Albany International Reports Third-Quarter 2022 Results
Albany International Corp. (NYSE:AIN) today reported operating results for its third quarter of 2022, which ended September 30, 2022.
"We are pleased to report another strong quarter,” said Albany International President and Chief Executive Officer, Bill Higgins. “Our revenue of $261 million was up year-over-year. Engineered Composites grew third quarter sales nearly 37% compared to the third quarter of 2021 driven by higher LEAP production and the CH53-K helicopter program. The Machine Clothing segment delivered another excellent performance in the quarter. On the bottom line, both segments achieved strong operating income, working hard to overcome inflation and supply chain challenges.
"Third quarter GAAP earnings per share was $0.34 inclusive of a pension settlement charge of $1.03 partially offset by currency gains. Adjusted earnings per share was $1.15 up from $0.83 reported last year," concluded Higgins.
For the third quarter ended September 30, 2022:
Net sales were $260.6 million, up 12.1%, or 16.5% after adjusting for currency translation, when compared to the prior year, primarily due to year-over-year growth in sales related to the CH-53K and LEAP programs within the Engineered Composites segment. Gross profit of $100.5 million was 9.2% higher than the $92.0 million reported for the same period of 2021. Selling, Technical, General, and Research (STG&R) expenses were $46.8 million, compared to $47.4 million in the same period of 2021. The decrease was driven by the favorable effect of the revaluation of foreign currency in the Machine Clothing segment. Operating income was $53.6 million, compared to $44.5 million in the prior year, an increase of 20.6%. Certain pension plan liabilities were settled for a plan in the U.S., leading to charges totaling $49.1 million and reducing GAAP earnings per share by $1.20. Effective tax rate for the quarter was -41.9%, driven by the release of residual taxes as a result of the pension settlement; excluding the effect of the pension settlement and related adjustments, the effective tax rate for the quarter was 24.6% or 250 basis points lower than that for the third quarter of 2021, mainly due to favorable discrete tax adjustments in the third quarter of 2022. Net income attributable to the Company was $10.7 million ($0.34 per share), compared to $30.9 million ($0.95 per share) in the third quarter of 2021. Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.15 per share in the third quarter of 2022, compared to $0.83 in the same period of last year. Adjusted EBITDA (a non-GAAP measure) was $68.1 million, compared to $60.2 million in the third quarter of 2021, an increase of 13%.Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures.
Outlook for Full-Year 2022
The Company has updated its guidance for the full year 2022 as follows:
Total company revenue of between $990 million and $1.015 billion; Effective income tax rate, including tax adjustments, of 25% to 27%; Total company depreciation and amortization of between $71 and $72 million; Capital expenditures in the range of $75 to $85 million; GAAP earnings per share of between $2.84 and $3.14; Adjusted earnings per share of between $3.50 and $3.80; Total company Adjusted EBITDA of $240 to $255 million; Machine Clothing revenue of $595 to $610 million; Machine Clothing Adjusted EBITDA of between $215 and $225 million; Albany Engineered Composites revenue of between $395 and $405 million; and Albany Engineered Composites Adjusted EBITDA of between $75 and $80 million.ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Net sales
$
260,563
$
232,442
$
766,101
$
689,322
Cost of goods sold
160,070
140,400
473,411
407,006
Gross profit
100,493
92,042
292,690
282,316
Selling, general, and administrative expenses
36,873
37,696
119,325
116,899
Technical and research expenses
9,934
9,673
29,984
28,916
Restructuring expenses, net
42
187
268
230
Operating income
53,644
44,486
143,113
136,271
Interest expense, net
3,794
3,734
11,336
11,521
Pension settlement expense
49,128
—
49,128
—
Aviation Manufacturing Jobs Protection (AMJP) grant
—
(5,832
)
—
(5,832
)
Other (income)/expense, net
(6,918
)
2,753
(17,891
)
4,215
Income before income taxes
7,640
43,831
100,540
126,367
Income tax expense/(benefit)
(3,183
)
12,889
22,273
36,375
Net income
10,823
30,942
78,267
89,992
Net income attributable to the noncontrolling interest
129
80
635
150
Net income attributable to the Company
$
10,694
$
30,862
$
77,632
$
89,842
Earnings per share attributable to Company shareholders - Basic
$
0.34
$
0.95
$
2.47
$
2.78
Earnings per share attributable to Company shareholders - Diluted
$
0.34
$
0.95
$
2.46
$
2.77
Shares of the Company used in computing earnings per share:
Basic
31,111
32,381
31,416
32,369
Diluted
31,223
32,434
31,518
32,424
Dividends declared per share, Class A and Class B
$
0.21
$
0.20
$
0.63
$
0.60
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
September 30, 2022
December 31, 2021
ASSETS
Cash and cash equivalents
$
276,482
$
302,036
Accounts receivable, net
198,847
191,985
Contract assets, net
148,729
112,546
Inventories
133,840
117,882
Income taxes prepaid and receivable
4,055
1,958
Prepaid expenses and other current assets
46,761
32,394
Total current assets
$
808,714
$
758,801
Property, plant and equipment, net
411,139
436,417
Intangibles, net
34,306
39,081
Goodwill
172,820
182,124
Deferred income taxes
17,954
26,376
Noncurrent receivables, net
28,770
31,849
Other assets
98,146
81,416
Total assets
$
1,571,849
$
1,556,064
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
$
65,378
$
68,954
Accrued liabilities
106,831
124,325
Current maturities of long-term debt
—
—
Income taxes payable
17,328
14,887
Total current liabilities
189,537
208,166
Long-term debt
447,000
350,000
Other noncurrent liabilities
103,843
107,794
Deferred taxes and other liabilities
11,281
12,499
Total liabilities
751,661
678,459
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; 40,785,434 issued in 2022 and 40,760,577 in 2021
41
41
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; none issued and outstanding in 2022 and 104 in 2021
—
—
Additional paid in capital
440,295
436,996
Retained earnings
920,966
863,057
Accumulated items of other comprehensive income:
Translation adjustments
(185,721
)
(105,880
)
Pension and postretirement liability adjustments
(12,613
)
(38,490
)
Derivative valuation adjustment
17,961
(1,614
)
Treasury stock (Class A), at cost; 9,674,542 shares in 2022 and 8,665,090 in 2021
(364,923
)
(280,143
)
Total Company shareholders' equity
816,006
873,967
Noncontrolling interest
4,182
3,638
Total equity
820,188
877,605
Total liabilities and shareholders' equity
$
1,571,849
$
1,556,064
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
OPERATING ACTIVITIES
Net income
$
10,823
$
30,942
$
78,267
$
89,992
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
15,588
15,925
46,864
48,485
Amortization
1,446
2,289
5,044
6,862
Change in deferred taxes and other liabilities
(18,178
)
1,606
(15,582
)
7,022
Impairment of property, plant, equipment, and inventory
(52
)
25
2,610
563
Non-cash interest expense
279
283
840
593
Non-cash portion of pension settlement expense
42,657
—
42,657
—
Compensation and benefits paid or payable in Class A Common Stock
835
606
3,282
2,232
Provision/(recovery) for credit losses from uncollected receivables and contract assets
(441
)
(1,075
)
885
(1,158
)
Foreign currency remeasurement (gain)/loss on intercompany loans
(5,369
)
480
(6,629
)
(551
)
Fair value adjustment on foreign currency options
(28
)
29
(409
)
169
Changes in operating assets and liabilities that provided/(used) cash:
Accounts receivable
(5,853
)
(10,927
)
(20,260
)
(14,292
)
Contract assets
(13,333
)
(3,473
)
(37,201
)
22,170
Inventories
(3,760
)
546
(24,895
)
(9,838
)
Prepaid expenses and other current assets
1,741
3,949
(2,733
)
2,444
Income taxes prepaid and receivable
(2,119
)
2,717
(2,179
)
2,408
Accounts payable
(2,395
)
(296
)
5,081
4,312
Accrued liabilities
(879
)
5,112
(12,624
)
(12,311
)
Income taxes payable
10,378
2,871
2,639
(1,085
)
Noncurrent receivables
1,112
1,245
2,976
2,832
Other noncurrent liabilities
(2,708
)
(1,319
)
(5,960
)
(5,582
)
Other, net
(150
)
1,324
4,634
3,232
Net cash provided by operating activities
29,594
52,859
67,307
148,499
INVESTING ACTIVITIES
Purchases of property, plant and equipment
(15,289
)
(8,918
)
(50,948
)
(31,754
)
Purchased software
(1,518
)
(106
)
(1,884
)
(394
)
Net cash used in investing activities
(16,807
)
(9,024
)
(52,832
)
(32,148
)
FINANCING ACTIVITIES
Proceeds from borrowings
10,000
—
145,000
8,000
Principal payments on debt
(48,000
)
—
(48,000
)
(56,009
)
Principal payments on finance lease liabilities
—
(363
)
(654
)
(1,067
)
Purchase of Treasury shares
—
—
(84,780
)
—
Taxes paid in lieu of share issuance
—
—
(770
)
(998
)
Proceeds from options exercised
10
4
17
153
Dividends paid
(6,533
)
(6,476
)
(19,932
)
(19,418
)
Net cash used in financing activities
(44,523
)
(6,835
)
(9,119
)
(69,339
)
Effect of exchange rate changes on cash and cash equivalents
(12,652
)
(4,113
)
(30,910
)
(2,111
)
(Decrease)/increase in cash and cash equivalents
(44,388
)
32,887
(25,554
)
44,901
Cash and cash equivalents at beginning of period
320,870
253,330
302,036
241,316
Cash and cash equivalents at end of period
$
276,482
$
286,217
$
276,482
$
286,217
The following table presents the reconciliation of Net sales to net sales excluding the effect of changes in currency translation rates, a non-GAAP measure:
(in thousands, except percentages)
Net sales as reported, Q3 2022
Decrease due to changes in currency translation rates
Q3 2022 sales on same basis as Q3 2021 currency translation rates
Net sales as reported, Q3 2021
% Change compared to Q3 2021, excluding currency rate effects
Machine Clothing
$
153,389
$
(6,570
)
$
159,959
$
154,171
3.8
%
Albany Engineered Composites
107,174
(3,637
)
110,811
78,271
41.6
%
Consolidated total
$
260,563
$
(10,207
)
$
270,770
$
232,442
16.5
%
(in thousands, except percentages)
Net sales as reported, YTD 2022
Decrease due to changes in currency translation rates
YTD 2022 sales on same basis as 2021 currency translation rates
Net sales as reported, YTD 2021
% Change compared to 2021, excluding currency rate effects
Machine Clothing
$
459,121
$
(14,545
)
$
473,666
$
462,298
2.5
%
Albany Engineered Composites
306,980
(5,631
)
312,611
227,024
37.7
%
Consolidated total
$
766,101
$
(20,176
)
$
786,277
$
689,322
14.1
%
The following table presents Gross profit and Gross profit margin:
(in thousands, except percentages)
Gross profit, Q3 2022
Gross profit margin, Q3 2022
Gross profit, Q3 2021
Gross profit margin, Q3 2021
Machine Clothing
$
79,232
51.7
%
$
79,437
51.5
%
Albany Engineered Composites
21,261
19.8
%
12,605
16.1
%
Consolidated total
$
100,493
38.6
%
$
92,042
39.6
%
(in thousands, except percentages)
Gross profit, YTD 2022
Gross profit margin, YTD 2022
Gross profit, YTD 2021
Gross profit margin, YTD 2021
Machine Clothing
$
237,434
51.7
%
$
240,427
52.0
%
Albany Engineered Composites
55,256
18.0
%
41,889
18.5
%
Consolidated total
$
292,690
38.2
%
$
282,316
41.0
%
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 September 30, 2022
(in thousands)
Machine Clothing
Albany Engineered
Composites
Corporate expenses
and other
Total Company
Net income/(loss) (GAAP)
$
57,247
$
9,958
$
(56,382
)
$
10,823
Interest expense, net
—
—
3,794
3,794
Income tax expense/(benefit)
—
—
(3,183
)
(3,183
)
Depreciation and amortization expense
4,913
11,303
818
17,034
EBITDA (non-GAAP)
62,160
21,261
(54,953
)
28,468
Restructuring expenses, net
42
—
—
42
Foreign currency revaluation (gains)/losses (a)
(2,931
)
122
(6,633
)
(9,442
)
Dissolution of business relationships in Russia
(214
)
—
—
(214
)
Pension settlement expense
—
—
49,128
49,128
Acquisition/integration costs
—
255
—
255
Pre-tax (income) attributable to noncontrolling interest
—
(176
)
—
(176
)
Adjusted EBITDA (non-GAAP)
$
59,057
$
21,462
$
(12,458
)
$
68,061
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales) (non-GAAP)
38.5
%
20.0
%
—
26.1
%
Three months ended September 30, 2021
(in thousands)
Machine Clothing
Albany Engineered
Composites
Corporate expenses
and other
Total Company
Net income/(loss) (GAAP)
$
55,467
$
2,917
$
(27,442
)
$
30,942
Interest expense, net
—
—
3,734
3,734
Income tax expense
—
—
12,889
12,889
Depreciation and amortization expense
5,014
12,265
935
18,214
EBITDA (non-GAAP)
60,481
15,182
(9,884
)
65,779
Restructuring expenses, net
251
(81
)
17
187
Foreign currency revaluation (gains)/losses (a)
(1,571
)
31
472
(1,068
)
AMJP grant
—
963
(5,832
)
(4,869
)
Acquisition/integration costs
—
297
—
297
Pre-tax (income) attributable to noncontrolling interest
—
(95
)
—
(95
)
Adjusted EBITDA (non-GAAP)
$
59,161
$
16,297
$
(15,227
)
$
60,231
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales) (non-GAAP)
38.4
%
20.8
%
—
25.9
%
Nine months ended September 30, 2022
(in thousands)
Machine Clothing
Albany Engineered
Composites
Corporate expenses
and other
Total Company
Net income/(loss) (GAAP)
$
161,752
$
20,688
$
(104,173
)
$
78,267
Interest expense, net
—
—
11,336
11,336
Income tax expense
—
—
22,273
22,273
Depreciation and amortization expense
14,716
34,792
2,400
51,908
EBITDA (non-GAAP)
176,468
55,480
(68,164
)
163,784
Restructuring expenses, net
255
—
13
268
Foreign currency revaluation (gains)/losses (a)
(3,690
)
755
(17,644
)
(20,579
)
Dissolution of business relationships in Russia
1,573
—
781
2,354
Pension settlement expense
—
—
49,128
49,128
Acquisition/integration costs
—
806
—
806
Pre-tax (income) attributable to noncontrolling interest
—
(633
)
—
(633
)
Adjusted EBITDA (non-GAAP)
$
174,606
$
56,408
$
(35,886
)
$
195,128
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)
38.0
%
18.4
%
—
25.5
%
Nine months ended September 30, 2021
(in thousands)
Machine Clothing
Albany Engineered
Composites
Corporate expenses
and other
Total Company
Net income/(loss) (GAAP)
$
161,731
$
13,019
$
(84,758
)
$
89,992
Interest expense, net
—
—
11,521
11,521
Income tax expense
—
—
36,375
36,375
Depreciation and amortization expense
15,272
37,326
2,749
55,347
EBITDA (non-GAAP)
177,003
50,345
(34,113
)
193,235
Restructuring expenses, net
193
(40
)
77
230
Foreign currency revaluation (gains)/losses (a)
(156
)
363
813
1,020
AMJP grant
—
963
(5,832
)
(4,869
)
Acquisition/integration costs
—
911
—
911
Pre-tax (income) attributable to noncontrolling interest
—
(206
)
—
(206
)
Adjusted EBITDA (non-GAAP)
$
177,040
$
52,336
$
(39,055
)
$
190,321
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)
38.3
%
23.1
%
—
27.6
%
Per share impact of the adjustments to earnings per share are as follows:
Three months ended September 30, 2022
(in thousands, except per share amounts)
Pre tax
Amounts
Tax
Effect
After tax
Effect
Per share
Effect
Restructuring expenses, net
$
42
$
6
$
36
$
0.00
Foreign currency revaluation (gains)/losses (a)
(9,442
)
(2,694
)
(6,748
)
(0.22
)
Dissolution of business relationships in Russia
(214
)
(18
)
(196
)
(0.01
)
Pension settlement expense
49,128
11,947
37,181
1.20
Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b)
—
5,217
(5,217
)
(0.17
)
Acquisition/integration costs
255
77
178
0.01
Three months ended September 30, 2021
(in thousands, except per share amounts)
Pre tax
Amounts
Tax
Effect
After tax
Effect
Per share
Effect
Restructuring expenses, net
$
187
$
55
$
132
$
0.00
Foreign currency revaluation (gains)/losses (a)
(1,068
)
(314
)
(754
)
(0.02
)
AMJP grant
(4,869
)
(1,446
)
(3,423
)
(0.11
)
Acquisition/integration costs
297
89
208
0.01
Nine months ended September 30, 2022
(in thousands, except per share amounts)
Pre tax
Amounts
Tax
Effect
After tax
Effect
Per share
Effect
Restructuring expenses, net
$
268
$
75
$
193
$
0.01
Foreign currency revaluation (gains)/losses (a)
(20,579
)
(5,829
)
(14,750
)
(0.47
)
Dissolution of business relationships in Russia
2,354
314
2,040
0.06
Pension settlement expense
49,128
11,947
37,181
1.20
Tax impact of stranded OCI benefit from TCJA for pension liability (b)
—
5,217
(5,217
)
(0.17
)
Acquisition/integration costs
806
241
565
0.03
Nine months ended September 30, 2021
(in thousands, except per share amounts)
Pre tax
Amounts
Tax
Effect
After tax
Effect
Per share
Effect
Restructuring expenses, net
$
230
$
67
$
163
$
0.00
Foreign currency revaluation (gains)/losses (a)
1,020
332
688
0.02
AMJP grant
(4,869
)
(1,446
)
(3,423
)
(0.11
)
Acquisition/integration costs
911
273
638
0.03
The following table provides a reconciliation of Earnings per share to Adjusted Earnings per share:
Three months ended September 30,
Nine months ended September 30,
Per share amounts (Basic)
2022
2021
2022
2021
Earnings per share (GAAP)
$
0.34
$
0.95
$
2.47
$
2.78
Adjustments, after tax:
Restructuring expenses, net
—
—
0.01
—
Foreign currency revaluation (gains)/losses (a)
(0.22
)
(0.02
)
(0.47
)
0.02
Dissolution of business relationships in Russia
(0.01
)
—
0.06
—
Pension settlement charge
1.20
—
1.20
—
Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b)
(0.17
)
—
(0.17
)
—
AMJP grant
—
(0.11
)
—
(0.11
)
Acquisition/ integration costs
0.01
0.01
0.03
0.03
Adjusted Earnings per share (non-GAAP)
$
1.15
$
0.83
$
3.13
$
2.72
(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) Our Adjusted EPS excluded the benefit from the reclassification of stranded income tax effects caused by the TCJA associated with the US pension plan liability that was eliminated in September 2022, a one-time event that would not recur in the future. Such stranded income tax effect represented a one-time benefit that distorted the effective tax rate for the quarter and year-to-date ended September 30, 2022 , and would not be indicative of ongoing or expected future income tax rate at the Company. Management believes excluding pension settlement expense and its income tax impact, including the stranded income tax effects, from its Adjusted EBITDA and Adjusted EPS for the quarter and year-to-date ended September 30, 2022 would provide investors a transparent view and enhanced ability to better assess the Company’s ongoing operational and financial performance.
The calculations of net debt are as follows:
(in thousands)
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
Current maturities of long-term debt
$
—
$
—
$
—
$
—
Long-term debt
447,000
485,000
427,000
350,000
Total debt
447,000
485,000
427,000
350,000
Cash and cash equivalents
276,482
320,870
307,415
302,036
Net debt (non-GAAP)
$
170,518
$
164,130
$
119,585
$
47,964
The calculation of net leverage ratio as of September 30, 2022 is as follows:
Total Company
Twelve months ended
Nine months ended
Trailing twelve months ended
(in thousands)
December 31, 2021
September 30, 2021
September 30, 2022
September 30, 2022 (non-GAAP) (c)
Net income/(loss) (GAAP)
$
118,768
$
89,992
$
78,267
$
107,043
Interest expense, net
14,891
11,521
11,336
14,706
Income tax expense
47,163
36,375
22,273
33,061
Depreciation and amortization expense
74,255
55,347
51,908
70,816
EBITDA (non-GAAP)
255,077
193,235
163,784
225,626
Restructuring expenses, net
1,331
230
268
1,369
Foreign currency revaluation (gains)/losses (a)
(1,442
)
1,020
(20,579
)
(23,041
)
Aviation Manufacturing Job Protection (AMJP) grant
(4,731
)
(4,869
)
—
138
Dissolution of business relationships in Russia
—
—
2,354
2,354
Pension settlement expense
—
—
49,128
49,128
Acquisition/integration costs
1,166
911
806
1,061
Pre-tax (income) attributable to noncontrolling interest
(510
)
(206
)
(633
)
(937
)
Adjusted EBITDA (non-GAAP)
$
250,891
$
190,321
$
195,128
$
255,698
(in thousands, except for net leverage ratio)
September 30, 2022
Net debt (non-GAAP)
$
170,518
Trailing twelve months Adjusted EBITDA (non-GAAP)
255,698
Net leverage ratio (non-GAAP)
0.67
(c) Calculated as amounts incurred during the twelve months ended December 31, 2021, less those incurred during the nine months ended September 30, 2021, plus those incurred during the nine months ended September 30, 2022.
The tables below provide a reconciliation of forecasted full-year 2022 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures:
Forecast of Full Year 2022 Adjusted EBITDA
Machine Clothing
AEC
(in millions)
Low
High
Low
High
Net income attributable to the Company (GAAP) (d)
$
198
$
207
$
27
$
31
Income attributable to the noncontrolling interest
—
—
1
1
Interest expense, net
—
—
—
—
Income tax expense
—
—
—
—
Depreciation and amortization
19
20
46
47
EBITDA (non-GAAP)
217
227
74
79
Restructuring expenses, net (e)
—
—
—
—
Foreign currency revaluation (gains)/losses (e)
(4
)
(4
)
1
1
Acquisition/integration costs (e)
—
—
1
1
Dissolution of business relationships in Russia
2
2
—
—
Pre-tax (income)/loss attributable to non-controlling interest
—
—
(1
)
(1
)
Adjusted EBITDA (non-GAAP)
$
215
$
225
$
75
$
80
(d) Interest, Other income/expense and Income taxes are not allocated to the business segments
Forecast of Full Year 2022 Adjusted EBITDA
Total Company
(in millions)
Low
High
Net income attributable to the Company (GAAP)
$
90
$
99
Income attributable to the noncontrolling interest
1
1
Interest expense, net
15
16
Income tax expense
33
37
Depreciation and amortization
71
72
EBITDA (non-GAAP)
210
225
Restructuring expenses, net (e)
—
—
Foreign currency revaluation (gains)/losses (e)
(21
)
(21
)
Acquisition/integration costs (e)
1
1
Pension settlement expense
49
49
Dissolution of business relationships in Russia
2
2
Pre-tax (income)/loss attributable to non-controlling interest
(1
)
(1
)
Adjusted EBITDA (non-GAAP)
$
240
$
255
Total Company
Forecast of Full Year 2022 Earnings per share (basic) (f)
Low
High
Net income attributable to the Company (GAAP)
$
2.84
$
3.14
Restructuring expenses, net (e)
0.01
0.01
Foreign currency revaluation (gains)/losses (e)
(0.47
)
(0.47
)
Dissolution of business relationships in Russia
0.06
0.06
Pension settlement expense
1.20
1.20
Tax impact of stranded OCI benefit from TCJA for pension liability
(0.17
)
(0.17
)
Acquisition/integration costs (e)
0.03
0.03
Adjusted Earnings per share (non-GAAP)
$
3.50
$
3.80
(e) Due to the uncertainty of these items, we are unable to forecast these items for 2022
(f) Calculations based on weighted average shares outstanding estimate of approximately 31.5 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 fabrics and process 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 approximately 4,100 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 sales and percent change in net sales, 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 sales and change in Net sales, after currency effects are excluded, provides management and investors insight into underlying sales trends. Net sales, or 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. 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 sales.
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 2022 and in future years; expectations in 2022 and in future periods of sales, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net sales), 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 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.
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