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Item 1. Business

2024-02-26 compared with 2023-02-24 · 175 added, 100 removed, 88 unchanged (76% of the section changed)

Albany International Corp.

(the Registrant, the Company, we, us, or our) and its subsidiaries are engaged in two business segments.

(the Registrant, the Company, Albany, we, us, or our) and its subsidiaries are engaged in two business segments.

The Machine Clothing (“MC”) segment supplies consumable permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, pulp, nonwovens, fiber cement and several other industrial applications.

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Pressing fabrics are designed to carry the sheet through the press section, where water is pressed from the sheet as it passes through the press nip.

In the drying section, drying fabrics manage air movement and hold the sheet against heated cylinders to enhance drying to a final moisture content between 4% to 9%, depending on the grade.

In the drying section, drying fabrics manage air movement and hold the sheet against heated cylinders to enhance drying to a final moisture content between 4 percent to 9 percent, depending on the grade.

Process belts are used in the press section to increase dryness and enhance sheet properties, as well as in other sections of the machine to improve runnability and enhance sheet qualities.

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MC products, manufacturing processes, and distribution channels are substantially the same in each region of the world in which we operate.

The sales of paper machine clothing forming, pressing, and drying fabrics, individually and in the aggregate, accounted for more than 10 percent of our consolidated Net sales during one or more of the last three years.

No individual customer accounted for as much as 10 percent of MC segment Net sales in any of the periods presented.

A majority of MC segment Net sales in the year ended December 31, 2022 were for use in the production of the growing grades of tissue, containerboard, other paper categories, and other engineered fabrics, while less than 20% of MC segment Net sales were for the production of the declining newsprint and printing and writing papers categories.

The sales of paper machine clothing forming, pressing, and drying fabrics, individually and in the aggregate, accounted for more than 10 percent of our consolidated Net revenues during one or more of the last three years.

No individual customer accounted for as much as 10 percent of MC segment Net revenues in any of the periods presented.

A majority of MC segment Net revenues in the year ended December 31, 2023 were for use in the production of the growing grades of tissue, containerboard, other paper categories, and other engineered fabrics, while less than 20 percent of MC segment Net revenues were for the production of the declining newsprint and printing and writing papers categories.

On August 31, 2023, the Company completed the acquisition of Heimbach GmbH ("Heimbach"), a privately-held manufacturer of paper machine clothing and technical textiles, as further described in Note 24, Business Combination, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K .

The financial results of the acquired company are included in the MC reportable segment.

The Albany Engineered Composites (“AEC”) segment, provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries.

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The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircrafts.

AEC’s largest aerospace customer is SAFRAN and sales to SAFRAN (consisting primarily of fan blades and cases for CFM’s LEAP engine) accounted for approximately 16 percent of the Company’s consolidated Net sales in 2022.

Other significant AEC programs include the production of structures and parts for the Sikorsky CH-53K helicopter, F-35 fighter jet, Joint Air-to-Surface Standoff Missile ("JASSM"), and Boeing 787 platforms.

AEC also supplies vacuum waste tanks for most of the Boeing 7X7 aircraft, as well as the fan case for the GE9X engine.

In 2022, approximately 46% of the AEC segment’s sales were related to U.S.

Other significant AEC programs include the production of structures, parts and sub-assemblies for the Sikorsky CH-53K helicopter, F-35 fighter jet, Joint Air-to-Surface Standoff Missile ("JASSM"), and Boeing 787 aircraft.

AEC also supplies vacuum waste tanks for most Boeing commercial aircraft, as well as the fan case for the GE9X engine.

In 2023, approximately 39 percent of the AEC segment’s revenues were related to U.S.

government contracts or programs.

See “Business Environment Overview and Trends” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for a discussion of general segment developments in recent years.

Following is a table of Net sales by segment for 2022, 2021, and 2020.

Following is a table of Net revenues by segment for years ended December 31, 2023, 2022, and 2021.

(in thousands)

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477,141 425,426 310,225

Consolidated total

Total net revenues

$ 1,147,909 $ 1,034,887 $ 929,240

The table setting forth certain sales, operating income, and balance sheet data that appears in Note 3, is included in “Reportable Segments and Geographic Data,” of the Consolidated Financial Statements, included under Item 8 of this Form 10-K.

The table that sets forth certain Net revenues, operating income, and balance sheet data appears in Note 3, Reportable Segments and Geographic Data, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

International Operations

Our Machine Clothing business segment maintains manufacturing facilities in Brazil, Canada, China, France, Italy, Mexico, South Korea, Sweden, the United Kingdom, and the United States.

Our MC business segment maintains manufacturing facilities in Belgium, Brazil, Canada, China, France, Germany, Italy, Mexico, South Korea, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

MC's global manufacturing footprint is designed to most efficiently meet regional customer requirements.

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Changes in the trade or regulatory compliance in any country that we have significant cash balances could make it difficult to repatriate foreign earnings cost-effectively in the future.

Effect of Global Macroeconomic and Political Climate

The war between Russia and Ukraine is affecting the economic and global financial markets and exacerbating ongoing economic challenges caused by impacts of the ongoing COVID-19 pandemic, including rising inflation and global supply chain disruptions.

Our MC segment has historically generated approximately 2% of its annual net sales from customers in Russia and Ukraine.

In addition, a subsidiary within our Machine Clothing segment has been a partner in a joint venture (“JV”) that supplies paper machine clothing products to local papermakers in Russia.

In March 2022, we made the decision to cease doing business in Russia, including giving notice to our JV partner of our intent to exit the venture.

As a result, we recognized $1.5 million expense in cost of goods sold and in Selling, General, and Administrative expense, representing reserves against the risk of obsolescence of certain inventory destined for Russian customers and uncollectible receivables from Russian customers, respectively.

In the first quarter of 2022, we also wrote down the net book value of our investment in the aforementioned JV to reflect our intent to exit such venture, resulting in $0.8 million impairment loss included in Other (income)/expense, net.

Our cessation of doing business in Russia resulted in a reduction of approximately $10 million in annual net sales in the MC segment during 2022.

During 2022, our segments saw higher input costs due to increased energy costs, tight supply market, and global logistics challenges.

Our MC segment experienced higher energy prices, higher labor costs, and increased raw material prices.

We continued to identify alternatives to secure materials in the face of intense supply constraints.

Logistics costs have begun to stabilize compared to the same period last year, though they remained higher than pre-pandemic levels.

We anticipate inflationary pressure and energy cost escalation to be a primary input cost pressure in the near term.

The ultimate financial impact due to the aforementioned global macroeconomic conditions and political climate is difficult to predict.

During 2022, MC segment input costs increased approximately $10 million as a result of these factors, or an unfavorable impact to the segment gross margin of approximately 140 basis points for the year.

Our Albany Engineered Composites segment does not have significant direct exposure in Russia.

However, it has not been immune from supply chain disruptions.

Increasing fuel prices coupled with higher demand has resulted in increased freight costs during the quarter, along with ongoing logistic constraints, higher labor costs, and increases in raw material prices.

Due to the nature of AEC’s contracts with its customers, we currently anticipate passing through a portion of such cost increases to the customers.

Until the effects of the macroeconomic conditions and political climate on global markets subside, there can be no assurance that our input costs will not continue to rise beyond our current estimate, thus unfavorably impacting our future results of operations, financial position and liquidity.

Research and Development and Technology

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While much of our research activity supports existing products, we also engage in significant research and development activities for new technology platforms, products and product enhancements.

MC segment products are custom-designed for each user, depending on the type, size, and speed of the machine, and the products being produced.

Product design is also a function of the machine section, the grade of product being produced, and the quality of the stock used.

Our MC segment products are custom-designed for each user, depending on the type, size, and speed of the machine, and the products being produced.

Products are specifically designed for each section and position on a machine, the grade of product being produced, and the quality of the stock used.

Technical expertise, judgment, and experience are critical in designing the appropriate clothing for each machine, position, and application.

As a result, many employees in sales and technical functions have engineering degrees, paper mill experience, or other manufacturing experience in the markets in which they operate.

Our market leadership position reflects our commitment to technological innovation.

This innovation has resulted in new MC products and/or enhancements across all of our product lines.

Albany Engineered Composites designs, develops and manufactures advanced composite parts for complex aerospace applications, using a range of core technologies, including its proprietary 3D-woven reinforced composites technology, traditional 2D laminated composite structures, automated material placement, filament winding, through-thickness reinforcement, braiding, and thermoplastic pultrusion.

As a result, many employees in sales and technical functions have engineering degrees, paper mill experience, or other manufacturing experience in the markets in which we operate.

Our market leadership position reflects our commitment to technology innovation.

This innovation has resulted in new products and enhancements across all of our product lines.

AEC designs, develops and manufactures advanced composite parts and sub-assemblies for complex aerospace applications, using a range of core technologies, including its proprietary 3D-woven reinforced composites technology, traditional 2D laminated composite structures, automated fiber placement for both thermoplastics and thermoset composites as well as rigid installation for through-thickness reinforcements, and braided structures.

In addition to continuous significant investment in core research and development activities in pursuit of new proprietary products and manufacturing processes, experienced research and development employees in each business segment also work collaboratively with customers, OEMs and suppliers on targeted development efforts to introduce new products and applications in their respective markets.

Company-funded research expenses totaled $31.4 million in 2022, $29.6 million in 2021, and $25.8 million in 2020.

In 2022, these costs were 3.0 percent of total Company Net sales, including $15.4 million, or 3.6 percent of Net sales, in our AEC segment.

Research and development in the AEC segment includes both Company-sponsored and customer-funded activities.

Some customer funded research and development may be on a cost sharing basis, in which case, amounts charged to the collaborating entity are credited against research and development costs.

For customer-funded research and development in which we anticipate funding to exceed expenses, we include amounts charged to the customer in Net sales.

Cost of sales associated with customer-funded research was $5.2 million in 2022, $5.2 million in 2021, and $5.1 million in 2020.

Technical and research expenses totaled $40.6 million in 2023, $39.9 million in 2022, and $38.9 million in 2021.

In 2023, these costs were 3.5 percent of total Company Net revenues, including $16.0 million, or 3.3 percent of Net revenues, in our AEC segment.

Research and development in the AEC segment include both Company-sponsored and customer-funded activities.

Some customer funded research and development may be on a cost sharing basis, in

which case, amounts charged to the collaborating entity are credited against research and development costs.

For customer-funded research and development in which we anticipate funding to exceed expenses, we include amounts charged to the customer in Net revenues.

Cost of goods sold associated with customer-funded research was $6.4 million in 2023, $5.2 million in 2022, and $5.2 million in 2021.

We have developed, and continue to develop, proprietary intellectual property germane to the industries we serve.

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or its subsidiaries.

We have from time to time licensed some of our patents and/or know-how to one or more competitors, and have been licensed under some competitors’ patents, in each case mainly to enhance customer acceptance of new products.

The revenue from such licenses is less than 1 percent of consolidated net sales.

Raw Materials

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In addition, we manufacture polymer monofilaments, a basic raw material for all types of machine clothing, at our facility in Homer, New York, which supplies approximately 25 percent of our worldwide monofilament requirements.

In the AEC segment, the primary raw materials are carbon fiber and resin.

While there are a number of potential suppliers of carbon fiber and other raw materials used by AEC, the use of certain suppliers may be mandated by customer agreements, and alternative suppliers would be subject to material

qualification or other requirements that may preclude or delay their availability.

In our AEC segment, the primary raw materials are carbon fiber and resin.

In the case of mandated suppliers, AEC endeavors to enter into long-term supply agreements to help mitigate price and availability risks.

Currently, the primary raw materials used in each segment are derived from petroleum, and are therefore sensitive to changes in the price of petroleum and petroleum intermediates.

In the paper machine clothing market, we believe that we had a worldwide market share of approximately 30 percent in 2022.

Price and technology are the primary means of competitive differentiation in the industry.

Albany’s Machine Clothing product portfolio is broad and deep, with products for every part of the machine and a wide range of machine types and paper grades.

Our MC product portfolio is broad and deep, with products for every part of the machine and a wide range of machine types and paper grades.

The Company’s research and development team works closely with the sales and technical organization to develop new products to meet changes in customer needs, and also pursues targeted joint development activities with customers and equipment manufacturers to create new products.

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These efforts – which effectively integrate the Company’s experience and technological expertise into each product we sell – are reflected in the Company’s strong competitive position in the marketplace.

Some of the Company’s paper machine clothing competitors also supply paper machines, papermaking equipment, and aftermarket parts and services, and often bundle clothing with original or rebuilt machines and/or aftermarket services.

The primary competitive factors in the markets in which our Albany Engineered Composites segment competes are product performance, delivery performance, quality, and price.

Achieving lower weight without sacrificing strength is the key to improving fuel efficiency, which helps reduce the carbon footprint of global aviation, and is a critical performance requirement in the aerospace industry.

Some of the Company’s paper machine clothing competitors also supply paper machines, papermaking equipment, and aftermarket parts and services, and often bundle machine clothing products with original or rebuilt machines and/or aftermarket services.

The primary competitive factors in the markets in which our AEC segment competes are product performance, delivery performance, quality, and price.

Achieving lower weight without sacrificing strength is the key to improving fuel efficiency, which helps reduce the carbon emissions footprint of global aviation, and is a critical performance requirement in the aerospace industry.

Our broad array of capabilities in composites enables us to offer customers the opportunity to displace metal components and, in some cases, conventional composites with lower-weight, high-strength, and potentially high-temperature resistant composites.

The dominant competitive factor is the relative importance the customer places on these performance benefits, which include fuel savings/ emissions reductions due to lower weight, against the possible cost advantage of more traditional metal and composite components.

The dominant competitive factor is the relative

importance the customer places on these performance benefits, which include fuel savings/emissions reductions due to lower weight, against the possible cost advantage of more traditional metal and composite components.

Human Capital Resources

Albany International recognizes that its long, successful history and future opportunities are directly linked to dedicated, engaged and diverse employees that serve the Company in all business operations.

Albany currently employs approximately 4,100 people, with significant operations in North America, South America, Europe and Asia.

Wages and benefits are competitive with those of other manufacturers in the geographic areas in which our facilities are located.

A number of hourly employees outside of the United States are members of various unions.

In general, we consider our relations with employees to be excellent.

Employees participate in regular training programs appropriate for their responsibility and extensive optional training programs have been developed for those who seek professional and personal growth opportunities.

All employees are required to participate in safety training on a regular basis.

We have systematically and continuously reduced our Total Recordable Incident Rate (TRIR) by approximately 65% since 2019 to 0.48 in 2022.

The Company’s Executive Vice President- Human Resources and Chief Human Resources Officer meets regularly with the Chief Executive Officer to align Human Capital strategy, plan and initiatives with business strategy and goals.

Albany’s Human Capital Resources plan ensures that we provide a rewarding employee experience across the company.

We continuously review our Human Capital Resources metrics, including safety metrics and action plans, to promote an emotionally and physically safe and inclusive working environment.

Our Diversity, Equity and Inclusion (DE&I) Council develops a holistic and actionable DE&I strategy that seeks diversity, nurtures inclusion, amplifies innovation and empowers champions.

Our hiring strategy recruits candidates from a broad range of hiring sources that target people with diverse backgrounds and skills to fill open positions within

Approximately 26% of our global workforce were women in 2022.

The health and safety of our employees is our highest priority, and drives the successful execution of our business.

Our objective is always zero injuries at work, and our entire workforce from the Board of Directors to our teams on the shop floor work together towards this goal.

We track and review safety metrics throughout the year, including Total Recordable Incident Rate ("TRIR") and proactive safety actions taken.

Our Board of Directors further reinforces our culture of safety by tying a portion of each Executive Officer's compensation to the achievement of TRIR goals across the entire company.

Our talented and innovative people are truly our greatest advantage.

We are unwavering in our commitment to nurture a thriving people-first and high-engagement workplace culture defined by mutual respect.

We strive to foster an inclusive and equitable culture where diversity of experiences, backgrounds, and skills are valued, respected, and celebrated.

We believe that an inclusion-based culture has the power to enhance innovation, nurture an environment where our people can reach their highest potential, and deliver the best solutions to our customers.

We believe in the power of open and transparent communication throughout the organization and endeavor to ensure our employees’ voices are heard.

We currently employ approximately 5,600 people, with significant global operations in North America, South America, Europe and Asia.

Our Employee Value Proposition enables us to provide an outstanding Albany employee experience and strengthen our high-performance organization.

We ensure that our global employees receive inclusive and competitive compensation, benefits, and total rewards for their critical contributions at Albany.

For employees in the U.S.

this includes 401(k) match and profit sharing contribution, paid time off, personal days off, health and dental insurance, pet insurance, reward and recognition programs, and strong commitment to employee well-being and work/life balance.

Our talent management strategy focuses on a three-pronged approach:

developing and growing our internal talent, hiring the best talent from the market, and leveraging our internship program to identify and build the next generation of talent.

To develop internal talent, our talent management process focuses on identifying opportunities for career growth and development within the organization.

We are committed to enhancing the employee experience, which includes consistent learning and development to support our employees as they enhance their knowledge, unleash their full potential and reach their career aspirations.

We have defined curriculum by disciplines and functions.

We also provide a variety of continuous learning opportunities through on-the-job training, virtual training, instructor-led training, and external learning opportunities.

Our learning management system provides our employees with over 8,000 courses to choose from, in a flexible format, allowing employees to participate in regular training programs appropriate for their responsibility, and extensive optional training programs have been developed for those who seek professional and personal growth opportunities.

All employees are required to participate in safety, ethics and compliance training on a regular basis.

Our Chief Human Resources Officer meets regularly with the Chief Executive Officer and the Senior Leadership Team to align People strategy, plan and initiatives with business strategy and goals.

Our People Resources plan ensures that we provide a rewarding employee experience across the Company.

We continuously review leading and lagging People metrics.

To further our Diversity, Equity and Inclusion (DE&I) impact, our DE&I Council develops a holistic and actionable DE&I strategy that seeks diversity, nurtures inclusion, amplifies innovation and empowers champions.

Our hiring strategy recruits candidates from a broad range of hiring sources that target diverse backgrounds, skills and competencies to fill our open positions with the most qualified candidate.

Approximately 27 percent of our global workforce were women in 2023 and 30 percent of our U.S.

workforce identified as a ‘U.S.

minority’, as defined by the Equal Employment Opportunity Commission.

Our Empowering Women Leaders Network aims to continue increasing representation of women at all levels to contribute to the Company’s business success through relationships and partnerships.

Executive Officers of the Registrant

As part of our DE&I strategy, employees attend an annual DE&I training session to create awareness of the importance of DE&I as part of Albany’s culture.

Further, we ensure DE&I training is fully integrated into our continuous learning culture.

Our journey on DE&I continues with the establishment of Employee Resource Groups to champion DE&I and foster a diverse and inclusive environment.

We fully support global human rights and have aligned our policies and procedures with the United Nations Global Compact and the Universal Declaration of Human Rights, among others.

In 2023 we issued a standalone Human Rights Policy to further affirm our commitment to human rights throughout our value chain.

Sustainability

Product Stewardship

Our business is centered around driving success for our customers.

Our products are designed for performance and consistency, while enabling our customers to improve their environmental footprint through more sustainable and efficient processes and end products.

As described above, our paper machine clothing products enable our paper-making customers to reduce their own environmental footprint by reducing their energy consumption, improving resource efficiency, and helping maintain and improve water quality.

Energy is one of the top three cost components in the paper making process.

Our machine clothing solutions use innovative technologies to reduce the amount of heat energy required for paper production.

We continue to innovate and remain focused on developing and bringing to market proprietary products aimed at improving the energy and resource efficiency needed for our customers’ products and their production processes.

In aerospace, weight savings that drive fuel efficiency are essential for aircraft producers, if the industry is to achieve its goals for sustainable aviation.

This fundamental design goal has driven the increased use of lightweight composite structures in an ever-broadening sphere of aerospace applications.

We have applied learnings from our 128+ years of experience manufacturing machine clothing to pioneer 3D weaving technologies to manufacture our composite material.

The process involves layering and interweaving fibers in a precise, computer-controlled process to create complex, high-strength parts that allows for the production of lightweight and strong composite parts with high-performance properties.

This technology has the ability to produce parts with complex geometries and high-performance properties, such as high strength, stiffness and resistance to impact and fatigue making it well-suited for use in aerospace, defense and industrial applications.

These structurally demanding applications have historically been served by heavier, metallic structures, and traditional laminated composites do not possess the required structural characteristics that 3D woven can offer.

As such, our proprietary 3D woven technology expands the role that lightweight composites can serve as the next generation of aircraft is designed and built.

Our AEC business also develops solutions that champion sustainable energy.

Through innovative composite technologies and advanced manufacturing processes, we contribute to the creation of energy-efficient components, reducing the environmental footprint and bolstering the renewable energy sector.

Carbon Emissions Footprint

We are committed to responsible stewardship of the environment, which includes full compliance with environmental regulation everywhere we operate.

And we are committed to going beyond regulatory requirements, implementing responsible and intentional strategies to continually minimize our environmental impact.

In 2022, we completed efforts to gather, aggregate, and report comprehensive and comparable information on the energy use and emissions across the 23 Albany facilities in the 11 countries where we have historically operated, in accordance with the Greenhouse Gas ("GHG") Protocol for Scope 1 and Scope 2.

In 2023, we partnered with an independent third-party enterprise climate platform to enhance measurement, reporting, and reduction of our carbon emissions.

This work sets the foundation for calculating Scope 3 emissions and, importantly, developing a climate transition plan to address both our products and services as well as our company operations and manufacturing footprint.

In 2023, we signed a commitment letter with the Science Based Targets Initiative ("SBTi") that commits us to establishing near-term Science-Based Targets.

Once committed to SBTi, we have a maximum of 24 months to set formal emissions reduction targets and goals aligned with the Paris Agreement’s ambition of maintaining global temperature rise to 1.5°C.

This commitment has the full support of our Board of Directors and Senior Leadership Team, and we look forward to developing these science-based targets along with a comprehensive emissions

reduction strategy, tracking and reporting progress at least annually, while continuing to accelerate progress on our energy initiatives across our global portfolio.

We continue to focus on the impact of our own operations by evaluating our risks and identifying actionable opportunities to drive meaningful improvement in our energy and GHG emissions intensity, as well as our products’ environmental impact.

We are also focused on increased transparency with our first global response to CDP and our first Taskforce on Climate-related Financial Disclosures ("TCFD") Report in 2023.

Water and Waste

As a global company, Albany operates in 14 countries with varying options available for waste and recycling.

We are committed to reducing waste, both from our own operations as well as our customers’, and we continue to look for opportunities to reduce waste generated across our operations and our products.

As a first step we strive to separate our waste streams across our operations including general waste, hazardous waste, electronic waste, and carbon fiber/raw material waste.

Waste streams are collected via appropriate third parties, with the objective of optimizing reuse and minimizing waste to landfill.

For example, at one of our facilities we have achieved zero waste to landfill since 2022, primarily through recycling and converting waste to energy sources.

Innovation and partnerships are key to our core business and our sustainability objectives.

In our AEC business, we work with a third party specialist carbon fiber recycling company to recycle 3D woven fibers, water jet cut off carbon fibers, and long tow carbon fibers.

These materials are recycled and reused in applications such as thermoplastic (which can be recycled) and thermoset products, 3D printing, fiber reinforced concrete, textile yarn, and friction materials.

In our MC business, we work with a third party specialist that collects scrap raw materials and converts it into plastic furniture.

As recycling technology advances, there are also increasing opportunities to use recycled raw materials in some of our manufacturing processes.

We continue to explore and trial various options and are pleased to have identified several recycled materials that meet our rigorous requirements, and which we will be using from 2024.

Supply Chain Footprint

We recognize the importance of maintaining value and quality throughout our supply chain.

We conduct our business ethically, legally, environmentally, and socially responsibly, and we expect the same from our suppliers.

Accordingly, we require our global suppliers to respect human rights, employ fair labor practices, and conduct business ethically, as outlined in our Supplier Code of Conduct.

In 2023, we began evaluating climate-related risks and opportunities in our value chain, including engaging with suppliers to understand their carbon footprints and driving efficiency in our global logistics.

Our procurement teams have also progressed a number of initiatives to drive efficiency and sustainability in our logistics.

Climate and Sustainability Reporting and Regulation

The past several years have seen an unprecedented increase in interest and focus on sustainability and climate change, with an associated increase in global regulation.

Various jurisdictions around the world in which we operate, including the European Union, the U.S., the United Kingdom, Australia, and certain U.S.

states, have proposed or adopted new regulations related to sustainability and climate reporting.

These and potential future regulations and policies, which include increased mandatory reporting, disclosure and assurance, including potential changes in procurement policies and procedures, could significantly increase our operational and compliance costs.

We closely monitor developments in sustainability- and climate-related regulation and their associated impacts on our operations.

As described above, we have a comprehensive sustainability program that seeks to manage the risks and opportunities associated with sustainability and climate change.

For more information on the risk of sustainability- and climate-related regulation, see Item 1A - Risk Factors.

Executive Officers

The following table sets forth certain information with respect to the executive officers of the Company as of February 26, 2024:

William Higgins, 64, President and Chief Executive Officer , joined the Company in 2020.

He has served the Company as President and Chief Executive Officer since January 2020.

He has been a director of the Company since 2016 and served as Chairman of the Board from February 2019 until January 2020.

From 2005 to 2012 he served CIRCOR International, Inc.

in a variety of senior organizational positions, including Chief Executive Officer and Chairman.

Prior to joining CIRCOR, he held a variety of senior management positions with Honeywell International and AlliedSignal.

Nolan, 53, Chief Financial Officer and Treasurer, joined the Company in 2019.

He has served the Company as Chief Financial Officer and Treasurer since April 2019.

Prior to joining the Company, he served as Chief Financial Officer of Esterline and previously held the same role at Vista Outdoor, Inc.

He previously worked in a number of strategic and operational management roles at ATK, including Senior Vice President for Strategy and Business Development and several business unit leadership positions.

Earlier in his career, Mr.

Nolan served in corporate development and strategy roles at Raytheon Company and as a strategy consultant at McKinsey & Company.

Gunnar Kleveland, 54, President and Chief Executive Officer , joined the Company in 2023.

He has served the Company as President and Chief Executive Officer since September 2023.

Prior to joining the Company, Mr.

Kleveland served as President and Chief Executive Officer of Textron Specialized Vehicles Inc.

He also served as the President of TRU Simulation + Training Inc.

and Executive Vice President of Integrated Operations for Bell Helicopter Textron Inc.

Prior to joining Textron in 2004, Mr.

Kleveland was a fighter pilot in the Royal Norwegian Air Force (RNoAF) and finished his 15-year career in the air force as the Chief of Flight Safety.

Starr, 56, Executive Vice President and Chief Financial Officer, joined the Company in 2023.

Prior to joining the Company, he served for 18 months as Chief Financial Officer of Fairbanks Morse Defense, a privately-held supplier of naval power and propulsion systems.

He previously spent 12 years at Kaman Corporation where he served as Chief Financial Officer for 8 years and VP, Treasurer for 4 years.

Before joining Kaman, Mr.

Starr held increasingly senior treasury roles at large publicly listed companies including Crane Co., Aetna and Fisher Scientific International.

Early in his career he worked in investment banking both domestically and internationally across a broad range of industries.

Halftermeyer, 62, President – Machine Clothing, joined the Company in 1987.

He has served the Company as President – Machine Clothing since February 2012.

Halftermeyer has served the Company as President – Machine Clothing since February 2012.

He previously served the Company as President – Paper Machine Clothing and Engineered Fabrics from August 2011 to February 2012, as President – Paper Machine Clothing from January 2010 until August 2011, Group Vice President – Paper Machine Clothing Europe from 2005 to August 2008, Vice President and General Manager – North American Dryer Fabrics from 1997 to March 2005, and Technical Director – Dryer Fabrics from 1993 to 1997.

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Greg Harwell, 60, President – Albany Engineered Composites, joined the Company in 2019.

He has served the Company as President - Albany Engineered Composites since November 2019.

Harwell has served the Company as President – Albany Engineered Composites since November 2019.

Prior to joining the Company, he served as President of Aerostructures for Precision Castparts (PCC) managing all aspects of the organization for the Aerostructures division.

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Alice McCarvill, 59, Executive Vice President – Human Resources and Chief Human Resources Officer, joined the Company in 2018.

She has served the Company as Executive Vice President- Human Resources and Chief Human Resources Officer since February 2019 .

McCarvill has served the Company as Executive Vice President – Human Resources and Chief Human Resources Officer since February 2019 .

She joined the Company in March 2018 as Executive Vice President- Human Resources.

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Gaug, 60, Vice President – General Counsel and Secretary, joined the Company in 2004.

He has served the Company as Vice President- Secretary and General Counsel since May 2020.

Gaug has served the Company as Vice President – General Counsel and Secretary since May 2020.

He previously served as Associate General Counsel from 2004 and as Associate General Counsel and Assistant Secretary from 2006 to May 2020.

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Hansen, 66, Senior Vice President and Chief Technology Officer, joined the Company in 1981.

He has served the Company as Senior Vice President and Chief Technology Officer since January 2010.

Hansen has served the Company as Senior Vice President and Chief Technology Officer since January 2010.

He previously served as Vice President – Corporate Research and Development from April 2006 to January 2010, and Director of Technical and Marketing – Europe Press Fabrics from 2004 to April 2006.

From 2000 to 2004, he served as Technical Director – Press Fabrics, Göppingen, Germany.

From 2000 to 2004, he served as Technical Director – Göppingen, Germany.

Before 2000, he served the Company in a number of technical management and research and development positions in Europe and the U.S.

Elisabeth Indriani, 47, Vice President – Controller , joined the Company in 2021.

Prior to joining the Company, she was the Global Controller at Century Aluminum Company, where she oversaw accounting and financial reporting, led global policy and process transformation initiatives, and was a business partner in financial planning and analysis,

M&A due diligence, investor relations, treasury, financing and tax structuring transactions.

Earlier in her career, Ms.

Indriani served as an Audit Senior Manager with Deloitte and Touche LLP – as a member of the Industry Professional Practice Director group, she authored Deloitte interpretive accounting guides and was a frequent speaker at Deloitte accounting and advisory events, in addition to advising clients on the application of accounting standards on complex transactions.

Tedone, 59, Vice President – Controller and Chief Accounting Officer , joined the Company in 2023.

Prior to joining the Company, Mr.

Tedone was the Chief Accounting Officer at Eos Energy Enterprises, Inc., a developer and manufacturer of energy storage solutions, where he oversaw the accounting, SEC reporting, tax, treasury, and risk management functions.

Prior to Eos Energy Enterprises, Inc., Mr.

Tedone served as Vice President, Finance and Chief Accounting Officer of Lydall, Inc.

He previously spent 16 years at Kaman Corporation where he served as the

Vice President, Finance and Chief Accounting Officer from 2007 to 2020.

Earlier in his career he held finance and accounting roles of increasing responsibility at Diageo NA, United Technologies Corp., and KPMG.

We are incorporated under the laws of the State of Delaware and are the successor to a New York corporation originally incorporated in 1895, which was merged into the Company in August 1987 solely for the purpose of changing the domicile of the corporation.

5 unchanged sentences

Data security is a top priority at the Company.

To protect our Company and customer data, we employ industry best practices and adhere to the CIS 20 and NIST SP 800-171 cyber security frameworks.

To protect our Company and customer data, we employ industry best practices and adhere to the Center for Internet Security ("CIS") 20 and National Institute of Standards and Technology ("NIST") SP 800-171 cyber security frameworks.

Our Data Security strategy is overseen by the Audit Committee of our Board of Directors, regularly reviewed at the executive level, directed by our Chief Information Officer, and managed by our Enterprise Cyber Security (ECS) team.

Information on our approach to data security is available in the Sustainability section of our website (www.albint.com).

Our current reports on Form 8-K, quarterly reports on Form 10-Q, and annual reports on Form 10-K are electronically filed with the Securities and Exchange Commission (the “SEC”), and all such reports and amendments to such reports filed subsequent to November 15, 2002, have been and will be made available, free of charge, through our website (www.albint.com) as soon as reasonably practicable after such filing.

The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reading Room at 100 F Street, N.E., Room 1580, Washington, D.C.

The public may obtain information on the operation of the Public Reading Room by calling the SEC at 1-800-SEC-0330.

The SEC maintains a website (www.sec.gov) that contains reports, proxy, information statements, and other information regarding issuers that file electronically with the SEC.

For information on our approach, see Item 1C, Cybersecurity in this Part I and the Sustainability section of our website at www.albint.com.

Regulatory Matters

Our AEC segment business is heavily regulated.

We may contract with U.S.

Government agencies and entities, or we are a subcontractor to an OEM who contracts directly with U.S.

Government agencies and entities.

We must comply with, and are affected by, laws and regulations relating to the formation, administration and performance of U.S.

Government contracts and contracts with foreign governments.

Government, and other foreign governments, may terminate any government contract at their convenience or for default, if we fail to meet specified performance measurements.

If such contracts were to be terminated for convenience, we would generally be entitled to receive payment for work completed and allowable termination and cancellation costs.

Government, and other foreign governments, terminate a contract due to our default, generally, we would only be paid for work that has been accepted by our customer and our customer can require us to pay the differential between the original contract price and cost to re-procure the contract items, net of work accepted from the original contract.

In addition, we can be held liable for damages resulting from our default and may be responsible to provide transition services to another supplier or the customer.

Available Information

Our principal executive offices are located at 216 Airport Drive, Rochester, New Hampshire 03867.

Our telephone number is 603-330-5800 and our website address www.albint.com.

Our current reports on Form 8-K, quarterly reports on Form 10-Q, and annual reports on Form 10-K, proxy statements for our annual stockholders' meetings and amendments to those reports are electronically filed with the Securities and Exchange Commission (the “SEC”), and all such reports and amendments to such reports filed subsequent to November 15, 2002, have been and will be made available, free of charge, through our website at www.albint.com as soon as reasonably practicable after such filing.

In addition, copies of our Annual Report on Form 10-K will be made available, free of charge, upon written request.

We make our website content available for information purposes only.

It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K.

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-K

Item 1. Business