Second-quarter Financial Highlights
- Net sales were $215.6 million, an
increase of 6.1% compared to 2016 (see Table 1).
- As previously reported, in Q2 2017, the
Company recorded a $15.8 million ($0.31 per share – see Table 13)
charge to Cost of goods sold related to revisions in the estimated
profitability of two contracts in the Albany Engineered Composites
segment.
- Net income attributable to the Company
was $1.1 million ($0.03 per share) in Q2 2017, compared to $10.4
million ($0.32 per share) in Q2 2016. The decrease in 2017 was
principally due to the revisions in the contract estimates noted
above.
- Net income attributable to the Company,
excluding adjustments (a non-GAAP measure), was $0.16 per share in
Q2 2017, compared to $0.48 in Q2 2016 (see Table 17). The decrease
in 2017 was principally due to the revisions in the contract
estimates noted above.
- Adjusted EBITDA (a non-GAAP measure)
was $30.6 million in Q2 2017, compared to $46.6 million in Q2 2016
(see Tables 8 and 9). The decrease in 2017 was principally due to
the revisions in the contract estimates noted above.
Albany International Corp. (NYSE:AIN) reported that Q2 2017 Net
income attributable to the Company was $1.1 million, including a
net charge of $0.8 million for income tax adjustments. Q2 2016 Net
income attributable to the Company was $10.4 million, including
favorable income tax adjustments of $0.2 million. The difference
was principally due to the after tax effect of the previously
disclosed revisions in the estimated profitability of two contracts
in the Albany Engineered Composite segment (see Table 13).
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Q2 2017 Income before income taxes was $3.0 million, including
restructuring charges of $2.0 million, and losses from foreign
currency revaluation of $3.5 million. Q2 2017 Income before income
taxes also includes a $15.8 million charge to Cost of goods sold
related to the revisions in the contract estimates noted above. Q2
2016 Net income before income taxes was $16.2 million, including
restructuring charges of $6.6 million, $3.8 million of acquisition
expenses, and gains of $1.9 million from foreign currency
revaluation.
Table 1 summarizes net sales and the effect of
changes in currency translation rates:
Table 1
Impact ofChangesin CurrencyTranslation
Rates
PercentChangeexcludingCurrencyRate Effect (in thousands, excluding
Net SalesThree Months endedJune 30,
Percent percentages) 2017 2016
Change Machine Clothing
(MC) $146,572 $148,934
-1.6 % $(916 ) -1.0 % Albany
Engineered Composites (AEC) 68,999
54,256 27.2 % (307 )
27.7 % Total $215,571
$203,190 6.1 % $(1,223 )
6.7 %
In comparison to Q2 2016, the decrease in MC net sales was
principally due to the continuing decline in publication grades,
which was mostly offset by increases in other grades. The increase
in AEC net sales was primarily due to growth in LEAP.
Table 2 summarizes gross profit by segment:
Table 2
Three Months endedJune 30, 2017
Three Months endedJune 30, 2016
(in thousands, excluding percentages)
Gross profit
Percent of sales
Gross profit
Percent of sales
Machine Clothing $70,833 48.3 %
$70,902 47.6 % Albany Engineered Composites
(7,599 ) (11.0 ) 7,652 14.1
Corporate Expenses (180 ) -
(239 ) - Total Gross profit
$63,054 29.2 % $78,315 38.5 %
In comparison to Q2 2016, the decrease in gross profit and gross
profit percentage was due principally to the $15.8 million AEC
charge (7.3% of sales), as well as higher depreciation and
amortization in AEC. The decrease in overall gross profit
percentage also reflects the continued shift in sales mix toward
AEC.
Table 3 summarizes STG&R expenses and other
data by segment:
Table 3
Three Months endedJune 30, 2017
Three Months endedJune 30, 2016
(in thousands, excluding percentages)
Expense
Percent of sales
Expense
Percent of sales
Machine Clothing $31,610 21.6 % $30,063
20.2 % Albany Engineered Composites 8,998
13.0 12,353 22.8 Corporate
Expenses 11,182 - 11,394
- Total STG&R $51,790 24.0 %
$53,810 26.5 %
Losses from the revaluation of nonfunctional-currency assets and
liabilities increased selling, technical, general, and research
(STG&R) expenses by $1.6 million in Q2 2017, while gains from
revaluation of such assets and liabilities reduced STG&R
expenses by $0.3 million in Q2 2016. Q2 2016 STG&R expenses
also included $3.8 million of acquisition expenses in AEC.
Table 4 summarizes second-quarter expenses
associated with internally funded research and development by
segment:
Table 4
Research and development expenses by
segmentThree Months endedJune 30,
(in thousands)
2017
2016
Machine Clothing $4,525 $4,420 Albany
Engineered Composites 2,778 2,911 Total
$7,303 $7,331
Table 5 summarizes second-quarter operating
income by segment:
Table 5
Operating Income/(loss)Three Months
endedJune 30,
(in thousands)
2017
2016
Machine Clothing $38,418 $35,405 Albany
Engineered Composites
(17,828)*
(5,848) Corporate expenses (11,362)
(11,700) Total $9,228
$17,857
* Includes charge of $15.8 million related
to revisions in the estimated profitability of two long-term
contracts.
Table 6 presents the effect on operating income
from restructuring, currency revaluation, and acquisition
expenses:
Table 6
Expenses in Q2 2017resulting from
Expenses/(gain) in Q2 2016resulting
from
(in thousands)
Restructuring
Revaluation
Restructuring
Revaluation
AcquisitionExpenses
Machine Clothing $805 $1,650 $5,434
$(330) $ - Albany Engineered Composites
1,231 (63) 1,147 (1) 3,771 Corporate
expenses - 2 67 - - Total
$2,036 $1,589 $6,648
$(331)
$3,771
Q2 2017 Other income/expense, net, was expense of $1.9 million,
including losses related to the revaluation of
nonfunctional-currency balances of $1.9 million. Q2 2016 Other
income/expense, net, was income of $2.0 million, including income
related to the revaluation of nonfunctional-currency balances of
$1.6 million.
Table 7 summarizes currency revaluation effects on certain
financial metrics:
Table 7
Income/(loss) attributable to currency
revaluationThree Months ended June 30,
(in thousands)
2017
2016
Operating income
$(1,589)
$331 Other income/(expense), net
(1,948) 1,571 Total $(3,537)
$1,902
The Company’s income tax rate based on income from continuing
operations was 32.8% for Q2 2017, compared to 38.7% for Q2 2016.
The decrease in the rate was due to a shift in the mix of pretax
income in the jurisdictions in which we operate. Discrete tax items
and the effect of a change in the estimated income tax rate
increased income tax expense by $0.8 million in Q2 2017, and
decreased income tax expense by $0.2 million in Q2 2016.
Tables 8 and 9 provide a reconciliation of
operating income and net income to EBITDA and Adjusted EBITDA:
Table 8
Three Months ended June 30, 2017(in
thousands)
MachineClothing
AlbanyEngineeredComposites*
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $38,418
$(17,828 ) $(11,362 )
$9,228 Interest, taxes, other income/expense
- - (7,995 ) (7,995 )
Net income (GAAP) 38,418
(17,828 ) (19,357 )
1,233 Interest expense, net - -
4,285 4,285 Income tax expense
- - 1,779 1,779
Depreciation and amortization 8,431
8,218 1,184 17,833
EBITDA
(non-GAAP) 46,849 (9,610
) (12,109 ) 25,130
Restructuring expenses, net 805 1,231
- 2,036 Foreign currency revaluation
losses/(gains) 1,650 (63 ) 1,950
3,537 Pretax (income) attributable to non-controlling
interest in ASC - (144 ) -
(144 )
Adjusted EBITDA (non-GAAP)
$49,304 $(8,586 )
$(10,159 ) $30,559
* Includes charge of $15.8 million related
to revisions in the estimated profitability of two long-term
contracts.
Table 9
Three Months ended June 30, 2016(in
thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $35,405
$(5,848 ) $(11,700
) $17,857 Interest, taxes, other
income/expense - - (7,756
) (7,756 )
Net income (GAAP)
35,405 (5,848 )
(19,456 ) 10,101 Interest
expense, net - - 3,691
3,691 Income tax expense -
- 6,082 6,082
Depreciation and amortization 9,496
6,354 2,109 17,959
EBITDA
(non-GAAP) 44,901 506
(7,574 ) 37,833
Restructuring expenses, net 5,434 1,147
67 6,648 Foreign currency
revaluation (gains)/losses (330 ) (1 )
(1,571 ) (1,902 ) Acquisition expenses -
3,771 - 3,771
Pretax loss attributable to non-controlling interest in ASC
- 276 - 276
Adjusted EBITDA (non-GAAP) $50,005
$5,699 $(9,078 )
$46,626
Payments for capital expenditures increased to $21.7 million in
Q2 2017, compared to $20.7 million in Q2 2016. Depreciation and
amortization was $17.8 million in Q2 2017, compared to $18.0
million in Q2 2016.
CFO Comments
CFO and Treasurer John Cozzolino commented, “Cash flow in the
second quarter was negatively impacted by significant investments
in working capital and fixed assets, mostly to fund the growth in
AEC. For the total Company, the net effect of higher receivables
and inventory was a use of cash of approximately $13 million during
the quarter. Payments for capital expenditures were $22 million in
Q2 and $47 million year to date; we continue to estimate full-year
spending in 2017 to be $95 million to $105 million. At this rate of
capital expenditures, and with continued increases in working
capital as AEC grows, we expect net debt to increase over the
second half of the year.
“Total debt increased about $16 million to $496 million as of
the end of the quarter, while cash balances decreased about $4
million to a total of $139 million. The combined effect of those
two changes resulted in a $20 million increase to net debt (total
debt less cash, see Table 19) to a balance of $357 million as of
the end of the quarter. The Company’s leverage ratio, as defined in
our primary debt agreements, was 2.55 at the end of Q2 2017, well
below our limit of 3.50.
“The Company’s income tax rate based on income from continuing
operations was 33% in Q2 2017, compared to 35% for the full-year
2016. We continue to expect the full-year tax rate for 2017 to be
approximately 35% to 36%. Cash paid for income taxes was about $9
million in Q2 and $18 million year to date; we estimate cash taxes
in 2017 to range from $25 million to $30 million.”
CEO Comments
CEO Joseph Morone said, “Aside from the charge associated with
future losses on the BR 725 and A380 programs, Q2 was another
strong quarter for Albany International. MC once again generated
stable sales and strong income, while AEC grew sharply and took
another incremental step toward improved profitability. Both
businesses are now a little ahead of our expectations for the full
year, and remain firmly on track toward their longer term
objectives of stable MC cash flow and sharp AEC growth coupled with
gradually improving profitability.
“In MC, sales were once again steady; Q2 sales were slightly
above the preceding three quarters and slightly below a strong Q2
2016. The market trends of recent quarters continued. Publication
sales declined by nearly 8%, but since they now represent less than
25% of total sales, they were almost completely offset by
incremental growth in packaging and tissue. This pattern held in
every major geographic region. Meanwhile, pricing across all
regions was stable and new product development and performance were
again very strong, particularly in the growth grades of tissue,
packaging and nonwovens.
“Turning to the outlook for MC, due to seasonal effects, the
second half of the year tends to be weaker than the first half. But
on a year-over-year basis, given MC’s strong competitive
performance, stable market conditions, and good order backlog, it
is reasonable to expect continued stable performance in the second
half of the year. Last quarter, we reported that the MC segment was
on track toward full-year 2017 Adjusted EBITDA in the middle of our
expected range of $180 million to $195 million dollars. With the
strong first-half performance and our outlook for the second half,
MC 2017 Adjusted EBITDA now appears more likely to end up in the
upper half of that range.
“AEC sales grew to $69 million, compared to $56 million in Q1
and $54 million in Q2 2016. The growth was driven primarily by
LEAP, and secondarily by the F-35 and Boeing fuselage frame
programs. Each of AEC’s key growth and legacy programs performed
well, with good performance on deliveries and steady advances
across all operations in continuous improvement activities aimed at
higher yields and lower costs. Operating income declined in the
quarter principally due to the $15.8 million charge associated with
the BR 725 and A380 programs. But aside from this charge, AEC took
another tangible, incremental, sequential step in Q2 toward our
target of 18% to 20% Adjusted EBITDA as a percentage of sales by
2020.
“New business development activity continues to be strong on all
fronts, with AEC actively exploring a portfolio of opportunities in
both civil and defense markets, including opportunities on existing
aerospace platforms, emerging aerospace platforms, and outside of
aerospace. The biggest news in the quarter came from the Paris Air
Show. Orders for LEAP were very strong, the order backlog now
exceeds 13,100 engines (over six years of full production), and GE
and Safran are now considering additional increases in LEAP
production rates. There was also a great deal of discussion by
Boeing at the show about its planning for the potentially new 797
(i.e., new middle-of-market aircraft), and CFM and Safran expressed
their clear intent to compete for the engine that would power it. A
decision by Boeing to launch the 797 would create potentially
significant opportunities for AEC on both airframe and engine.
“As for the near-term outlook for AEC, we had previously stated
that we were looking for full-year 2017 revenue to grow by 25% to
35% compared to full-year 2016, coupled with gradually improving
Adjusted EBITDA as a percentage of sales. We now expect full-year
2017 growth to be at the high end of that range, and for the trend
of incremental, sequential improvements in Adjusted EBITDA as a
percentage of sales to continue through the second half of the
year.”
About Albany International Corp.
Albany International is a global advanced textiles and materials
processing company, with two core businesses. Machine Clothing is
the world’s leading producer of custom-designed fabrics and belts
essential to production in the paper, nonwovens, and other process
industries. Albany Engineered Composites is a rapidly growing
supplier of highly engineered composite parts for the aerospace
industry. Albany International is headquartered in Rochester, New
Hampshire, operates 22 plants in 10 countries, employs 4,400 people
worldwide, and is listed on the New York Stock Exchange (Symbol
AIN). Additional information about the Company and its products and
services can be found at www.albint.com.
This release contains certain non-GAAP metrics, including:
percent change in net sales excluding currency rate effects (for
each segment and the Company as a whole); EBITDA and Adjusted
EBITDA (for each segment and the Company as a whole, represented in
dollars or as a percentage of net sales); net debt; and net income
per share attributable to the Company, excluding adjustments. Such
items are provided because management believes that, when
reconciled from the GAAP items to which they relate, they provide
additional useful information to investors regarding the Company’s
operational performance.
Presenting increases or decreases in sales, after currency
effects are excluded, can give management and investors insight
into underlying sales trends. EBITDA, or net income with interest,
taxes, depreciation, and amortization added back, is a common
indicator of financial performance used, among other things, to
analyze and compare core profitability between companies and
industries because it eliminates effects due to differences in
financing, asset bases and taxes. An understanding of the impact in
a particular quarter of specific restructuring costs, acquisition
expenses, currency revaluation, or other gains and losses, on net
income (absolute as well as on a per-share basis), operating income
or EBITDA can give management and investors additional insight into
core financial performance, especially when compared to quarters in
which such items had a greater or lesser effect, or no effect.
Restructuring expenses in the MC segment, while frequent in recent
years, are reflective of significant reductions in manufacturing
capacity and associated headcount in response to shifting markets,
and not of the profitability of the business going forward as
restructured. Net debt is, in the opinion of the Company, helpful
to investors wishing to understand what the Company’s debt position
would be if all available cash were applied to pay down
indebtedness. EBITDA, Adjusted EBITDA and net income per share
attributable to the Company, excluding adjustments, are performance
measures that relate to the Company’s continuing operations.
Percent changes in net sales, excluding currency rate effects,
are calculated by converting amounts reported in local currencies
into U.S. dollars at the exchange rate of a prior period. That
amount is then compared to the U.S. dollar amount reported in the
current period. The Company calculates EBITDA by removing the
following from Net income: Interest expense net, Income tax
expense, Depreciation and amortization. Adjusted EBITDA is
calculated by: adding to EBITDA costs associated with restructuring
and pension settlement charges; adding (or subtracting) revaluation
losses (or gains); subtracting (or adding) gains (or losses) from
the sale of buildings or investments; subtracting insurance
recovery gains; subtracting (or adding) Income (or loss)
attributable to the non-controlling interest in Albany Safran
Composites (ASC); and adding expenses related to the Company’s
acquisition of Harris Corporation’s composite aerostructures
division. Adjusted EBITDA may also be presented as a percentage of
net sales by dividing it by net sales. Net income per share
attributable to the Company, excluding adjustments, is calculated
by adding to (or subtracting from) net income attributable to the
Company per share, on an after-tax basis: restructuring charges;
discrete tax charges (or gains) and the effect of changes in the
income tax rate; foreign currency revaluation losses (or gains);
acquisition expenses; and losses (or gains) from the sale of
investments.
EBITDA, Adjusted EBITDA, and net income per share attributable
to the Company, excluding adjustments, as defined by the Company,
may not be similar to similarly named measures of other companies.
Such measures are not considered measurements under GAAP, and
should be considered in addition to, but not as substitutes for,
the information contained in the Company’s statements of
income.
The Company discloses certain income and expense items on a
per-share basis. The Company believes that such disclosures provide
important insight into underlying quarterly earnings and are
financial performance metrics commonly used by investors. The
Company calculates the quarterly per-share amount for items
included in continuing operations by using the income tax rate
based on income from continuing operations and the weighted-average
number of shares outstanding for each period. Year-to-date earnings
per-share effects are determined by adding the amounts calculated
at each reporting period.
Table 10
Impact ofChangesin CurrencyTranslation
Rates
PercentChangeexcludingCurrencyRate Effect (in
thousands, excluding
Net SalesSix Months endedJune 30,
Percent percentages) 2017 2016
Change Machine Clothing
(MC) $289,399 $294,197
-1.6 % $(3,083 ) -0.6 % Albany
Engineered Composites (AEC) 125,449
81,324 54.3 % (749 )
55.2 % Total $414,848
$375,521 10.5 % $(3,832 )
11.5 %
Table 11
Six Months ended June 30, 2017(in
thousands)
MachineClothing
AlbanyEngineeredComposites*
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $76,679
$(22,942 ) $(22,453 )
$31,284 Interest, taxes, other income/expense
- - (19,077 ) (19,077 )
Net income (GAAP) 76,679
(22,942 ) (41,530 )
12,207 Interest expense, net - -
8,613 8,613 Income tax expense
- - 8,329 8,329
Depreciation and amortization 16,718
16,022 2,386 35,126
EBITDA
(non-GAAP) 93,397 (6,920
) (22,202 ) 64,275
Restructuring expenses, net 916 3,801
- 4,717 Foreign currency revaluation
losses 3,313 34 2,052
5,399 Pretax (income) attributable to non-controlling
interest in ASC - (314 ) -
(314 )
Adjusted EBITDA (non-GAAP)
$97,626 $(3,399 )
$(20,150 ) $74,077
* Includes charge of $15.8 million related
to revisions in the estimated profitability of two long-term
contracts.
Table 12
Six Months ended June 30, 2016(in
thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $72,543
$(9,553 ) $(22,864 )
$40,126 Interest, taxes, other income/expense
- - (16,709 ) (16,709 )
Net income (GAAP) 72,543
(9,553 ) (39,573 )
23,417 Interest expense, net - -
5,929 5,929 Income tax expense
- - 13,125 13,125
Depreciation and amortization 18,813
9,750 4,216 32,779
EBITDA
(non-GAAP) 91,356 197
(16,303 ) 75,250
Restructuring expenses, net 6,132 1,147
48 7,327 Foreign currency revaluation
(gains)/losses 1,560 4 (2,047 )
(483 ) Acquisition expenses - 5,367
- 5,367 Pretax loss attributable
to non-controlling interest in ASC - 463
- 463
Adjusted EBITDA
(non-GAAP) $99,048 $7,178
$(18,302 ) $87,924
Table 13
Three Months ended June 30, 2017(in
thousands, except per share amounts)
Pretaxamounts
TaxEffect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $2,036 $739
$1,297 $0.04 Foreign currency revaluation losses
3,537 1,284 2,253 0.07 Unfavorable
effect of change in income tax rate - 36
36 0.00 Net discrete income tax charge
- 754 754 0.02 Charge for revision to
estimated profitability of AEC contracts 15,821
5,854 9,967 0.31
Table 14
Three Months ended June 30, 2016(in
thousands, except per share amounts)
Pretaxamounts
TaxEffect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $6,648 $2,573
$4,075 $0.13 Foreign currency revaluation gains
1,902 736 1,166 0.04 Acquisition
expenses 3,771 1,358 2,413 0.08
Favorable effect of change in income tax rate -
203 203 0.01 Net discrete income tax charge
- 27 27 0.00
Table 15
Six Months ended June 30, 2017(in
thousands, except per share amounts)
Pretaxamounts
TaxEffect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $4,717 $1,718
$2,999 $0.09 Foreign currency revaluation losses
5,399 1,964 3,435 0.11 Expenses
related to integration of acquired business 589
224 365 0.01 Net discrete income tax charge
- 1,585 1,585 0.05 Charge for
revision to estimated profitability of AEC contracts
15,821 5,854 9,967 0.31
Table 16
Six Months ended June 30, 2016(in
thousands, except per share amounts)
Pretaxamounts
TaxEffect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $7,327 $2,843
$4,484 $0.14 Foreign currency revaluation gains
483 173 310 0.01 Acquisition
expenses 5,367 1,933 3,434 0.11
Net discrete income tax benefit - 1,006
1,006 0.03
Table 17 contains the calculation of net income per share
attributable to the Company, excluding adjustments:
Table 17
Three Months endedJune 30,
Six Months endedJune 30,
Per share amounts (Basic)
2017
2016
2017
2016
Net income/(loss) attributable to the Company, reported (GAAP)
$0.03* $0.32 $0.37* $0.74
Adjustments:
Restructuring charges 0.04
0.13 0.09 0.14 Discrete tax
adjustments and effect of change in income tax rate
0.02 (0.01 ) 0.05 (0.03 ) Foreign currency
revaluation (gains)/ losses 0.07 (0.04 )
0.11 (0.01 ) Acquisition expenses -
0.08 - 0.11 Net income
attributable to the Company, excluding adjustments (non-GAAP)
$0.16 $0.48 $0.62 $0.95
* Includes charge of $0.31 per share for
revisions in estimated profitability of two AEC contracts
Table 18
Adjusted EBITDA as a percentage of net
sales
Three months ended
Year ended
(in thousands)
June 30, 2017
March 31, 2017
December 31, 2016
Adjusted EBITDA (non-GAAP)
$(8,586)*
$5,188
$16,420
Net sales (GAAP) $68,999 $56,450
$197,649 Adjusted EBITDA as a percentage of net sales
(12.4)% 9.2% 8.3%
* Includes charge of $15.8 million for
revisions in estimated profitability of two AEC contracts. See
table 8 for calculation of Adjusted EBITDA.
Table 19 contains the calculation of net debt:
Table 19
(in thousands)
June 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Notes and loans payable $249 $274 $312
$343 $531 Current maturities of long-term debt
51,732 51,699 51,666 1,462 566
Long-term debt 444,030 428,477 432,918
490,003 485,215
Total debt
496,011 480,450 484,896
491,808 486,312 Cash and cash equivalents
138,792 143,333 181,742 196,170
176,025
Net debt $357,219
$337,117 $303,154 $295,638
$310,287
Table 20 contains the reconciliation of MC 2017 projected
Adjusted EBITDA to MC 2017 projected net income:
Table 20
Machine Clothing Full-Year 2017
Outlook(in millions)
Actual, sixmonthsended June30, 2017
Results forlast twoquarters ofyear to
meetlow end ofrange
Results forlast twoquarters ofyear to
meethigh end ofrange
Estimatedrange for full-year
Net income (non-GAAP) $ 77
$ 67 $ 78 $144
- $155 Depreciation and amortization 17
15 19 (32-36)
EBITDA
(non-GAAP) $ 94 $
82 $ 97 $176 - $191
Restructuring expenses 1 * *
1 Foreign currency revaluation losses 3
* * 3
Adjusted EBITDA (non-GAAP)
$ 98 $ 82 $
97 $180 - $195
* Due to the uncertainty of these items,
management is currently unable to project restructuring expenses
and foreign currency revaluation gains/losses for the remainder of
the year.
This press release may contain statements, estimates, or
projections that constitute “forward-looking statements” as defined
under U.S. federal securities laws. Generally, the words “believe,”
“expect,” “intend,” “estimate,” “anticipate,” “project,” “will,”
“should,” “look for,” and similar expressions identify
forward-looking statements, which generally are not historical in
nature. Forward-looking statements are subject to certain risks and
uncertainties (including, without limitation, those set forth in
the Company’s most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q) that could cause actual results to differ
materially from the Company’s historical experience and our present
expectations or projections.
Forward-looking statements in this release or in the webcast
include, without limitation, statements about macroeconomic,
geopolitical and paper-industry trends and conditions during 2017
and in future years; expectations in 2017 and in future periods of
sales, EBITDA, Adjusted EBITDA (both in dollars and as a percentage
of net sales), income, gross profit, gross margin, cash flows and
other financial items in each of the Company’s businesses,
including the acquired composite aerostructures business, and for
the Company as a whole; the timing and impact of production and
development programs in the Company’s AEC business segment and the
sales growth potential of key AEC programs, as well as AEC as a
whole; the amount and timing of capital expenditures, future tax
rates and cash paid for taxes, depreciation and amortization;
future debt and net debt levels and debt covenant ratios; and
changes in currency rates and their impact on future revaluation
gains and losses. Furthermore, a change in any one or more of the
foregoing factors could have a material effect on the Company’s
financial results in any period. Such statements are based on
current expectations, and the Company undertakes no obligation to
publicly update or revise any forward-looking statements.
Statements expressing management’s assessments of the growth
potential of its businesses, or referring to earlier assessments of
such potential, are not intended as forecasts of actual future
growth, and should not be relied on as such. While management
believes such assessments to have a reasonable basis, such
assessments are, by their nature, inherently uncertain. This
release and earlier releases set forth a number of assumptions
regarding these assessments, including historical results,
independent forecasts regarding the markets in which these
businesses operate, and the timing and magnitude of orders for our
customers’ products.
Historical growth rates are no guarantee of future growth, and
such independent forecasts and assumptions could prove materially
incorrect in some cases.
ALBANY INTERNATIONAL CORP.CONSOLIDATED
STATEMENTS OF INCOME(in thousands, except per share
amounts)(unaudited) Three Months EndedJune 30, Six
Months EndedJune 30, 2017 2016 2017 2016 $ 215,571 $
203,190 Net sales $ 414,848 $ 375,521 152,517 124,875
Cost of goods sold 275,889 224,705
63,054 78,315 Gross profit 138,959 150,816 41,817 43,534
Selling, general, and administrative expenses 82,723 82,955 9,973
10,276 Technical and research expenses 20,235 20,408 2,036
6,648 Restructuring expenses, net 4,717
7,327 9,228 17,857 Operating income 31,284 40,126
4,285 3,691 Interest expense, net 8,613 5,929 1,931
(2,017 ) Other expense/(income), net 2,135 (2,345 )
3,012 16,183 Income before income taxes 20,536 36,542
1,779 6,082 Income tax expense 8,329
13,125 1,233 10,101 Net income 12,207 23,417
116 (266 ) Net income/(loss) attributable to the
noncontrolling interest 251 (451 ) $ 1,117 $ 10,367
Net income attributable to the Company $ 11,956 $ 23,868
$ 0.03 $ 0.32 Earnings per share attributable to
Company shareholders - Basic $ 0.37 $ 0.74 $ 0.03 $ 0.32
Earnings per share attributable to Company shareholders - Diluted $
0.37 $ 0.74 Shares of the Company used in computing earnings
per share: 32,166 32,093 Basic 32,147 32,067 32,200 32,131
Diluted 32,182 32,106 $ 0.17 $ 0.17 Dividends declared per
share, Class A and Class B $ 0.34 $ 0.34 ALBANY
INTERNATIONAL CORP.CONSOLIDATED BALANCE SHEETS(in thousands, except
share data)(unaudited) June 30,2017
December 31,2016 ASSETS Cash and cash equivalents $ 138,792 $
181,742 Accounts receivable, net 193,065 171,193 Inventories
151,534 133,906 Income taxes prepaid and receivable 8,076 5,213
Prepaid expenses and other current assets 11,980
9,251 Total current assets 503,447 501,305
Property, plant and equipment, net 446,814 422,564 Intangibles, net
62,916 66,454 Goodwill 164,328 160,375 Income taxes receivable and
deferred 77,323 68,865 Contract receivables 21,581 14,045 Other
assets 31,859 29,825 Total assets $
1,308,268 $ 1,263,433 LIABILITIES AND
SHAREHOLDERS' EQUITY Notes and loans payable $ 249 $ 312 Accounts
payable 46,666 43,305 Accrued liabilities 96,617 95,195 Current
maturities of long-term debt 51,732 51,666 Income taxes payable
8,916 9,531 Total current liabilities
204,180 200,009 Long-term debt 444,030 432,918 Other
noncurrent liabilities 104,893 106,827 Deferred taxes and other
liabilities 13,074 12,389 Total
liabilities 766,177 752,143
SHAREHOLDERS' EQUITY Preferred stock, par value $5.00 per share;
authorized 2,000,000 shares; none issued - - Class A Common Stock,
par value $.001 per share; authorized 100,000,000 shares; issued
37,372,553 in 2017 and 37,319,266 in 2016 37 37 Class B Common
Stock, par value $.001 per share; authorized 25,000,000 shares;
issued and outstanding 3,233,998 in 2017 and 2016 3 3 Additional
paid in capital 427,538 425,953 Retained earnings 523,875 522,855
Accumulated items of other comprehensive income: Translation
adjustments (104,845 ) (133,298 ) Pension and postretirement
liability adjustments (52,466 ) (51,719 ) Derivative valuation
adjustment 794 828 Treasury stock (Class A), at cost 8,431,335
shares in 2017 and 8,443,444 shares in 2016 (256,876 )
(257,136 ) Total Company shareholders' equity 538,060
507,523 Noncontrolling interest 4,031 3,767
Total equity 542,091 511,290
Total liabilities and shareholders' equity $ 1,308,268 $
1,263,433 ALBANY INTERNATIONAL
CORP.CONSOLIDATED STATEMENTS OF CASH FLOW(in thousands)(unaudited)
Three Months EndedJune 30, Six
Months endedJune 30, 2017 2016 2017 2016 OPERATING
ACTIVITIES $ 1,233 $ 10,101 Net income $ 12,207 $ 23,417
Adjustments to reconcile net income to net cash provided by
operating activities: 15,201 15,142 Depreciation 29,845 28,266
2,632 2,817 Amortization 5,281 4,513 (758 ) (3,371 ) Change in
other noncurrent liabilities (2,354 ) (4,735 ) (6,745 ) (1,457 )
Change in deferred taxes and other liabilities (7,357 ) 1,072 534
484 Provision for write-off of property, plant and equipment 830
1,076 212 - Non-cash interest expense 423 - 681 668 Compensation
and benefits paid or payable in Class A Common Stock 1,670 1,532
Changes in operating assets and liabilities that
provided/(used) cash, net of impact of business acquisition:
(14,395 ) (10,384 ) Accounts receivable (15,136 ) (11,286 ) 1,655
(6,027 ) Inventories (13,266 ) (7,375 ) (651 ) 2,561 Prepaid
expenses and other current assets (2,568 ) (2,821 ) (2,817 ) 3,732
Income taxes prepaid and receivable (2,817 ) 1,837 (1,459 ) 1,267
Accounts payable 2,065 2,899 10,071 689 Accrued liabilities (900 )
(8,154 ) 1,978 2,903 Income taxes payable (508 ) (933 ) (3,621 )
(7,768 ) Contract receivables (7,536 ) (7,768 ) 4,638
7,291 Other, net 3,938 2,490
8,389 18,648 Net cash provided
by operating activities 3,817 24,030
INVESTING ACTIVITIES - (187,000 ) Purchase of business, net
of cash acquired - (187,000 ) (21,360 ) (20,112 ) Purchases of
property, plant and equipment (46,405 ) (28,105 ) (353 ) (589 )
Purchased software (391 ) (671 ) - 1,736
Proceeds from sale or involuntary conversion of assets
- 1,736 (21,713 )
(205,965 ) Net cash used in investing activities (46,796 )
(214,040 ) FINANCING ACTIVITIES 16,114 207,134
Proceeds from borrowings 32,259 219,530 (540 ) (426 ) Principal
payments on debt (21,142 ) (22,824 ) - (1,571 ) Debt acquisition
costs - (1,771 ) - (5,175 ) Swap termination payment - (5,175 ) - -
Taxes paid in lieu of share issuance (1,364 ) (1,272 ) 100 185
Proceeds from options exercised 175 390 (5,467 )
(5,454 ) Dividends paid (10,926 ) (10,897 )
10,207 194,693 Net cash (used in)/provided by
financing activities (998 ) 177,981
(1,424 ) (966 ) Effect of exchange rate changes on
cash and cash equivalents 1,027 2,941
(4,541 ) 6,410 (Decrease)/increase in cash and cash
equivalents (42,950 )
(9,088 ) 143,333 169,615 Cash and cash
equivalents at beginning of period 181,742
185,113 $ 138,792 $ 176,025 Cash and cash
equivalents at end of period $ 138,792 $ 176,025
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170801006684/en/
Albany International Corp.InvestorsJohn Cozzolino,
518-445-2281john.cozzolino@albint.comorMediaHeather Kralik,
801-505-7001heather.kralik@albint.com
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