Albany International (AIN) Q3 2024 earnings summary

Executive summary

• Consolidated net sales reached $298.4 million, up 6.1% year-over-year, driven by the Heimbach acquisition and stable AEC revenues; nine-month revenues increased 14.5% year-over-year.

• Machine Clothing revenues grew to $183 million, while AEC revenues were $115.4 million, flat year-over-year due to contract adjustments and program mix.

• Operational excellence and cost management led to improved margins in Machine Clothing, while AEC margins were impacted by negative contract adjustments and suspended production at a key customer.

• Backlog remains robust at over $1 billion, with continued growth in defense and space platforms, despite near-term softness in certain commercial programs.

• Cash flow from operations improved to $140 million for the nine months ended September 30, 2024, up from $73.8 million in the prior year.

Financial highlights

• Machine Clothing net sales increased 9.9% year-over-year; organic sales declined 1% due to SAP implementation delays.

• AEC net sales were flat, with a $16 million negative impact from contract adjustments; underlying CH-53K sales increased.

• Q3 2024 gross profit was $90.4 million, down from $101.8 million, but would have been $112 million excluding contract adjustments.

• GAAP net income was $18 million, down from $27 million, primarily due to contract adjustments.

• Adjusted diluted EPS was $0.80, down from $1.02; contract adjustments reduced EPS by $0.55.

• Adjusted EBITDA was $54 million, with Machine Clothing at $64 million (+12%) and AEC at $4 million (down from $22 million).

• Free cash flow for the quarter was $32 million; year-to-date free cash flow reached $78 million.

Outlook and guidance

• Revenue and adjusted EBITDA guidance for both segments narrowed, with consolidated adjusted EBITDA slightly higher than prior guidance.

• Full-year AEC EBITDA guide implies high-teens margins for Q4; adjusted EPS midpoint raised to $3.20, a 5% increase.

• Full-year 2025 guidance and longer-term outlook to be provided at year-end and at the spring 2025 investor day.

• Full-year outlook for AEC revised downward due to negative changes in long-term contract profitability and slower-than-expected aerospace production rates.

• Monitoring potential impacts from Boeing and Airbus production adjustments and labor strikes.