Third-quarter Financial Highlights
- Net sales were $222.1 million, an
increase of 16.1% compared to 2016 (see Table 1).
- Net income attributable to the Company
was $15.3 million ($0.47 per share), compared to $13.1 million
($0.41 per share) in Q3 2016.
- Net income attributable to the Company,
excluding adjustments (a non-GAAP measure), was $0.57 per share,
compared to $0.41 per share in Q3 2016 (see Table 17).
- Adjusted EBITDA (a non-GAAP measure)
was $51.9 million, compared to $42.7 million in Q3 2016 (see Tables
8 and 9). Q3 2017 Adjusted EBITDA includes a $2.0 million insurance
recovery gain related to the theft in Japan that was reported in Q4
2016.
Albany International Corp. (NYSE:AIN) reported that Q3 2017 Net
income attributable to the Company was $15.3 million, including a
net benefit of $3.1 million for income tax adjustments. Q3 2016 Net
income attributable to the Company was $13.1 million, including
favorable income tax adjustments of $0.4 million.
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Q3 2017 Income before income taxes was $19.0 million. During Q3
2017, the Company decided to discontinue the Bear Claw® line of
hydraulic fracking components used in the oil and gas industry,
which was part of the Harris aerostructures business acquired by
AEC in 2016. This decision resulted in a non-cash restructuring
charge of $4.5 million for the write-off of intangible assets and
equipment, and a $3.2 million charge to Cost of goods sold for the
write-off of inventory. Q3 2017 results also include $1.0 million
of other restructuring charges, $1.5 million of losses from foreign
currency revaluation, and an insurance recovery gain of $2.0
million related to the theft in Japan that was reported in Q4 2016.
Q3 2016 income before income taxes was $20.9 million, including
restructuring charges of $0.3 million and gains of $0.2 million
from foreign currency revaluation.
Table 1 summarizes net sales and the effect of changes in
currency translation rates:
Table 1
Net Sales
Three Months ended
September 30,
Percent
Impact ofChanges
inCurrency
Translation
Percent ChangeexcludingCurrency Rate
(in thousands, excluding percentages)
2017
2016
Change
Rates
Effect
Machine Clothing (MC) $ 150,694 $ 143,248
5.2 % $ 1,771 4.0 % Albany Engineered
Composites (AEC) 71,447 48,024
48.8 486 47.8 Total
$ 222,141 $ 191,272 16.1 % $
2,257 15.0 %
In comparison to Q3 2016, the increase in MC net sales was due
to strong performance in the tissue, packaging and pulp grades,
which more than offset continuing declines in the publication
grades. The increase in AEC net sales was primarily due to growth
in the LEAP, 787 fuselage frames and CH-53K programs.
Table 2 summarizes gross profit by segment:
Table 2
Three Months endedSeptember 30, 2017
Three Months endedSeptember 30, 2016
(in thousands, excluding percentages)
Gross profit
Percent of sales
Gross profit
Percent of sales
Machine Clothing $ 73,028 48.5 %
$ 68,104 47.5 % Albany Engineered Composites
6,638 9.3 4,556
9.5 Corporate Expenses
(231 ) - (240 ) - Total
$ 79,435 35.8 % $ 72,420
37.9 %
The increase in MC gross profit reflects higher sales and strong
productivity. Despite the write-off of Bear Claw® inventory, which
reduced AEC gross profit by $3.2 million and gross profit
percentage by 4.4%, AEC gross profit increased, reflecting higher
sales and improved productivity. Total company gross profit
percentage was reduced 1.4% by the Bear Claw® inventory
write-off.
Table 3 summarizes selling, technical, general and research
(STG&R) expenses by segment:
Table 3
Three Months endedSeptember 30, 2017
Three Months endedSeptember 30, 2016
(in thousands, excluding percentages)
STG&R Expense
Percent of sales
STG&R Expense
Percent of sales
Machine Clothing $30,258 20.1 % $28,276
19.7 % Albany Engineered Composites 10,532
14.7 8,445 17.6 Corporate
Expenses 10,839 - 10,553
- Total $51,629 23.2 % $47,274
24.7 %
Losses from the revaluation of nonfunctional-currency assets and
liabilities increased third-quarter STG&R expenses by $1.3
million in 2017 and $0.1 million in 2016. The increase in
third-quarter AEC STG&R expenses is due primarily to higher
R&D spending (see table 4) and higher amortization expense
related to acquisition accounting adjustments made in Q4 2016.
Table 4 summarizes third-quarter expenses associated with
internally funded research and development by segment:
Table 4
Research and development expenses by
segmentThree Months endedSeptember 30,
(in thousands)
2017
2016
Machine Clothing $4,229 $3,937 Albany
Engineered Composites 3,828 2,656 Total
$8,057 $6,593
Table 5 summarizes third-quarter operating income by
segment:
Table 5
Operating Income/(loss)Three Months
endedSeptember 30,
(in thousands)
2017
2016
Machine Clothing $42,674 $40,039
Albany Engineered Composites (9,301 ) (4,529 )
Corporate expenses (11,070 ) (10,690 ) Total
$22,303 $24,820
Table 6 presents the effect on operating income from
restructuring, currency revaluation, and the Bear Claw® inventory
write-off:
Table 6
Expenses in Q3 2017resulting from
Expenses/(gain) in Q3 2016resulting
from
(in thousands)
Restructuring
Revaluation
Bear Claw®InventoryWrite-off
Restructuring
Revaluation
Machine Clothing $96 $1,114 $-
($212
)
$86 Albany Engineered Composites 5,407
137 3,155 640 - Corporate expenses
- 5 - (102 ) 4 Total
$5,503 $1,256 $3,155 $326
$90
AEC restructuring charges in Q3 2017 consisted primarily of
non-cash charges (write-off of intangibles and equipment)
associated with the decision to exit the Bear Claw® product line.
In October 2017, the Company announced that its MC entity in France
had initiated discussions with the local works council regarding a
potential restructuring. Due to the ongoing nature of those
discussions, the Company has not recorded a restructuring charge
related to this proposal.
Q3 2017 Other income/expense, net, was income of $1.2 million,
including losses related to the revaluation of
nonfunctional-currency balances of $0.3 million, and an insurance
recovery gain of $2.0 million related to the theft in Japan that
was reported in Q4 2016. Q3 2016 Other income/expense, net, was
expense of $0.2 million, including income related to the
revaluation of nonfunctional-currency balances of $0.3 million.
Table 7 summarizes currency revaluation effects on certain
financial metrics:
Table 7
Income/(loss) attributable to currency
revaluationThree Months ended September 30,
(in thousands)
2017
2016
Operating income $(1,256 )
$(90
) Other income/(expense), net (261 ) 312
Total $(1,517 ) $222
The Company’s income tax rate based on income from continuing
operations was 36.4% for Q3 2017, compared to 37.5% for Q3 2016.
Discrete tax items and the effect of a change in the estimated
income tax rate decreased income tax expense by $3.1 million in Q3
2017, principally due to a reduction in net deferred tax asset
valuation allowances in certain countries. Discrete tax items and
the effect of a change in the estimated income tax rate decreased
income tax expense by $0.4 million in Q3 2016.
Tables 8 and 9 provide a reconciliation of operating income and
net income to EBITDA and Adjusted EBITDA:
Table 8
Three Months ended September 30,
2017(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $
42,674 $ (9,301 )
$ (11,070 ) $ 22,303
Interest, taxes, other income/expense -
- (7,083 ) (7,083
)
Net income (GAAP) 42,674
(9,301 ) (18,153
) 15,220 Interest expense, net
- - 4,429
4,429 Income tax expense
- - 3,809
3,809 Depreciation and amortization
8,380 8,591 1,159
18,130
EBITDA (non-GAAP)
51,054 (710 )
(8,756 ) 41,588
Restructuring expenses, net 96
5,407 - 5,503
Foreign currency revaluation losses 1,114
137 266
1,517 Write-off of inventory in a discontinued product line
- 3,155 -
3,155 Pretax loss attributable to
non-controlling interest in ASC -
136 - 136
Adjusted EBITDA (non-GAAP) $
52,264 $ 8,125 $
(8,490 ) $ 51,899
Table 9
Three Months ended September 30,
2016(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $
40,039 $ (4,529 )
$ (10,690 ) $ 24,820
Interest, taxes, other income/expense -
- (11,411 )
(11,411 )
Net income (GAAP)
40,039 (4,529 )
(22,101 ) 13,409
Interest expense, net - -
3,681 3,681 Income
tax expense - -
7,488 7,488 Depreciation
and amortization 9,032
8,027 1,386 18,445
EBITDA (non-GAAP) 49,071
3,498 (9,546
) 43,023 Restructuring expenses,
net (212 ) 640
(102 ) 326 Foreign currency revaluation
losses/(gains) 86 -
(308 ) (222 ) Pretax (income)
attributable to non-controlling interest in ASC
- (428 ) -
(428 )
Adjusted EBITDA (non-GAAP)
$ 48,945 $ 3,710
$ (9,956 ) $
42,699
Payments for capital expenditures were $15.5 million in Q3 2017,
compared to $22.5 million in Q3 2016. Depreciation and amortization
was $18.1 million in Q3 2017, compared to $18.4 million in Q3
2016.
CFO Comments
CFO and Treasurer John Cozzolino commented, “Cash flow in the
third quarter improved compared to the first half of the year. The
improvement was primarily the result of strong operating
performance and lower capital expenditures. Cash balances increased
about $15 million to a total of $153 million, while total debt
increased about $10 million to $506 million as of the end of the
quarter. The combined effect of those two changes resulted in a $5
million decrease to net debt (total debt less cash, see Table 19)
to a balance of $352 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 Q3 2017, unchanged from Q2 and
well below our limit of 3.50.
”Payments for capital expenditures in Q3 were about $15 million,
lower than the previous two quarters due to timing of required cash
payments. We expect total company capital expenditures in Q4 and
through 2018 to be in the range of $20 - $25 million per quarter,
as several key AEC programs continue to ramp.
“The Company’s income tax rate based on income from continuing
operations was about 36% in Q3 2017, compared to 35% for the
full-year 2016. The Company expects the full-year rate for 2017 to
stay at approximately 36%. Cash paid for income taxes was about $3
million in Q3, bringing the year-to-date total to $22 million. For
the full year, we estimate cash taxes to range from $25 million to
$28 million.”
CEO Comments
CEO Joseph Morone said, “Q3 2017 was an especially strong
quarter for Albany International. Aggregate sales, Net income and
Adjusted EBITDA grew sharply; MC’s performance was outstanding; and
AEC continued its rapid growth, took another incremental step
forward in profitability, and made good progress on its multiple
ramp-ups and new business development. Both businesses are now on
pace to outperform our previously upgraded full-year targets.
“MC sales grew in comparison to both Q3 2016 and Q2 2017, due to
a combination of strong performance and good economic conditions,
especially in the Americas. The market trends of recent quarters
continued. Sales in the publication grades again declined, though
only by about 3% compared to Q3 2016, while sales in packaging,
tissue and pulp grades grew. Although pricing pressure remained
intense, Albany’s pricing was once again stable, except in the
publication grades where pricing pressure is greatest. New product
performance was outstanding across virtually all product lines, and
development of the new technology platform continued to advance
impressively. Gross margins remained strong, due to good
productivity gains and lower material costs.
“Because of end-of-year seasonal effects and the regression we
typically experience after especially strong quarters, Q4 will
likely be the weakest quarter of the year. But on a year-over-year
basis, because of good backlogs and healthy economic conditions, we
expect Q4 2017 to be comparable to Q4 2016. Given the strong
year-to-date performance in MC, this means that we now expect
full-year Adjusted EBITDA to be at least at the high-end of our
normal $180 million to $195 million range.
“In AEC, compared to Q3 2016, sales increased by nearly 50%,
driven by growth in the LEAP, 787 fuselage frames, and CH-53K
programs. Every AEC plant is now facing the steepest part of their
ramp-ups. Each made good progress on quality and yield
improvements, and in hiring, training, and installation and
qualification of new equipment. It is worth noting in this regard
that we are now constructing a second plant in Queretaro, Mexico.
The first plant, which is dedicated to LEAP fan blades and is a
satellite of the Rochester, New Hampshire LEAP plant, is on
schedule to begin production in Q4. The second plant, which we need
to handle growing demand for other engine components, will be a
satellite of our Boerne, Texas operation and is scheduled to begin
production in the second half of next year.
“As expected, the simultaneously high rates of hiring, training
and equipment installation across our plants held back productivity
in Q3, and will continue to do so for several more quarters.
Nonetheless, AEC continues to make steady, incremental progress
toward its long-term profitability objective of 18% to 20% Adjusted
EBITDA as a percent of sales by 2020. Because of the
discontinuation of the non-aerospace Bear Claw® product line,
operating income declined compared to Q3 2016. However, Adjusted
EBITDA as a percent of sales grew to 11%, compared to 8% in Q3
2016.
“R&D spending grew sharply in the quarter, in support of
rapidly accelerating new business development activity. AEC is
actively exploring opportunities for near-term growth with existing
customers, both on programs already under contract and on programs
that would be new for AEC. Good progress was also made on
longer-term growth prospects, on both commercial and defense
platforms. Given the encouraging progress, we expect to update our
projection of AEC’s 2020 revenue potential on our Q4 earnings
call.
“As for the near-term outlook for AEC, we expect continued sharp
sales growth in Q4, and despite the heavy ramp-up activity, stable
or incrementally improved profitability. Last quarter, we revised
upward our revenue outlook for the year to the high end of our
previously stated outlook of 25% to 35% full-year revenue growth.
We now expect full-year revenue growth to be between 35% and
40%.
“In sum, this was an outstanding quarter for Albany, with good
performance in both businesses, and a stronger full-year outlook
for each business than the already strong, upgraded estimates we
provided on our last earnings call.”
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, inventory write-offs associated
with discontinued businesses, 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, inventory write-offs associated with discontinued
businesses 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 in excess of previously recorded losses;
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; inventory write-offs
associated with discontinued businesses; 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
Net Sales
Nine Months ended
September 30,
Percent
Impact ofChangesin Currency
PercentChangeexcludingCurrency
(in thousands, excluding percentages)
2017
2016
Change
Translation Rates
Rate Effect
Machine Clothing (MC) $440,093 $437,445
0.6 % $(1,311 ) 0.9 % Albany Engineered Composites
(AEC) 196,896 129,348 52.2
(263 ) 52.4 Total $636,989
$566,793 12.4 % $(1,574 ) 12.7 %
Table 11
Nine Months ended September 30,
2017(in thousands)
MachineClothing
AlbanyEngineeredComposites*
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $
119,352 $ (32,242 )
$ (33,523 ) $ 53,587
Interest, taxes, other income/expense -
- (26,160 )
(26,160 )
Net income (GAAP)
119,352 (32,242 )
(59,683 ) 27,427 Interest
expense, net - -
13,042 13,042 Income tax expense
- - 12,138
12,138 Depreciation and amortization
25,098 24,613
3,545 53,256
EBITDA
(non-GAAP) 144,450
(7,629 ) (30,958 )
105,863 Restructuring expenses, net
1,012 9,208 -
10,220 Foreign currency revaluation
losses 4,427 171
2,318 6,916 Write-off of
inventory in a discontinued product line -
3,155 -
3,155 Pretax (income) attributable to non-controlling
interest in ASC - (178 )
- (178 )
Adjusted EBITDA
(non-GAAP) $ 149,889
$ 4,727 $ (28,640
) $ 125,976
* Includes charge of $15.8 million related
to revisions in the estimated profitability of two long-term
contracts.
Table 12
Nine Months ended September 30,
2016(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $
112,583 $ (14,083 )
$ (33,554 ) $ 64,946
Interest, taxes, other income/expense -
- (28,120 )
(28,120 )
Net income (GAAP)
112,583 (14,083 )
(61,674 ) 36,826 Interest
expense, net - -
9,610 9,610 Income tax expense
- - 20,613
20,613 Depreciation and amortization
27,845 17,778
5,601 51,224
EBITDA
(non-GAAP) 140,428
3,695 (25,850 )
118,273 Restructuring expenses, net
5,921 1,787 (55 )
7,653 Foreign currency revaluation
losses/(gains) 1,646 5
(2,355 ) (704 ) Acquisition expenses
- 5,367 -
5,367 Pretax loss attributable to
non-controlling interest in ASC -
36 - 36
Adjusted EBITDA (non-GAAP) $
147,995 $ 10,890 $
(28,260 ) $ 130,625
Table 13
Three Months ended September 30,
2017(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $5,503 $2,003
$3,500 $0.11 Foreign currency revaluation losses
1,517 552 965 0.03 Write-off of
inventory in a discontinued product line 3,155
1,167 1,988 0.06 Unfavorable effect of change in
income tax rate - 741 741 0.02
Net discrete income tax benefit - 3,866
3,866 0.12
Table 14
Three Months ended September 30,
2016(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 326 $ 122
$ 204 $ 0.01 Foreign currency revaluation gains
222 83 139
0.00 Favorable effect of change in income tax rate
- 425 425 0.01 Net
discrete income tax charge - 74
74 0.00
Table 15
Nine Months ended September 30,
2017(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 10,220 $ 3,721
$ 6,499 $ 0.20 Foreign currency revaluation losses
6,916 2,516 4,400
0.14 Write-off of inventory in a discontinued product
line 3,155 1,167
1,988 0.06 Net discrete income tax benefit
- 2,281 2,281
0.07 Charge for revision to estimated profitability of AEC
contracts 15,821 5,854
9,967 0.31
Table 16
Nine Months ended September 30,
2016(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 7,653 $ 2,965
$ 4,688 $ 0.15 Foreign currency revaluation gains
704 256 448
0.01 Acquisition expenses 5,367
1,933 3,434 0.11 Net discrete
income tax benefit - 932
932 0.03
Table 17 contains the calculation of net income per share
attributable to the Company, excluding adjustments:
Table 17
Three Months endedSeptember 30,
Nine Months endedSeptember 30,
Per share amounts (Basic)
2017
2016
2017
2016
Net income/(loss) attributable to the Company, reported (GAAP)
$ 0.47 $ 0.41
$
0.85*
$ 1.15 Adjustments:
Restructuring charges
0.11 0.01
0.20 0.15 Discrete tax
adjustments and effect of change in income tax rate
(0.10 ) (0.01 ) (0.07 )
(0.03 ) Foreign currency revaluation losses/(gains)
0.03 - 0.14
(0.01 ) Write-off of inventory in a
discontinued product line 0.06
- 0.06 -
Acquisition expenses - -
- 0.11 Net income
attributable to the Company, excluding adjustments (non-GAAP)
$ 0.57 $ 0.41 $ 1.18
$ 1.37
* Includes charge of $0.31 per share for
revisions in estimated profitability of two AEC contracts
Table 18 contains the calculation AEC Adjusted EBITDA as a
percentage of sales:
Table 18
Adjusted EBITDA as a percentage of net
salesThree months ended
(in thousands, except percentages)
September 30,2017
June 30,2017
March 31,2017
September 30,2016
Adjusted EBITDA (non-GAAP)
$8,125
$(8,586)*
$5,188
$3,710
Net sales (GAAP) $71,447 $68,999
$56,450 $48,024 Adjusted EBITDA as a percentage of net sales
11.4% (12.4)% 9.2% 7.7%
* Includes charge of $15.8 million in Q2
2017 for revisions in estimated profitability of two AEC
contracts.
Table 19 contains the calculation of net debt:
Table 19
(in thousands)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Notes and loans payable
$186
$249
$274
$312 $343 Current maturities of long-term debt
51,765
51,732 51,699 51,666 1,462 Long-term
debt
453,578
444,030 428,477 432,918 490,003
Total debt
505,529
496,011 480,450 484,896
491,808 Cash and cash equivalents
153,465
138,792 143,333 181,742 196,170
Net
debt
$352,064
$357,219 $337,117
$303,154 $295,638
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, ninemonths endedSeptember
30,2017
Results for lastquarter of yearto meet low
endof normal range
Results forlast quarter ofyear to
meethigh-end ofnormal range
Normaltarget rangefor full-year
Net income (non-GAAP) $119
$24 $37 $143 - $156 Depreciation
and amortization 25 7 9 (32-34)
EBITDA (non-GAAP) $144
$31 $46 $175 - $190
Restructuring expenses 1 * * 1
Foreign currency revaluation losses 4 *
* 4
Adjusted EBITDA (non-GAAP)
$149 $31 $46 $180 -
$195
* Due to the uncertainty of these items,
management is currently unable to project restructuringexpenses 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 EndedSeptember 30, Nine Months
EndedSeptember 30, 2017 2016 2017 2016 $ 222,141 $ 191,272
Net sales $ 636,989 $ 566,793 142,706 118,852
Cost of goods sold 418,595 343,557
79,435 72,420 Gross profit 218,394 223,236 41,076 38,042 Selling,
general, and administrative expenses 123,799 120,997 10,553 9,232
Technical and research expenses 30,788 29,640 5,503
326 Restructuring expenses, net 10,220 7,653
22,303 24,820 Operating income 53,587 64,946 4,429
3,681 Interest expense, net 13,042 9,610 (1,155 ) 242
Other expense/(income), net 980 (2,103 )
19,029 20,897 Income before income taxes 39,565 57,439 3,809
7,488 Income tax expense 12,138 20,613
15,220 13,409 Net income 27,427 36,826 (49 )
340 Net income/(loss) attributable to the noncontrolling
interest 202 (111 ) $ 15,269 $ 13,069 Net
income attributable to the Company $ 27,225 $ 36,937
$ 0.47 $ 0.41 Earnings per share attributable to Company
shareholders - Basic $ 0.85 $ 1.15 $ 0.47 $ 0.41 Earnings
per share attributable to Company shareholders - Diluted $ 0.85 $
1.15 Shares of the Company used in computing earnings per
share: 32,187 32,104 Basic 32,160 32,079 32,214 32,141
Diluted 32,193 32,118 $ 0.17 $ 0.17 Dividends declared per
share, Class A and Class B $ 0.51 $ 0.51 ALBANY INTERNATIONAL
CORP.CONSOLIDATED BALANCE SHEETS(in thousands, except share
data)(unaudited)
September 30,2017
December 31,2016 ASSETS Cash and cash equivalents $ 153,465 $
181,742 Accounts receivable, net 199,938 171,193 Inventories
157,143 133,906 Income taxes prepaid and receivable 8,133 5,213
Prepaid expenses and other current assets 12,690
9,251 Total current assets 531,369 501,305
Property, plant and equipment, net 451,966 422,564 Intangibles, net
56,997 66,454 Goodwill 166,010 160,375 Income taxes receivable and
deferred 81,244 68,865 Contract receivables 29,688 14,045 Other
assets 32,343 29,825 Total assets $
1,349,617 $ 1,263,433 LIABILITIES AND
SHAREHOLDERS' EQUITY Notes and loans payable $ 186 $ 312 Accounts
payable 45,121 43,305 Accrued liabilities 103,498 95,195 Current
maturities of long-term debt 51,765 51,666 Income taxes payable
12,493 9,531 Total current liabilities
213,063 200,009 Long-term debt 453,578 432,918 Other
noncurrent liabilities 105,318 106,827 Deferred taxes and other
liabilities 13,002 12,389 Total
liabilities 784,961 752,143
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
37,392,353 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 428,088 425,953 Retained earnings 533,670 522,855
Accumulated items of other comprehensive income: Translation
adjustments (92,523 ) (133,298 ) Pension and postretirement
liability adjustments (52,648 ) (51,719 ) Derivative valuation
adjustment 917 828 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 560,668
507,523 Noncontrolling interest 3,988 3,767
Total equity 564,656 511,290
Total liabilities and shareholders' equity $ 1,349,617 $
1,263,433 ALBANY INTERNATIONAL CORP.CONSOLIDATED STATEMENTS
OF CASH FLOW(in thousands)(unaudited)
Three Months EndedSeptember 30, Nine Months endedSeptember 30, 2017
2016 2017 2016 OPERATING ACTIVITIES $ 15,220 $ 13,409 Net income $
27,427 $ 36,826 Adjustments to reconcile net income to net cash
provided by operating activities: 15,522 16,470 Depreciation 45,367
44,736 2,608 1,975 Amortization 7,889 6,488 (168 ) (275 ) Change in
other noncurrent liabilities (2,522 ) (5,010 ) (3,263 ) (1,712 )
Change in deferred taxes and other liabilities (10,620 ) (640 )
1,086 333 Provision for write-off of property, plant and equipment
1,916 1,409 211 - Non-cash interest expense 634 - 195 350
Compensation and benefits paid or payable in Class A Common Stock
1,865 1,882 4,149 - Write-off of intangible assets in a
discontinued product line 4,149 - Changes in operating assets and
liabilities that provided/(used) cash, net of impact of business
acquisition: (4,645 ) 4,794 Accounts receivable (19,781 ) (6,492 )
(3,944 ) (5,511 ) Inventories (17,210 ) (12,886 ) (599 ) (481 )
Prepaid expenses and other current assets (3,167 ) (3,302 ) - (100
) Income taxes prepaid and receivable (2,817 ) 1,737 (4,769 )
(4,443 ) Accounts payable (2,704 ) (1,544 ) 5,425 4,418 Accrued
liabilities 4,525 (3,736 ) 3,472 4,932 Income taxes payable 2,964
3,999 (8,107 ) - Contract receivables (15,643 ) - (4,495 )
(4,974 ) Other, net (557 ) (10,252 )
17,898 29,185 Net cash provided by operating
activities 21,715 53,215
INVESTING ACTIVITIES - - Purchase of business, net of cash acquired
- (187,000 ) (15,319 ) (21,924 ) Purchases of property, plant and
equipment (61,724 ) (50,029 ) (147 ) (591 ) Purchased software (538
) (1,262 ) - 4,686 Proceeds from sale
or involuntary conversion of assets - 6,422
(15,466 ) (17,829 ) Net cash used in investing
activities (62,262 ) (231,869 ) FINANCING
ACTIVITIES 13,076 13,265 Proceeds from borrowings 45,335 232,795
(3,569 ) (871 ) Principal payments on debt (24,711 ) (23,695 ) - -
Debt acquisition costs - (1,771 ) - - Swap termination payment -
(5,175 ) - - Taxes paid in lieu of share issuance (1,364 ) (1,272 )
356 64 Proceeds from options exercised 531 454 (5,470 )
(5,457 ) Dividends paid (16,396 ) (16,354 )
4,393 7,001 Net cash provided by
financing activities 3,395 184,982
7,848 1,788 Effect of exchange
rate changes on cash and cash equivalents 8,875
4,729 14,673 20,145 (Decrease)/increase in
cash and cash equivalents (28,277 )
11,057 138,792 176,025 Cash and cash
equivalents at beginning of period 181,742
185,113 $ 153,465 $ 196,170 Cash and cash
equivalents at end of period $ 153,465 $ 196,170
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171030006174/en/
Albany International Corp.InvestorsJohn Cozzolino,
518-445-2281john.cozzolino@albint.comorMediaHeather Kralik,
801-505-7001heather.kralik@albint.com
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