Sets Q2 Earnings Release and Webcast Dates
ROCHESTER, N.H.--(BUSINESS WIRE)--Jul. 13, 2017--
Albany International Corp. (NYSE:AIN) announced today that it expects to
record a second-quarter pre-tax charge of approximately $16
million associated with revisions in the estimated profitability of two
contracts in the Albany Engineered Composites segment (AEC). The charge
is principally due to second-quarter 2017 downward revisions of
estimated customer demand for the components manufactured by AEC related
to the two contracts.
As previously disclosed, AEC has a contract for the manufacture of
composite components for the Rolls-Royce BR 725 engine, which powers
Gulfstream’s G-650 business jet. The contract obligates AEC to supply
these components for the life of the BR 725 program.
During the second quarter of 2017, the Company revised its estimate of
the profitability of this contract and determined that an additional
charge of approximately $10 million should be recorded as a provision
for anticipated losses through the end of the program. The charge is
driven primarily by a reduction in the estimated future demand for these
components. The Company previously recorded a charge of $14 million in
the second quarter of 2015 for this program, including $11 million for
the write-off of development costs for nonrecurring engineering and
tooling, and $3 million for anticipated future losses.
AEC’s subsidiary, Albany Aerospace Composites LLC, has a contract for
the manufacture of composite struts for the Airbus A380, under which it
is obligated to supply composite wing box struts through 2020 and floor
beam struts through 2023. During the second quarter of 2017, the Company
revised its estimate of the profitability of this contract and
determined that a charge of approximately $6 million should be recorded
as a provision for anticipated losses through contract completion. The
revision is driven by a decrease in estimated demand for these
components during the contract term, as well as by program
inefficiencies.
The estimated total charge of $16 million for both contracts will be
included in Cost of goods sold for the AEC segment.
CEO Joseph Morone said, “Unlike AEC’s key growth and legacy programs,
these two programs are exposed to the weakest segments in the commercial
aerospace market – business jets and super wide-bodies. We do not
consider either program to be strategic or material to AEC’s growth
prospects. Their combined revenue in Q1 2017 was $1.1 million. We are
meeting customer expectations in both programs, but because of very
challenging legacy contracts, we lost money on both in Q1 2017 and had
been expecting both programs to continue to lose money for several more
years before turning profitable. Because of the new and significant
reductions in estimated customer demand for these two programs, coupled
with changes in our estimates of their costs, we now project that both
programs will lose money over the life of their contracts. As a result,
we are required to record the total projected losses over the life of
these two contracts in the current quarter.
“In our first quarter earnings release, I said that AEC was on track for
full-year revenue growth between 25% and 35%, coupled with gradually
improving Adjusted EBITDA as a percentage of sales. I also said that
there is more upside than downside risk to our current estimate of $450
million to $500 million revenue potential by 2020, as well as potential
for substantial growth beyond 2020. While the recording of these
projected future losses will obviously have a material impact on Q2
results, our outlook for AEC– both in 2017 and beyond – remains
unchanged.”
The Company will release second-quarter 2017 financial results after the
close of the market on August 1, 2017, and it will host a webcast to
discuss earnings at 9:00 a.m. Eastern Time on August 2, 2017. Interested
parties are invited to listen to the webcast via the Company’s Investor
Relations website at www.albint.com.
A replay of the webcast will be available on the website at
approximately noon Eastern Time on August 2.
This 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,” “would,” “should” 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 Albany’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 Albany’s historical experience and our present
expectations or projections. Forward-looking statements in this release
include, without limitation, statements about estimated contract
profitability and the likelihood, amount, and timing of other cash and
noncash charges. Such statements are based on current expectations, and
Albany undertakes no obligation to publicly update or revise any
forward-looking statements.
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.
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Source: Albany International Corp.
Albany International Corp.
Investors
John Cozzolino,
518-445-2281
john.cozzolino@albint.com
or
Media
Heather
Kralik, 801-505-7001
heather.kralik@albint.com