Albany International Reports First-Quarter 2024 Results

Albany International Corp. (NYSE:AIN) today reported operating results for its first quarter of 2024, which ended March 31, 2024.

"We had another good quarter as our businesses delivered solid results and are executing to their plans," said President and CEO, Gunnar Kleveland. "Revenue of $313 million, was up $44 million or 16.4% over prior year due to the inclusion of Heimbach and sales growth in Engineered Composites.

"In Machine Clothing, North American markets remain strong. For the quarter we experienced lower organic demand due to continued softness in Europe. However, we have seen an improvement in our global order backlog. We also continue to make excellent progress on the integration of Heimbach.

"Engineered Composites is continuing to execute on its long-term strategy of delivering top-line growth. Revenues increased more than 10% over prior year, driven by strength in our commercial programs, including space and other emerging platforms. We continue to see a ramp up in our programs as the year progresses.

"Our Q1 performance was in line with our plan and we are reaffirming our guidance for the year," concluded Kleveland.

For the first quarter ended March 31, 2024:

• Net revenues were $313.3 million, up 16.4%, or 16.6% after adjusting for currency translation, when compared to the prior year. MC's net revenues increased 20.9%, driven by Heimbach net revenues, which was partially offset by lower net revenues in the rest of the segment, driven primarily by weakness in publication globally and in all grades in Europe. AEC's net revenues increased 10.6%, primarily driven by growth on commercial programs, partially offset by lower revenues on defense programs.
• Gross profit of $108.7 million was 9.4% higher than the $99.3 million reported for the same period of 2023; overall gross margin declined by more than 200 basis points, driven by lower margins at Heimbach.
• Selling, General, and Administrative (SG&A) expenses were $54.8 million, compared to $48.5 million in the same period of 2023; the increase was driven primarily by the inclusion of Heimbach.
• Operating income was $39.0 million, compared to $40.5 million in the prior year, the result of higher STG&R at MC and restructuring expenses at AEC.
• Effective tax rate for the quarter was 29.2%, compared to 28.2% for the first quarter of 2023.
• Net income attributable to the Company was $27.3 million ($0.87 per share), compared to $26.9 million ($0.86 per share) in the first quarter of 2023; Adjusted diluted earnings per share (or Adjusted diluted EPS, a non-GAAP measure) was $0.90 per share, compared to $0.91 per share for the same period last year.
• Adjusted EBITDA (a non-GAAP measure) was $65.4 million, compared to $60.4 million in the first quarter of 2023, an increase of 8.3%.

Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures.

Outlook for Full-Year 2024

The company has reaffirmed its guidance for the full year of 2024 as follows:

• 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
• Adjusted diluted earnings per share between $3.55 and $4.05
• 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 revenue between $500 to $540 million, and
• Albany Engineered Composites Adjusted EBITDA between $97 to $107 million.

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:

The following table presents Gross profit and Gross profit margin:

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:

Per share impact of the adjustments to earnings per share are as follows:

The following table provides a reconciliation of Diluted Earnings per share to Adjusted Diluted Earnings per share:

The calculations of net debt are as follows:

The calculation of net leverage ratio as of March 31, 2024 is as follows:

The tables below provide a reconciliation of forecasted full-year 2024 Adjusted EBITDA and Adjusted Diluted EPS (non-GAAP measures) to the comparable GAAP measures.

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 plants 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 Diluted 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 Diluted 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 Diluted 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 Diluted 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 the current year and in future years; expectations in the current period and in future periods of revenues, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net revenues), Adjusted Diluted 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.

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