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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:
June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 1-10026
ALBANY INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

216 Airport DriveRochesterNew Hampshire
(Address of principal executive offices)

14-0462060
(IRS Employer Identification No.)

03867
(Zip Code)

603-330-5850
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par value per shareAIN
The New York Stock Exchange (NYSE)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No
The registrant had 31.2 million shares of Class A Common Stock as of July 15, 2023.



ALBANY INTERNATIONAL CORP.
TABLE OF CONTENTS
Page No.
Consolidated balance sheets as of June 30, 2023 and December 31, 2022


Index

ITEM 1. FINANCIAL STATEMENTS

ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Net revenues$274,123 $261,369 $543,219 $505,538 
Cost of goods sold171,419 160,776 341,197 313,341 
Gross profit102,704 100,593 202,022 192,197 
Selling, general, and administrative expenses46,760 39,745 95,239 82,452 
Technical and research expenses10,318 10,161 20,595 20,050 
Restructuring expenses, net125 (28)145 226 
Operating income45,501 50,715 86,043 89,469 
Interest expense/(income), net3,106 3,933 6,396 7,542 
Other (income)/expense, net(4,511)(7,045)(4,966)(10,973)
Income before income taxes46,906 53,827 84,613 92,900 
Income tax expense20,080 14,458 30,701 25,456 
Net income26,826 39,369 53,912 67,444 
Net income attributable to the noncontrolling interest154 168 351 506 
Net income attributable to the Company$26,672 $39,201 $53,561 $66,938 
Earnings per share attributable to Company shareholders - Basic$0.86 $1.25 $1.72 $2.12 
Earnings per share attributable to Company shareholders - Diluted$0.85 $1.25 $1.71 $2.11 
Shares of the Company used in computing earnings per share:
Basic31,174 31,268 31,152 31,571 
Diluted31,269 31,378 31,243 31,668 
Dividends declared per Class A share$0.25 $0.21 $0.50 $0.42 
The accompanying notes are an integral part of the consolidated financial statements
1

Index
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(in thousands)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Net income$26,826 $39,369 $53,912 $67,444 
Other comprehensive income/(loss), before tax:
Foreign currency translation(2,818)(39,319)10,622 (40,870)
Amortization of pension liability adjustments:
Prior service credit(1,030)(1,122)(2,061)(2,245)
Net actuarial loss347 967 693 1,938 
Payments and amortization related to interest rate swaps included in earnings(3,678)1,168 (6,901)2,864 
Derivative valuation adjustment4,199 3,316 3,537 15,037 
Income taxes related to items of other comprehensive income/(loss):
Amortization of prior service credit316 343 631 687 
Amortization of net actuarial loss(107)(296)(212)(593)
Payments and amortization related to interest rate swaps included in earnings931 (295)1,746 (725)
Derivative valuation adjustment(1,063)(840)(895)(3,809)
Comprehensive income23,923 3,291 61,072 39,728 
Comprehensive income attributable to the noncontrolling interest333 77 768 471 
Comprehensive income attributable to the Company$23,590 $3,214 $60,304 $39,257 
The accompanying notes are an integral part of the consolidated financial statements
2

Index
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
June 30, 2023December 31, 2022
ASSETS
Cash and cash equivalents$300,916 $291,776 
Accounts receivable, net242,189 200,018 
Contract assets, net145,324 148,695 
Inventories151,360 139,050 
Income taxes prepaid and receivable8,473 7,938 
Prepaid expenses and other current assets55,538 50,962 
Total current assets903,800 838,439 
Property, plant and equipment, net451,986 445,658 
Intangibles, net31,842 33,811 
Goodwill179,257 178,217 
Deferred income taxes14,491 15,196 
Noncurrent receivables, net26,568 27,913 
Other assets99,204 103,021 
Total assets$1,707,148 $1,642,255 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable$65,812 $69,707 
Accrued liabilities104,398 126,385 
Current maturities of long-term debt  
Income taxes payable10,905 15,224 
Total current liabilities181,115 211,316 
Long-term debt487,000 439,000 
Other noncurrent liabilities107,781 108,758 
Deferred taxes and other liabilities15,533 15,638 
Total liabilities791,429 774,712 
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS' EQUITY
Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued
  
Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,842,023 issued in 2023 and 40,785,434 in 2022
41 41 
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; none issued and outstanding in 2023 and 2022
  
Additional paid in capital443,556 441,540 
Retained earnings969,292 931,318 
Accumulated items of other comprehensive income:
Translation adjustments(135,538)(146,851)
Pension and postretirement liability adjustments(17,423)(15,783)
Derivative valuation adjustment15,194 17,707 
Treasury stock (Class A), at cost; 9,662,562 shares in 2023 and 9,674,542 in 2022
(364,665)(364,923)
Total Company shareholders' equity910,457 863,049 
Noncontrolling interest5,262 4,494 
Total equity915,719 867,543 
Total liabilities and shareholders' equity$1,707,148 $1,642,255 
The accompanying notes are an integral part of the consolidated financial statements
3

Index
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 30,
20232022
OPERATING ACTIVITIES
Net income$53,912 $67,444 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation32,299 31,276 
Amortization3,018 3,598 
Change in deferred taxes and other liabilities1,787 2,596 
Impairment of property, plant, equipment, and inventory532 2,662 
Non-cash interest expense565 561 
Compensation and benefits paid or payable in Class A Common Stock2,274 2,447 
Provision for credit losses from uncollected receivables and contract assets493 1,326 
Foreign currency remeasurement (gain) on intercompany loans(3,198)(1,260)
Fair value adjustment on foreign currency options(123)(381)
Changes in operating assets and liabilities that provided/(used) cash:
Accounts receivable(40,131)(14,407)
Contract assets4,606 (23,868)
Inventories(9,174)(21,135)
Prepaid expenses and other current assets(2,700)(4,474)
Income taxes prepaid and receivable(381)(60)
Accounts payable(5,255)7,476 
Accrued liabilities(21,570)(11,745)
Income taxes payable(4,943)(7,739)
Noncurrent receivables1,705 1,864 
Other noncurrent liabilities(1,922)(3,252)
Other, net2,881 4,784 
Net cash provided by operating activities14,675 37,713 
INVESTING ACTIVITIES
Purchases of property, plant and equipment(34,899)(35,659)
Purchased software(72)(366)
Net cash used in investing activities(34,971)(36,025)
FINANCING ACTIVITIES
Proceeds from borrowings61,000 135,000 
Principal payments on debt(13,000) 
Principal payments on finance lease liabilities (654)
Purchase of Treasury shares (84,780)
Taxes paid in lieu of share issuance(3,136)(770)
Proceeds from options exercised 7 
Dividends paid(15,570)(13,399)
Net cash provided by financing activities29,294 35,404 
Effect of exchange rate changes on cash and cash equivalents142 (18,258)
Increase in cash and cash equivalents9,140 18,834 
Cash and cash equivalents at beginning of period291,776 302,036 
Cash and cash equivalents at end of period$300,916 $320,870 
The accompanying notes are an integral part of the consolidated financial statements
4

Index
ALBANY INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Significant Accounting Policies
Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of results for such periods. Albany International Corp. ("Albany", the "Registrant", the "Company", "we", "us", or "our") consolidates the financial results of its subsidiaries for all periods presented. The results for any interim period are not necessarily indicative of results for the full year.
The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the Company's Consolidated Financial Statements and accompanying Notes. Actual results could differ materially from those estimates.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Albany International Corp.’s Annual Report on Form 10-K for the year ended December 31, 2022.
Acquisition
On June 14, 2023, the Company entered into an agreement to acquire Heimbach GmbH ("Heimbach"), a privately-held manufacturer of paper machine clothing and technical textiles located in Düren, Germany. The Company will acquire Heimbach for a purchase price of approximately €153 million, including net debt of approximately €21 million. Albany expects to fund the acquisition using cash on hand. The transaction is subject to regulatory approvals and other customary closing conditions.

2. Reportable Segments and Revenue Recognition
In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments.
Machine Clothing:
The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate.
We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.
Albany Engineered Composites:
The Albany Engineered Composites (“AEC”) segment provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, the SAFRAN Group (“SAFRAN”) owns a 10 percent noncontrolling interest. AEC, through ASC, is the exclusive supplier of the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract, where revenue is determined by a cost-plus-fee agreement. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft. AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM International's LEAP engine) accounted for approximately 16 percent of the Company's consolidated Net revenues in 2022. AEC net sales to SAFRAN were $93.5 million and $83.1 million in the first six months of 2023 and 2022, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $88.9 million and $80.8 million as of June 30, 2023 and December 31, 2022, respectively.
Other significant programs by AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing 7-Series programs, and specialty components for the Rolls Royce
5

Index
lift fan on the F-35, as well as the fan case for the GE9X engine. For the year ended December 31, 2022, approximately 46 percent of AEC revenues were related to U.S. government contracts or programs.
The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:
Three months ended June 30,Six months ended June 30,
(in thousands)
2023202220232022
Net revenues
Machine Clothing
$159,217 $151,670 $312,439 $305,732 
Albany Engineered Composites114,906 109,699 230,780 199,806 
Consolidated revenues$274,123 $261,369 $543,219 $505,538 
Operating income/(loss)
Machine Clothing
$53,726 $54,861 $102,690 $104,505 
Albany Engineered Composites8,668 9,535 18,086 10,730 
Corporate expenses(16,893)(13,681)(34,733)(25,766)
Consolidated Operating income$45,501 $50,715 $86,043 $89,469 
Reconciling items:
Interest income(1,838)(846)(2,944)(1,498)
Interest expense
4,944 4,779 9,340 9,040 
Other (income)/expense, net(4,511)(7,045)(4,966)(10,973)
Income before income taxes$46,906 $53,827 $84,613 $92,900 
Revenue Recognition:
Products and services provided under long-term contracts represent a significant portion of revenues in the Albany Engineered Composites segment and we account for these contracts over time, primarily using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors. Changes in the estimated profitability of long-term contracts decreased operating income by $1.9 million for the second quarter of 2023 and decreased operating income $4.0 million for the first half of 2023. Adjustments in the estimated profitability of long-term contracts increased operating income by $1.2 million and decreased operating income $0.6 for the second quarter and first half of 2022, respectively.











6

Index
We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes.
The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2023:
Three months ended June 30, 2023
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$158,273 $944 $159,217 
Albany Engineered Composites:
   ASC 47,417 47,417 
   Other AEC3,511 63,978 67,489 
Total Albany Engineered Composites
3,511 111,395 114,906 
                                         
Total revenues$161,784 $112,339 $274,123 
The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2022:
Three months ended June 30, 2022
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$150,770 $900 $151,670 
Albany Engineered Composites:
   ASC 41,661 41,661 
   Other AEC5,018 63,020 68,038 
Total Albany Engineered Composites
5,018 104,681 109,699 
Total revenues$155,788 $105,581 $261,369 
The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2023:
Six months ended June 30, 2023
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$310,551 $1,888 $312,439 
Albany Engineered Composites:
   ASC 91,949 91,949 
   Other AEC9,304 129,527 138,831 
Total Albany Engineered Composites9,304 221,476 230,780 
Total revenues$319,855 $223,364 $543,219 





7

Index

The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2022:
Six months ended June 30, 2022
(in thousands)Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$303,933 $1,799 $305,732 
Albany Engineered Composites:
   ASC 81,373 81,373 
   Other AEC8,931 109,502 118,433 
Total Albany Engineered Composites8,931 190,875 199,806 
Total revenues$312,864 $192,674 $505,538 
The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing ("PMC") and engineered fabrics), and, for PMC, the geographical region to which the paper machine clothing was sold:
Three months ended June 30,Six months ended June 30,
(in thousands)
2023202220232022
Americas PMC$94,154 $79,062 $177,532 $155,678 
Eurasia PMC
48,541 52,368 100,278 107,854 
Engineered Fabrics16,522 20,240 34,629 42,200 
Total Machine Clothing net revenues$159,217 $151,670 $312,439 $305,732 
We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year and certain contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $792 million and $579 million as of June 30, 2023 and 2022, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of June 30, 2023, we expect to recognize as revenue approximately $78 million during 2023, $131 million during 2024, $148 million during 2025, and the remainder thereafter.

8

Index
3. Pensions and Other Postretirement Benefit Plans
The Company has defined benefit pension plans covering certain U.S. and non-U.S. employees. The Company also provides certain postretirement benefits to retired employees in the U.S. and Canada. The Company accrues the cost of providing these benefits during the active service period of the employees.
The composition of the net periodic benefit cost/ (income) for the six months ended June 30, 2023 and 2022, was as follows:
Pension plans
Other postretirement benefits
(in thousands)
2023202220232022
Components of net periodic benefit cost/(income):
Service cost
$565 $708 $30 $57 
Interest cost2,141 2,828 937 611 
Expected return on assets
(1,955)(3,405)  
Amortization of prior service cost/(income)(16)(1)(2,045)(2,244)
Amortization of net actuarial loss
279 997 414 941 
Net periodic benefit cost/(income)$1,014 $1,127 $(664)$(635)
The amount of net benefit cost/(income) is determined at the beginning of each year and generally only varies from quarter to quarter when a significant event occurs, such as a curtailment or a settlement. There were no such events in the first six months of 2023 or 2022.
Service cost for defined benefit pension and postretirement plans are reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net periodic benefit cost are included in the line item Other (income)/expense, net in the Consolidated Statements of Income.

4. Other (Income)/Expense, net
The components of Other (income)/expense, net are:
Three months ended June 30,Six months ended June 30,
(in thousands)
2023202220232022
Currency transaction (gains)/losses$(4,193)$(7,284)$(4,133)$(11,024)
Bank fees and amortization of debt issuance costs
33 80 91 176 
Components of net periodic pension and postretirement cost other than service cost(120)(137)(245)(273)
Other
(231)296 (679)148 
Total other (income)/expense, net$(4,511)$(7,045)$(4,966)$(10,973)

Other (income)/expense, net, included foreign currency related transactions which resulted in gains of $4.2 million and $4.1 million in the three and six months ended June 30, 2023, respectively, as compared to gains of $7.3 million and $11.0 million in the same period last year. The stronger Euro and Mexican Peso during the three and six months ended June 30, 2023 led to a lesser gain on foreign currency related transactions.

9

Index
5. Income Taxes
The following table presents components of income tax expense for the three and six months ended June 30, 2023 and 2022:
Three months ended June 30,Six months ended June 30,
(in thousands, except percentages)2023202220232022
Income tax based on income from operations (1)$13,909 $15,165 $24,967 $26,107 
Provision for change in estimated tax rate124 66 124 66 
Income tax before discrete items14,033 15,231 25,091 26,173 
Discrete tax expense:
Exercise of U.S. stock options   (9)
Impact of amended tax returns (17) (98)
True-up of prior year estimated taxes1,941 (612)1,396 (508)
Enacted tax legislation and rate change  313  
Provision for/resolution of tax audits and contingencies, net750 (146)778 (140)
Impact of long range tax planning  (443) 
Withholding tax related to internal restructuring3,026  3,026  
Other330 2 540 38 
Total income tax expense/(benefit)$20,080 $14,458 $30,701 $25,456 
(1) Income tax is calculated at estimated annualized effective tax rate of 29.7% and 28.2% for the three and six months ended June 30, 2023 and 2022, respectively.
Income tax expense for the quarter was computed in accordance with ASC 740-270, Income Taxes – Interim Reporting. Under this method, loss jurisdictions, which cannot recognize a tax benefit with regard to their generated losses, are excluded from the annual effective tax rate calculation and their taxes will be recorded discretely in each quarter.

6. Earnings Per Share
The amounts used in computing earnings per share and the weighted average number of shares of potentially dilutive securities are as follows:
Three months ended June 30,Six months ended June 30,
(in thousands, except market price and earnings per share)
2023202220232022
Net income attributable to the Company$26,672 $39,201 $53,561 $66,938 
Weighted average number of shares:
Weighted average number of shares used in calculating basic net income per share
31,174 31,268 31,152 31,571 
Effect of dilutive stock-based compensation plans:
RSU and MPP shares95 110 91 97 
Weighted average number of shares used in calculating diluted net income per share31,269 31,378 31,243 31,668 
Net income attributable to the Company per share:
Basic$0.86 $1.25 $1.72 $2.12 
Diluted$0.85 $1.25 $1.71 $2.11 



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Index
7. Accumulated Other Comprehensive Income ("AOCI")
The table below presents changes in the components of AOCI for the period from December 31, 2022 to June 30, 2023:
(in thousands)
Translation
adjustments
Pension and
postretirement
liability
adjustments
Derivative
valuation
adjustment
Total Other
Comprehensive
Income
December 31, 2022$(146,851)$(15,783)$17,707 $(144,927)
Other comprehensive income/(loss) before reclassifications, net of tax
11,313 (691)2,642 13,264 
Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax  (5,155)(5,155)
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax
 (949) (949)
Net current period other comprehensive income11,313 (1,640)(2,513)7,160 
June 30, 2023$(135,538)$(17,423)$15,194 $(137,767)

The table below presents changes in the components of AOCI for the period from December 31, 2021 to June 30, 2022:
(in thousands)
Translation
adjustments
Pension and
postretirement
liability
adjustments
Derivative
valuation
adjustment
Total Other
Comprehensive
Income
December 31, 2021$(105,880)$(38,490)$(1,614)$(145,984)
Other comprehensive income/(loss) before reclassifications, net of tax(41,391)521 11,228 (29,642)
Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax  2,139 2,139 
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax (213) (213)
Net current period other comprehensive income(41,391)308 13,367 (27,716)
June 30, 2022$(147,271)$(38,182)$11,753 $(173,700)

The components of AOCI that are reclassified to the Consolidated Statements of Income relate to our pension and postretirement plans and interest rate swaps.











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The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the Consolidated Statements of Income that were affected for the three and six months ended June 30, 2023 and 2022:
Three months ended June 30,Six months ended June 30,
(in thousands)
2023202220232022
Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:
Other (income)/expense, net related to interest rate swaps included in Income before taxes$(3,678)$1,168 $(6,901)$2,864 
Income tax effect931 (295)1,746 (725)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income
$(2,747)$873 $(5,155)$2,139 
Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:
Amortization of prior service credit$(1,030)$(1,122)$(2,061)$(2,245)
Amortization of net actuarial loss
347 967 693 1,938 
Total pretax amount reclassified (a)(683)(155)(1,368)(307)
Income tax effect209 47 419 94 
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income$(474)$(108)$(949)$(213)
(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 3. Pensions and Other Postretirement Benefit Plans).


8. Noncontrolling Interest
Effective October 31, 2013, Safran S.A. (Safran) acquired a 10 percent equity interest in a new Albany subsidiary, Albany Safran Composites, LLC ("ASC"). The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiary, Albany Safran Composites, LLC:
Six months ended June 30,
(in thousands, except percentages)20232022
Net income of Albany Safran Composites (ASC)$4,146 $5,690 
Less: Return attributable to the Company's preferred holding637 632 
Net income of ASC available for common ownership$3,509 $5,058 
Ownership percentage of noncontrolling shareholder10 %10 %
Net income attributable to the noncontrolling interest$351 $506 
Noncontrolling interest, beginning of year$4,494 $3,638 
Net income attributable to noncontrolling interest351 506 
Changes in other comprehensive income attributable to the noncontrolling interest417 (35)
Noncontrolling interest, end of interim period$5,262 $4,109 







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Index


9. Accounts Receivable
Accounts receivable, net includes Trade and other accounts receivable and Bank promissory notes, net of Allowance for expected credit losses. In connection with certain revenues in Asia, the Company accepts a bank promissory note as customer payment. The notes may be presented for payment at maturity, which is less than one year. As of June 30, 2023 and December 31, 2022, Accounts receivable consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Trade and other accounts receivable$226,996 $179,676 
Bank promissory notes18,859 23,439 
Allowance for expected credit losses(3,666)(3,097)
Accounts receivable, net$242,189 $200,018 

The Company has Noncurrent receivables in the AEC segment that represent revenue earned, which has extended payment terms. The Noncurrent receivables will be invoiced to the customer over a 10-year period, which began in 2020. As of June 30, 2023 and December 31, 2022, Noncurrent receivables consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Noncurrent receivables$26,702 $28,053 
Allowance for expected credit losses
(134)(140)
Noncurrent receivables, net$26,568 $27,913 


10. Contract Assets and Liabilities
Contract assets include unbilled amounts typically resulting from revenues under contracts when the cost-to-cost method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to Accounts receivable, net when the entitlement to pay becomes unconditional and the customer is invoiced. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract liabilities are included in Accrued liabilities in the Consolidated Balance Sheets.
Contract assets and Contract liabilities are reported on the Consolidated Balance Sheets in a net position on a contract-by-contract basis at the end of each reporting period.
As of June 30, 2023 and December 31, 2022, Contract assets and Contract liabilities consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Contract assets$146,054 $149,443 
Allowance for expected credit losses
(730)(748)
Contract assets, net$145,324 $148,695 
Contract liabilities$6,796 $15,176 

Contract assets, net decreased $3.4 million during the six months ended June 30, 2023. The decrease was primarily due to invoicing to customers for satisfied performance obligations for contracts that were in a contract asset position. There were no impairment losses related to our Contract assets during the six months ended June 30, 2023 and June 30, 2022.
Contract liabilities decreased $8.4 million during the six months ended June 30, 2023, primarily due to revenue recognized from satisfied performance obligations exceeding amounts invoiced to customers that were in a contract liability position. Revenue recognized for the six months ended June 30, 2023 and 2022 that was included in the Contract liability balance at the beginning of the year was $11.7 million and $5.5 million, respectively.
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Index
11. Inventories
Costs included in inventories are raw materials, labor, supplies and allocable depreciation and overhead. Raw material inventories are valued on an average cost basis. Other inventory cost elements are valued at cost, using the first-in, first-out method. The Company writes down the inventories for estimated obsolescence, and to lower of cost or net realizable value based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related write-down represents the new cost basis of such inventories.
As of June 30, 2023 and December 31, 2022, Inventories consisted of the following:
(in thousands)June 30, 2023December 31, 2022
Raw materials$78,251 $74,631 
Work in process
57,691 50,516 
Finished goods15,418 13,903 
Total inventories
$151,360 $139,050 


12. Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually.
In the second quarter of 2023, management applied the qualitative assessment approach in performing its annual evaluation of goodwill for the Company's Machine Clothing reporting unit and two AEC reporting units and concluded that each reporting unit’s fair value continued to exceed its carrying value. In addition, there were no amounts at risk due to the estimated excess between the fair and carrying values. Accordingly, no impairment charges were recorded.
When a quantitative assessment is performed, determining the fair value of a reporting unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates, and future market conditions, among others. Goodwill and other long-lived assets are reviewed for impairment whenever events, such as significant changes in the business climate, plant closures, changes in product offerings, or other circumstances indicate that the carrying amount may not be recoverable.
To determine fair value, we utilize two market-based approaches and an income approach. Under the market-based approaches, we utilize information regarding the Company, as well as publicly available industry information, to determine earnings multiples and revenues multiples. Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.







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Index
13. Financial Instruments
Long-term debt, principally to banks and noteholders, consists of:
(in thousands, except interest rates)June 30, 2023December 31, 2022
Revolving credit agreement with borrowings outstanding at an end of period interest rate of 3.68% in 2023 and 3.16% in 2022 (including the effect of interest rate hedging transactions, as described below), due in 2024
$487,000 $439,000 
We had no current maturities of Long-term debt as of June 30, 2023 or December 31, 2022.
On October 27, 2020, we entered into a $700 million Amended and Restated unsecured Four-Year Revolving Credit Agreement (the “Credit Agreement”), which amended and restated the prior $685 million Five-Year Revolving Credit Facility Agreement, entered into on November 7, 2017. On June 23, 2023, we entered into the first Amendment to the Credit Agreement (the Credit Agreement and the First Amendment, collectively, the "Amended Credit Agreement") to replace the LIBOR-based reference interest rate option with a reference interest rate option based on the Term Secured Overnight Financing Rate ("Term SOFR") plus an applicable credit spread adjustment (subject to a minimum floor of 0.00%). The Amendment did not make any other material changes to the terms and conditions of the Credit Agreement, including the representations and warranties, events of default, affirmative and negative covenants.
The applicable interest rate for borrowings is based on Term SOFR plus a spread, which is based on our leverage ratio (as defined in the Amended Credit Agreement) at the time of a borrowing as follows:
Leverage RatioCommitment FeeABR SpreadTotal Spread
<1.00:1.00
0.275%0.500%1.500%
1.00:1.00 and < 2.00:1.00
0.300%0.625%1.625%
2.00:1.00 and < 3.00:1.00
0.325%0.750%1.750%
3.00:1.00
0.350%1.000%2.000%
As of June 30, 2023, however, the applicable interest rate for borrowings was based on LIBOR plus the spread, which was 1.625%.
As of June 30, 2023, there was $487 million of borrowings outstanding under the Amended Credit Agreement. As of June 30, 2023, we had borrowings available of $213 million, based on our maximum leverage ratio and our Consolidated EBITDA (as defined in the Amended Credit Agreement).
The Amended Credit Agreement contains customary terms, as well as affirmative covenants, negative covenants and events of default. As of June 30, 2023, we were in compliance with all applicable covenants. We anticipate continued compliance in each of the next four quarters while continuing to monitor its future compliance based on current and future economic conditions.
The borrowings are guaranteed by certain of the Company’s subsidiaries as defined in the Amended Credit Agreement. Our ability to borrow additional amounts under the Amended Credit Agreement is conditional upon the absence of any defaults, as well as the absence of any material adverse change (as defined in the Amended Credit Agreement).
On June 14, 2021, we entered into interest rate swap agreements for the period October 17, 2022 through October 27, 2024. These transactions have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $350 million of indebtedness, drawn under the Amended Credit Agreement at the rate of 0.838% during the period. Under the terms of these transactions, we paid the fixed rate of 0.838% and the counterparties paid a floating rate based on the one-month LIBOR rate at each monthly calculation date. The Amended Credit Agreement monthly calculation date is the 16th of each month, and on June 16, 2023, one-month LIBOR was 5.16%. As of June 16, 2023, the all-in-rate on the $350 million of debt was 2.463%. On June 29, 2023, the Company amended each Swap agreement, in accordance with the practical expedients included in Accounting Standards Codification (“ASC”) 848, Reference Rate Reform, to replace the LIBOR Benchmark with a Term SOFR Benchmark. As a result of the amendments, we will pay a fixed blended rate of 0.7683% (plus a credit spread adjustment as defined in the Amended Credit Agreement) through October 27, 2024 on $350 million of borrowings under the Amended Credit Agreement. The effective date of the amended Swap agreements is July 17, 2023.
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Index
On October 17, 2022, our interest rate swap agreements that were in effect from December 18, 2017 terminated. These transactions had the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $350 million of indebtedness drawn under the Credit Agreement at the rate of 2.11% during the period. Under the terms of those transactions, we paid the fixed rate of 2.11% and the counterparties paid a floating rate based on the one-month LIBOR rate at each monthly calculation date. The all-in-rate on the $350 million of debt was 3.735% at the time the swap agreements terminated.
These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14. Fair-Value Measurements. No cash collateral was received or pledged in relation to the swap agreements.
Under the Amended Credit Agreement, we are required to maintain leverage and minimum interest coverage ratios (as defined in the Credit Agreement) of not greater than 3.50 to 1.00 and greater than 3.00 to 1.00, respectively.
As of June 30, 2023, our leverage ratio was 1.49 to 1.00 and our interest coverage ratio was 14.36 to 1.00. We may purchase our Common Stock or pay dividends to the extent our leverage ratio remains at or below 3.50 to 1.00, and may make acquisitions with cash, provided our leverage ratio does not exceed the limits noted above.
Indebtedness under the Amended Credit Agreement is ranked equally in right of payment to all unsecured senior debt.

14. Fair-Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
We had no Level 3 financial assets or liabilities at June 30, 2023 or at December 31, 2022.
The following table presents the fair-value hierarchy for our Level 1 and Level 2 financial and non-financial assets and liabilities, which are measured at fair value on a recurring basis:
June 30, 2023December 31, 2022
Quoted
prices in
active
markets
Significant
other
observable
inputs
Quoted
prices in
active
markets
Significant
other
observable
inputs
(in thousands)
(Level 1)
(Level 2)
(Level 1)
(Level 2)
Fair Value
Assets:
Cash equivalents$12,212 $ $6,533 $ 
Other Assets:
Common stock of unaffiliated foreign public company (a)565  602  
Interest rate swaps$ $20,303 $ $23,605 
(a)Original cost basis $0.5 million.

Cash equivalents include short-term securities that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities.
The interest rate swaps are accounted for as hedges of future cash flows. The fair value of our interest rate swaps are derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve, and is
16

Index
included in Other assets and/or Other noncurrent liabilities in the Consolidated Balance Sheets. Amounts determined to be due within one year are reclassified to Other current assets and/or Accrued liabilities in the Consolidated Balance Sheets. Unrealized gains and losses on the interest rate swaps flow through the caption Derivative valuation adjustment in the Shareholders’ equity section of the Consolidated Balance Sheets. On June 29, 2023, the Company amended each Swap agreement, in accordance with the practical expedients included in ASC 848, Reference Rate Reform, to replace the LIBOR Benchmark with a Term SOFR Benchmark (See Note 13. Financial Instruments for additional information). As of June 30, 2023, these interest rate swaps were determined to be highly effective hedges of interest rate cash flow risk. Amounts accumulated in Other comprehensive income are reclassified as interest expense/(income), net when the related interest payments (that is, the hedged forecasted transactions), affect earnings. Interest expense/(income) related to payments under the active swap agreements totaled $(6.9) million for the six months ended June 30, 2023, and $2.9 million for the six months ended June 30, 2022.
We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results. Foreign currency instruments are entered into periodically, and consist of foreign currency option contracts and forward contracts that are valued using quoted prices in active markets obtained from independent pricing sources. These instruments are measured using market foreign exchange prices and are recorded in the Consolidated Balance Sheets as Other current assets and Accounts payable, as applicable. Changes in fair value of these instruments are recorded as gains or losses within Other (income)/expense, net.
When exercised, the foreign currency instruments are net settled with the same financial institution that bought or sold them. For all positions, whether options or forward contracts, there is risk from the possible inability of the financial institution to meet the terms of the contracts and the risk of unfavorable changes in interest and currency rates, which may reduce the value of the instruments. We seek to mitigate risk by evaluating the creditworthiness of counterparties and by monitoring the currency exchange and interest rate markets while reviewing the hedging risks and contracts to ensure compliance with our internal guidelines and policies.
(Gains)/losses related to changes in fair value of derivative instruments that were recognized in Other (income)/expense, net in the Consolidated Statements of Income were as follows:
Three months ended June 30,Six months ended June 30,
(in thousands)2023202220232022
Derivatives not designated as hedging instruments:
Foreign currency options (gains)/losses$(138)$596 $(123)$(381)

15. Commitments and Contingencies
Asbestos Litigation
Albany International Corp. is a defendant in suits brought in various courts in the United States by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. We were defending 3,601 claims as of June 30, 2023.
The following table sets forth the number of claims filed, the number of claims settled, dismissed or otherwise resolved, and the aggregate settlement amount during the periods presented:
(in thousands, except number of claims)
Opening
Number of
Claims
Claims
Dismissed,
Settled, or
Resolved
New Claims
Closing
Number of
Claims
Amounts Paid to
Settle or
Resolve
As of December 31, 20223,609 43 32 3,598 $125 
As of June 30, 20233,598 4 7 3,601 $4 
We anticipate that additional claims will be filed against the Company and related companies in the future but are unable to predict the number and timing of such future claims. Due to the fact that information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to pending or future claims and therefore are unable to estimate a range of reasonably possible loss in excess of amounts already accrued for pending or future claims.
17


While we believe we have meritorious defenses to these claims, we have settled certain claims for amounts we consider reasonable given the facts and circumstances of each case. Our insurance carrier has defended each case and funded settlements under a standard reservation of rights. As of June 30, 2023, we had resolved, by means of settlement or dismissal, 38,032 claims at a total cost of $10.6 million. Of this amount, almost 100% was paid by our insurance carrier, who has confirmed that we have approximately $140 million of remaining coverage under primary and excess policies that should be available with respect to current and future asbestos claims.
The Company’s subsidiary, Brandon Drying Fabrics, Inc. (“Brandon”), is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant, despite never having manufactured any fabrics containing asbestos. While Brandon was defending against 7,702 claims as of June 30, 2023, only twelve claims have been filed against Brandon since January 1, 2012, and only $15,000 in settlement costs have been incurred since 2001. Brandon was acquired by the Company in 1999 and has its own insurance policies covering periods prior to 1999. Since 2004, Brandon’s insurance carriers have covered 100% of indemnification and defense costs, subject to policy limits and a standard reservation of rights.
In some of these asbestos cases, the Company is named both as a direct defendant and as the “successor in interest” to Mount Vernon Mills (“Mount Vernon”). We acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products. We deny any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, we have successfully moved for dismissal in a number of actions.
We currently do not anticipate, based on currently available information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results of operations, or cash flows of the Company. Although we cannot predict the number and timing of future claims, based on the foregoing factors, the trends in claims filed against us, and available insurance, we also do not currently anticipate that potential future claims will have a material adverse effect on our financial position, results of operations, or cash flows.

16. Changes in Shareholders’ Equity
The following table summarizes changes in Shareholders’ Equity for the period December 31, 2022 to June 30, 2023:
Class A
Common Stock
Additional paid-in capital
Retained 
earnings
Accumulated items of other comprehensive income
Class A
Treasury Stock
Noncontrolling Interest
Total Shareholders' Equity
(in thousands)
Shares
Amount
Shares
Amount
December 31, 202240,785 $41 $441,540 $931,318 $(144,927)9,675 $(364,923)$4,494 $867,543 
Net income— — — 26,889 — — — 197 27,086 
Compensation and benefits paid or payable in shares58 — 378 — — — — — 378 
Dividends declared on Class A Common Stock, $0.25 per share
— — — (7,792)— — — — (7,792)
Cumulative translation adjustments— — — — 13,881 — — 238 14,119 
Pension and postretirement liability adjustments— — — — (916)— — — (916)
Derivative valuation adjustment— — — — (2,902)— — — (2,902)
March 31, 202340,842 $41 $441,917 $950,415 $(134,864)9,675 $(364,923)$4,929 $897,515 
Net income— — — 26,672 — — — 154 26,826 
Compensation and benefits paid or payable in shares— — 811 — — — — — 811 
Shares issued to Directors'— 828 — — (12)258 — 1,086 
Dividends declared on Class A Common Stock, $0.25 per share
— — — (7,795)— — — — (7,795)
Cumulative translation adjustments— — — — (2,568)— — 179 (2,389)
Pension and postretirement liability adjustments— — — — (724)— — — (724)
Derivative valuation adjustment— — — — 389 — — — 389 
June 30, 202340,842 $41 $443,556 $969,292 $(137,767)9,663 $(364,665)$5,262 $915,719 

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The following table summarizes changes in Shareholders’ Equity for the period December 31, 2021 to June 30, 2022:
Class A
Common Stock
Additional paid-in capital
Retained 
earnings
Accumulated items of other comprehensive income
Class A
Treasury Stock
Noncontrolling Interest
Total 
Shareholders' Equity
(in thousands)
Shares
Amount
Shares
Amount
December 31, 202140,760 $41 $436,996 $863,057 $(145,984)8,665 $(280,143)$3,638 $877,605 
Net income— — — 27,737 — — — 338 28,075 
Compensation and benefits paid or payable in shares21 — 745 — — — — — 745 
Options exercised— — 7 — — — — — 7 
Purchase of Treasury shares (a)— — — — — 515 (43,937)— (43,937)
Dividends declared on Class A Common Stock, $0.21 per share
— — — (6,661)— — — — (6,661)
Cumulative translation adjustments— — —