ALBANY INTERNATIONAL CORP /DE/

Previous wording

Although we believe the expectations reflected in our other forward-looking statements are based on reasonable assumptions, it is not possible to foresee or identify all factors that could have a material and negative impact on our future performance. The forward-looking statements included or incorporated by reference in this report are made on the basis of our assumptions and analyses, as of the time the statements are made, in light of our experience and perception of historical conditions, expected future developments, and other factors believed to be appropriate under the circumstances.

Current wording

Further information concerning important factors that could cause actual events or results to be materially different from the forward-looking statements can be found in the “Business Environment Overview and Trends” sections of this quarterly report, as well as in the Item 1A-“Risk Factors” section of our most recent Annual Report on Form 10-K. Although we believe the expectations reflected in our other forward-looking statements are based on reasonable assumptions, it is not possible to foresee or identify all factors that could have a material and negative impact on our future performance. The forward-looking statements included or incorporated by reference in this report are made on the basis of our assumptions and analyses, as of the time the statements are made, in light of our experience and perception of historical conditions, expected future developments, and other factors believed to be appropriate under the circumstances.

Previous wording

The MC segment expects revenues to continue to decline for publication grade paper into 2025 and beyond, however, we see an offsetting effect due to growth in demand across Europe for packaging, and to a lesser degree, tissue grade products and continued softness in Asia. The MC segment's backlog continues to be stable.

Current wording

The MC segment expects revenues to continue to decline for publication grade paper and continued softness in Asia into 2025 and beyond, however, we see an offsetting effect due to growth in demand across Europe for packaging, and to a lesser degree, tissue grade products. The MC segment's backlog continues to be stable.

Previous wording

The AEC segment continues to ramp-up production levels on commercial, defense, and space programs. In the first quarter of 2025, the Company updated its labor, material input and scrap assumptions and estimates of certain long-term programs that resulted in a negative cumulative change in estimated profitability in the amount of $7.0 million. The negative cumulative change in profitability was primarily driven by a few large complex programs, including $2.0 million for various CH-53K programs, $1.7 million on our Gulfstream program, $0.9 million on our F-35 program, and $2.4 million, net on all other programs.

Current wording

The AEC segment continues to ramp-up production levels on commercial, defense, and space programs. In the first six months of 2025, the Company updated its labor, material input and scrap assumptions and estimates of certain long-term programs that resulted in a negative cumulative change in estimated profitability in the amount of $7.2 million for the second quarter of 2025 and $14.2 million for the six months June 30, 2025. The negative cumulative change in profitability during the second quarter of 2025 was primarily driven by a few large complex programs, including $8.1 million for various CH-53K programs, $0.8 million on our F-35 program, offset by a gain of $1.6 million on our Gulfstream program and $0.1 million, net gain on all other programs. The negative cumulative change in profitability during the six months ended June 2025 was driven by $10.1 million for various CH-53K programs, $2.1 million on our F-35 program, and $2.0 million, net on all other programs.

Previous wording

Also, please refer to the Business Environment Overview and Trends in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024. The Annual Report on Form 10-K, along with the Company's other filings, can be found on the Securities and Exchange Commission's website, www.sec.gov, as well as on the Company's website: www.albint.com.

Current wording

Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024. The Annual Report on Form 10-K, along with the Company's other filings, can be found on the Securities and Exchange Commission's website, www.sec.gov, as well as on the Company's website: www.albint.com.

Previous wording

Net revenues decreased 7.8% compared to the first quarter of 2024, driven by lower Net revenues in publication, tissue and pulp grades within MC and a decrease in Net revenues in AEC due to a reduction in certain commercial and space programs.

Current wording

Net revenues for the three months ended June 30, 2025 decreased 6.2% compared to the three months ended June 30, 2024, primarily driven by reduced demand in Asia, an unplanned equipment downtime in one of our production facilities within MC and a decrease in Net revenues in AEC due to a reduction in certain commercial and space programs.

Previous wording

•AEC's gross profit margin decreased from 18.8% in 2024 to 14.5% in 2025, driven primarily by cumulative changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025, as compared to a decrease of $0.9 million during the same period last year.

Current wording

•AEC's gross profit margin decreased from 17.0% in 2024 to 10.5% in 2025, driven primarily by cumulative changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025, as compared to a decrease of $5.0 million in 2024.

Previous wording

The decrease in 2025 Gross profit, as compared to the same period last year, was driven by increased cost assumptions that adjusted the expected profitability of certain long-term contracts in the AEC segment. Gross profit as a percentage of revenues by segment was as follows:

Current wording

The decrease in gross profit for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was driven by increased cost assumptions that adjusted the expected profitability of certain long-term contracts in the AEC segment. Gross profit as a percentage of revenues by segment was as follows:

Previous wording

Consolidated SG&A expenses decreased 1.9% as compared to the first quarter of 2024, however, as a percentage of Net revenues, SG&A expenses increased from 17.5% in 2024 to 18.6% in 2025.

Current wording

Consolidated SG&A expenses increased 5.4% as compared to the three months ended June 30, 2024, as a percentage of Net revenues, SG&A expenses increased from 16.7% in 2024 to 18.8% in 2025.

Previous wording

•In AEC, SG&A expenses decreased $1.4 million, compared to the first quarter of 2024 primarily driven by lower incentive compensation and personnel-related costs.

Current wording

•In AEC, SG&A expenses decreased $1.0 million, compared to the three months ended June 30, 2024 primarily driven by lower incentive compensation and personnel-related costs.

Previous wording

•Corporate SG&A expenses increased $0.3 million, compared to the first quarter of 2024 principally due to higher incentive compensation and personnel-related costs, offset by a decrease in professional fees and smaller impact from changes in currency translation rates.

Current wording

•Corporate SG&A expenses decreased $1.1 million, compared to the three months ended June 30, 2024 principally due to lower incentive compensation and personnel-related costs, offset by a increase in professional fees.

Previous wording

Consolidated Technical and research expenses decreased 6.1% as compared to the first quarter of 2024 and as a percentage of Net revenues increased from 4.0% in 2024 to 4.1% in 2025.

Current wording

Consolidated Technical and research expenses increased 5.8% as compared to the three months ended June 30, 2024 and as a percentage of Net revenues increased from 3.6% in 2024 to 4.0% in 2025.

Previous wording

•MC Technical and research expenses decreased $0.3 million as compared to the first quarter of 2024 due to lower personnel and development related costs, in addition to increased allocated costs to Corporate.

Current wording

•MC Technical and research expenses decreased by $0.1 million as compared to the three months ended June 30, 2024 due to higher personnel and development related costs, offset by allocated costs to Corporate.

Previous wording

•Corporate expenses in the first quarter of 2025 relate primarily to new business ventures initiatives and allocated costs from MC and AEC in 2025.

Current wording

•Corporate expenses in the three months ended June 30, 2025 relate primarily to new business ventures initiatives and allocated costs from MC and AEC in 2025.

Previous wording

•AEC Technical and research expenses decreased $1.5 million as compared to the first quarter of 2024, due to decreases in research material and labor costs, in addition to increased allocated costs to Corporate.

Current wording

•AEC Technical and research expenses decreased $1.7 million as compared to the six months ended June 30, 2024, due to decreases in research material and labor costs and increased allocated costs to Corporate.

Previous wording

In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, Operating income was affected by Restructuring expense, net, of $2.5 million in the three months ended March 31, 2025, compared to $2.2 million in the first quarter of 2024.

Current wording

In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, Operating income was affected by Restructuring expense, net, of $4.2 million in the three months ended June 30, 2025, compared to $2.1 million in the three months ended June 30, 2024; and $6.7 million in the six months ended June 30, 2025, compared to $4.3 million in the six months ended June 30, 2024.

Previous wording

At MC, restructuring actions were taken in 2024 and 2025 to cease operations at several facilities, including at the Company's MC forming fabric manufacturing facility in Chungju, South Korea, at the Company's Heimbach engineered fabric manufacturing facility in Rochdale, UK, at the Company's Heimbach paper machine clothing facility in Olten, Switzerland and at the Company's MC manufacturing facility in Ballo, Italy. These actions drove $3.3 million of restructuring charges during the first three months of 2025, of which $3.1 million in restructuring expenses related to workforce reductions, fixed asset impairments and related costs, as well as related charges of $0.2 million in Cost of goods sold for the write-off of inventory, offset by a $1.8 million pension curtailment gain. We expect to incur additional restructuring expenses related to these actions throughout the remainder of the year.

Current wording

At MC, restructuring actions were taken in 2025 and 2024 to cease operations at five facilities.

Previous wording

At AEC, restructuring activities were related to reorganizational costs as well as a reduction in the workforce within AEC, which resulted in restructuring expenses of $1.2 million and $2.2 million for the first three months of 2025 and 2024, respectively.

Current wording

At AEC, restructuring activities were related to reorganizational costs as well as a reduction in the workforce within AEC, which resulted in restructuring expenses of $0.5 million for the three months ended June 30, 2025 and $0.9 million for the three months ended June 30, 2024. For the six months ended June 30, 2025 and June 30, 2024, restructuring expenses were related to reductions in workforce and totaled $1.7 million and $3.1 million, respectively.

Previous wording

Other (income)/expense, net, included foreign currency related transactions, which resulted in losses of $3.2 million in the three months ended March 31, 2025, as compared to losses of $1.3 million in the same period last year. In addition, changes in the fair value of derivative instruments included gains of $2.5 million in the three months ended March 31, 2025, as compared to gains of $0.1 million in the same period last year, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso.

Current wording

Other (income)/expense, net, included foreign currency related transactions, which resulted in losses of $5.7 million and $8.8 million in the three and six months ended June 30, 2025, as compared to losses of $0.2 million and gains of $1.1 million in the same period last year. These changes were the result of unrealized losses on intercompany loans. In addition, changes in the fair value of derivative instruments included gains of $0.7 million and $3.3 million in the three and six months ended March 31, 2025, as compared to losses of $4.4 million and $4.3 million for the three and six months ended June 30, 2024, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. Other (income)/expense, net, also included net gains of $1.6 million from the divestiture of Arcari during the three and six months ended June 30, 2025 along with amortization of debt issuance costs, and other non-operating expenses.

Previous wording

The tax rate is affected by recurring items, such as the income tax rate in the U.S. and non-U.S. jurisdictions and the mix of pre-tax income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign pre-tax earnings, and by discrete items that may occur in any given year but are not consistent from year to year. The Company’s effective tax rate for the first quarter of 2025 was 26.6%, lower compared to 29.2% for the same period in 2024, mainly due to favorable discrete tax adjustments in the current period exceeding favorable discrete tax adjustments in the prior period. For more information, see Note 6, Income Taxes, in the Notes to the Consolidated Financial Statements.

Current wording

The tax rate is affected by recurring items, such as the income tax rate in the U.S. and non-U.S. jurisdictions and the mix of pre-tax income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign pre-tax earnings, and by discrete items that may occur in any given year but are not consistent from year to year. The Company’s effective tax rate for the second quarter of 2025 was 31.3%, higher compared to 27.9% for the same period in 2024, mainly due to favorable discrete tax adjustments in the prior period exceeding favorable discrete tax adjustments in the current period. For more information, see Note 7, Income Taxes, in the Notes to the Consolidated Financial Statements.

Previous wording

The MC segment accounted for 60% of our consolidated revenues during the three months ended March 31, 2025. A summary of selected financial results for MC is as follows:

Current wording

The MC segment accounted for 58% and 59% of our consolidated revenues during the three and six months ended June 30, 2025. A summary of selected financial results for MC is as follows:

Previous wording

For the three months ended March 31, 2025, Operating income decreased as compared to the first three months of 2024, decreasing $5.9 million or 13.3%. The weaker Gross profit performance was slightly offset by lower Technical and Research expenses. SG&A expenses increased $0.1 million as compared to 2024, with a $3.1 million increase due to changes in currency translation rates, offset by a $3.0 million decrease in travel, service, and personnel-related costs. Technical and research expenses decreased $0.3 million as compared to 2024 due to lower personnel and development costs, along with an increase in allocated costs to Corporate. In addition, Restructuring expenses increased $1.3 million related to recent announcements to cease operations at multiple manufacturing facilities, further reducing Operating income.

Current wording

For the six months ended June 30, 2025, Operating income decreased as compared to the first six months of 2024, decreasing $17.9 million. The weaker Gross profit performance was impacted by higher SG&A expenses which increased $5.2 million as compared to 2024, primarily due to increases in unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies (changes in currency translation rates), consulting costs and impacts of general inflationary pressures, offset by lower personnel-related costs. Technical and research expenses decreased $0.4 million as compared to 2024 due to lower personnel and development costs, along with an increase in allocated costs to Corporate. In addition, Restructuring expenses increased $0.6 million related to recent announcements to cease operations at multiple manufacturing facilities, further reducing Operating income.

Previous wording

The AEC segment accounted for 40% of our consolidated revenues during the three months ended March 31, 2025, respectively. A summary of selected financial results for AEC is as follows:

Current wording

The AEC segment accounted for 42% and 41% of our consolidated revenues during the three and six months ended June 30, 2025, respectively. A summary of selected financial results for AEC is as follows:

Previous wording

For the three months ended March 31, 2025, Net revenues decreased 14.0 million or 11.0% as compared to the first quarter of 2024. This decrease is primarily driven by demand reductions on certain commercial and space programs, which was partially offset by higher revenues on CH-53K and other programs. Changes in currency translation rates had the effect of Net revenues $0.5 million.

Current wording

For the three months ended June 30, 2025, Net revenues decreased $7.9 million or 5.7% as compared to the three months ended June 30, 2024. This decrease is primarily driven by reductions on certain commercial and space programs, which was partially offset by higher revenues on CH-53K and other programs. Changes in currency translation rates had the effect of decreasing Net revenues $0.9 million.

Previous wording

AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 32 percent and 36 percent of segment revenue for the first three months of 2025 and 2024, respectively.

Current wording

AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 34 percent and 40 percent of segment revenue for the first six months of 2025 and 2024, respectively.

Previous wording

For the three months ended March 31, 2025, Gross profit decreased $7.4 million as compared to the same period last year, and as a percentage of revenues decreased from 18.8% in 2024 to 14.5% in 2025. This decrease in Gross profit was driven primarily by changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025 due to increased cost assumptions. For the three months ended March 31, 2024, adjustments in the estimated profitability of long-term contracts decreased Gross profit $0.9 million.

Current wording

For the three months ended June 30, 2025, gross profit decreased $9.8 million as compared to the three months ended June 30, 2024, and as a percentage of revenues decreased from 17.0% in 2024 to 10.5% in 2025. This decrease in gross profit was driven primarily by changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025 due to increased cost assumptions. For the three months ended June 30, 2024, adjustments in the estimated profitability of long-term contracts decreased gross profit $5.0 million.

Previous wording

For the three months ended March 31, 2025, Operating income decreased $3.5 million, principally due to reduced Gross profit as noted above. This was offset by a decrease in SG&A expenses of $1.4 million, primarily driven by decreased incentive compensation and personnel-related costs. Technical and research expenses decreased $1.5 million compared to the first quarter of 2024, attributable to decreases in research and material costs, combined with allocations to Corporate. Restructuring expenses decreased $1.0 million compared to the same period in the prior year.

Current wording

For the three months ended June 30, 2025, Operating income decreased $8.1 million, principally due to reduced gross profit as noted above. This was offset by a decrease in SG&A expenses of $1.0 million, primarily driven by decreased incentive compensation and personnel-related costs. Technical and research expenses decreased $0.2 million compared to the three months ended June 30, 2024, attributable to decreases in research and material costs, combined with allocations to Corporate. Further, restructuring expenses decreased $0.4 million compared to the three months ended June 30, 2024.

Previous wording

Net cash provided by operating activities during the first three months of 2025 was $2.1 million, compared to $9.6 million in the same period last year. The decrease was primarily driven by a reduction in the gross profit of both segments, resulting in a lower net income compared to the first three months of 2024. This was offset by a slightly lower change in working capital, along with favorable changes in other noncurrent liabilities and deferred taxes.

Current wording

Net cash provided by operating activities during the six months ended June 30, 2025 was $34.8 million, compared to $93.0 million in the six months ended June 30, 2024. The decrease was primarily driven by a reduction in the gross profit of both segments, resulting in a lower net income compared to the first six months of 2024 and an increase in working capital.

Previous wording

Net cash used in investing activities included capital expenditures totaling $15.6 million and $26.9 million for the first three months of 2025 and 2024, respectively, with investments focused on aerospace program support, continued maintenance capex and capital designed to improve operating efficiencies across the Company.

Current wording

Net cash used in investing activities included capital expenditures totaling $30.5 million and $46.6 million for the first six months ended June 30, 2025 and June 30, 2024, respectively, with investments focused on aerospace program support, continued maintenance capex and capital designed to improve operating efficiencies across the Company.

Previous wording

Under our $800 million unsecured committed Amended Credit Agreement, $416.4 million of borrowings were outstanding as of March 31, 2025. In addition, we have borrowings outstanding at our Heimbach subsidiary that are considered immaterial in the aggregate.

Current wording

Under our $800 million unsecured committed Amended Credit Agreement, $444.7 million of borrowings were outstanding as of June 30, 2025.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $119.4 million and available borrowings under our Amended Credit Agreement of $383.6 million, for a total liquidity of approximately $503.0 million. We believe cash flows from operations and the availability of funds under our Amended Credit Agreement will be adequate to fund our operations and business needs over the next twelve months. For more information on credit agreements, see Note 14. Financial Instruments in the Notes to Consolidated Financial Statements.

Current wording

As of June 30, 2025, we had cash and cash equivalents of $106.7 million and borrowing capacity under our Amended Credit Agreement of $355.3 million, for a total liquidity of approximately $462.0 million. We believe cash flows from operations and the availability of funds under our Amended Credit Agreement will be adequate to fund our operations and business needs over the next twelve months. For more information on credit agreements, see Note 15. Financial Instruments in the Notes to Consolidated Financial Statements.

Previous wording

As of March 31, 2025, $88.4 million of our total cash and cash equivalents were held by non-U.S. subsidiaries. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were in excess of $140.0 million, as of March 31, 2025 and are intended to remain indefinitely invested in foreign operations. Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there can be no assurance that we will be able to cost effectively repatriate funds in the future. Repatriating such cash from certain jurisdictions, which is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes.

Current wording

As of June 30, 2025, $85.3 million of our total cash and cash equivalents were held by non-U.S. subsidiaries. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were in excess of $140.0 million, as of June 30, 2025 and are intended to remain indefinitely invested in foreign operations. Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there can be no assurance that we will be able to cost effectively repatriate funds in the future. Repatriating such cash from certain jurisdictions, which is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes.

Previous wording

We have also returned cash to shareholders through dividends and share repurchases. During the first three months of 2025, we paid $8.4 million in dividends and repurchased 925,443 shares for a total cost of $69.2 million.

Current wording

We have also returned cash to shareholders through dividends and share repurchases. During the six months ended June 30, 2025, we paid $16.7 million in dividends and repurchased 1,670,858 shares for a total cost including excise taxes and fees of $120.4 million.

Previous wording

During the first quarter of 2025, the Company decided to consolidate headquarters in Portsmouth, NH. This change impacts approximately 100 employees, will take place over the next year and a half, and will cost an estimated $7.0 million over that period related to retention, relocation, severance, and professional costs.

Current wording

Earlier this year, the Company announced that it will be consolidating its corporate headquarters in Portsmouth, NH. This change impacts approximately 100 employees, will take place over the next year and a half, and will cost an estimated $7.0 million over that period related to retention, relocation, severance, and professional costs.

Previous wording

The Company is party to certain off-balance sheet arrangements, including certain guarantees. The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $10 million. There were no material changes in the Company’s off-balance sheet arrangements during the first quarter of 2025.

Current wording

The Company is party to certain off-balance sheet arrangements, including certain guarantees. The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $10 million. There were no material changes in the Company’s off-balance sheet arrangements during the second quarter of 2025.