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Albany International Reports Second-Quarter 2021 Results, Raises 2021 Guidance

July 26, 2021

ROCHESTER, N.H.--(BUSINESS WIRE)--Jul. 26, 2021-- Albany International Corp. (NYSE:AIN) today reported operating results for its second quarter of 2021, which ended June 30, 2021. Additionally, the company raised its financial guidance for 2021.

"We are pleased to report another quarter of solid performance," said Bill Higgins, President and CEO. "We delivered revenues of $235 million as well as profitability and free cash flow near record levels. Both business segments contributed to the strong results. Our Machine Clothing segment continued to experience solid demand from customers across the globe. In our Engineered Composites segment, performance remains very good - particularly in light of the headwinds caused by the ongoing destocking in the commercial aerospace supply chain. We are executing well on our defense programs and preparing to meet planned increases on OEM production rates on our narrow body commercial programs."

"We had a great first half of 2021," added CFO, Stephen Nolan. "Our consistent operating performance, near record free cash flow, and strong balance sheet position us well as global markets recover. At this stage, we believe that we have sufficient insight into that recovery and our operational performance to be able to raise our full year revenue and profit guidance, including raising the guidance midpoint of GAAP EPS and Adjusted EPS, each by over $0.40."

For the second quarter ended June 30, 2021:

  • Net sales were $234.5 million, up 4%, or 1% after adjusting for currency translation rates, when compared to the prior year.
  • Gross profit of $101.7 million was 1% lower than the $103.0 million reported for the same period of 2020.
  • Selling, Technical, General, and Research (STG&R) expenses were $51.8 million, compared to $47.4 million in the same period of 2020. The increase was driven by higher incentive compensation, travel, Research and Development costs, and revaluation of foreign currency balances, which increased STG&R by $1.9 million in 2021, compared to an increase of $1.1 million in the same period of 2020.
  • Operating income was $50.0 million, compared to $52.7 million in the prior year, a decrease of 5%, principally due to higher STG&R expenses, partially offset by lower restructuring expenses.
  • The effective tax rate was 30.0%, compared to 32.1% for the second quarter of 2020. A lower share of our global profits in jurisdictions with higher tax rates contributed to the lower tax rate this quarter compared to that for the second-quarter 2020.
  • Net income attributable to the Company was $31.4 million ($0.97 per share), compared to $32.4 million ($1.00 per share) in the second quarter of 2020. Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.01 per share, compared to $1.09 for the same period of last year.
  • Adjusted EBITDA (a non-GAAP measure) was $69.4 million, compared to $73.7 million in the second quarter of 2020, a decrease of 6%.

Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures.

Outlook for Full-Year 2021

Albany International is updating financial guidance for the full-year 2021:

  • Total company revenue between $880 and $910 million;
  • Effective income tax rate, including tax adjustments, of 28% to 30%;
  • Total company depreciation and amortization of approximately $75 million;
  • Capital expenditures in the range of $40 to $50 million;
  • GAAP earnings per share between $2.84 and $3.14 and Adjusted earnings per share between $2.90 and $3.20;
  • Total company Adjusted EBITDA between $225 to $240 million;
  • Machine Clothing revenue between $585 to $600 million;
  • Machine Clothing Adjusted EBITDA between $210 and $220 million;
  • Albany Engineered Composites (AEC) revenue between $290 to $310 million; and
  • Albany Engineered Composites Adjusted EBITDA between $65 to $70 million.

     

 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)

         

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

Net sales

 

$

234,519

 

 

$

225,990

 

 

$

456,880

 

 

$

461,754

 

Cost of goods sold

 

132,791

 

 

123,010

 

 

266,606

 

 

269,302

 

 

 

 

 

 

 

 

 

 

Gross profit

 

101,728

 

 

102,980

 

 

190,274

 

 

192,452

 

Selling, general, and administrative expenses

 

42,009

 

 

38,543

 

 

79,203

 

 

78,649

 

Technical and research expenses

 

9,762

 

 

8,873

 

 

19,243

 

 

18,003

 

Restructuring expenses, net

 

(9

)

 

2,837

 

 

43

 

 

3,479

 

 

 

 

 

 

 

 

 

 

Operating income

 

49,966

 

 

52,727

 

 

91,785

 

 

92,321

 

Interest expense, net

 

4,218

 

 

3,823

 

 

7,787

 

 

7,800

 

Other expense/(income), net

 

862

 

 

1,091

 

 

1,462

 

 

16,660

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

44,886

 

 

47,813

 

 

82,536

 

 

67,861

 

Income tax expense

 

13,446

 

 

15,364

 

 

23,486

 

 

27,818

 

 

 

 

 

 

 

 

 

 

Net income

 

31,440

 

 

32,449

 

 

59,050

 

 

40,043

 

Net income/(loss) attributable to the noncontrolling interest

 

43

 

 

95

 

 

70

 

 

(1,420

)

Net income attributable to the Company

 

$

31,397

 

 

$

32,354

 

 

$

58,980

 

 

$

41,463

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Company shareholders - Basic

 

$

0.97

 

 

$

1.00

 

 

$

1.82

 

 

$

1.28

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Company shareholders - Diluted

 

$

0.97

 

 

$

1.00

 

 

$

1.82

 

 

$

1.28

 

 

 

 

 

 

 

 

 

 

Shares of the Company used in computing earnings per share:

 

 

 

 

 

 

 

 

Basic

 

32,375

 

 

32,328

 

 

32,363

 

 

32,320

 

 

 

 

 

 

 

 

 

 

Diluted

 

32,422

 

 

32,336

 

 

32,411

 

 

32,328

 

 

 

 

 

 

 

 

 

 

Dividends declared per share, Class A and Class B

 

$

0.20

 

 

$

0.19

 

 

$

0.40

 

 

$

0.38

 

 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

         

 

 

June 30, 2021

 

December 31, 2020

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

253,330

 

 

$

241,316

 

Accounts receivable, net

 

190,937

 

 

188,423

 

Contract assets, net

 

113,225

 

 

139,289

 

Inventories

 

120,665

 

 

110,478

 

Income taxes prepaid and receivable

 

6,236

 

 

5,940

 

Prepaid expenses and other current assets

 

33,089

 

 

31,830

 

Total current assets

 

$

717,482

 

 

$

717,276

 

 

 

 

 

 

Property, plant and equipment, net

 

438,392

 

 

448,554

 

Intangibles, net

 

42,998

 

 

46,869

 

Goodwill

 

185,293

 

 

187,553

 

Deferred income taxes

 

33,102

 

 

38,757

 

Noncurrent receivables, net

 

34,466

 

 

36,265

 

Other assets

 

74,907

 

 

74,662

 

Total assets

 

$

1,526,640

 

 

$

1,549,936

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Accounts payable

 

$

55,348

 

 

$

49,173

 

Accrued liabilities

 

108,007

 

 

125,459

 

Current maturities of long-term debt

 

 

 

9

 

Income taxes payable

 

12,233

 

 

16,222

 

Total current liabilities

 

175,588

 

 

190,863

 

 

 

 

 

 

Long-term debt

 

350,000

 

 

398,000

 

Other noncurrent liabilities

 

121,333

 

 

130,424

 

Deferred taxes and other liabilities

 

11,660

 

 

10,784

 

Total liabilities

 

658,581

 

 

730,071

 

 

 

 

 

 

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; 39,142,483 issued in 2021 and 39,115,405 in 2020

 

39

 

 

39

 

Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; issued and outstanding 1,617,998 in 2021 and 2020

 

2

 

 

2

 

Additional paid in capital

 

435,230

 

 

433,696

 

Retained earnings

 

816,778

 

 

770,746

 

Accumulated items of other comprehensive income:

 

 

 

 

Translation adjustments

 

(85,384

)

 

(83,203

)

Pension and postretirement liability adjustments

 

(39,282

)

 

(39,661

)

Derivative valuation adjustment

 

(7,398

)

 

(9,544

)

Treasury stock (Class A), at cost; 8,379,804 shares in 2021 and 8,391,011 in 2020

 

(255,768

)

 

(256,009

)

Total Company shareholders' equity

 

864,217

 

 

816,066

 

Noncontrolling interest

 

3,842

 

 

3,799

 

Total equity

 

868,059

 

 

819,865

 

Total liabilities and shareholders' equity

 

$

1,526,640

 

 

$

1,549,936

 

 
ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

         

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

31,440

 

 

$

32,449

 

 

$

59,050

 

 

$

40,043

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

15,971

 

 

15,498

 

 

32,560

 

 

31,004

 

Amortization

 

2,280

 

 

2,456

 

 

4,573

 

 

5,020

 

Change in deferred taxes and other liabilities

 

974

 

 

3,543

 

 

5,416

 

 

9,360

 

Impairment of property, plant and equipment

 

353

 

 

36

 

 

538

 

 

233

 

Non-cash interest expense

 

265

 

 

20

 

 

310

 

 

171

 

Compensation and benefits paid or payable in Class A Common Stock

 

1,639

 

 

1,198

 

 

1,626

 

 

516

 

Provision for credit losses from uncollected receivables and contract assets

 

27

 

 

114

 

 

(83

)

 

1,769

 

Foreign currency remeasurement (gain)/loss on intercompany loans

 

(723

)

 

194

 

 

(1,031

)

 

15,581

 

Fair value adjustment on foreign currency options

 

1

 

 

 

 

140

 

 

64

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities that provided/(used) cash:

 

 

 

 

 

 

 

 

Accounts receivable

 

(129

)

 

11,511

 

 

(3,365

)

 

8,117

 

Contract assets

 

9,539

 

 

(11,169

)

 

25,643

 

 

(20,009

)

Inventories

 

(1,821

)

 

(4,878

)

 

(10,384

)

 

(24,628

)

Prepaid expenses and other current assets

 

(606

)

 

(301

)

 

(1,505

)

 

(2,457

)

Income taxes prepaid and receivable

 

1,156

 

 

29

 

 

(309

)

 

(208

)

Accounts payable

 

(4,580

)

 

(9,337

)

 

4,608

 

 

(10,383

)

Accrued liabilities

 

2,062

 

 

4,171

 

 

(17,423

)

 

(10,901

)

Income taxes payable

 

4,121

 

 

5,526

 

 

(3,956

)

 

1,955

 

Noncurrent receivables

 

1,099

 

 

628

 

 

1,587

 

 

397

 

Other noncurrent liabilities

 

(2,166

)

 

(464

)

 

(4,263

)

 

(524

)

Other, net

 

1,051

 

 

(552

)

 

1,908

 

 

(1,086

)

Net cash provided by operating activities

 

61,953

 

 

50,672

 

 

95,640

 

 

44,034

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(10,302

)

 

(9,212

)

 

(22,836

)

 

(21,971

)

Purchased software

 

(286

)

 

 

 

(288

)

 

(46

)

Net cash used in investing activities

 

(10,588

)

 

(9,212

)

 

(23,124

)

 

(22,017

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

 

 

 

8,000

 

 

70,000

 

Principal payments on debt

 

(34,002

)

 

(56,005

)

 

(56,009

)

 

(59,011

)

Principal payments on finance lease liabilities

 

(355

)

 

(329

)

 

(704

)

 

(6,463

)

Taxes paid in lieu of share issuance

 

 

 

 

 

(998

)

 

(490

)

Proceeds from options exercised

 

21

 

 

20

 

 

149

 

 

20

 

Dividends paid

 

(6,474

)

 

(6,141

)

 

(12,942

)

 

(12,280

)

Net cash used in financing activities

 

(40,810

)

 

(62,455

)

 

(62,504

)

 

(8,224

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

4,904

 

 

2,352

 

 

2,002

 

 

(5,296

)

 

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

15,459

 

 

(18,643

)

 

12,014

 

 

8,497

 

Cash and cash equivalents at beginning of period

 

237,871

 

 

222,680

 

 

241,316

 

 

195,540

 

Cash and cash equivalents at end of period

 

$

253,330

 

 

$

204,037

 

 

$

253,330

 

 

$

204,037

 

 

Financial tables and reconciliation of non-GAAP measures to comparable GAAP measures

The following tables present Net sales and the effect of changes in currency translation rates:

(in thousands, except percentages)

 

Net sales as
reported, Q2 2021

 

Increase due to
changes in currency
translation rates

 

Q2 2021 sales
on same basis as
Q2 2020 currency
translation rates

 

Net sales as
reported, Q2 2020

 

% Change compared
to Q2 2020, excluding
currency rate effects

Machine Clothing

 

$

159,921

 

 

$

5,281

 

 

$

154,640

 

 

$

153,433

 

 

0.8

%

Albany Engineered Composites

 

74,598

 

 

1,088

 

 

73,510

 

 

72,557

 

 

1.3

%

Consolidated total

 

$

234,519

 

 

$

6,369

 

 

$

228,150

 

 

$

225,990

 

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except percentages)

 

Net sales as
reported, YTD 2021

 

Increase due to
changes in currency
translation rates

 

YTD 2021 sales
on same basis as
2020 currency
translation rates

 

Net sales as
reported, YTD 2020

 

% Change compared
to 2020, excluding
currency rate effects

Machine Clothing

 

$

308,127

 

 

$

10,142

 

 

$

297,985

 

 

$

290,035

 

 

2.7

%

Albany Engineered Composites

 

148,753

 

 

2,267

 

 

146,486

 

 

171,719

 

 

(14.7)

%

Consolidated total

 

$

456,880

 

 

$

12,409

 

 

$

444,471

 

 

$

461,754

 

 

(3.7)

%

The following tables present Gross profit and Gross profit margin:

(in thousands, except percentages)

 

Gross profit,
Q2 2021

 

Gross profit margin,
Q2 2021

 

Gross profit,
Q2 2020

 

Gross profit margin,
Q2 2020

Machine Clothing

 

$

84,597

 

 

52.9

%

 

$

83,612

 

 

54.5

%

Albany Engineered Composites

 

17,131

 

 

23.0

%

 

19,368

 

 

26.7

%

Consolidated total

 

$

101,728

 

 

43.4

%

 

$

102,980

 

 

45.6

%

(in thousands, except percentages)

 

Gross profit,
YTD 2021

 

Gross profit margin,
YTD 2021

 

Gross profit,
YTD 2020

 

Gross profit margin,
YTD 2020

Machine Clothing

 

$

160,990

 

 

52.2

%

 

$

156,264

 

 

53.9

%

Albany Engineered Composites

 

29,284

 

 

19.7

%

 

36,188

 

 

21.1

%

Consolidated total

 

$

190,274

 

 

41.6

%

 

$

192,452

 

 

41.7

%

 

A reconciliation from operating 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 June 30, 2021

(in thousands)

 

Machine Clothing

 

Albany Engineered

Composites

 

Corporate expenses

and other

 

Total Company

Operating income/(loss) (GAAP)

 

$

55,902

 

 

$

7,164

 

 

$

(13,100

)

 

$

49,966

 

Interest, taxes, other income/(expense)

 

 

 

 

 

(18,526

)

 

(18,526

)

Net income/(loss) (GAAP)

 

55,902

 

 

7,164

 

 

(31,626

)

 

31,440

 

Interest expense, net

 

 

 

 

 

4,218

 

 

4,218

 

Income tax expense

 

 

 

 

 

13,446

 

 

13,446

 

Depreciation and amortization expense

 

5,138

 

 

12,194

 

 

919

 

 

18,251

 

EBITDA (non-GAAP)

 

61,040

 

 

19,358

 

 

(13,043

)

 

67,355

 

Restructuring expenses, net

 

10

 

 

(48

)

 

29

 

 

(9

)

Foreign currency revaluation (gains)/losses

 

1,908

 

 

(244

)

 

174

 

 

1,838

 

Acquisition/integration costs

 

 

 

300

 

 

 

 

300

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(65

)

 

 

 

(65

)

Adjusted EBITDA (non-GAAP)

 

$

62,958

 

 

$

19,301

 

 

$

(12,840

)

 

$

69,419

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

39.4

%

 

25.9

%

 

 

 

29.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2020

(in thousands)

 

Machine Clothing

 

Albany Engineered

Composites

 

Corporate expenses

and other

 

Total Company

Operating income/(loss) (GAAP)

 

$

56,543

 

 

$

8,299

 

 

$

(12,115

)

 

$

52,727

 

Interest, taxes, other income/(expense)

 

 

 

 

 

(20,278

)

 

(20,278

)

Net income/(loss) (GAAP)

 

56,543

 

 

8,299

 

 

(32,393

)

 

32,449

 

Interest expense, net

 

 

 

 

 

3,823

 

 

3,823

 

Income tax expense

 

 

 

 

 

15,364

 

 

15,364

 

Depreciation and amortization expense

 

4,981

 

 

11,971

 

 

1,002

 

 

17,954

 

EBITDA (non-GAAP)

 

61,524

 

 

20,270

 

 

(12,204

)

 

69,590

 

Restructuring expenses, net

 

388

 

 

2,248

 

 

201

 

 

2,837

 

Foreign currency revaluation (gains)/losses

 

973

 

 

30

 

 

20

 

 

1,023

 

Acquisition/integration costs

 

 

 

278

 

 

 

 

278

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(58

)

 

 

 

(58

)

Adjusted EBITDA (non-GAAP)

 

$

62,885

 

 

$

22,768

 

 

$

(11,983

)

 

$

73,670

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

41.0

%

 

31.4

%

 

 

 

32.6

%

 

Six months ended June 30, 2021

(in thousands)

 

Machine Clothing

 

Albany Engineered

Composites

 

Corporate expenses

and other

 

Total Company

Operating income/(loss) (GAAP)

 

$

106,264

 

 

$

10,102

 

 

$

(24,581

)

 

$

91,785

 

Interest, taxes, other income/(expense)

 

 

 

 

 

(32,735

)

 

(32,735

)

Net income/(loss) (GAAP)

 

106,264

 

 

10,102

 

 

(57,316

)

 

59,050

 

Interest expense, net

 

 

 

 

 

7,787

 

 

7,787

 

Income tax expense

 

 

 

 

 

23,486

 

 

23,486

 

Depreciation and amortization expense

 

10,258

 

 

25,061

 

 

1,814

 

 

37,133

 

EBITDA (non-GAAP)

 

116,522

 

 

35,163

 

 

(24,229

)

 

127,456

 

Restructuring expenses, net

 

(58

)

 

41

 

 

60

 

 

43

 

Foreign currency revaluation (gains)/losses

 

1,415

 

 

332

 

 

341

 

 

2,088

 

Acquisition/integration costs

 

 

 

614

 

 

 

 

614

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(111

)

 

 

 

(111

)

Adjusted EBITDA (non-GAAP)

 

$

117,879

 

 

$

36,039

 

 

$

(23,828

)

 

$

130,090

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

38.3

%

 

24.2

%

 

   

28.5

%

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2020

(in thousands)

 

Machine Clothing

 

Albany Engineered

Composites

 

Corporate expenses

and other

 

Total Company

Operating income/(loss) (GAAP)

 

$

103,718

 

 

$

15,922

 

 

$

(27,319

)

 

$

92,321

 

Interest, taxes, other income/(expense)

 

 

 

 

 

(52,278

)

 

(52,278

)

Net income/(loss) (GAAP)

 

103,718

 

 

15,922

 

 

(79,597

)

 

40,043

 

Interest expense, net

 

 

 

 

 

7,800

 

 

7,800

 

Income tax expense

 

 

 

 

 

27,818

 

 

27,818

 

Depreciation and amortization expense

 

10,068

 

 

23,956

 

 

2,000

 

 

36,024

 

EBITDA (non-GAAP)

 

113,786

 

 

39,878

 

 

(41,979

)

 

111,685

 

Restructuring expenses, net

 

1,030

 

 

2,248

 

 

201

 

 

3,479

 

Foreign currency revaluation (gains)/losses

 

(2,688

)

 

727

 

 

14,850

 

 

12,889

 

Former CEO termination costs

 

 

 

 

 

2,742

 

 

2,742

 

Acquisition/integration costs

 

 

 

576

 

 

 

 

576

 

Pre-tax loss attributable to noncontrolling interest

 

 

 

1,434

 

 

 

 

1,434

 

Adjusted EBITDA (non-GAAP)

 

$

112,128

 

 

$

44,863

 

 

$

(24,186

)

 

$

132,805

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

38.7

%

 

26.1

%

 

 

 

28.8

%

 

Per share impact of the adjustments to earnings per share are as follows:

Three months ended June 30, 2021

(in thousands, except per share amounts)

 

Pre tax

Amounts

 

Tax

Effect

 

After tax

Effect

 

Per share

Effect

Restructuring expenses, net

 

$

(9

)

 

$

(3

)

 

$

(6

)

 

$

0.00

 

Foreign currency revaluation (gains)/losses

 

1,838

 

 

781

 

 

1,057

 

 

0.03

 

Acquisition/integration costs

 

300

 

 

90

 

 

210

 

 

0.01

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2020

(in thousands, except per share amounts)

 

Pre tax

Amounts

 

Tax

Effect

 

After tax

Effect

 

Per share

Effect

Restructuring expenses, net

 

$

2,837

 

 

$

953

 

 

$

1,884

 

 

$

0.06

 

Foreign currency revaluation (gains)/losses

 

1,023

 

 

536

 

 

487

 

 

0.02

 

Acquisition/integration costs

 

278

 

 

83

 

 

195

 

 

0.01

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2021

(in thousands, except per share amounts)

 

Pre tax

Amounts

 

Tax

Effect

 

After tax

Effect

 

Per share

Effect

Restructuring expenses, net

 

$

43

 

 

$

12

 

 

$

31

 

 

$

0.00

 

Foreign currency revaluation (gains)/losses

 

2,088

 

 

646

 

 

1,442

 

 

0.04

 

Acquisition/integration costs

 

614

 

 

184

 

 

430

 

 

0.02

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2020

(in thousands, except per share amounts)

 

Pre tax

Amounts

 

Tax

Effect

 

After tax

Effect

 

Per share

Effect

Restructuring expenses, net

 

$

3,479

 

 

$

1,145

 

 

$

2,334

 

 

$

0.07

 

Foreign currency revaluation (gains)/losses (a)

 

12,889

 

 

(1,009

)

 

13,898

 

 

0.44

 

Former CEO termination costs

 

2,742

 

 

713

 

 

2,029

 

 

0.06

 

Acquisition/integration costs

 

576

 

 

172

 

 

404

 

 

0.02

 

 

(a) In Q1 2020, the company recorded losses of approximately $17 million in jurisdictions where it cannot record a tax benefit from the losses, which results in an unusual relationship between the pre-tax and after-tax amounts.

The following table provides a reconciliation of Earnings per share to Adjusted Earnings per share:

 

 

Three months ended June 30,

 

Six months ended June 30,

Per share amounts (Basic)

 

2021

 

2020

 

2021

 

2020

Earnings per share (GAAP)

 

$

0.97

 

 

$

1.00

 

 

$

1.82

 

 

$

1.28

 

Adjustments, after tax:

 

 

 

 

 

 

 

 

Restructuring expenses, net

 

 

 

0.06

 

 

 

 

0.07

 

Foreign currency revaluation (gains)/losses

 

0.03

 

 

0.02

 

 

0.04

 

 

0.44

 

Former CEO termination costs

 

 

 

 

 

 

 

0.06

 

Acquisition/integration costs

 

0.01

 

 

0.01

 

 

0.02

 

 

0.02

 

Adjusted Earnings per share (non-GAAP)

 

$

1.01

 

 

$

1.09

 

 

$

1.88

 

 

$

1.87

 

 

The calculations of net debt are as follows:

(in thousands)

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

Current maturities of long-term debt

 

$

 

 

$

2

 

 

$

9

 

Long-term debt

 

350,000

 

 

384,000

 

 

398,000

 

Total debt

 

350,000

 

 

384,002

 

 

398,009

 

Cash and cash equivalents

 

253,330

 

 

237,871

 

 

241,316

 

Net debt (non-GAAP)

 

$

96,670

 

 

$

146,131

 

 

$

156,693

 

The tables below provide a reconciliation of forecasted full-year 2021 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures:

Forecast of Full Year 2021 Adjusted EBITDA

 

Machine Clothing

 

AEC

(in millions)

 

Low

 

High

 

Low

 

High

Net income attributable to the Company (GAAP) (b)

 

$

189

 

 

$

198

 

 

$

15

 

 

$

19

 

Income attributable to the noncontrolling interest

 

 

 

 

 

(1

)

 

(1

)

Interest expense, net

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

Depreciation and amortization

 

20

 

 

21

 

 

49

 

 

50

 

EBITDA (non-GAAP)

 

209

 

 

219

 

 

63

 

 

68

 

Restructuring expenses, net (c)

 

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (c)

 

1

 

 

1

 

 

 

 

 

Acquisition/integration costs (c)

 

 

 

 

 

1

 

 

1

 

Pre-tax (income)/loss attributable to non-controlling interest

 

 

 

 

 

1

 

 

1

 

Adjusted EBITDA (non-GAAP)

 

$

210

 

 

$

220

 

 

$

65

 

 

$

70

 

(b) Interest, Other income/expense and Income taxes are not allocated to the business segments

 

 

 

 

 

 

 

 

 

Forecast of Full Year 2021 Adjusted EBITDA

 

Total Company

 

 

 

 

(in millions)

 

Low

 

High

 

 

 

 

Net income attributable to the Company (GAAP)

 

$

92

 

 

$

102

 

 

 

 

 

Income attributable to the noncontrolling interest

 

(1

)

 

(1

)

 

 

 

 

Interest expense, net

 

16

 

 

16

 

 

 

 

 

Income tax expense

 

40

 

 

44

 

 

 

 

 

Depreciation and amortization

 

74

 

 

75

 

 

 

 

 

EBITDA (non-GAAP)

 

221

 

 

236

 

 

 

 

 

Restructuring expenses, net (c)

 

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (c)

 

2

 

 

2

 

 

 

 

 

Acquisition/integration costs (c)

 

1

 

 

1

 

 

 

 

 

Pre-tax (income)/loss attributable to non-controlling interest

 

1

 

 

1

 

 

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

225

 

 

$

240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

Forecast of Full Year 2021 Earnings per share (basic) (d)

 

Low

 

High

 

 

 

 

Net income attributable to the Company (GAAP)

 

$

2.84

 

 

$

3.14

 

 

 

 

 

Restructuring expenses, net (c)

 

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (c)

 

0.04

 

 

0.04

 

 

 

 

 

Acquisition/integration costs (c)

 

0.02

 

 

0.02

 

 

 

 

 

Adjusted Earnings per share (non-GAAP)

 

$

2.90

 

 

$

3.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c) Due to the uncertainty of these items, we are unable to forecast these items for 2021. The amount shown represents the value incurred through the second quarter.

(d) Calculations based on shares outstanding estimate of 32.4 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 4,000 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, including: net sales, and percent change in net sales, excluding the impact of currency translation effects (for each segment and on a consolidated basis); EBITDA and Adjusted EBITDA (for each segment and on a consolidated basis, represented in dollars or as a percentage of net sales); Net debt; and Adjusted earnings per share (or Adjusted EPS). Such items are provided because management believes that they provide additional useful information to investors regarding the Company’s operational performance.

Presenting Net sales and increases or decreases in Net sales, after currency effects are excluded, can give 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, Adjusted EBITDA and Adjusted EPS are performance measures that relate to the Company’s continuing operations. 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. The Company calculates EBITDA by removing the following from Net income: Interest expense, net, Income tax expense, Depreciation and amortization expense. Adjusted EBITDA is calculated by: adding to EBITDA costs associated with restructuring, former CEO termination costs, and inventory write-offs associated with discontinued businesses; adding charges and credits related to pension plan settlements and curtailments; 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; adding acquisition/integration costs and subtracting (or adding) Income (or loss) attributable to the non-controlling interest in Albany Safran Composites (ASC). Adjusted EBITDA may also be presented as a percentage of net sales by dividing it by net sales. An understanding of the impact in a particular quarter of specific restructuring costs, former CEO termination costs, acquisition/integration costs, 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, 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. Adjusted earnings per share (Adjusted EPS) is calculated by adding to (or subtracting from) net income attributable to the Company per share, on an after-tax basis: restructuring charges; former CEO severance costs; charges and credits related to pension plan settlements and curtailments; inventory write-offs associated with discontinued businesses; foreign currency revaluation losses (or gains); acquisition-related expenses; and losses (or gains) from the sale of investments.

EBITDA, Adjusted EBITDA, and Adjusted EPS, 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 an income tax rate based on either the tax rates in specific countries or the estimated tax rate applied to total company results. The tax rate applied excludes income tax adjustments (discrete tax adjustments and the effect of changes in the estimated income tax rate). The after-tax amount is then divided by 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.

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. The Company calculates Net debt by subtracting Cash and cash equivalents from Total debt. Total debt is calculated by adding Long-term debt, Current maturities of long-term debt, and Notes and loans payable, if any.

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 and paper-industry trends and conditions during 2021 and in future years; expectations in 2021 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.

John Hobbs
603-330-5897
john.hobbs@albint.com

Source: Albany International Corp.

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