What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-07-28 compared with 2021-04-27 · 162 added, 77 removed, 290 unchanged (45% of the section changed)

36 unchanged sentences

The following table summarizes our Net sales by business segment:

Three months ended

Three months ended June 30, Six months ended June 30,

(in thousands, except percentages)

2021 2020 % Change

2021 2020 % Change 2021 2020 % Change

Machine Clothing $159,921 $153,433 4.2 % $308,127 $290,035 6.2 %

3 unchanged sentences

The following tables provide a comparison of 2021 Net sales, excluding the impact of currency translation effects, to 2020 Net sales:

(in thousands, except percentages)

Net sales as reported, Q1 2021 Increase due to changes in currency translation rates Q1 2021 sales on same basis as Q1 2020 currency translation rates Net sales as reported, Q1 2020 % Change compared to Q1 2020, excluding currency rate effects

(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 %

74,156 1,178 72,978 99,162 -26.4 %

Total $ 222,362 $ 6,039 $ 216,323 $ 235,764 -8.2 %

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 %

Three month comparison

• Changes in currency translation rates had the effect of increasing Net sales by $6.0 million during the first quarter of 2021, as compared to 2020, principally due to the stronger euro in 2021.

• Changes in currency translation rates had the effect of increasing Net sales by $6.4 million during the second quarter of 2021, as compared to 2020, principally due to stronger Euro and Chinese Yuan Renminbi in 2021.

• Excluding the effect of changes in currency translation rates:

• Net sales increased 1.0% compared to the same period in 2020.

• Net sales in MC increased 0.8% compared to the second quarter of 2020, principally due to growth in sales for packaging grades and engineered fabrics, partially offset by declines in other grades.

• Net sales in AEC increased 1.3%, mainly due to an increase in sales for the LEAP and CH-53K programs, partially offset by a decline in sales on the Boeing 787 program.

Six month comparison

• Changes in currency translation rates had the effect of increasing Net sales by $12.4 million during the first six months of 2021, as compared to 2020, principally due to stronger Euro and Chinese Yuan Renminbi in 2021.

• Excluding the effect of changes in currency translation rates:

• Net sales decreased 3.7% compared to the same period in 2020.

• Net sales in MC increased 4.9% compared to the first quarter of 2020, principally due to growth in sales for packaging and other grades, which more than offset decreases in sales for publication grades.

• Net sales in AEC decreased 26.4% principally due to declines in sales for the LEAP and Boeing 787 programs.

• Net sales in MC increased 2.7% compared to the first six months of 2020, primarily due to growth in sales for packaging grades and Engineered Fabrics, partially offset by declines in other grades.

• Net sales in AEC decreased 14.7%, primarily due to declines in sales for the Boeing 787 program.

The following table summarizes Gross profit by business segment:

Three months ended

Three months ended June 30, Six months ended June 30,

(in thousands, except percentages)

2021 2020 2021 2020

Machine Clothing $ 84,597 $ 83,612 $ 160,990 $ 156,264

5 unchanged sentences

Three month comparison

The decrease in 2021 Gross profit, as compared to the same period in 2020, was principally due to the effect of lower Net sales in AEC, partially offset by an increase in Machine Clothing Net sales.

The decrease in second quarter 2021 Gross profit, as compared to the same period in 2020, was due to a decline in AEC Gross profit, partially offset by higher Gross profit in MC .

Gross profit as a percentage of sales:

• Decreased from 53.2% in 2020 to 51.5% in 2021 in Machine Clothing, principally due to an increase in production costs and lower cost absorption.

• Decreased from 17.0% in 2020 to 16.4% in 2021 in AEC, principally due to changes in the estimated profitability of long-term contracts, which increased Gross profit by $0.9 million in the first quarter of 2020, but had an insignificant effect on gross profit for the same period of 2021.

• Decreased from 54.5% in 2020 to 52.9% in 2021 in MC, due to higher input and fixed costs, partially offset by improved absorption.

• Decreased from 26.7% in 2020 to 23.0% in 2021 in AEC, principally due to a smaller impact from changes in the estimated profitability of long-term contracts, which increased Gross profit by $4.3 million for the second quarter of 2021, compared to an increase of $7.4 million for the second quarter of 2020.

Six month comparison

Gross Profit for the first half of 2021 was slightly lower than the same period in 2020.

Gross profit as a percentage of sales:

• Decreased from 53.9% in 2020 to 52.2% in 2021 in MC, due to an increase in production costs and lower cost absorption.

• Decreased from 21.1% in 2020 to 19.7% in 2021 in AEC, driven by changes in the estimated profitability of long-term contracts, which increased Gross profit by $3.7 million versus $6.4 million in the first half of 2021 and 2020, respectively.

Selling, Technical, General, and Research (STG&R)

Selling, Technical, General and Research (STG&R) expenses include;

selling, general, administrative, technical and research expenses.

Selling, Technical, General and Research (STG&R) expenses include selling, general, administrative, technical and research expenses.

The following table summarizes STG&R expenses by business segment:

Three months ended

Three months ended June 30, Six months ended June 30,

(in thousands, except percentages)

2021 2020 2021 2020

Machine Clothing $ 28,685 $ 26,682 $ 54,784 $ 51,517

Albany Engineered Composites

10,014 8,821 19,140 18,018

Corporate expenses 13,071 11,913 24,522 27,117

2 unchanged sentences

Three month comparison

The overall decrease in STG&R expenses in the first quarter of 2021, compared to the same period in 2020, was principally due to the net effect of the following individually significant items:

• In MC, STG&R expenses increased due to revaluation of nonfunctional currency assets and liabilities which resulted in a first-quarter gain of $0.5 million in 2021, compared to a gain of $3.7 million in 2020.

That effect was partially offset by lower travel costs and effects of cost reduction initiatives in 2020.

• In Corporate, STG&R expenses decreased principally due to former CEO termination costs recorded in the first quarter of 2020.

The overall increase in STG&R expenses in the second quarter of 2021, compared to the same period in 2020, was driven by higher incentive compensation and travel expense, as well as research and development spending.

Additionally, revaluation of nonfunctional currency assets and liabilities in Machine Clothing resulted in a second-quarter loss of $1.9 million in 2021, compared to a loss of $1.1 million for the same period in 2020.

Six month comparison

The overall increase in STG&R expenses in the first six months of 2021, compared to the same period in 2020, was due to the net effect of the following:

• Revaluation of nonfunctional currency assets and liabilities in Machine Clothing, which resulted in a loss of $1.4 million in 2021, compared to a gain of $2.6 million for the first six months of 2020

• Former CEO termination costs of $2.7 million were recorded in Corporate expenses during the first quarter of 2020

• Higher incentive compensation in all business segments in 2021

Restructuring Expense, net

In addition to the items discussed above affecting Gross profit, and STG&R expenses, operating income was affected by restructuring costs of $0.1 million in the first three months of 2021, and $0.6 million for the same period in 2020.

In addition to the items discussed above affecting Gross profit and STG&R expenses, Operating income was minimally affected by restructuring costs in the first six months of 2021, but totaled $3.5 million for the same period in 2020.

The following table summarizes Restructuring expenses, net by business segment:

Three months ended

Three months ended June 30, Six months ended June 30,

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Total $ (9) $ 2,837 $ 43 $ 3,479

Machine Clothing restructuring charges or credits in both years principally related to discontinued operations at its production facility in Sélestat, France announced in 2017.

Machine Clothing restructuring charges or credits in both years mainly related to discontinued operations at its production facility in Sélestat, France, announced in 2017.

The restructuring program was driven by the Company’s need to balance manufacturing capacity with demand.

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The following table summarizes operating income/(loss) by business segment:

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Three months ended June 30, Six months ended June 30,

(in thousands) 2021 2020 2021 2020

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Other Earnings Items

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Three months ended June 30, Six months ended June 30,

(in thousands) 2021 2020 2021 2020

4 unchanged sentences

Interest Expense, net

Year-to-date 2021 Interest expense, net, was lower as compared to 2020, principally due to lower average debt.

Year-to-date 2021 Interest expense, net, was lower as compared to 2020, due to lower average debt outstanding.

See the Capital Resources section for further discussion of borrowings and interest rates.

Other (income)/expense, net

Three month comparison

The decrease in Other (income)/expense, net included the following individually significant items:

• For the first quarter of each year, revaluation of nonfunctional currency cash and intercompany balances resulted in a loss of $0.2 million in 2021, compared to a loss of $14.8 million in 2020.

The loss in 2020 principally resulted from an intercompany demand loan payable by a Mexican subsidiary.

Three and Six month comparison

Other (income)/expense net included losses related to the revaluation of nonfunctional-currency balances of $0.3 million for the first six months of 2021, compared to losses of $14.9 million for the first six months of 2020, which principally resulted from an intercompany demand loan payable by a Mexican subsidiary.

As a result of changes in business conditions that occurred in the first quarter of 2020, loan repayments on that intercompany loan are not expected in the foreseeable future and, beginning April 1, 2020, the revaluation effects are recorded in Other comprehensive income.

The Company has operations, which constitute a taxable presence in 18 countries outside of the United States.

4 unchanged sentences

From period to period, the jurisdictional mix of earnings can vary as a result of operating fluctuations in the normal course of business, as well as the extent and location of other income and expense items, such as pension settlement and restructuring charges.

Three month comparison

The Company’s effective tax rates for the first quarter of 2021 and 2020 were 26.7% and 62.1%, respectively.

Three and six month comparison

The Company’s effective tax rates for the second quarter of 2021 and 2020 were 30.0% and 32.1%, respectively, and for the first half of 2021 and 2020, were 28.5% and 41.0%, respectively.

The tax rate is affected by recurring items, such as the income tax rate in the U.S.

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tax costs on foreign earnings, and by discrete items that may occur in any given year but are not consistent from year to year.

It should be noted that the effective tax rate for the first quarter of 2020 was significantly affected by a non-recurring tax adjustment due to non-deductible foreign exchange losses, as illustrated in the table below.

Significant items that impacted the effective tax rate in the first quarter of 2021 and 2020 included the following (percentages reflect the effect of each item as a percentage of income before income taxes):

The decrease in the Q2 2021 income tax rate from continuing operations, excluding discrete items, was primarily driven by a decrease in losses in a foreign jurisdiction that were excluded in calculating the quarterly income tax provision.

The effective tax rate for the six months ended June 30, 2020 was significantly affected by a non-recurring tax adjustment due to non-deductible foreign exchange losses, which occurred in the first quarter of 2020.

Significant items that impacted the effective tax rate in the second quarter of 2021 and 2020 included the following (percentages reflect the effect of each item as a percentage of income before income taxes):

Three months ended

June 30, Six months ended

2021 2020 2021 2020

(in thousands, except percentages)

Continuing operations (excluding discrete items) 13,251 29.5 % 16,262 34.0 % 24,365 29.5 % 23,081 34.0 %

Provision for/resolution of tax audits and contingencies, net 278 0.7 % (244) (1.2) %

Exercise of U.S.

stock options (14) — % — — % (156) (0.2) % — — %

Adjustments to prior period tax liabilities 22 — % 879 1.8 % (1,421) (1.7) % 767 1.1 %

Out-of-period adjustments — — % 1,830 9.1 %

Revaluation of deferred tax assets due to tax rate change 352 0.8 % — — % 352 0.4 % — — %

Provision for/resolution of tax audits and contingencies, net — — % (1,489) (3.1) % 278 0.3 % (1,733) (2.6) %

Write-off of net operating losses related to tax audit — — % — — % — — % 1,830 2.7 %

Tax effect of non-deductible foreign exchange loss on intercompany loan — — % (13) (0.1) % — — % 3,656 5.4 %

Changes in valuation allowance — — % 222 0.5 % — — % 222 0.4 %

Other adjustments (165) (0.3) % (497) (1.0) % 68 0.2 % (5) — %

Effective tax rate 13,446 30.0 % 15,364 32.1 % 23,486 28.5 % 27,818 41.0 %

For more information on income tax, see Note 6 to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

For more information on income tax, see Note 6 to the Consolidated Financial Statements.

Segment Results of Operations

Machine Clothing Segment

Machine Clothing is our primary business segment and accounted for 67% of our consolidated revenues during the first three months of 2021.

Machine Clothing accounted for 68% of our consolidated revenues during the six months of 2021.

MC products are purchased primarily by manufacturers of paper and paperboard.

6 unchanged sentences

Review of Operations

Three months ended

Three months ended June 30, Six months ended June 30,

(in thousands, except percentages)

2021 2020 2021 2020

Net sales $ 159,921 $ 153,433 $ 308,127 $ 290,035

6 unchanged sentences

• Net sales increased by 4.2%.

• Changes in currency translation rates had the effect of increasing first-quarter 2021 sales by $4.9 million compared to the same period in 2020.

That currency translation effect was principally due to the stronger euro in the first quarter of 2021, compared to 2020.

• Excluding the effect of changes in currency translation rates, Net sales in MC increased 4.9% compared to the first quarter of 2020, as growth in sales for packaging and other grades more than offset declines in publication grades.

• Changes in currency translation rates had the effect of increasing second-quarter 2021 sales by $5.3 million compared to the same period in 2020.

That currency translation effect was mainly due to stronger Euro and Chinese Yuan Renminbi in the second quarter of 2021, compared to 2020.

• Excluding the effect of changes in currency translation rates, Net sales in MC increased 0.8% compared to the second quarter of 2020, principally due to growth in sales for packaging grades and engineered fabrics, partially offset by declines in other grades.

Six month comparison

• Net sales increased by 6.2%.

• Changes in currency translation rates had the effect of increasing 2021 sales by $10.1 million compared to the same period in 2020.

That currency translation effect was principally due to stronger Euro and Chinese Yuan Renminbi in the first six months of 2021, compared to 2020.

• Excluding the effect of changes in currency translation rates, Net sales in MC increased 2.7% compared to 2020, as growth in sales for packaging grades and Engineered Fabrics partially offset the declines in other grades.

Three month comparison

• The increase in MC Gross profit was principally due to higher sales as noted above, partially offset by a decrease in gross profit percentage that was principally due to an increase in production costs and lower cost absorption compared to 2020.

The decrease in MC Gross profit margins was due to higher input and fixed costs, partially offset by improved absorption, in the second quarter of 2021.

Six month comparison

The decrease in MC Gross profit margins was due to an increase in production costs and lower cost absorption compared to the same period in 2020.

Operating Income

Three month comparison

The increase in Operating income was principally due to the net effect of higher sales, partially offset by higher STG&R expenses.

The slight decrease in the second quarter of 2021 operating income, compared to the same period in 2020, was primarily due to a slight improvement in gross profit, partially offset by higher STG&R expenses.

Six month comparison

The increase in operating income in first half of 2021 was driven by higher gross profit, offset by higher STG&R expenses, compared to the same period in 2020.

Albany Engineered Composites Segment

3 unchanged sentences

The LEAP engine is used on the Airbus A320neo and Boeing 737 MAX family of jets.

Other significant AEC programs include components for the F-35, fuselage frames for the Boeing 787, components for the CH53-K helicopter, and the fan case for the GE9X engine.

Other significant AEC programs include components for the F-35, components for the CH-53K helicopter, fuselage frames for the Boeing 787, and the fan case for the GE9X engine.

Review of Operations

Three months ended

Three months ended June 30, Six months ended June 30,

(in thousands, except percentages)

2021 2020 2021 2020

Net sales $ 74,598 $ 72,557 $ 148,753 $ 171,719

2 unchanged sentences

STG&R expenses

10,014 8,821 19,140 18,018

Operating income 7,164 8,299 10,102 15,922

Three month comparison

The decrease in Net sales was principally due to lower sales in the LEAP and Boeing 787 programs, partially offset by growth on the F-35 and CH-53K platforms.

Three month comparison

The decrease in Gross profit of $4.7 million was principally due to the decrease in Net sales.

Adjustments in the estimated profitability of long-term contracts increased operating income by $0.9 million for the first quarter of 2020, compared to an insignificant effect for the first quarter of 2021.

The increase in Net sales was mainly due to higher sales in the LEAP and CH-53K programs, partially offset by a decline in sales in the Boeing 787 program.

Six month comparison

The decrease in Net sales was primarily due to lower sales in the Boeing 787 program.

Three and six month comparison

The decrease in Gross profit was principally due to smaller impact from changes in the estimated profitability of long-term contracts.

Long-term contracts

AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement.

Revenue earned under these arrangements accounted for approximately 40 percent of segment revenue for each of the first three months of 2021 and 2020.

Revenue earned under these arrangements accounted for approximately 35 percent of segment revenue for each of the first six months of 2021 and 40 percent for the same period of 2020.

LEAP engines are currently used on the Boeing 737 MAX, Airbus A320neo and COMAC aircraft.

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Operating Income

Three month comparison

The decrease in Operating income of $4.7 million in the first quarter of 2021 was principally due to the decrease in Net sales, as described above.

Three and six month comparison

The decrease in Operating income was driven by lower gross profit and higher STG&R expenses, offset by lower restructuring expenses.

Liquidity and Capital Resources

Cash Flow Summary

Three months ended

Six months ended

(in thousands)

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Operating activities

Cash flow provided by operating activities was $33.7 million in the first three months of 2021, compared to cash flow used by operating activities of $6.6 million in the first three months of 2020.

The improvement in cash provided by operating activities in 2021 was due to improved working capital cash flows in AEC and an increase in Net income.

Cash paid for income taxes was $15.7 million and $9.6 million for the first three months of 2021 and 2020, respectively.

Cash flow provided by operating activities was $95.6 million in the first six months of 2021, compared to $44.0 million in the first six months of 2020.

This improvement was due to improved working capital cash flows in AEC and an increase in consolidated Net income.

Cash paid for income taxes was $22.8 million and $16.5 million for the first six months of 2021 and 2020, respectively.

The increase is primarily due to an increase in corporate income tax payments in Brazil, China and Switzerland related to prior year tax liabilities.

At March 31, 2021, we had $237.9 million of cash and cash equivalents, of which $209.0 million was held by subsidiaries outside of the United States.

At June 30, 2021, we had $253.3 million of cash and cash equivalents, of which $215.2 million was held by subsidiaries outside of the United States.

Investing and Financing Activities

Capital expenditures for the first three months were $12.5 million in 2021 and $12.8 million in 2020.

Capital expenditures for the first six months were $23.1 million in 2021 and $22.0 million in 2020.

Dividends have been declared each quarter since the fourth quarter of 2001.

4 unchanged sentences

Our subsidiaries outside of the United States may also maintain working capital lines with local banks, but borrowings under such local facilities tend to be insignificant.

The majority of our cash balance at March 31, 2021 was held by non-U.S.

The majority of our cash balance at June 30, 2021 was held by non-U.S.

subsidiaries.

Based on cash on hand and credit facilities, we anticipate that the Company has sufficient capital resources to operate for the foreseeable future.

We were in compliance with all debt covenants as of March 31, 2021.

We were in compliance with all debt covenants as of June 30, 2021.

On October 27, 2020, we entered into a $700 million unsecured Four-Year Revolving Credit Facility Agreement (the “Credit Agreement”) which amended and restated the prior amended and restated $685 million Five-Year Revolving Credit Facility Agreement, which we had entered into on November 7, 2017 (the “Prior Agreement”).

Under the Credit Agreement, $384 million of borrowings were outstanding as of March 31, 2021.

Under the Credit Agreement, $350 million of borrowings were outstanding as of June 30, 2021.

The applicable interest rate for borrowings was LIBOR plus a spread, based on our leverage ratio at the time of borrowing.

At the time of the last borrowing on March 31, 2021, the spread was 1.625%.

At the time of the last borrowing on June 30, 2021, the spread was 1.625%.

The spread was based on a pricing grid, which ranged from 1.500% to 2.000%, based on our leverage ratio.

Based on our maximum leverage ratio and our Consolidated EBITDA, and without modification to any other credit agreements, as of March 31, 2021, we would have been able to borrow an additional $316 million under the Agreement.

For more information, see Note 14 to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

Based on our maximum leverage ratio and our Consolidated EBITDA, and without modification to any other credit agreements, as of June 30, 2021, we would have been able to borrow an additional $350 million under the Agreement.

For more information, see Note 14 to the Consolidated Financial Statements.

Off-Balance Sheet Arrangements

As of March 31, 2021, we have no off-balance sheet arrangements required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K.

As of June 30, 2021, we have no off-balance sheet arrangements required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K.

Recent Accounting Pronouncements

The information set forth under Note 18 contained in Item 1, “Notes to Consolidated Financial Statements”, which is incorporated herein by reference.

The information set forth under Note 18 to the Consolidated Financial Statements.

Non-GAAP Measures

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An understanding of the impact in a particular quarter of specific restructuring costs, former CEO termination costs, acquisition/integrations costs, currency revaluation, pension settlement/curtailment charges, 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.

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.

Net sales, or percent changes in Net sales, excluding currency rate effects, are calculated by converting amounts reported in local currencies into U.S.

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The following tables show the calculation of EBITDA and Adjusted EBITDA:

Three months ended March 31, 2021

Three months ended June 30, 2021

(in thousands) Machine Clothing Albany Engineered

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Adjusted EBITDA (non-GAAP) $ 62,958 $ 19,301 $ (12,840) $ 69,419

Three months ended March 31, 2020

Three months ended June 30, 2020

(in thousands) Machine Clothing Albany Engineered

10 unchanged sentences

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

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

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 expense attributable to noncontrolling interest — 1,492 — 1,492

Pre-tax loss attributable to noncontrolling interest — 1,434 — 1,434

Adjusted EBITDA (non-GAAP) $ 112,128 $ 44,863 $ (24,186) $ 132,805

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The following tables show the earnings per share effect of certain income and expense items:

Three months ended March 31, 2021

Three months ended June 30, 2021

(in thousands, except per share amounts) Pre tax

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Acquisition/integration costs 300 90 210 0.01

Three months ended March 31, 2020

Three months ended June 30, 2020

(in thousands, except per share amounts) Pre tax

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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

Effect After tax

Effect Per share

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

Effect After tax

Effect Per share

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

1 unchanged sentence

Acquisition/integration costs 576 172 404 0.02

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

The following table contains the calculation of Adjusted EPS:

Three months ended March 31,

(a) In Q1 2020, the company incurred 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

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(in thousands)

March 31, 2021 December 31, 2020 March 31, 2020

June 30, 2021 March 31, 2021 December 31, 2020

Current maturities of long-term debt $ — $ 2 $ 9

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis