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.
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF
INCOME
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended
March 31,
2024
2023
Net revenues
$
313,330
$
269,096
Cost of goods sold
204,644
169,778
Gross profit
108,686
99,318
Selling, general, and administrative
expenses
54,835
48,479
Technical and research expenses
12,665
10,277
Restructuring expenses, net
2,209
20
Operating income
38,977
40,542
Interest expense/(income), net
3,319
3,290
Other (income)/expense, net
(2,982
)
(455
)
Income before income taxes
38,640
37,707
Income taxes
11,271
10,621
Net income
27,369
27,086
Net income attributable to the
noncontrolling interest
78
197
Net income attributable to the Company
$
27,291
$
26,889
Earnings per share attributable to Company
shareholders - Basic
$
0.87
$
0.86
Earnings per share attributable to Company
shareholders - Diluted
$
0.87
$
0.86
Shares of the Company used in computing
earnings per share:
Basic
31,209
31,131
Diluted
31,291
31,217
Dividends declared per Class A share
$
0.26
$
0.25
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share
data)
(unaudited)
March 31, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
125,412
$
173,420
Accounts receivable, net
305,495
287,781
Contract assets, net
179,223
182,281
Inventories
166,025
169,567
Income taxes prepaid and receivable
11,686
11,043
Prepaid expenses and other current
assets
57,331
53,872
Total current assets
$
845,172
$
877,964
Property, plant and equipment, net
589,970
601,989
Intangibles, net
42,839
44,646
Goodwill
178,704
180,181
Deferred income taxes
24,153
22,941
Noncurrent receivables, net
—
4,392
Other assets
117,342
102,901
Total assets
$
1,798,180
$
1,835,014
Liabilities and Shareholders' Equity
Accounts payable
$
80,778
$
87,104
Accrued liabilities
118,181
142,988
Current maturities of long-term debt
4,445
4,218
Income taxes payable
8,586
14,369
Total current liabilities
211,990
248,679
Long-term debt
434,689
452,667
Other noncurrent liabilities
151,121
139,385
Deferred taxes and other liabilities
26,815
26,963
Total liabilities
824,615
867,694
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 $0.001 per
share; authorized 100,000,000 shares; 40,898,219 issued in 2024 and
40,856,910 in 2023
41
41
Additional paid in capital
449,028
448,218
Retained earnings
1,030,111
1,010,942
Accumulated items of other comprehensive
income:
Translation adjustments
(137,017
)
(124,901
)
Pension and postretirement liability
adjustments
(16,964
)
(17,346
)
Derivative valuation adjustment
6,955
9,079
Treasury stock (Class A), at cost;
9,661,845 shares in 2024 and 2023
(364,665
)
(364,665
)
Total shareholders' equity
967,489
961,368
Noncontrolling interest
6,076
5,952
Total equity
973,565
967,320
Total liabilities and shareholders'
equity
$
1,798,180
$
1,835,014
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
(unaudited)
Three Months Ended March
31,
2024
2023
Cash flows from operating activities:
Net income
$
27,369
$
27,086
Adjustments to reconcile net income to net
cash provided by/(used in) operating activities:
Depreciation
20,556
15,864
Amortization
1,748
1,503
Change in deferred taxes and other
liabilities
(675
)
(887
)
Impairment of property, plant and
equipment
49
100
Non-cash interest expense
256
280
Compensation and benefits paid or payable
in Class A Common Stock
810
378
Provision for credit losses from
uncollected receivables and contract assets
365
309
Foreign currency remeasurement (gain) on
intercompany loans
(792
)
(1,732
)
Fair value adjustment on foreign currency
options
280
58
Changes in operating assets and
liabilities that provided/(used) cash:
Accounts receivable
(17,061
)
(13,702
)
Contract assets
2,982
(4,403
)
Inventories
1,917
(12,360
)
Prepaid expenses and other current
assets
(6,525
)
(2,191
)
Income taxes prepaid and receivable
(721
)
(693
)
Accounts payable
7,730
5,214
Accrued liabilities
(22,739
)
(23,137
)
Income taxes payable
(5,466
)
(10,996
)
Noncurrent receivables
(178
)
867
Other noncurrent liabilities
506
7
Other, net
(814
)
2,042
Net cash provided by/(used in) operating
activities
9,597
(16,393
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(26,859
)
(16,275
)
Purchased software
(21
)
—
Net cash used in investing activities
(26,880
)
(16,275
)
Cash flows from financing activities:
Proceeds from borrowings
43,237
58,000
Principal payments on debt
(60,750
)
(6,000
)
Taxes paid in lieu of share issuance
(2,446
)
(3,136
)
Dividends paid
(8,110
)
(7,778
)
Net cash (used in)/provided by financing
activities
(28,069
)
41,086
Effect of exchange rate changes on cash
and cash equivalents
(2,656
)
4,064
(Decrease)/increase in cash and cash
equivalents
(48,008
)
12,482
Cash and cash equivalents at beginning of
period
173,420
291,776
Cash and cash equivalents at end of
period
$
125,412
$
304,258
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, Q1
2024
(Decrease)/ increase due to changes in
currency translation rates
Q1 2024 revenues on same basis as Q1
2023 currency translation rates
Net revenues as reported, Q1
2023
% Change compared to Q1 2023, excluding
currency rate effects
Machine Clothing
$
185,217
$
(598)
$
185,815
$
153,222
21.3 %
Albany Engineered Composites
128,113
221
127,892
115,874
10.4 %
Consolidated total
$
313,330
$
(377)
$
313,707
$
269,096
16.6 %
The following table presents Gross profit and Gross profit
margin:
(in thousands, except
percentages)
Gross profit,
Q1 2024
Gross profit margin, Q1 2024
Gross profit,
Q1 2023
Gross profit margin, Q1 2023
Machine Clothing
$
84,655
45.7 %
$
77,855
50.8 %
Albany Engineered Composites
24,031
18.8 %
21,463
18.5 %
Consolidated total
$
108,686
34.7 %
$
99,318
36.9 %
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 March 31,
2024
(in thousands)
Machine Clothing
Albany Engineered
Composites
Corporate expenses
and other
Total Company
Net income/(loss) (GAAP)
$
48,110
$
9,188
$
(29,929
)
$
27,369
Interest expense/(income), net
—
—
3,319
3,319
Income tax expense
—
—
11,271
11,271
Depreciation and amortization expense
8,101
13,059
1,144
22,304
EBITDA (non-GAAP)
56,211
22,247
(14,195
)
64,263
Restructuring expenses, net
21
2,188
—
2,209
Foreign currency revaluation
(gains)/losses (a)
(1,410
)
280
(1,296
)
(2,426
)
Other transition expenses
—
—
125
125
Acquisition/integration costs
713
182
426
1,321
Pre-tax (income) attributable to
noncontrolling interest
(11
)
(105
)
—
(116
)
Adjusted EBITDA (non-GAAP)
$
55,524
$
24,792
$
(14,940
)
$
65,376
Adjusted EBITDA margin (Adjusted EBITDA
divided by Net revenues) (non-GAAP)
30.0
%
19.4
%
—
20.9
%
Three months ended March 31,
2023
(in thousands)
Machine Clothing
Albany Engineered
Composites
Corporate expenses
and other
Total Company
Net income/(loss) (GAAP)
$
48,964
$
9,418
$
(31,296
)
$
27,086
Interest expense/(income), net
—
—
3,290
3,290
Income tax benefit
—
—
10,621
10,621
Depreciation and amortization expense
4,775
11,664
928
17,367
EBITDA (non-GAAP)
53,739
21,082
(16,457
)
58,364
Restructuring expenses, net
20
—
—
20
Foreign currency revaluation
(gains)/losses (a)
1,960
(133
)
60
1,887
Acquisition/integration costs
—
269
—
269
Pre-tax (income) attributable to
noncontrolling interest
—
(189
)
—
(189
)
Adjusted EBITDA (non-GAAP)
$
55,719
$
21,029
$
(16,397
)
$
60,351
Adjusted EBITDA margin (Adjusted EBITDA
divided by Net revenues) (non-GAAP)
36.4
%
18.1
%
—
22.4
%
Per share impact of the adjustments to earnings per share are as
follows:
Three months ended March 31,
2024
(in thousands, except per share
amounts)
Pre tax
Amounts
Tax
Effect
After tax
Effect
Per share
Effect
Restructuring expenses, net
$
2,209
$
583
$
1,626
$
0.05
Foreign currency revaluation
(gains)/losses (a)
(2,426
)
(728
)
(1,698
)
(0.05
)
Other transition expenses
125
31
94
0.00
Acquisition/integration costs
1,321
386
935
0.03
Three months ended March 31,
2023
(in thousands, except per share
amounts)
Pre tax
Amounts
Tax
Effect
After tax
Effect
Per share
Effect
Restructuring expenses, net
$
20
$
4
$
16
$
0.00
Foreign currency revaluation
(gains)/losses (a)
1,887
553
1,334
0.04
Acquisition/integration costs
269
77
192
0.01
The following table provides a reconciliation of Diluted
Earnings per share to Adjusted Diluted Earnings per share:
Three months ended March
31,
Per share amounts (Diluted)
2024
2023
Diluted Earnings per share (GAAP)
$
0.87
$
0.86
Adjustments, after tax:
Restructuring expenses, net
0.05
—
Foreign currency revaluation
(gains)/losses (a)
(0.05
)
0.04
Acquisition/integration costs
0.03
0.01
Adjusted Diluted Earnings per share
(non-GAAP)
$
0.90
$
0.91
The calculations of net debt are as follows:
(in thousands)
March 31, 2024
December 31, 2023
March 31, 2023
Current maturities of long-term debt
$
4,445
$
4,218
$
—
Long-term debt
434,689
452,667
491,000
Total debt
439,134
456,885
491,000
Cash and cash equivalents
125,412
173,420
304,258
Net debt (non-GAAP)
$
313,722
$
283,465
$
186,742
The calculation of net leverage ratio as of March 31, 2024 is as
follows:
Total Company
Twelve months ended
Three months ended
Trailing twelve months
ended
(in thousands)
December 31, 2023
March 31, 2023
March 31, 2024
March 31, 2024 (non-GAAP)
(b)
Net income/(loss) (GAAP)
$
111,610
$
27,086
$
27,369
$
111,893
Interest expense/(income), net
13,601
3,290
3,319
13,630
Income tax expense
48,846
10,621
11,271
49,496
Depreciation and amortization expense
76,733
17,367
22,304
81,670
EBITDA (non-GAAP)
250,790
58,364
64,263
256,689
Restructuring expenses, net
282
20
2,209
2,471
Foreign currency revaluation
(gains)/losses (a)
1,296
1,887
(2,426
)
(3,017
)
CEO and other transition expenses
2,719
—
125
2,844
Inventory step-up impacting Cost of goods
sold
5,480
—
—
5,480
Acquisition/integration costs
5,194
269
1,321
6,246
Pre-tax (income) attributable to
noncontrolling interest
(665
)
(189
)
(116
)
(592
)
Adjusted EBITDA (non-GAAP)
$
265,096
$
60,351
$
65,376
$
270,121
(in thousands, except for net leverage
ratio)
March 31, 2024
Net debt (non-GAAP)
$
313,722
Trailing twelve months Adjusted EBITDA
(non-GAAP)
270,121
Net leverage ratio (non-GAAP)
1.16
(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, 2023, less those incurred
during the three months ended March 31, 2023, plus those incurred
during the three months ended March 31, 2024.
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.
Forecast of Full Year 2024 Adjusted
EBITDA
Machine Clothing
AEC
(in millions)
Low
High
Low
High
Net income attributable to the Company
(GAAP) (c)
$
198
$
213
$
45
$
50
Income attributable to the noncontrolling
interest
—
—
(1
)
(1
)
Interest expense/(income), net
—
—
—
—
Income tax expense
—
—
—
—
Depreciation and amortization
30
35
50
55
EBITDA (non-GAAP)
228
248
94
104
Restructuring expenses, net (d)
—
—
2
2
Foreign currency revaluation
(gains)/losses (d)
1
1
—
—
Acquisition/integration costs (d)
1
1
—
—
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
Forecast of Full Year 2024 Adjusted
EBITDA
Total Company
(in millions)
Low
High
Net income attributable to the Company
(GAAP)
$
110
$
125
Income attributable to the noncontrolling
interest
(1
)
(1
)
Interest expense/(income), net
17
18
Income tax expense
44
48
Depreciation and amortization
85
95
EBITDA (non-GAAP)
255
285
Restructuring expenses, net (d)
2
2
Foreign currency revaluation
(gains)/losses (d)
1
1
Acquisition/integration costs (d)
1
1
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)
$
3.52
$
4.02
Restructuring expenses, net (d)
0.05
0.05
Foreign currency revaluation
(gains)/losses (d)
(0.05
)
(0.05
)
Acquisition/integration costs (d)
0.03
0.03
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 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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429521852/en/
JC Chetnani 603-330-5851 jc.chetnani@albint.com
Albany (NYSE:AIN)
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