) — (0.08 ) Acquisition/integration costs 0.06 0.01 0.14 0.04 Adjusted Diluted Earnings per share (non-GAAP) $ 1.22 $ 0.75 $ 4.06 $ 3.87 (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. The calculations of net debt are as follows: (in thousands) December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Current maturities of long-term debt $ 4,218 $ 27,246 $ — $ — $ — Long-term debt 452,667 463,339 487,000 491,000 439,000 Total debt 456,885 490,585 487,000 491,000 439,000 Cash and cash equivalents 173,420 171,506 300,916 304,258 291,776 Net debt (non GAAP) $ 283,465 $ 319,079 $ 186,084 $ 186,742 $ 147,224 The calculation of net leverage ratio as of December 31, 2023 is as follows: Total Company Twelve months ended (in thousands) December 31, 2023 Net income/(loss) (GAAP) $ 111,610 Interest expense, net 13,601 Income tax expense 48,846 Depreciation and amortization expense 76,733 EBITDA (non-GAAP) 250,790 Restructuring expenses, net 282 Foreign currency revaluation (gains)/losses (a) 1,296 CEO transition expenses 2,719 Inventory step-up impacting Cost of goods sold 5,480 Acquisition/integration costs 5,194 Pre-tax (income) attributable to noncontrolling interest (665 ) Adjusted EBITDA (non-GAAP) $ 265,096 (in thousands, except for net leverage ratio) December 31, 2023 Net debt (non-GAAP) $ 283,465 Adjusted EBITDA (non-GAAP) 265,096 Net leverage ratio (non-GAAP) 1.07 The tables below provide a reconciliation of initial outlook for the full-year 2024 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures: Initial Outlook Full Year 2024 Adjusted EBITDA Machine Clothing AEC (in millions) Low High Low High Net income attributable to the Company (GAAP) (c) $ 200 $ 215 $ 47 $ 52 Income attributable to the noncontrolling interest — — (1 ) (1 ) Interest expense, net — — — — Income tax expense — — — — Depreciation and amortization 30 35 50 55 EBITDA (non-GAAP) 230 250 96 106 Restructuring expenses, net (c) — — — — Foreign currency revaluation (gains)/losses (c) — — — — Acquisition/integration costs (c) — — — — Pre-tax (income)/loss attributable to non-controlling interest — — 1 1 Adjusted EBITDA (non-GAAP) $ 230 $ 250 $ 97 $ 107 (c) Interest, Other income/expense and Income taxes are not allocated to the business segments Initial Outlook Full Year 2024 Adjusted EBITDA Total Company (in millions) Low High Net income attributable to the Company (GAAP) (c) $ 111 $ 126 Income attributable to the noncontrolling interest (1 ) (1 ) Interest expense, net 17 18 Income tax expense 47 51 Depreciation and amortization 85 95 EBITDA (non-GAAP) 259 289 Restructuring expenses, net (d) — — Foreign currency revaluation (gains)/losses (d) — — Acquisition/integration costs (d) — — Pre-tax (income)/loss attributable to non-controlling interest 1 1 Adjusted EBITDA (non-GAAP) $ 260 $ 290 Total Company Forecast of Full Year 2024 Earnings per share (diluted) (e) Low High Net income attributable to the Company (GAAP) (c) $ 3.55 $ 4.05 Restructuring expenses, net (d) — — Foreign currency revaluation (gains)/losses (d) — — Acquisition/integration costs (d) — — Adjusted Diluted Earnings per share (non-GAAP) $ 3.55 $ 4.05 (d) Due to the uncertainty of these items, we are unable to forecast these items for 2024. (e) Calculations based on estimated diluted shares outstanding 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 custom-designed, consumable belts essential for the manufacture of paper, paperboard, tissue and towel, pulp, non-wovens and a variety of other industrial applications. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for demanding aerospace applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 32 facilities in 14 countries, employs approximately 5,600 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 Diluted 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 diluted 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/20240226431606/en/Contacts John Hobbs 603-330-5897 john.hobbs@albint.com
Albany International Corp. (NYSE:AIN) today reported operating results for its full year and fourth quarter of 2023, which ended December 31, 2023. "In 2023, our business remained focused on operational execution and delivered outstanding financial performance," said Gunnar Kleveland, President and Chief Executive Officer. "I am pleased to report record revenues of $1.15 billion in 2023, up 11% from last year. GAAP EPS grew in the mid-teens, and Adjusted EPS of $4.06, was up 4.9% from last year. Importantly the company delivered 2023 free cash flow of $64 million, up significantly from the $32 million generated in 2022. "Fourth quarter results were particularly strong with outstanding contributions from both of our business segments," continued Kleveland. "Our first full quarter of Heimbach integration is complete, and we are on track to deliver on the promise of that acquisition. Meanwhile, our core Machine Clothing operations grew fourth quarter revenue and expanded profit margins despite soft business conditions in Europe. The Engineered Composites segment continues to grow. We have completed another year of growth on our commercial programs, and recent program wins were also important drivers of year-over-year revenue and profit growth in the business. We are well positioned for another strong year in 2024." For the fourth-quarter ended December 31, 2023: Net revenues were $323.6 million, up 20.4%, or 19.6% after adjusting for currency translation, when compared to the prior year, primarily driven by Heimbach's contribution during the fourth quarter and growth in the Engineered Composites segment. Gross profit of $119.9 million was 23.5% higher than the $97.1 million reported for the same period of 2022, mainly due to higher net revenues from the Machine Clothing segment due to the addition of Heimbach and higher net revenues from new programs and commercial programs in the Engineered Composites segment. Selling, General, and Administrative expenses were $67.7 million, compared to $49.4 million in the same period of 2022. The increase was due to the addition of Heimbach. Operating income was $41.8 million, compared to $37.9 million in the prior year, an increase of 10.2%. The effective tax rate for the quarter was 22.6% compared to a 42.0% effective tax rate in the fourth quarter of 2022. Favorable discrete tax items in 2023 vs. unfavorable discrete tax items in 2022 and a shift in taxable income to lower-rate jurisdictions resulted in a lower effective tax rate for the fourth quarter of 2023. Net income attributable to the Company was $30.5 million ($0.97 per share), compared to $18.1 million ($0.58 per share) in the fourth quarter of 2022. Adjusted Diluted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.22 per share, compared to $0.75 per share for the same period of last year. Adjusted EBITDA (a non-GAAP measure) was $75.0 million, compared to $58.4 million in the fourth quarter of 2022, an increase of 28.5%. Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures. "We are on sound financial footing as we enter 2024," said Robert Starr, Chief Financial Officer. "Our businesses continue to deliver outstanding execution that will help sustain solid results and generate healthy cash flow this year. We will continue to invest thoughtfully to drive long-term growth." Outlook for the Full-Year 2024 Albany International's initial financial guidance for the full-year 2024: Total company revenue between $1.26 and $1.33 billion; Effective income tax rate between 29% and 31%; Capital expenditures in the range of $90 to $95 million; Diluted earnings per share between $3.55 and $4.05. This includes: Higher pension expense due to the expiration of the prior service cost benefit (approximately $0.09 per share); Higher Depreciation and Amortization due to the recording of Heimbach-acquired assets at fair value (approximately $0.08 per share); and Higher interest expense resulting from the termination of interest rate swaps in the fourth quarter of 2024 (approximately $0.06 per share, assuming the current interest rate environment). Total company Adjusted EBITDA between $260 to $290 million; Machine Clothing revenue between $760 to $790 million; Machine Clothing Adjusted EBITDA between $230 and $250 million; Albany Engineered Composites (AEC) revenue between $500 to $540 million; and Albany Engineered Composites Adjusted EBITDA between $97 to $107 million. ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Net revenues $ 323,584 $ 268,786 $ 1,147,909 $ 1,034,887 Cost of goods sold 203,723 171,694 724,191 645,105 Gross profit 119,861 97,092 423,718 389,782 Selling, general, and administrative expenses 67,701 49,388 214,915 168,713 Technical and research expenses 10,324 9,957 40,627 39,941 Restructuring expenses, net 55 (162 ) 282 106 Operating income 41,781 37,909 167,894 181,022 Interest expense, net 3,552 2,664 13,601 14,000 Pension settlement expense — — — 49,128 Other (income)/expense, net (1,253 ) 3,805 (6,163 ) (14,086 ) Income before income taxes 39,482 31,440 160,456 131,980 Income tax expense 8,938 13,199 48,846 35,472 Net income 30,544 18,241 111,610 96,508 Net income attributable to the noncontrolling interest 94 111 490 746 Net income attributable to the Company $ 30,450 $ 18,130 $ 111,120 $ 95,762 Earnings per share attributable to Company shareholders - Basic $ 0.98 $ 0.58 $ 3.56 $ 3.06 Earnings per share attributable to Company shareholders - Diluted $ 0.97 $ 0.58 $ 3.55 $ 3.04 Shares of the Company used in computing earnings per share: Basic 31,195 31,111 31,171 31,339 Diluted 31,332 31,267 31,276 31,455 Dividends declared per share, Class A $ 0.26 $ 0.25 $ 1.01 $ 0.88 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) December 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 173,420 $ 291,776 Accounts receivable, net 287,781 200,018 Contract assets, net 182,281 148,695 Inventories 169,567 139,050 Income taxes prepaid and receivable 11,043 7,938 Prepaid expenses and other current assets 53,872 50,962 Total current assets $ 877,964 $ 838,439 Property, plant and equipment, net 601,989 445,658 Intangibles, net 44,646 33,811 Goodwill 180,181 178,217 Deferred income taxes 22,941 15,196 Noncurrent receivables, net 4,392 27,913 Other assets 102,901 103,021 Total assets $ 1,835,014 $ 1,642,255 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 87,104 $ 69,707 Accrued liabilities 142,988 126,385 Current maturities of long-term debt 4,218 — Income taxes payable 14,369 15,224 Total current liabilities 248,679 211,316 Long-term debt 452,667 439,000 Other noncurrent liabilities 139,385 108,758 Deferred taxes and other liabilities 26,963 15,638 Total liabilities 867,694 774,712 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 448,218 441,540 Retained earnings 1,010,942 931,318 Accumulated items of other comprehensive income: Translation adjustments (124,901 ) (146,851 ) Pension and postretirement liability adjustments (17,346 ) (15,783 ) Derivative valuation adjustment 9,079 17,707 Treasury stock (Class A), at cost; 9,661,845 shares in 2023 and 9,674,542 in 2022 (364,665 ) (364,923 ) Total Company shareholders' equity 961,368 863,049 Noncontrolling interest 5,952 4,494 Total equity 967,320 867,543 Total liabilities and shareholders' equity $ 1,835,014 $ 1,642,255 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Twelve Months Ended December 31, 2023 2022 OPERATING ACTIVITIES Net income $ 111,610 $ 96,508 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 70,374 62,480 Amortization 6,359 6,569 Change in deferred taxes and other liabilities (2,046 ) (8,496 ) Impairment of property, plant, equipment, and inventory 1,773 1,808 Non-cash interest expense 1,404 1,118 Non-cash portion of pension settlement expense — 42,657 Compensation and benefits paid or payable in Class A Common Stock 6,936 4,527 Provision/(recovery) for credit losses from uncollected receivables and contract assets 640 1,408 Foreign currency remeasurement (gain)/loss on intercompany loans (2,831 ) (4,434 ) Fair value adjustment on foreign currency options (139 ) (509 ) Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition: Accounts receivable (11,038 ) (14,301 ) Contract assets (32,156 ) (36,434 ) Inventories 15,093 (24,541 ) Prepaid expenses and other current assets 1,530 (4,134 ) Income taxes prepaid and receivable (2,897 ) (6,005 ) Accounts payable (5,672 ) 8,572 Accrued liabilities (10,441 ) 3,226 Income taxes payable (1,988 ) 183 Noncurrent receivables 3,723 3,911 Other noncurrent liabilities (9,783 ) (10,133 ) Other, net 7,605 4,234 Net cash provided by operating activities 148,056 128,214 INVESTING ACTIVITIES Purchase of business, net of cash acquired (133,470 ) — Purchases of property, plant and equipment (83,560 ) (93,675 ) Purchased software (869 ) (2,673 ) Net cash used in investing activities (217,899 ) (96,348 ) FINANCING ACTIVITIES Proceeds from borrowings 78,040 162,000 Principal payments on debt (92,274 ) (73,000 ) 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 (31,163 ) (26,465 ) Net cash used in financing activities (52,641 ) (23,652 ) Effect of exchange rate changes on cash and cash equivalents 4,128 (18,474 ) Increase/(decrease) in cash and cash equivalents (118,356 ) (10,260 ) Cash and cash equivalents at beginning of period 291,776 302,036 Cash and cash equivalents at end of period $ 173,420 $ 291,776 Financial tables and reconciliation of non-GAAP measures to comparable GAAP measures The following tables present Net revenues and the effect of changes in currency translation rates: (in thousands, except percentages) Net revenues as reported, Q4 2023 Increase due to changes in currency translation rates Q4 2023 revenues on same basis as Q4 2022 currency translation rates Net revenues as reported, Q4 2022 % Change compared to Q4 2022, excluding currency rate effects Machine Clothing $ 191,741 $ 1,088 $ 190,653 $ 150,340 26.8 % Albany Engineered Composites 131,843 896 130,947 118,446 10.6 % Consolidated total $ 323,584 $ 1,984 $ 321,600 $ 268,786 19.6 % (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 $ 670,768 $ (2,596 ) $ 673,364 $ 609,461 10.5 % Albany Engineered Composites 477,141 1,747 475,394 425,426 11.7 % Consolidated total $ 1,147,909 $ (849 ) $ 1,148,758 $ 1,034,887 11.0 % The following tables present Gross profit and Gross profit margin: (in thousands, except percentages) Gross profit, Q4 2023 Gross profit margin, Q4 2023 Gross profit, Q4 2022 Gross profit margin, Q4 2022 Machine Clothing $ 93,527 48.8 % $ 74,851 49.8 % Albany Engineered Composites 26,334 20.0 % 22,241 18.8 % Consolidated total $ 119,861 37.0 % $ 97,092 36.1 % (in thousands, except percentages) Gross profit, YTD 2023 Gross profit margin, YTD 2023 Gross profit, YTD 2022 Gross profit margin, YTD 2022 Machine Clothing $ 331,558 49.4 % $ 312,285 51.2 % Albany Engineered Composites 92,160 19.3 % 77,497 18.2 % Consolidated total $ 423,718 36.9 % $ 389,782 37.7 % 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 December 31, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 45,978 $ 14,127 $ (29,561 ) $ 30,544 Interest expense, net — — 3,552 3,552 Income tax expense — — 8,938 8,938 Depreciation and amortization expense 8,209 12,784 962 21,955 EBITDA (non-GAAP) 54,187 26,911 (16,109 ) 64,989 Restructuring expenses, net 55 — — 55 Foreign currency revaluation (gains)/losses (a) 2,247 44 725 3,016 CEO transition expenses — — 667 667 Inventory step-up impacting Cost of goods sold 4,110 — — 4,110 Acquisition/integration costs 984 268 1,124 2,376 Pre-tax (income) attributable to noncontrolling interest (24 ) (167 ) — (191 ) Adjusted EBITDA (non-GAAP) $ 61,559 $ 27,056 $ (13,593 ) $ 75,022 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 32.1 % 20.5 % — 23.2 % Three months ended December 31, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 44,462 $ 10,891 $ (37,112 ) $ 18,241 Interest expense, net — — 2,664 2,664 Income tax expense — — 13,199 13,199 Depreciation and amortization expense 4,767 11,410 964 17,141 EBITDA (non-GAAP) 49,229 22,301 (20,285 ) 51,245 Restructuring expenses, net (163 ) — 1 (162 ) Foreign currency revaluation (gains)/losses (a) 3,170 (83 ) 7,663 10,750 Acquisition/integration costs — 251 — 251 Dissolution of business relationships in Russia (79 ) — — (79 ) IP address sales — — (3,420 ) (3,420 ) Pre-tax (income) attributable to noncontrolling interest — (184 ) — (184 ) Adjusted EBITDA (non-GAAP) $ 52,157 $ 22,285 $ (16,041 ) $ 58,401 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.7 % 18.8 % — 21.7 % Twelve months ended December 31, 2023 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 199,378 $ 41,587 $ (129,355 ) $ 111,610 Interest expense, net — — 13,601 13,601 Income tax expense — — 48,846 48,846 Depreciation and amortization expense 23,891 49,030 3,812 76,733 EBITDA (non-GAAP) 223,269 90,617 (63,096 ) 250,790 Restructuring expenses, net 282 — — 282 Foreign currency revaluation (gains)/losses (a) 4,117 63 (2,884 ) 1,296 CEO transition expenses — — 2,719 2,719 Inventory step-up impacting Cost of goods sold 5,480 — — 5,480 Acquisition/integration costs 984 1,081 3,129 5,194 Pre-tax (income) attributable to noncontrolling interest (24 ) (641 ) — (665 ) Adjusted EBITDA (non-GAAP) $ 234,108 $ 91,120 $ (60,132 ) $ 265,096 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 34.9 % 19.1 % — 23.1 % Twelve months ended December 31, 2022 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Net income/(loss) (GAAP) $ 206,214 $ 31,579 $ (141,285 ) $ 96,508 Interest expense, net — — 14,000 14,000 Income tax expense — — 35,472 35,472 Depreciation and amortization expense 19,483 46,202 3,364 69,049 EBITDA (non-GAAP) 225,697 77,781 (88,449 ) 215,029 Restructuring expenses, net 92 — 14 106 Foreign currency revaluation (gains)/losses (a) (520 ) 672 (9,981 ) (9,829 ) Dissolution of business relationships in Russia 1,494 — 781 2,275 Pension settlement expense — — 49,128 49,128 IP address sales — — (3,420 ) (3,420 ) Acquisition/integration costs — 1,057 — 1,057 Pre-tax (income) attributable to noncontrolling interest — (817 ) — (817 ) Adjusted EBITDA (non-GAAP) $ 226,763 $ 78,693 $ (51,927 ) $ 253,529 Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP) 37.2 % 18.5 % — 24.5 % Per share impact of the adjustments to diluted earnings per share are as follows: Three months ended December 31, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 55 $ 13 $ 42 $ 0.00 Foreign currency revaluation (gains)/losses (a) 3,016 933 2,083 0.07 CEO transition expenses 667 — 667 0.02 Inventory step-up impacting Cost of goods sold 4,110 908 3,202 0.10 Acquisition/integration costs 2,376 486 1,890 0.06 Three months ended December 31, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ (162 ) $ (41 ) $ (121 ) $ 0.00 Foreign currency revaluation (gains)/losses (a) 10,750 3,247 7,503 0.24 Dissolution of business relationships in Russia (79 ) (9 ) (70 ) 0.00 IP address sales (3,420 ) (872 ) (2,548 ) (0.08 ) Acquisition/integration costs 251 75 176 0.01 Year ended December 31, 2023 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 282 $ 70 $ 212 $ 0.01 Foreign currency revaluation (gains)/losses (a) 1,296 416 880 0.03 CEO transition expenses 2,719 — 2,719 0.09 Withholding tax related to internal restructuring — (3,026 ) 3,026 0.10 Inventory step-up impacting Cost of goods sold 5,480 1,211 4,269 0.14 Acquisition/integration costs 5,194 951 4,243 0.14 Year ended December 31, 2022 (in thousands, except per share amounts) Pre tax Amounts Tax Effect After tax Effect Per share Effect Restructuring expenses, net $ 106 $ 34 $ 72 $ 0.01 Foreign currency revaluation (gains)/losses (a) (9,829 ) (2,582 ) (7,247 ) (0.23 ) Dissolution of business relationships in Russia 2,275 305 1,970 0.06 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 ) IP address sales (3,420 ) (872 ) (2,548 ) (0.08 ) Acquisition/integration costs 1,057 316 741 0.04 The following table provides a reconciliation of Earnings per share to Adjusted Diluted Earnings per share: Three months ended December 31, Twelve months ended December 31, Per share amounts 2023 2022 2023 2022 Earnings per share attributable to Company shareholders - Basic (GAAP) $ 0.98 $ 0.58 $ 3.56 $ 3.06 Effect of dilutive stock-based compensation plans (0.01 ) — (0.01 ) (0.02 ) Earnings per share attributable to Company shareholders - Diluted (GAAP) $ 0.97 $ 0.58 $ 3.55 $ 3.04 Adjustments, after tax: Restructuring expenses, net — — 0.01 0.01 Foreign currency revaluation (gains)/losses (a) 0.07 0.24 0.03 (0.23 ) CEO transition expenses 0.02 — 0.09 — Inventory step-up impacting Cost of goods sold 0.10 — 0.14 — Dissolution of business relationships in Russia — — — 0.06 Pension settlement charge — — — 1.20 Withholding tax related to internal restructuring — — 0.10 — Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — — — (0.17 ) IP address sales — (0.08 ) — (0.08 ) Acquisition/integration costs 0.06 0.01 0.14 0.04 Adjusted Diluted Earnings per share (non-GAAP) $ 1.22 $ 0.75 $ 4.06 $ 3.87 (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. The calculations of net debt are as follows: (in thousands) December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Current maturities of long-term debt $ 4,218 $ 27,246 $ — $ — $ — Long-term debt 452,667 463,339 487,000 491,000 439,000 Total debt 456,885 490,585 487,000 491,000 439,000 Cash and cash equivalents 173,420 171,506 300,916 304,258 291,776 Net debt (non GAAP) $ 283,465 $ 319,079 $ 186,084 $ 186,742 $ 147,224 The calculation of net leverage ratio as of December 31, 2023 is as follows: Total Company Twelve months ended (in thousands) December 31, 2023 Net income/(loss) (GAAP) $ 111,610 Interest expense, net 13,601 Income tax expense 48,846 Depreciation and amortization expense 76,733 EBITDA (non-GAAP) 250,790 Restructuring expenses, net 282 Foreign currency revaluation (gains)/losses (a) 1,296 CEO transition expenses 2,719 Inventory step-up impacting Cost of goods sold 5,480 Acquisition/integration costs 5,194 Pre-tax (income) attributable to noncontrolling interest (665 ) Adjusted EBITDA (non-GAAP) $ 265,096 (in thousands, except for net leverage ratio) December 31, 2023 Net debt (non-GAAP) $ 283,465 Adjusted EBITDA (non-GAAP) 265,096 Net leverage ratio (non-GAAP) 1.07 The tables below provide a reconciliation of initial outlook for the full-year 2024 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures: Initial Outlook Full Year 2024 Adjusted EBITDA Machine Clothing AEC (in millions) Low High Low High Net income attributable to the Company (GAAP) (c) $ 200 $ 215 $ 47 $ 52 Income attributable to the noncontrolling interest — — (1 ) (1 ) Interest expense, net — — — — Income tax expense — — — — Depreciation and amortization 30 35 50 55 EBITDA (non-GAAP) 230 250 96 106 Restructuring expenses, net (c) — — — — Foreign currency revaluation (gains)/losses (c) — — — — Acquisition/integration costs (c) — — — — Pre-tax (income)/loss attributable to non-controlling interest — — 1 1 Adjusted EBITDA (non-GAAP) $ 230 $ 250 $ 97 $ 107 (c) Interest, Other income/expense and Income taxes are not allocated to the business segments Initial Outlook Full Year 2024 Adjusted EBITDA Total Company (in millions) Low High Net income attributable to the Company (GAAP) (c) $ 111 $ 126 Income attributable to the noncontrolling interest (1 ) (1 ) Interest expense, net 17 18 Income tax expense 47 51 Depreciation and amortization 85 95 EBITDA (non-GAAP) 259 289 Restructuring expenses, net (d) — — Foreign currency revaluation (gains)/losses (d) — — Acquisition/integration costs (d) — — Pre-tax (income)/loss attributable to non-controlling interest 1 1 Adjusted EBITDA (non-GAAP) $ 260 $ 290 Total Company Forecast of Full Year 2024 Earnings per share (diluted) (e) Low High Net income attributable to the Company (GAAP) (c) $ 3.55 $ 4.05 Restructuring expenses, net (d) — — Foreign currency revaluation (gains)/losses (d) — — Acquisition/integration costs (d) — — Adjusted Diluted Earnings per share (non-GAAP) $ 3.55 $ 4.05 (d) Due to the uncertainty of these items, we are unable to forecast these items for 2024. (e) Calculations based on estimated diluted shares outstanding 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 custom-designed, consumable belts essential for the manufacture of paper, paperboard, tissue and towel, pulp, non-wovens and a variety of other industrial applications. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for demanding aerospace applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 32 facilities in 14 countries, employs approximately 5,600 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 Diluted 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 diluted 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/20240226431606/en/