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Albany International Reports Second-Quarter 2023 Results

Albany International Corp. (NYSE:AIN) today reported operating results for its second quarter of 2023, which ended June 30, 2023.

“We are reporting another strong quarter of operational results,” said Albany International President and Chief Executive Officer, Bill Higgins. "Our revenue of $274 million was up $13 million or approximately 5% year-over-year with growth across both business segments. I'm particularly pleased that revenue growth and operational execution in our businesses allows us to increase our guidance for 2023.

“We continue to advance our strategies for long-term value creation. During the quarter we announced our agreement to acquire Heimbach Group, a European producer of paper machine clothing which we expect to close in the second half of this year. With Heimbach, our broadened footprint will allow us to better serve customers in Europe and Asia. It's an exciting opportunity to create significant value for our shareholders as well as for our customers.

“Our Albany Engineered Composites team is on track to meeting short term growth and value deliverables. Longer term we are engaged with customers, demonstrating the capabilities of our proprietary 3D woven composites technology for applications in next-generation airframe, wing, and engine designs. We are investing our time and effort today to position for these long-term program opportunities,” concluded Higgins.

For the second quarter ended June 30, 2023:

  • Net revenues were $274.1 million, up 4.9%, or 4.8% after adjusting for currency translation, when compared to the prior year, due to year-over-year growth in revenues related to commercial programs within the Engineered Composites segment and revenue growth in all paper machine clothing grades within the Machine Clothing segment.
  • Gross profit of $102.7 million was 2.1% higher than the $100.6 million reported for the same period of 2022; overall gross margin declined by 100 basis points, primarily due to higher contribution from the lower-margin Engineered Composites segment.
  • Selling, Technical, General, and Research (STG&R) expenses were $57.1 million, compared to $49.9 million in the same period of 2022; the increase was driven by executive transition costs and professional service fees.
  • Operating income was $45.5 million, compared to $50.7 million in the prior year, a decrease of 10.3%.
  • Effective tax rate for the quarter was 42.8%, compared to 26.9% for the second quarter of 2022. The year-over-year increase was mainly due to unfavorable discrete tax adjustments recognized in the second quarter of 2023.
  • Net income attributable to the Company was $26.7 million ($0.86 per share), compared to $39.2 million ($1.25 per share) in the second quarter of 2022; Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $0.90 per share, compared to $1.06 per share for the same period last year.
  • Adjusted EBITDA (a non-GAAP measure) was $65.0 million, compared to $66.0 million in the second quarter of 2022, a decrease of 1.5%.

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

Outlook for Full-Year 2023

The Company has updated its guidance for the full year of 2023 as follows:

  • Total company revenue between $1.040 and $1.070 billion, up $30 million on the low end and $20 million on the high end of the range;
  • Effective income tax rate, including tax adjustments, between 32% and 33%, implying an effective tax rate between 28% and 30% in the second half of 2023;
  • Total company depreciation and amortization between $72 and $74 million;
  • Capital expenditures in the range of $85 to $95 million, $5 million lower;
  • GAAP earnings per share between $3.07 and $3.67, up $0.02 on the low end and $0.12 on the high end of the range;
  • Adjusted earnings per share between $3.15 and $3.75, raised by $0.05 on the low end and $0.15 on the high end of the range;
  • Total company Adjusted EBITDA between $232 and $257 million, up $7 million on the low end of the range and $2 million on the top end of the range;
  • Machine Clothing revenue between $610 and $620 million, increasing $20 million on the low end and $10 million on the high end of the range;
  • Machine Clothing Adjusted EBITDA between $210 and $225 million, up $5 million on the low end of the range;
  • Albany Engineered Composites (AEC) revenue between $430 and $450 million, up $10 million; and
  • Albany Engineered Composites Adjusted EBITDA between $82 and $92 million, up $2 million.
 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net revenues

$

274,123

 

 

$

261,369

 

 

$

543,219

 

 

$

505,538

 

Cost of goods sold

 

171,419

 

 

 

160,776

 

 

 

341,197

 

 

 

313,341

 

 

 

 

 

 

 

 

 

Gross profit

 

102,704

 

 

 

100,593

 

 

 

202,022

 

 

 

192,197

 

Selling, general, and administrative expenses

 

46,760

 

 

 

39,745

 

 

 

95,239

 

 

 

82,452

 

Technical and research expenses

 

10,318

 

 

 

10,161

 

 

 

20,595

 

 

 

20,050

 

Restructuring expenses, net

 

125

 

 

 

(28

)

 

 

145

 

 

 

226

 

 

 

 

 

 

 

 

 

Operating income

 

45,501

 

 

 

50,715

 

 

 

86,043

 

 

 

89,469

 

Interest expense/(income), net

 

3,106

 

 

 

3,933

 

 

 

6,396

 

 

 

7,542

 

Other (income)/expense, net

 

(4,511

)

 

 

(7,045

)

 

 

(4,966

)

 

 

(10,973

)

 

 

 

 

 

 

 

 

Income before income taxes

 

46,906

 

 

 

53,827

 

 

 

84,613

 

 

 

92,900

 

Income tax expense

 

20,080

 

 

 

14,458

 

 

 

30,701

 

 

 

25,456

 

 

 

 

 

 

 

 

 

Net income

 

26,826

 

 

 

39,369

 

 

 

53,912

 

 

 

67,444

 

Net income attributable to the noncontrolling interest

 

154

 

 

 

168

 

 

 

351

 

 

 

506

 

Net income attributable to the Company

$

26,672

 

 

$

39,201

 

 

$

53,561

 

 

$

66,938

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Company shareholders - Basic

$

0.86

 

 

$

1.25

 

 

$

1.72

 

 

$

2.12

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Company shareholders - Diluted

$

0.85

 

 

$

1.25

 

 

$

1.71

 

 

$

2.11

 

 

 

 

 

 

 

 

 

Shares of the Company used in computing earnings per share:

 

 

 

 

 

 

 

Basic

 

31,174

 

 

 

31,268

 

 

 

31,152

 

 

 

31,571

 

 

 

 

 

 

 

 

 

Diluted

 

31,269

 

 

 

31,378

 

 

 

31,243

 

 

 

31,668

 

 

 

 

 

 

 

 

 

Dividends declared per Class A share

$

0.25

 

 

$

0.21

 

 

$

0.50

 

 

$

0.42

 

 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

June 30, 2023

 

December 31, 2022

ASSETS

 

 

 

Cash and cash equivalents

$

300,916

 

 

$

291,776

 

Accounts receivable, net

 

242,189

 

 

 

200,018

 

Contract assets, net

 

145,324

 

 

 

148,695

 

Inventories

 

151,360

 

 

 

139,050

 

Income taxes prepaid and receivable

 

8,473

 

 

 

7,938

 

Prepaid expenses and other current assets

 

55,538

 

 

 

50,962

 

Total current assets

$

903,800

 

 

$

838,439

 

 

 

 

 

Property, plant and equipment, net

 

451,986

 

 

 

445,658

 

Intangibles, net

 

31,842

 

 

 

33,811

 

Goodwill

 

179,257

 

 

 

178,217

 

Deferred income taxes

 

14,491

 

 

 

15,196

 

Noncurrent receivables, net

 

26,568

 

 

 

27,913

 

Other assets

 

99,204

 

 

 

103,021

 

Total assets

$

1,707,148

 

 

$

1,642,255

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Accounts payable

$

65,812

 

 

$

69,707

 

Accrued liabilities

 

104,398

 

 

 

126,385

 

Current maturities of long-term debt

 

 

 

 

 

Income taxes payable

 

10,905

 

 

 

15,224

 

Total current liabilities

 

181,115

 

 

 

211,316

 

 

 

 

 

Long-term debt

 

487,000

 

 

 

439,000

 

Other noncurrent liabilities

 

107,781

 

 

 

108,758

 

Deferred taxes and other liabilities

 

15,533

 

 

 

15,638

 

Total liabilities

 

791,429

 

 

 

774,712

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued

 

 

 

 

 

Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,842,023 issued in 2023 and 40,785,434 in 2022

 

41

 

 

 

41

 

Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; none issued and outstanding in 2022; shares eliminated in 2023

 

 

 

 

 

Additional paid in capital

 

443,556

 

 

 

441,540

 

Retained earnings

 

969,292

 

 

 

931,318

 

Accumulated items of other comprehensive income:

 

 

 

Translation adjustments

 

(135,538

)

 

 

(146,851

)

Pension and postretirement liability adjustments

 

(17,423

)

 

 

(15,783

)

Derivative valuation adjustment

 

15,194

 

 

 

17,707

 

Treasury stock (Class A), at cost; 9,662,562 shares in 2023 and 9,674,542 shares in 2022

 

(364,665

)

 

 

(364,923

)

Total Company shareholders' equity

 

910,457

 

 

 

863,049

 

Noncontrolling interest

 

5,262

 

 

 

4,494

 

Total equity

 

915,719

 

 

 

867,543

 

Total liabilities and shareholders' equity

$

1,707,148

 

 

$

1,642,255

 

 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

 

2022

 

OPERATING ACTIVITIES

 

 

 

 

Net income

 

$

53,912

 

 

$

67,444

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

 

32,299

 

 

 

31,276

 

Amortization

 

 

3,018

 

 

 

3,598

 

Change in deferred taxes and other liabilities

 

 

1,787

 

 

 

2,596

 

Impairment of property, plant, equipment, and inventory

 

 

532

 

 

 

2,662

 

Non-cash interest expense

 

 

565

 

 

 

561

 

Compensation and benefits paid or payable in Class A Common Stock

 

 

2,274

 

 

 

2,447

 

Provision for credit losses from uncollected receivables and contract assets

 

 

493

 

 

 

1,326

 

Foreign currency remeasurement (gain) on intercompany loans

 

 

(3,198

)

 

 

(1,260

)

Fair value adjustment on foreign currency options

 

 

(123

)

 

 

(381

)

 

 

 

 

 

Changes in operating assets and liabilities that provided/(used) cash:

 

 

 

 

Accounts receivable

 

 

(40,131

)

 

 

(14,407

)

Contract assets

 

 

4,606

 

 

 

(23,868

)

Inventories

 

 

(9,174

)

 

 

(21,135

)

Prepaid expenses and other current assets

 

 

(2,700

)

 

 

(4,474

)

Income taxes prepaid and receivable

 

 

(381

)

 

 

(60

)

Accounts payable

 

 

(5,255

)

 

 

7,476

 

Accrued liabilities

 

 

(21,570

)

 

 

(11,745

)

Income taxes payable

 

 

(4,943

)

 

 

(7,739

)

Noncurrent receivables

 

 

1,705

 

 

 

1,864

 

Other noncurrent liabilities

 

 

(1,922

)

 

 

(3,252

)

Other, net

 

 

2,881

 

 

 

4,784

 

Net cash provided by operating activities

 

 

14,675

 

 

 

37,713

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

Purchases of property, plant and equipment

 

 

(34,899

)

 

 

(35,659

)

Purchased software

 

 

(72

)

 

 

(366

)

Net cash used in investing activities

 

 

(34,971

)

 

 

(36,025

)

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds from borrowings

 

 

61,000

 

 

 

135,000

 

Principal payments on debt

 

 

(13,000

)

 

 

 

Principal payments on finance lease liabilities

 

 

 

 

 

(654

)

Purchase of Treasury shares

 

 

 

 

 

(84,780

)

Taxes paid in lieu of share issuance

 

 

(3,136

)

 

 

(770

)

Proceeds from options exercised

 

 

 

 

 

7

 

Dividends paid

 

 

(15,570

)

 

 

(13,399

)

Net cash provided by financing activities

 

 

29,294

 

 

 

35,404

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

142

 

 

 

(18,258

)

 

 

 

 

 

Increase in cash and cash equivalents

 

 

9,140

 

 

 

18,834

 

Cash and cash equivalents at beginning of period

 

 

291,776

 

 

 

302,036

 

Cash and cash equivalents at end of period

 

$

300,916

 

 

$

320,870

 

The following table presents the reconciliation of Net revenues to net revenues excluding the effect of changes in currency translation rates, a non-GAAP measure:

(in thousands, except percentages)

Net revenues as reported, Q2 2023

(Decrease)/increase due to changes in currency translation rates

Q2 2023 revenues on same basis as Q2 2022 currency translation rates

Net revenues as reported, Q2 2022

% Change compared to Q2 2022, excluding currency rate effects

Machine Clothing

$

159,217

$

(878

)

$

160,095

$

151,670

5.6

%

Albany Engineered Composites

 

114,906

 

1,072

 

 

113,834

 

109,699

3.8

%

Consolidated total

$

274,123

$

194

 

$

273,929

$

261,369

4.8

%

 

 

 

 

 

 

(in thousands, except percentages)

Net revenues as reported, YTD 2023

(Decrease) 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

$

312,439

$

(4,346

)

$

316,785

$

305,732

3.6

%

Albany Engineered Composites

 

230,780

 

(424

)

 

231,204

 

199,806

15.7

%

Consolidated total

$

543,219

$

(4,770

)

$

547,989

$

505,538

8.4

%

The following table presents Gross profit and Gross profit margin:

(in thousands, except percentages)

Gross profit,

Q2 2023

Gross profit margin, Q2 2023

Gross profit,

Q2 2022

Gross profit margin, Q2 2022

Machine Clothing

$

80,919

50.8

%

$

78,857

52.0

%

Albany Engineered Composites

 

21,785

19.0

%

 

21,736

19.8

%

Consolidated total

$

102,704

37.5

%

$

100,593

38.5

%

 

 

 

 

 

(in thousands, except percentages)

Gross profit,

YTD 2023

Gross profit margin, YTD 2023

Gross profit,

YTD 2022

Gross profit margin, YTD 2022

Machine Clothing

$

158,774

50.8

%

$

158,202

51.7

%

Albany Engineered Composites

 

43,248

18.7

%

 

33,995

17.0

%

Consolidated total

$

202,022

37.2

%

$

192,197

38.0

%

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 June 30, 2023

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

53,726

 

$

8,668

 

$

(35,568

)

$

26,826

 

Interest expense/(income), net

 

 

 

 

 

3,106

 

 

3,106

 

Income tax expense

 

 

 

 

 

20,080

 

 

20,080

 

Depreciation and amortization expense

 

4,931

 

 

12,072

 

 

947

 

 

17,950

 

EBITDA (non-GAAP)

 

58,657

 

 

20,740

 

 

(11,435

)

 

67,962

 

Restructuring expenses, net

 

125

 

 

 

 

 

 

125

 

Foreign currency revaluation (gains)/losses (a)

 

566

 

 

133

 

 

(4,185

)

 

(3,486

)

Acquisition/integration costs

 

 

 

271

 

 

363

 

 

634

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(212

)

 

 

 

(212

)

Adjusted EBITDA (non-GAAP)

$

59,348

 

$

20,932

 

$

(15,257

)

$

65,023

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP)

 

37.3

%

 

18.2

%

 

 

 

23.7

%

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2022

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

54,861

 

$

9,535

 

$

(25,027

)

$

39,369

 

Interest expense/(income), net

 

 

 

 

 

3,933

 

 

3,933

 

Income tax expense

 

 

 

 

 

14,458

 

 

14,458

 

Depreciation and amortization expense

 

4,880

 

 

11,450

 

 

782

 

 

17,112

 

EBITDA (non-GAAP)

 

59,741

 

 

20,985

 

 

(5,854

)

 

74,872

 

Restructuring expenses, net

 

(30

)

 

 

 

2

 

 

(28

)

Foreign currency revaluation (gains)/losses (a)

 

(1,816

)

 

210

 

 

(7,271

)

 

(8,877

)

Acquisition/integration costs

 

 

 

269

 

 

 

 

269

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(205

)

 

 

 

(205

)

Adjusted EBITDA (non-GAAP)

$

57,895

 

$

21,259

 

$

(13,123

)

$

66,031

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues) (non-GAAP)

 

38.2

%

 

19.4

%

 

 

 

25.3

%

Six months ended June 30, 2023

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

102,690

 

$

18,086

 

$

(66,864

)

$

53,912

 

Interest expense/(income), net

 

 

 

 

 

6,396

 

 

6,396

 

Income tax expense

 

 

 

 

 

30,701

 

 

30,701

 

Depreciation and amortization expense

 

9,706

 

 

23,736

 

 

1,875

 

 

35,317

 

EBITDA (non-GAAP)

 

112,396

 

 

41,822

 

 

(27,892

)

 

126,326

 

Restructuring expenses, net

 

145

 

 

 

 

 

 

145

 

Foreign currency revaluation (gains)/losses (a)

 

2,526

 

 

 

 

(4,125

)

 

(1,599

)

Acquisition/integration costs

 

 

 

540

 

 

363

 

 

903

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(401

)

 

 

 

(401

)

Adjusted EBITDA (non-GAAP)

$

115,067

 

$

41,961

 

$

(31,654

)

$

125,374

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP)

 

36.8

%

 

18.2

%

 

 

 

23.1

%

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2022

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

104,505

 

$

10,730

 

$

(47,791

)

$

67,444

 

Interest expense/(income), net

 

 

 

 

 

7,542

 

 

7,542

 

Income tax expense

 

 

 

 

 

25,456

 

 

25,456

 

Depreciation and amortization expense

 

9,803

 

 

23,489

 

 

1,582

 

 

34,874

 

EBITDA (non-GAAP)

 

114,308

 

 

34,219

 

 

(13,211

)

 

135,316

 

Restructuring expenses, net

 

213

 

 

 

 

13

 

 

226

 

Foreign currency revaluation (gains)/losses (a)

 

(759

)

 

633

 

 

(11,011

)

 

(11,137

)

Dissolution of business relationships in Russia

 

1,787

 

 

 

 

781

 

 

2,568

 

Acquisition/integration costs

 

 

 

551

 

 

 

 

551

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(457

)

 

 

 

(457

)

Adjusted EBITDA (non-GAAP)

$

115,549

 

$

34,946

 

$

(23,428

)

$

127,067

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net revenues-non-GAAP)

 

37.8

%

 

17.5

%

 

 

 

25.1

%

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

Three months ended June 30, 2023

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

125

 

$

31

 

$

94

 

$

0.00

 

Foreign currency revaluation (gains)/losses (a)

 

(3,486

)

 

(1,034

)

 

(2,452

)

 

(0.08

)

Withholding tax related to internal restructuring

 

 

 

(3,026

)

 

3,026

 

 

0.10

 

Acquisition/integration costs

 

634

 

 

158

 

 

476

 

 

0.02

 

 

 

 

 

 

Three months ended June 30, 2022

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

(28

)

$

(4

)

$

(24

)

$

0.00

 

Foreign currency revaluation (gains)/losses (a)

 

(8,877

)

 

(2,492

)

 

(6,385

)

 

(0.20

)

Dissolution of business relationships in Russia

 

 

 

 

 

 

 

 

Acquisition/integration costs

 

269

 

 

80

 

 

189

 

 

0.01

 

 

 

 

 

 

Six months ended June 30, 2023

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

145

 

$

35

 

$

110

 

$

0.00

 

Foreign currency revaluation (gains)/losses (a)

 

(1,599

)

 

(481

)

 

(1,118

)

 

(0.04

)

Withholding tax related to internal restructuring

 

 

 

(3,026

)

 

3,026

 

 

0.10

 

Acquisition/integration costs

 

903

 

 

235

 

 

668

 

 

0.02

 

 

 

 

 

 

Six months ended June 30, 2022

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

226

 

$

69

 

$

157

 

$

0.01

 

Foreign currency revaluation (gains)/losses (a)

 

(11,137

)

 

(3,135

)

 

(8,002

)

 

(0.25

)

Dissolution of business relationships in Russia

 

2,568

 

 

332

 

 

2,236

 

 

0.07

 

Acquisition/integration costs

 

551

 

 

164

 

 

387

 

 

0.02

 

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

 

Three months ended June 30,

Six months ended June 30,

Per share amounts (Basic)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Earnings per share (GAAP)

$

0.86

 

$

1.25

 

$

1.72

 

$

2.12

 

Adjustments, after tax:

 

 

 

 

Restructuring expenses, net

 

 

 

 

 

 

 

0.01

 

Foreign currency revaluation (gains)/losses (a)

 

(0.08

)

 

(0.20

)

 

(0.04

)

 

(0.25

)

Withholding tax related to internal restructuring

 

0.10

 

 

 

 

0.10

 

 

 

Acquisition/ integration costs

 

0.02

 

 

0.01

 

 

0.02

 

 

0.02

 

Dissolution of business relationships in Russia

 

 

 

 

 

 

 

0.07

 

Adjusted Earnings per share (non-GAAP)

$

0.90

 

$

1.06

 

$

1.80

 

$

1.97

 

The calculations of net debt are as follows:

(in thousands)

June 30, 2023

December 31, 2022

June 30, 2022

Current maturities of long-term debt

$

$

$

Long-term debt

 

487,000

 

439,000

 

485,000

Total debt

 

487,000

 

439,000

 

485,000

Cash and cash equivalents

 

300,916

 

291,776

 

320,870

Net debt (non-GAAP)

$

186,084

$

147,224

$

164,130

The calculation of net leverage ratio as of June 30, 2023 is as follows:

Total Company

 

Twelve months ended

Six months ended

Trailing twelve months ended

(in thousands)

December 31, 2022

June 30, 2022

June 30, 2023

June 30, 2023 (non-GAAP) (b)

Net income/(loss) (GAAP)

$

96,508

 

$

67,444

 

$

53,912

 

$

82,976

 

Interest expense/(income), net

 

14,000

 

 

7,542

 

 

6,396

 

 

12,854

 

Income tax expense

 

35,472

 

 

25,456

 

 

30,701

 

 

40,717

 

Depreciation and amortization expense

 

69,049

 

 

34,874

 

 

35,317

 

 

69,492

 

EBITDA (non-GAAP)

 

215,029

 

 

135,316

 

 

126,326

 

 

206,039

 

Restructuring expenses, net

 

106

 

 

226

 

 

145

 

 

25

 

Foreign currency revaluation (gains)/losses (a)

 

(9,829

)

 

(11,137

)

 

(1,599

)

 

(291

)

Dissolution of business relationships in Russia

 

2,275

 

 

2,568

 

 

 

 

(293

)

Pension settlement expense

 

49,128

 

 

 

 

 

 

49,128

 

IP address sales

 

(3,420

)

 

 

 

 

 

(3,420

)

Acquisition/integration costs

 

1,057

 

 

551

 

 

903

 

 

1,409

 

Pre-tax (income) attributable to noncontrolling interest

 

(817

)

 

(457

)

 

(401

)

 

(761

)

Adjusted EBITDA (non-GAAP)

$

253,529

 

$

127,067

 

$

125,374

 

$

251,836

 

(in thousands, except for net leverage ratio)

June 30, 2023

Net debt (non-GAAP)

$

186,084

Trailing twelve months Adjusted EBITDA (non-GAAP)

 

251,836

Net leverage ratio (non-GAAP)

 

0.74

(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) Calculated as amounts incurred during the twelve months ended December 31, 2022, less those incurred during the six months ended June 30, 2022, plus those incurred during the six months ended June 30, 2023.

The tables below provide a reconciliation of forecasted full-year 2023 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures.

Forecast of Full Year 2023 Adjusted EBITDA

Machine Clothing

 

AEC

(in millions)

Low

High

 

Low

High

Net income attributable to the Company (GAAP) (c)

$

187

 

$

202

 

 

$

33

$

42

Income attributable to the noncontrolling interest

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

Depreciation and amortization

 

20

 

 

20

 

 

 

48

 

49

EBITDA (non-GAAP)

 

207

 

 

222

 

 

 

81

 

91

Restructuring expenses, net (d)

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (d)

 

3

 

 

3

 

 

 

 

Acquisition/integration costs (d)

 

 

 

 

 

 

1

 

1

Pre-tax (income)/loss attributable to non-controlling interest

 

 

 

 

 

 

 

Adjusted EBITDA (non-GAAP)

$

210

 

$

225

 

 

$

82

$

92

 

(c) Interest, Other income/expense and Income taxes are not allocated to the business segments

 

 

 

 

 

 

 

Forecast of Full Year 2023 Adjusted EBITDA

Total Company

 

 

 

(in millions)

Low

High

 

 

 

Net income attributable to the Company (GAAP)

$

96

 

$

115

 

 

 

 

Income attributable to the noncontrolling interest

 

 

 

 

 

 

 

Interest expense/(income), net

 

16

 

 

15

 

 

 

 

Income tax expense

 

47

 

 

56

 

 

 

 

Depreciation and amortization

 

74

 

 

72

 

 

 

 

EBITDA (non-GAAP)

 

233

 

 

258

 

 

 

 

Restructuring expenses, net (d)

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (d)

 

(2

)

 

(2

)

 

 

 

Acquisition/integration costs (d)

 

1

 

 

1

 

 

 

 

Pre-tax (income)/loss attributable to non-controlling interest

 

 

 

 

 

 

 

Adjusted EBITDA (non-GAAP)

$

232

 

$

257

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

Forecast of Full Year 2023 Earnings per share (basic) (e)

Low

High

 

 

 

Net income attributable to the Company (GAAP)

$

3.07

 

$

3.67

 

 

 

 

Restructuring expenses, net (d)

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (d)

 

(0.04

)

 

(0.04

)

 

 

 

Withholding tax related to internal restructuring

 

0.10

 

 

0.10

 

 

 

 

Acquisition/integration costs (d)

 

0.02

 

 

0.02

 

 

 

 

Adjusted Earnings per share (non-GAAP)

$

3.15

 

$

3.75

 

 

 

 

 

 

 

 

 

 

(d) Due to the uncertainty of these items, we are unable to forecast these items for 2023

(e) Calculations based on weighted average shares outstanding estimate of approximately 31.2 million

About Albany International Corp.

Albany International is a leading developer and manufacturer of engineered components, using advanced materials processing and automation capabilities, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed, consumable belts essential for the manufacture of all grades of paper products. 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 23 facilities in 11 countries, employs more than 4,200 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com.

Non-GAAP Measures

This release, including the conference call commentary associated with this release, contains certain non-GAAP measures, that should not be considered in isolation or as a substitute for the related GAAP measures. Such non-GAAP measures include net revenues and percent change in net revenues, excluding the impact of currency translation effects ; EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin; Net debt; Net leverage ratio; and Adjusted earnings per share (or Adjusted EPS). Management believes that these non-GAAP measures provide additional useful information to investors regarding the Company’s operational performance.

Presenting Net revenues and change in Net revenues, after currency effects are excluded, provides management and investors insight into underlying revenues trends. Net revenues, or percent changes in net revenues, excluding currency rate effects, are calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. These amounts are then compared to the U.S. dollar amount as reported in the current period.

EBITDA (calculated as net income excluding interest, income taxes, depreciation and amortization), Adjusted EBITDA, and Adjusted EPS are performance measures that relate to the Company’s continuing operations. The Company defines Adjusted EBITDA as EBITDA excluding costs or benefits that are not reflective of the Company’s ongoing or expected future operational performance. Such excluded costs or benefits do not consist of normal, recurring cash items necessary to generate revenues or operate our business. Adjusted EBITDA margin represents Adjusted EBITDA expressed as a percentage of net revenues.

The Company defines Adjusted EPS as basic earnings per share (GAAP), adjusted by the after tax per share amount of costs or benefits not reflective of the Company’s ongoing or expected future operational performance. The income tax effects are calculated using the applicable statutory income tax rate of the jurisdictions where such costs or benefits were incurred or the effective tax rate applicable to total company results.

The Company’s Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS may not be comparable to similarly titled measures of other companies.

Net debt aids investors in understanding the Company’s debt position if all available cash were applied to pay down indebtedness.

Net leverage ratio informs the investors of the Company's financial leverage at the end of the reporting period, providing an indicator of the Company's ability to repay its debt.

We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Forward-Looking Statements

This press release may contain statements, estimates, guidance or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “look for,” “guidance,” “guide,” and similar expressions identify forward-looking statements, which generally are not historical in nature. Because forward-looking statements are subject to certain risks and uncertainties (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q), actual results may differ materially from those expressed or implied by such forward-looking statements.

Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic conditions, including inflationary cost pressures, as well as global events, which include but are not limited to, the ongoing COVID-19 pandemic and the Russia-Ukraine military conflicts; 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.

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