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Albany International Reports Second-Quarter Results
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Second-quarter Financial Highlights

  • Net sales were $215.6 million, an increase of 6.1% compared to 2016 (see Table 1).
  • As previously reported, in Q2 2017, the Company recorded a $15.8 million ($0.31 per share – see Table 13) charge to Cost of goods sold related to revisions in the estimated profitability of two contracts in the Albany Engineered Composites segment.
  • Net income attributable to the Company was $1.1 million ($0.03 per share) in Q2 2017, compared to $10.4 million ($0.32 per share) in Q2 2016. The decrease in 2017 was principally due to the revisions in the contract estimates noted above.
  • Net income attributable to the Company, excluding adjustments (a non-GAAP measure), was $0.16 per share in Q2 2017, compared to $0.48 in Q2 2016 (see Table 17). The decrease in 2017 was principally due to the revisions in the contract estimates noted above.
  • Adjusted EBITDA (a non-GAAP measure) was $30.6 million in Q2 2017, compared to $46.6 million in Q2 2016 (see Tables 8 and 9). The decrease in 2017 was principally due to the revisions in the contract estimates noted above.

ROCHESTER, N.H.--(BUSINESS WIRE)--Aug. 1, 2017-- Albany International Corp. (NYSE:AIN) reported that Q2 2017 Net income attributable to the Company was $1.1 million, including a net charge of $0.8 million for income tax adjustments. Q2 2016 Net income attributable to the Company was $10.4 million, including favorable income tax adjustments of $0.2 million. The difference was principally due to the after tax effect of the previously disclosed revisions in the estimated profitability of two contracts in the Albany Engineered Composite segment (see Table 13).

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Q2 2017 Income before income taxes was $3.0 million, including restructuring charges of $2.0 million, and losses from foreign currency revaluation of $3.5 million. Q2 2017 Income before income taxes also includes a $15.8 million charge to Cost of goods sold related to the revisions in the contract estimates noted above. Q2 2016 Net income before income taxes was $16.2 million, including restructuring charges of $6.6 million, $3.8 million of acquisition expenses, and gains of $1.9 million from foreign currency revaluation.

Table 1 summarizes net sales and the effect of changes in currency translation rates:

                     

Table 1

Impact of
Changes
in Currency
Translation Rates

Percent
Change
excluding
Currency
Rate Effect
(in thousands, excluding

Net Sales
Three Months ended
June 30,

Percent
percentages)       2017     2016     Change        
Machine Clothing (MC)       $146,572     $148,934     -1.6 %     $(916 )     -1.0 %
Albany Engineered Composites (AEC)       68,999     54,256     27.2 %     (307 )     27.7 %
Total       $215,571     $203,190     6.1 %     $(1,223 )     6.7 %
 

In comparison to Q2 2016, the decrease in MC net sales was principally due to the continuing decline in publication grades, which was mostly offset by increases in other grades. The increase in AEC net sales was primarily due to growth in LEAP.

Table 2 summarizes gross profit by segment:

         

Table 2

 

 

 

Three Months ended
June 30, 2017

Three Months ended
June 30, 2016

(in thousands, excluding percentages)

   

Gross profit

 

Percent of sales

 

Gross profit

 

Percent of sales

Machine Clothing     $70,833     48.3 %   $70,902     47.6 %
Albany Engineered Composites     (7,599 )   (11.0 )   7,652     14.1  
Corporate Expenses     (180 )   -     (239 )   -  
Total Gross profit     $63,054     29.2 %   $78,315     38.5 %
 

In comparison to Q2 2016, the decrease in gross profit and gross profit percentage was due principally to the $15.8 million AEC charge (7.3% of sales), as well as higher depreciation and amortization in AEC. The decrease in overall gross profit percentage also reflects the continued shift in sales mix toward AEC.

Table 3 summarizes STG&R expenses and other data by segment:

     

Table 3

         

 

 

 

Three Months ended
June 30, 2017

Three Months ended
June 30, 2016

(in thousands, excluding percentages)

   

Expense

 

Percent of sales

 

Expense

 

Percent of sales

Machine Clothing     $31,610   21.6 %   $30,063   20.2 %
Albany Engineered Composites     8,998   13.0     12,353   22.8  
Corporate Expenses     11,182   -     11,394   -  
Total STG&R     $51,790   24.0 %   $53,810   26.5 %
   

Losses from the revaluation of nonfunctional-currency assets and liabilities increased selling, technical, general, and research (STG&R) expenses by $1.6 million in Q2 2017, while gains from revaluation of such assets and liabilities reduced STG&R expenses by $0.3 million in Q2 2016. Q2 2016 STG&R expenses also included $3.8 million of acquisition expenses in AEC.

Table 4 summarizes second-quarter expenses associated with internally funded research and development by segment:

   

Table 4

 

 

 

   

Research and development expenses by segment
Three Months ended
June 30,

(in thousands)

   

2017

   

2016

Machine Clothing     $4,525     $4,420
Albany Engineered Composites     2,778     2,911
Total     $7,303     $7,331
 

Table 5 summarizes second-quarter operating income by segment:

       

Table 5

           

 

 

 

Operating Income/(loss)
Three Months ended
June 30,

(in thousands)

   

2017

   

2016

Machine Clothing     $38,418     $35,405
Albany Engineered Composites    

(17,828)*

    (5,848)
Corporate expenses     (11,362)     (11,700)
Total     $9,228     $17,857

* Includes charge of $15.8 million related to revisions in the estimated profitability of two long-term contracts.

Table 6 presents the effect on operating income from restructuring, currency revaluation, and acquisition expenses:

 

Table 6

 

 

 

 

   

 

Expenses in Q2 2017
resulting from

 

Expenses/(gain) in Q2 2016
resulting from

(in thousands)

   

Restructuring

 

Revaluation

 

Restructuring

 

Revaluation

 

Acquisition
Expenses

Machine Clothing     $805   $1,650   $5,434   $(330)   $ -
Albany Engineered Composites     1,231   (63)   1,147   (1)   3,771
Corporate expenses     -   2   67   -   -
Total     $2,036   $1,589   $6,648  

$(331)

  $3,771
     

Q2 2017 Other income/expense, net, was expense of $1.9 million, including losses related to the revaluation of nonfunctional-currency balances of $1.9 million. Q2 2016 Other income/expense, net, was income of $2.0 million, including income related to the revaluation of nonfunctional-currency balances of $1.6 million.

Table 7 summarizes currency revaluation effects on certain financial metrics:

       

Table 7

           

 

 

Income/(loss) attributable to currency revaluation
Three Months ended June 30,

(in thousands)

   

2017

   

2016

Operating income    

$(1,589)

    $331
Other income/(expense), net     (1,948)     1,571
Total     $(3,537)     $1,902
 

The Company’s income tax rate based on income from continuing operations was 32.8% for Q2 2017, compared to 38.7% for Q2 2016. The decrease in the rate was due to a shift in the mix of pretax income in the jurisdictions in which we operate. Discrete tax items and the effect of a change in the estimated income tax rate increased income tax expense by $0.8 million in Q2 2017, and decreased income tax expense by $0.2 million in Q2 2016.

Tables 8 and 9 provide a reconciliation of operating income and net income to EBITDA and Adjusted EBITDA:

         

Table 8

                 

Three Months ended June 30, 2017
(in thousands)

   

Machine
Clothing

 

Albany
Engineered
Composites*

 

Corporate
expenses
and other

 

Total
Company

Operating income/(loss) (GAAP)     $38,418   $(17,828 )   $(11,362 )   $9,228  
Interest, taxes, other income/expense     -   -     (7,995 )   (7,995 )
Net income (GAAP)     38,418   (17,828 )   (19,357 )   1,233  
Interest expense, net     -   -     4,285     4,285  
Income tax expense     -   -     1,779     1,779  
Depreciation and amortization     8,431   8,218     1,184     17,833  
EBITDA (non-GAAP)     46,849   (9,610 )   (12,109 )   25,130  
Restructuring expenses, net     805   1,231     -     2,036  
Foreign currency revaluation losses/(gains)     1,650   (63 )   1,950     3,537  
Pretax (income) attributable to non-controlling interest in ASC     -   (144 )   -     (144 )
Adjusted EBITDA (non-GAAP)     $49,304   $(8,586 )   $(10,159 )   $30,559  

* Includes charge of $15.8 million related to revisions in the estimated profitability of two long-term contracts.

         

Table 9

                 

Three Months ended June 30, 2016
(in thousands)

   

Machine
Clothing

 

Albany
Engineered
Composites

 

Corporate
expenses
and other

 

Total
Company

Operating income/(loss) (GAAP)     $35,405     $(5,848 )   $(11,700 )   $17,857  
Interest, taxes, other income/expense     -     -     (7,756 )   (7,756 )
Net income (GAAP)     35,405     (5,848 )   (19,456 )   10,101  
Interest expense, net     -     -     3,691     3,691  
Income tax expense     -     -     6,082     6,082  
Depreciation and amortization     9,496     6,354     2,109     17,959  
EBITDA (non-GAAP)     44,901     506     (7,574 )   37,833  
Restructuring expenses, net     5,434     1,147     67     6,648  
Foreign currency revaluation (gains)/losses     (330 )   (1 )   (1,571 )   (1,902 )
Acquisition expenses     -     3,771     -     3,771  
Pretax loss attributable to non-controlling interest in ASC     -     276     -     276  
Adjusted EBITDA (non-GAAP)     $50,005     $5,699     $(9,078 )   $46,626  
 

Payments for capital expenditures increased to $21.7 million in Q2 2017, compared to $20.7 million in Q2 2016. Depreciation and amortization was $17.8 million in Q2 2017, compared to $18.0 million in Q2 2016.

CFO Comments

CFO and Treasurer John Cozzolino commented, “Cash flow in the second quarter was negatively impacted by significant investments in working capital and fixed assets, mostly to fund the growth in AEC. For the total Company, the net effect of higher receivables and inventory was a use of cash of approximately $13 million during the quarter. Payments for capital expenditures were $22 million in Q2 and $47 million year to date; we continue to estimate full-year spending in 2017 to be $95 million to $105 million. At this rate of capital expenditures, and with continued increases in working capital as AEC grows, we expect net debt to increase over the second half of the year.

“Total debt increased about $16 million to $496 million as of the end of the quarter, while cash balances decreased about $4 million to a total of $139 million. The combined effect of those two changes resulted in a $20 million increase to net debt (total debt less cash, see Table 19) to a balance of $357 million as of the end of the quarter. The Company’s leverage ratio, as defined in our primary debt agreements, was 2.55 at the end of Q2 2017, well below our limit of 3.50.

“The Company’s income tax rate based on income from continuing operations was 33% in Q2 2017, compared to 35% for the full-year 2016. We continue to expect the full-year tax rate for 2017 to be approximately 35% to 36%. Cash paid for income taxes was about $9 million in Q2 and $18 million year to date; we estimate cash taxes in 2017 to range from $25 million to $30 million.”

CEO Comments

CEO Joseph Morone said, “Aside from the charge associated with future losses on the BR 725 and A380 programs, Q2 was another strong quarter for Albany International. MC once again generated stable sales and strong income, while AEC grew sharply and took another incremental step toward improved profitability. Both businesses are now a little ahead of our expectations for the full year, and remain firmly on track toward their longer term objectives of stable MC cash flow and sharp AEC growth coupled with gradually improving profitability.

“In MC, sales were once again steady; Q2 sales were slightly above the preceding three quarters and slightly below a strong Q2 2016. The market trends of recent quarters continued. Publication sales declined by nearly 8%, but since they now represent less than 25% of total sales, they were almost completely offset by incremental growth in packaging and tissue. This pattern held in every major geographic region. Meanwhile, pricing across all regions was stable and new product development and performance were again very strong, particularly in the growth grades of tissue, packaging and nonwovens.

“Turning to the outlook for MC, due to seasonal effects, the second half of the year tends to be weaker than the first half. But on a year-over-year basis, given MC’s strong competitive performance, stable market conditions, and good order backlog, it is reasonable to expect continued stable performance in the second half of the year. Last quarter, we reported that the MC segment was on track toward full-year 2017 Adjusted EBITDA in the middle of our expected range of $180 million to $195 million dollars. With the strong first-half performance and our outlook for the second half, MC 2017 Adjusted EBITDA now appears more likely to end up in the upper half of that range.

“AEC sales grew to $69 million, compared to $56 million in Q1 and $54 million in Q2 2016. The growth was driven primarily by LEAP, and secondarily by the F-35 and Boeing fuselage frame programs. Each of AEC’s key growth and legacy programs performed well, with good performance on deliveries and steady advances across all operations in continuous improvement activities aimed at higher yields and lower costs. Operating income declined in the quarter principally due to the $15.8 million charge associated with the BR 725 and A380 programs. But aside from this charge, AEC took another tangible, incremental, sequential step in Q2 toward our target of 18% to 20% Adjusted EBITDA as a percentage of sales by 2020.

“New business development activity continues to be strong on all fronts, with AEC actively exploring a portfolio of opportunities in both civil and defense markets, including opportunities on existing aerospace platforms, emerging aerospace platforms, and outside of aerospace. The biggest news in the quarter came from the Paris Air Show. Orders for LEAP were very strong, the order backlog now exceeds 13,100 engines (over six years of full production), and GE and Safran are now considering additional increases in LEAP production rates. There was also a great deal of discussion by Boeing at the show about its planning for the potentially new 797 (i.e., new middle-of-market aircraft), and CFM and Safran expressed their clear intent to compete for the engine that would power it. A decision by Boeing to launch the 797 would create potentially significant opportunities for AEC on both airframe and engine.

“As for the near-term outlook for AEC, we had previously stated that we were looking for full-year 2017 revenue to grow by 25% to 35% compared to full-year 2016, coupled with gradually improving Adjusted EBITDA as a percentage of sales. We now expect full-year 2017 growth to be at the high end of that range, and for the trend of incremental, sequential improvements in Adjusted EBITDA as a percentage of sales to continue through the second half of the year.”

About Albany International Corp.

Albany International is a global advanced textiles and materials processing company, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed fabrics and belts essential to production in the paper, nonwovens, and other process industries. Albany Engineered Composites is a rapidly growing supplier of highly engineered composite parts for the aerospace industry. Albany International is headquartered in Rochester, New Hampshire, operates 22 plants in 10 countries, employs 4,400 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com.

This release contains certain non-GAAP metrics, including: percent change in net sales excluding currency rate effects (for each segment and the Company as a whole); EBITDA and Adjusted EBITDA (for each segment and the Company as a whole, represented in dollars or as a percentage of net sales); net debt; and net income per share attributable to the Company, excluding adjustments. Such items are provided because management believes that, when reconciled from the GAAP items to which they relate, they provide additional useful information to investors regarding the Company’s operational performance.

Presenting increases or decreases in sales, after currency effects are excluded, can give management and investors insight into underlying sales trends. EBITDA, or net income with interest, taxes, depreciation, and amortization added back, is a common indicator of financial performance used, among other things, to analyze and compare core profitability between companies and industries because it eliminates effects due to differences in financing, asset bases and taxes. An understanding of the impact in a particular quarter of specific restructuring costs, acquisition expenses, currency revaluation, or other gains and losses, on net income (absolute as well as on a per-share basis), operating income or EBITDA can give management and investors additional insight into core financial performance, especially when compared to quarters in which such items had a greater or lesser effect, or no effect. Restructuring expenses in the MC segment, while frequent in recent years, are reflective of significant reductions in manufacturing capacity and associated headcount in response to shifting markets, and not of the profitability of the business going forward as restructured. Net debt is, in the opinion of the Company, helpful to investors wishing to understand what the Company’s debt position would be if all available cash were applied to pay down indebtedness. EBITDA, Adjusted EBITDA and net income per share attributable to the Company, excluding adjustments, are performance measures that relate to the Company’s continuing operations.

Percent changes in net sales, 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. That amount is then compared to the U.S. dollar amount reported in the current period. The Company calculates EBITDA by removing the following from Net income: Interest expense net, Income tax expense, Depreciation and amortization. Adjusted EBITDA is calculated by: adding to EBITDA costs associated with restructuring and pension settlement charges; adding (or subtracting) revaluation losses (or gains); subtracting (or adding) gains (or losses) from the sale of buildings or investments; subtracting insurance recovery gains; subtracting (or adding) Income (or loss) attributable to the non-controlling interest in Albany Safran Composites (ASC); and adding expenses related to the Company’s acquisition of Harris Corporation’s composite aerostructures division. Adjusted EBITDA may also be presented as a percentage of net sales by dividing it by net sales. Net income per share attributable to the Company, excluding adjustments, is calculated by adding to (or subtracting from) net income attributable to the Company per share, on an after-tax basis: restructuring charges; discrete tax charges (or gains) and the effect of changes in the income tax rate; foreign currency revaluation losses (or gains); acquisition expenses; and losses (or gains) from the sale of investments.

EBITDA, Adjusted EBITDA, and net income per share attributable to the Company, excluding adjustments, as defined by the Company, may not be similar to similarly named measures of other companies. Such measures are not considered measurements under GAAP, and should be considered in addition to, but not as substitutes for, the information contained in the Company’s statements of income.

The Company discloses certain income and expense items on a per-share basis. The Company believes that such disclosures provide important insight into underlying quarterly earnings and are financial performance metrics commonly used by investors. The Company calculates the quarterly per-share amount for items included in continuing operations by using the income tax rate based on income from continuing operations and the weighted-average number of shares outstanding for each period. Year-to-date earnings per-share effects are determined by adding the amounts calculated at each reporting period.

Table 10

                 

Impact of
Changes
in Currency
Translation Rates

    Percent
Change
excluding
Currency
Rate Effect
(in thousands, excluding

Net Sales
Six Months ended
June 30,

Percent
percentages)       2017     2016     Change        
Machine Clothing (MC)       $289,399     $294,197     -1.6 %     $(3,083 )     -0.6 %
Albany Engineered Composites (AEC)       125,449     81,324     54.3 %     (749 )     55.2 %
Total       $414,848     $375,521     10.5 %     $(3,832 )     11.5 %
 
         

Table 11

Six Months ended June 30, 2017
(in thousands)

   

Machine
Clothing

 

Albany
Engineered
Composites*

 

Corporate
expenses
and other

 

Total
Company

Operating income/(loss) (GAAP)     $76,679   $(22,942 )   $(22,453 )   $31,284  
Interest, taxes, other income/expense     -   -     (19,077 )   (19,077 )
Net income (GAAP)     76,679   (22,942 )   (41,530 )   12,207  
Interest expense, net     -   -     8,613     8,613  
Income tax expense     -   -     8,329     8,329  
Depreciation and amortization     16,718   16,022     2,386     35,126  
EBITDA (non-GAAP)     93,397   (6,920 )   (22,202 )   64,275  
Restructuring expenses, net     916   3,801     -     4,717  
Foreign currency revaluation losses     3,313   34     2,052     5,399  
Pretax (income) attributable to non-controlling interest in ASC     -   (314 )   -     (314 )
Adjusted EBITDA (non-GAAP)     $97,626   $(3,399 )   $(20,150 )   $74,077  

* Includes charge of $15.8 million related to revisions in the estimated profitability of two long-term contracts.

         

Table 12

                 

Six Months ended June 30, 2016
(in thousands)

   

Machine
Clothing

 

Albany
Engineered
Composites

 

Corporate
expenses
and other

 

Total
Company

Operating income/(loss) (GAAP)     $72,543   $(9,553 )   $(22,864 )   $40,126  
Interest, taxes, other income/expense     -   -     (16,709 )   (16,709 )
Net income (GAAP)     72,543   (9,553 )   (39,573 )   23,417  
Interest expense, net     -   -     5,929     5,929  
Income tax expense     -   -     13,125     13,125  
Depreciation and amortization     18,813   9,750     4,216     32,779  
EBITDA (non-GAAP)     91,356   197     (16,303 )   75,250  
Restructuring expenses, net     6,132   1,147     48     7,327  
Foreign currency revaluation (gains)/losses     1,560   4     (2,047 )   (483 )
Acquisition expenses     -   5,367     -     5,367  
Pretax loss attributable to non-controlling interest in ASC     -   463     -     463  
Adjusted EBITDA (non-GAAP)     $99,048   $7,178     $(18,302 )   $87,924  
 
         

Table 13

Three Months ended June 30, 2017
(in thousands, except per share amounts)

   

Pretax
amounts

 

Tax
Effect

 

After-tax
Effect

 

Per Share
Effect

Restructuring expenses, net     $2,036   $739   $1,297   $0.04
Foreign currency revaluation losses     3,537   1,284   2,253   0.07
Unfavorable effect of change in income tax rate     -   36   36   0.00
Net discrete income tax charge     -   754   754   0.02
Charge for revision to estimated profitability of AEC contracts     15,821   5,854   9,967   0.31
 
 

Table 14

Three Months ended June 30, 2016
(in thousands, except per share amounts)

   

Pretax
amounts

 

Tax
Effect

 

After-tax
Effect

 

Per Share
Effect

Restructuring expenses, net     $6,648   $2,573   $4,075   $0.13
Foreign currency revaluation gains     1,902   736   1,166   0.04
Acquisition expenses     3,771   1,358   2,413   0.08
Favorable effect of change in income tax rate     -   203   203   0.01
Net discrete income tax charge     -   27   27   0.00
         
         

Table 15

                 

Six Months ended June 30, 2017
(in thousands, except per share amounts)

   

Pretax
amounts

 

Tax
Effect

 

After-tax
Effect

 

Per Share
Effect

Restructuring expenses, net     $4,717   $1,718   $2,999   $0.09
Foreign currency revaluation losses     5,399   1,964   3,435   0.11
Expenses related to integration of acquired business     589   224   365   0.01
Net discrete income tax charge     -   1,585   1,585   0.05
Charge for revision to estimated profitability of AEC contracts     15,821   5,854   9,967   0.31
 

Table 16

                 

Six Months ended June 30, 2016
(in thousands, except per share amounts)

   

Pretax
amounts

 

Tax
Effect

 

After-tax
Effect

 

Per Share
Effect

Restructuring expenses, net     $7,327   $2,843   $4,484   $0.14
Foreign currency revaluation gains     483   173   310   0.01
Acquisition expenses     5,367   1,933   3,434   0.11
Net discrete income tax benefit     -   1,006   1,006   0.03

Table 17 contains the calculation of net income per share attributable to the Company, excluding adjustments:

   

Table 17

 

 

   

Three Months ended
June 30,

 

Six Months ended
June 30,

Per share amounts (Basic)

   

2017

 

2016

 

2017

 

2016

Net income/(loss) attributable to the Company, reported (GAAP)     $0.03*   $0.32     $0.37*   $0.74  
Adjustments:                  
Restructuring charges     0.04   0.13     0.09   0.14  
Discrete tax adjustments and effect of change in income tax rate     0.02   (0.01 )   0.05   (0.03 )
Foreign currency revaluation (gains)/ losses     0.07   (0.04 )   0.11   (0.01 )
Acquisition expenses     -   0.08     -   0.11  
Net income attributable to the Company, excluding adjustments (non-GAAP)     $0.16   $0.48     $0.62   $0.95  

* Includes charge of $0.31 per share for revisions in estimated profitability of two AEC contracts

   

Table 18

     

 

 

 

 

   

Adjusted EBITDA as a percentage of net sales

Three months ended

Year ended

(in thousands)

   

June 30, 2017

   

March 31, 2017

   

December 31, 2016

Adjusted EBITDA (non-GAAP)    

$(8,586)*

   

$5,188

   

$16,420

Net sales (GAAP)     $68,999     $56,450     $197,649
Adjusted EBITDA as a percentage of net sales     (12.4)%     9.2%     8.3%

* Includes charge of $15.8 million for revisions in estimated profitability of two AEC contracts. See table 8 for calculation of Adjusted EBITDA.

Table 19 contains the calculation of net debt:

Table 19

 

(in thousands)

   

June 30,
2017

 

March 31,
2017

 

December 31,
2016

 

September 30,
2016

 

June 30,
2016

Notes and loans payable     $249   $274   $312   $343   $531
Current maturities of long-term debt     51,732   51,699   51,666   1,462   566
Long-term debt     444,030   428,477   432,918   490,003   485,215
Total debt     496,011   480,450   484,896   491,808   486,312
Cash and cash equivalents     138,792   143,333   181,742   196,170   176,025
Net debt     $357,219   $337,117   $303,154   $295,638   $310,287

Table 20 contains the reconciliation of MC 2017 projected Adjusted EBITDA to MC 2017 projected net income:

         

Table 20

                 

Machine Clothing Full-Year 2017 Outlook
(in millions)

   

Actual, six
months
ended June
30, 2017

 

Results for
last two
quarters of
year to meet
low end of
range

 

Results for
last two
quarters of
year to meet
high end of
range

 

 

Estimated
range for full-
year

Net income (non-GAAP)     $ 77   $ 67   $ 78   $144 - $155
Depreciation and amortization       17     15     19   (32-36)
EBITDA (non-GAAP)     $ 94   $ 82   $ 97   $176 - $191
Restructuring expenses       1   *   *   1
Foreign currency revaluation losses       3   *   *   3
Adjusted EBITDA (non-GAAP)     $ 98   $ 82   $ 97   $180 - $195

* Due to the uncertainty of these items, management is currently unable to project restructuring expenses and foreign currency revaluation gains/losses for the remainder of the year.

This press release may contain statements, estimates, 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,” and similar expressions identify forward-looking statements, which generally are not historical in nature. 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) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections.

Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic, geopolitical and paper-industry trends and conditions during 2017 and in future years; expectations in 2017 and in future periods of sales, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net sales), income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, including the acquired composite aerostructures business, 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 sales 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.

       
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
 
 
Three Months Ended
June 30,
Six Months Ended
June 30,
 
2017 2016 2017 2016
 
$ 215,571 $ 203,190 Net sales $ 414,848 $ 375,521
  152,517   124,875   Cost of goods sold   275,889   224,705  
 
63,054 78,315 Gross profit 138,959 150,816
41,817 43,534 Selling, general, and administrative expenses 82,723 82,955
9,973 10,276 Technical and research expenses 20,235 20,408
  2,036   6,648   Restructuring expenses, net   4,717   7,327  
 
9,228 17,857 Operating income 31,284 40,126
4,285 3,691 Interest expense, net 8,613 5,929
  1,931   (2,017 ) Other expense/(income), net   2,135   (2,345 )
 
3,012 16,183 Income before income taxes 20,536 36,542
  1,779   6,082   Income tax expense   8,329   13,125  
 
1,233 10,101 Net income 12,207 23,417
  116   (266 ) Net income/(loss) attributable to the noncontrolling interest   251   (451 )
$ 1,117 $ 10,367   Net income attributable to the Company $ 11,956 $ 23,868  
 
$ 0.03 $ 0.32 Earnings per share attributable to Company shareholders - Basic $ 0.37 $ 0.74
 
$ 0.03 $ 0.32 Earnings per share attributable to Company shareholders - Diluted $ 0.37 $ 0.74
 
Shares of the Company used in computing earnings per share:
32,166 32,093 Basic 32,147 32,067
 
32,200 32,131 Diluted 32,182 32,106
 
$ 0.17 $ 0.17 Dividends declared per share, Class A and Class B $ 0.34 $ 0.34

 
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
     
 
June 30,
2017
December 31,
2016
ASSETS
Cash and cash equivalents $ 138,792 $ 181,742
Accounts receivable, net 193,065 171,193
Inventories 151,534 133,906
Income taxes prepaid and receivable 8,076 5,213
Prepaid expenses and other current assets   11,980     9,251  
Total current assets 503,447 501,305
 
Property, plant and equipment, net 446,814 422,564
Intangibles, net 62,916 66,454
Goodwill 164,328 160,375
Income taxes receivable and deferred 77,323 68,865
Contract receivables 21,581 14,045
Other assets   31,859     29,825  
Total assets $ 1,308,268   $ 1,263,433  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable $ 249 $ 312
Accounts payable 46,666 43,305
Accrued liabilities 96,617 95,195
Current maturities of long-term debt 51,732 51,666
Income taxes payable   8,916     9,531  
Total current liabilities 204,180 200,009
 
Long-term debt 444,030 432,918
Other noncurrent liabilities 104,893 106,827
Deferred taxes and other liabilities   13,074     12,389  
Total liabilities   766,177     752,143  
 
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; issued 37,372,553 in 2017
and 37,319,266 in 2016 37 37
Class B Common Stock, par value $.001 per share;
authorized 25,000,000 shares; issued and
outstanding 3,233,998 in 2017 and 2016 3 3
Additional paid in capital 427,538 425,953
Retained earnings 523,875 522,855
Accumulated items of other comprehensive income:
Translation adjustments (104,845 ) (133,298 )
Pension and postretirement liability adjustments (52,466 ) (51,719 )
Derivative valuation adjustment 794 828
Treasury stock (Class A), at cost 8,431,335 shares in 2017
and 8,443,444 shares in 2016   (256,876 )   (257,136 )
Total Company shareholders' equity 538,060 507,523
Noncontrolling interest   4,031     3,767  
Total equity   542,091     511,290  
Total liabilities and shareholders' equity $ 1,308,268   $ 1,263,433  
 

 
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
       
 
Three Months Ended
June 30,
Six Months ended
June 30,
 
2017 2016 2017 2016
OPERATING ACTIVITIES
$ 1,233 $ 10,101 Net income $ 12,207 $ 23,417
Adjustments to reconcile net income to net cash provided by operating activities:
15,201 15,142 Depreciation 29,845 28,266
2,632 2,817 Amortization 5,281 4,513
(758 ) (3,371 ) Change in other noncurrent liabilities (2,354 ) (4,735 )
(6,745 ) (1,457 ) Change in deferred taxes and other liabilities (7,357 ) 1,072
534 484 Provision for write-off of property, plant and equipment 830 1,076
212 - Non-cash interest expense 423 -
681 668 Compensation and benefits paid or payable in Class A Common Stock 1,670 1,532
 
Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition:
(14,395 ) (10,384 ) Accounts receivable (15,136 ) (11,286 )
1,655 (6,027 ) Inventories (13,266 ) (7,375 )
(651 ) 2,561 Prepaid expenses and other current assets (2,568 ) (2,821 )
(2,817 ) 3,732 Income taxes prepaid and receivable (2,817 ) 1,837
(1,459 ) 1,267 Accounts payable 2,065 2,899
10,071 689 Accrued liabilities (900 ) (8,154 )
1,978 2,903 Income taxes payable (508 ) (933 )
(3,621 ) (7,768 ) Contract receivables (7,536 ) (7,768 )
  4,638     7,291   Other, net   3,938     2,490  
  8,389     18,648   Net cash provided by operating activities   3,817     24,030  
 
INVESTING ACTIVITIES
- (187,000 ) Purchase of business, net of cash acquired - (187,000 )
(21,360 ) (20,112 ) Purchases of property, plant and equipment (46,405 ) (28,105 )
(353 ) (589 ) Purchased software (391 ) (671 )
  -     1,736   Proceeds from sale or involuntary conversion of assets   -     1,736  
  (21,713 )   (205,965 ) Net cash used in investing activities   (46,796 )   (214,040 )
 
FINANCING ACTIVITIES
16,114 207,134 Proceeds from borrowings 32,259 219,530
(540 ) (426 ) Principal payments on debt (21,142 ) (22,824 )
- (1,571 ) Debt acquisition costs - (1,771 )
- (5,175 ) Swap termination payment - (5,175 )
- - Taxes paid in lieu of share issuance (1,364 ) (1,272 )
100 185 Proceeds from options exercised 175 390
  (5,467 )   (5,454 ) Dividends paid   (10,926 )   (10,897 )
  10,207     194,693   Net cash (used in)/provided by financing activities   (998 )   177,981  
 
  (1,424 )   (966 ) Effect of exchange rate changes on cash and cash equivalents   1,027     2,941  
 
(4,541 ) 6,410 (Decrease)/increase in cash and cash equivalents (42,950 )

 

(9,088 )
  143,333     169,615   Cash and cash equivalents at beginning of period   181,742     185,113  
$ 138,792   $ 176,025   Cash and cash equivalents at end of period $ 138,792   $ 176,025  
 

Source: Albany International Corp.

Albany International Corp.
Investors
John Cozzolino, 518-445-2281
john.cozzolino@albint.com
or
Media
Heather Kralik, 801-505-7001
heather.kralik@albint.com

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AIN (Common Stock)
Price$62.20
Change (%) Stock is Up 1.15 (1.88%)
12/15/17 4:01 p.m. ET
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