What changed in this filing

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Item 1. Financial Statements

2024-04-29 compared with 2023-11-06 · 232 added, 347 removed, 442 unchanged (57% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net revenues $ 313,330 $ 269,096

6 unchanged sentences

Interest expense/(income), net 3,319 3,290

Pension settlement expense — 49,128 — 49,128

Other (income)/expense, net ( 2,982 ) ( 455 )

Income before income taxes 38,640 37,707

Income tax expense/(benefit) 9,207 ( 3,183 ) 39,908 22,273

Income taxes 11,271 10,621

Net income 27,369 27,086

12 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 27,369 $ 27,086

1 unchanged sentence

Foreign currency translation ( 11,831 ) 13,440

Reclassification of loss on pension settlement — 42,657 — 42,657

Amortization of pension liability adjustments:

4 unchanged sentences

Income taxes related to items of other comprehensive income/(loss):

Reclassification of loss on pension settlement — ( 16,459 ) — ( 16,459 )

Amortization of prior service credit 11 315

9 unchanged sentences

(in thousands, except share and per share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cash and cash equivalents $ 125,412 $ 173,420

36 unchanged sentences

Treasury stock (Class A), at cost;

9,661,845 shares in 2023 and 9,674,542 in 2022

9,661,845 shares in 2024 and 2023

( 364,665 ) ( 364,665 )

Total Company shareholders' equity 914,839 863,049

Total shareholders' equity 967,489 961,368

Noncontrolling interest 6,076 5,952

5 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

OPERATING ACTIVITIES

Three Months Ended

Cash flows from operating activities:

Net income $ 27,369 $ 27,086

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

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:

Depreciation 20,556 15,864

1 unchanged sentence

Change in deferred taxes and other liabilities ( 675 ) ( 887 )

Impairment of property, plant, equipment, and inventory 577 2,610

Impairment of property, plant and equipment 49 100

Non-cash interest expense 256 280

Non-cash portion of pension settlement expense — 42,657

Compensation and benefits paid or payable in Class A Common Stock 810 378

2 unchanged sentences

Fair value adjustment on foreign currency options 280 58

Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition:

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

Accounts receivable ( 17,061 ) ( 13,702 )

9 unchanged sentences

Other, net ( 814 ) 2,042

Net cash provided by operating activities 73,812 67,307

INVESTING ACTIVITIES

Purchase of business, net of cash acquired ( 133,470 ) —

Net cash provided by/(used in) operating activities 9,597 ( 16,393 )

Cash flows from investing activities:

Purchases of property, plant and equipment ( 26,859 ) ( 16,275 )

1 unchanged sentence

Net cash used in investing activities ( 26,880 ) ( 16,275 )

FINANCING ACTIVITIES

Cash flows from financing activities:

Proceeds from borrowings 43,237 58,000

Principal payments on debt ( 60,750 ) ( 6,000 )

Principal payments on finance lease liabilities — ( 654 )

Debt acquisition costs ( 4,108 ) —

Purchase of Treasury shares — ( 84,780 )

Taxes paid in lieu of share issuance ( 2,446 ) ( 3,136 )

Proceeds from options exercised — 17

Dividends paid ( 8,110 ) ( 7,778 )

Net cash used in financing activities ( 10,839 ) ( 9,119 )

Net cash (used in)/provided by financing activities ( 28,069 ) 41,086

Effect of exchange rate changes on cash and cash equivalents ( 2,656 ) 4,064

Decrease in cash and cash equivalents ( 120,270 ) ( 25,554 )

(Decrease)/increase in cash and cash equivalents ( 48,008 ) 12,482

Cash and cash equivalents at beginning of period 173,420 291,776

5 unchanged sentences

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.

In the opinion of management, the accompanying consolidated financial information reflects all adjustments necessary for a fair presentation of Albany International Corp.'s ("Albany", the "Registrant", the "Company", "we", "us", or "our") financial position, results of operations and cash flows for the interim periods presented, but do not require all disclosures required by the accounting principles generally accepted in the United States ("GAAP").

All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report.

Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates.

Estimates and assumptions are reviewed periodically, and the effects of any revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

The guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

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.

The Company is organized based on the nature of its products and is composed of two reportable segments, Machine Clothing ("MC") and Albany Engineered Composites ("AEC"), each overseen by a Segment President.

These segments are reflective of how the Company's Chief Executive Officer, who is its Chief Operating Decisions Maker ("CODM"), reviews operating results for the purpose of allocating resources and assessing performance.

The Company has not aggregated operating segments for purposes of identifying 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.

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

Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.

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 17.

Business Combination .

We manufacture belts for each section of the paper machine and for every grade of paper.

We sell our MC products directly to customer end-users in countries across the globe.

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

On August 31, 2023, the Company completed the acquisition of Heimbach GmbH (“Heimbach”), a privately-held manufacturer of paper machine clothing and technical textiles.

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

5 unchanged sentences

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 2023.

AEC net sales to SAFRAN were $ 140.8 million and $ 125.4 million in the first nine months of 2023 and 2022, respectively.

The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $ 90.0 million and $ 80.8 million as of September 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 lift fan on the F-35, as well as the fan case for the GE9X engine.

AEC net sales to SAFRAN were $ 50.1 million and $ 45.3 million in the first three months of 2024 and 2023, respectively.

The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $ 89.6 million and $ 93.8 million as of March 31, 2024 and December 31, 2023, respectively.

Other significant programs for AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs.

AEC also supplies vacuum waste tanks for the Boeing commercial programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine.

For the year ended December 31, 2023, approximately 39 percent of AEC revenues were related to U.S.

1 unchanged sentence

The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:

Three months ended September 30, Nine months ended September 30,

Three months ended March 31,

(in thousands)

2023 2022 2023 2022

Machine Clothing

11 unchanged sentences

Interest expense

5,479 4,759 14,819 13,799

Pension settlement expense — 49,128 — 49,128

Other (income)/expense, net ( 2,982 ) ( 455 )

Income before income taxes $ 38,640 $ 37,707

Third quarter results include newly acquired Heimbach for the period of ownership, which began September 1, 2023.

Heimbach's impact on third quarter results is described in Note 17.

Business Combination .

This acquisition impacted MC third quarter results by increasing Net revenues by $ 15.6 million and reducing Operating income by $( 0.5 ) million, which included depreciation expense on Property, plant, and equipment, net of $ 1.1 million, and amortization expense on Intangibles, net of $ 0.1 million.

First quarter results include Heimbach, which was acquired August 31, 2023.

Heimbach contributed $ 37.9 million of net revenues and $( 2.9 ) million of operating loss for the three months ended March 31, 2024.

Corporate expenses include global information system costs of $ 8.3 million and $ 6.2 million for the three months ended March 31, 2024 and 2023, respectively.

Revenue Recognition:

3 unchanged sentences

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 increased operating income by $ 0.9 million for the third quarter of 2023 and decreased operating income $ 4.1 million for the first nine months of 2023.

Adjustments in the estimated profitability of long-term contracts increased operating income by $ 2.6 million and $ 2.0 million for the three and nine months ended September 30, 2022, respectively.

Changes in the estimated profitability of long-term contracts decreased operating income by $ 0.9 million during the first three months of 2024, compared to a decrease of $ 0.7 million in the same period last year.

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 September 30, 2023:

Three months ended September 30, 2023

The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended March 31, 2024:

Three months ended March 31, 2024

(in thousands)

8 unchanged sentences

Total revenues $ 189,992 $ 123,338 $ 313,330

The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended September 30, 2022:

Three months ended September 30, 2022

The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended March 31, 2023:

Three months ended March 31, 2023

(in thousands)

8 unchanged sentences

Total revenues $ 158,071 $ 111,025 $ 269,096

The following table disaggregates revenue for each product group by timing of revenue recognition for the nine months ended September 30, 2023:

Nine months ended September 30, 2023

(in thousands)

Point in Time Revenue

Recognition Over Time Revenue

Recognition Total

Machine Clothing $ 476,194 $ 2,833 $ 479,027

Albany Engineered Composites:

ASC — 138,603 138,603

Other AEC 14,259 192,436 206,695

Total Albany Engineered Composites 14,259 331,039 345,298

Total revenues $ 490,453 $ 333,872 $ 824,325

The following table disaggregates revenue for each product group by timing of revenue recognition for the nine months ended September 30, 2022:

Nine months ended September 30, 2022

(in thousands) Point in Time Revenue

Recognition Over Time Revenue

Recognition Total

Machine Clothing $ 456,423 $ 2,698 $ 459,121

Albany Engineered Composites:

ASC — 122,836 122,836

Other AEC 14,750 169,394 184,144

Total Albany Engineered Composites 14,750 292,230 306,980

Total revenues $ 471,173 $ 294,928 $ 766,101

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 September 30, Nine months ended September 30,

Three months ended March 31,

(in thousands)

2023 2022 2023 2022

Americas PMC $ 83,501 $ 83,378

4 unchanged sentences

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 $ 759 million and $ 600 million as of September 30, 2023 and 2022, respectively, and related primarily to firm fixed price contracts in the AEC segment.

Of the remaining performance obligations as of September 30, 2023, we expect to recognize as revenue approximately $ 38 million during 2023, $ 146 million during 2024, $ 146 million during 2025, and the remainder thereafter.

Remaining performance obligations on contracts that had an original duration of greater than one year totaled $ 752 million and $ 821 million as of March 31, 2024 and 2023, respectively, and related primarily to firm fixed price contracts in the AEC segment.

Of the remaining performance obligations as of March 31, 2024, we expect to recognize as revenue approximately $ 127 million during 2024, $ 168 million during 2025, $ 143 million during 2026, and the remainder thereafter.

Pensions and Other Postretirement Benefit Plans

2 unchanged sentences

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 nine months ended September 30, 2023 and 2022, was as follows:

The composition of the net periodic benefit cost/(income) for the three months ended March 31, 2024 and 2023, was as follows:

Pension plans

12 unchanged sentences

$ 851 $ 504 $ 326 $ ( 333 )

Settlement charge — 49,128 — —

Net benefit cost/(credit) $ 1,767 $ 50,816 $ ( 997 ) $ ( 952 )

The amount of net benefit cost/(credit) 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.

In the third quarter of 2022, we took actions to settle certain pension plan liabilities for a plan in the U.S., leading to charges totaling $ 49.1 million.

No similar charges were incurred during the current year.

The above reflects the acquisition of Heimbach, as further described in Note 17.

Business Combination.

There were no such events in the first three months of 2024 or 2023.

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.

Restructuring

Restructuring costs in the first quarter of 2024 were related to reductions in workforce at various AEC locations, while restructuring charges for the first quarter of 2023 were not significant.

There were no charges related to the impairment of assets for the periods presented.

The following table summarizes charges reported in the Consolidated Statements of Income under "Restructuring expenses, net":

Three months ended March 31,

(in thousands) 2024 2023

Machine Clothing $ 21 $ 20

Albany Engineered Composites 2,188 —

Total $ 2,209 $ 20

The table below presents the year-to-date changes in restructuring liabilities for 2024 and 2023, all of which are related to termination and other costs:

(in thousands) December 31, 2023 Restructuring

charges accrued Payments Currency

translation /other March 31, 2024

Total termination and other costs $ — $ 2,209 $ ( 221 ) $ ( 1 ) $ 1,987

(in thousands) December 31, 2022 Restructuring

charges accrued Payments Currency

translation /other March 31, 2023

Total termination and other costs $ — $ 20 $ ( 20 ) $ — $ —

Other (Income)/Expense, net

The components of Other (income)/expense, net are:

Three months ended September 30, Nine months ended September 30,

Three months ended March 31,

(in thousands)

2023 2022 2023 2022

Currency transaction (gains)/losses $ ( 1,292 ) $ 60

Bank fees and amortization of debt issuance costs

49 76 140 252

Components of net periodic pension and postretirement cost other than service cost 668 ( 125 )

1 unchanged sentence

Total other (income)/expense, net $ ( 2,982 ) $ ( 455 )

Other (income)/expense, net, included foreign currency related transactions which resulted in losses of $ 0.5 million and gains of $ 3.6 million in the three and nine months ended September 30, 2023, respectively, as compared to gains of $ 6.6 million and $ 17.7 million in the same period last year.

During 2023, the Mexican Peso weakened during the third quarter, but was overall stronger during the nine months ended September 30, 2023, driving the foreign currency gain in the period.

During 2022, the Euro remained weaker for the three and nine months ended September 30, 2022, resulting in a more significant foreign currency gain during those periods.

The following table presents components of income tax expense for the three and nine months ended September 30, 2023 and 2022:

Three months ended September 30, Nine months ended September 30,

(in thousands, except percentages) 2023 2022 2023 2022

Income tax based on income from operations (1) $ 10,731 $ 2,208 $ 35,698 $ 28,315

Provision for change in estimated tax rate ( 119 ) 674 5 740

Income tax before discrete items 10,612 2,882 35,703 29,055

Discrete tax expense:

Exercise of U.S.

stock options — ( 9 ) — ( 17 )

Impact of amended tax returns — — — ( 98 )

Reconciliation of prior year estimated taxes ( 1,833 ) ( 1,185 ) ( 437 ) ( 1,693 )

Enacted tax legislation and rate change — — 313 —

Provision for/resolution of tax audits and contingencies, net ( 602 ) 24 176 ( 116 )

Impact of long range tax planning — — ( 443 ) —

Withholding tax related to internal restructuring — — 3,026 —

US Pension Settlement - Release of Residual Tax Effect — ( 5,217 ) — ( 5,217 )

Impact of non-election of high tax exclusion under GILTI* 1,155 — 1,617 —

Other ( 125 ) 322 ( 47 ) 359

Total income tax expense/(benefit) $ 9,207 $ ( 3,183 ) $ 39,908 $ 22,273

(1) Income tax is calculated at estimated annualized effective tax rate of 29.5 % and 28.9 % for the three and nine months ended September 30, 2023 and 2022, respectively.

* Global Intangible Low-Taxed Income

Other (income)/expense, net, included foreign currency related transactions which resulted in gains of $ 1.3 million in the first three months of 2024, as compared to losses of $ 0.1 million in the same period last year.

The stronger Mexican Peso and weaker Euro during the three months ended March 31, 2024 led to a net gain on foreign currency related transactions, as compared to the same period last year.

Other (income)/expense, net, also included gains on changes in fair value of derivative instruments, gains on sales of fixed assets, and rental income.

The Company's effective income tax rate for the three months ended March 31, 2024 and 2023, is as follows:

Three months ended March 31,

Effective income tax rate 29.2 % 28.2 %

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.

The Company's policy for releasing income tax effects from accumulated other comprehensive income is the specific identification approach, whereas these items are released to income tax expense when the individual items are disposed of, terminated or extinguished.

The Tax Cuts and Jobs Act lowered the U.S.

corporate tax rate from 35% to 21% as of December 31, 2017, creating residual tax effects as a result of the remeasurement of deferred tax assets and liabilities originally established in other comprehensive income.

As a result of the U.S.

pension liability settlement (see Note 3, Pensions and Other Postretirement Benefit Plans ), and consistent with the Company's policy, in the third quarter of 2022, the Company recorded a net tax benefit of $ 5.2 million for the release of the residual tax effects within other comprehensive income related to the U.S.

pension settlement.

Our 2024 estimated annual effective tax rate primarily reflects the 21% federal tax rate, the impact of taxation upon foreign operations, and forecasted permanent differences.

Our actual effective tax rates were 29.2 % and 28.2 % for the three months ended March 31, 2024 and 2023, respectively.

The effective tax rate for the three months ended March 31, 2024 included a $ 2.4 million benefit related to the true-up for prior year estimated taxes treated as a discrete tax benefit and an additional increase of $ 1.2 million in the valuation allowance treated as a discrete tax expense.

The rate for the first quarter of 2024 was higher than the first quarter of 2023 mainly due to an unfavorable change in the jurisdictional mix of pre-tax earnings forecasted for 2024.

The Company is subject to audit in the U.S.

and various foreign jurisdictions.

Our open tax years for major jurisdictions generally range from 2013-2024.

We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

Audit outcomes and the timing of audit settlements are subject to significant uncertainty.

It is reasonably possible that within the next 12 months, unrecognized tax benefits related to federal tax matters under audit may decrease by up to $ 0.8 million based on current estimates.

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 September 30, Nine months ended September 30,

Three months ended March 31,

(in thousands, except market price and earnings per share)

2023 2022 2023 2022

Net income attributable to the Company $ 27,291 $ 26,889

9 unchanged sentences

Accumulated Other Comprehensive Income ("AOCI")

The table below presents changes in the components of AOCI for the period from December 31, 2022 to September 30, 2023:

The table below presents changes in the components of AOCI for the period from December 31, 2023 to March 31, 2024:

(in thousands)

6 unchanged sentences

Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax

— ( 1,423 ) — ( 1,423 )

Net current period other comprehensive income ( 12,116 ) 382 ( 2,124 ) ( 13,858 )

September 30, 2023 $ ( 151,177 ) $ ( 17,389 ) $ 12,957 $ ( 155,609 )

The table below presents changes in the components of AOCI for the period from December 31, 2021 to September 30, 2022:

March 31, 2024 $ ( 137,017 ) $ ( 16,964 ) $ 6,955 $ ( 147,026 )

The table below presents changes in the components of AOCI for the period from December 31, 2022 to March 31, 2023:

(in thousands) Translation

3 unchanged sentences

Other comprehensive income/(loss) before reclassifications, net of tax 13,881 ( 441 ) ( 494 ) 12,946

Pension settlement expense, net of tax — 26,198 — 26,198

Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax — — ( 2,408 ) ( 2,408 )

1 unchanged sentence

Net current period other comprehensive income 13,881 ( 916 ) ( 2,902 ) 10,063

September 30, 2022 $ ( 185,721 ) $ ( 12,613 ) $ 17,961 $ ( 180,373 )

March 31, 2023 $ ( 132,970 ) $ ( 16,699 ) $ 14,805 $ ( 134,864 )

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

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 nine months ended September 30, 2023 and 2022:

Three months ended September 30, Nine months ended September 30,

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 months ended March 31, 2024 and 2023:

Three months ended March 31,

(in thousands)

2023 2022 2023 2022

Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:

Pre-tax Derivative valuation reclassified from Accumulated Other Comprehensive Income:

Other (income)/expense, net related to interest rate swaps included in Income before taxes $ ( 4,038 ) $ ( 3,223 )

2 unchanged sentences

$ ( 3,016 ) $ ( 2,408 )

Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:

Pension settlement expense $ — $ 42,657 $ — $ 42,657

Pre-tax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:

Amortization of prior service credit $ ( 38 ) $ ( 1,031 )

Amortization of net actuarial loss

349 967 1,042 2,905

Total pretax amount reclassified (a) ( 682 ) 42,501 ( 2,050 ) 42,194

Total pre-tax amount reclassified (a)

Income tax effect ( 43 ) 210

4 unchanged sentences

Effective October 31, 2013, Safran S.A.

(Safran) acquired a 10 percent equity interest in a new Albany subsidiary, Albany Safran Composites, LLC ("ASC").

On August 31, 2023, the Company acquired all of the outstanding shares of Heimbach, a privately held manufacturer of paper machine clothing with headquarters in Düren, Germany.

(Safran) acquired a 10 percent equity interest in Albany Safran Composites, LLC ("ASC").

On August 31, 2023, the Company acquired all the outstanding shares of Heimbach, a privately held manufacturer of paper machine clothing with headquarters in Düren, Germany.

In July 2021, Heimbach acquired 85 % of Arcari, SRL (“Arcari”).

1 unchanged sentence

On the date of the acquisition, the fair value of the noncontrolling interest in Arcari was $ 0.5 million.

For the month ended September 30, 2023, the net income/(loss) attributable to Arcari’s noncontrolling interest was less than $ 0.1 million and the noncontrolling interest balance at September 30, 2023 was $ 1.6 million.

For the three months ended March 31, 2024, the net income/(loss) attributable to Arcari’s noncontrolling interest was less than $ 0.1 million and the noncontrolling interest balance at March 31, 2024 was $ 0.5 million.

The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiaries:

ASC Noncontrolling Interest Nine months ended September 30,

ASC Noncontrolling Interest Three months ended March 31,

(in thousands, except percentages) 2024 2023

9 unchanged sentences

$ 5,551 $ 4,929

Arcari Noncontrolling Interest

Net income of Arcari available for common ownership

Ownership percentage of noncontrolling shareholder 15 % —

Net income attributable to the noncontrolling interest $ 5 $ —

Noncontrolling interest, beginning of year $ — $ —

Initial equity related to Noncontrolling interest in Arcari

Net income attributable to noncontrolling interest 5 —

Changes in other comprehensive income attributable to the noncontrolling interest ( 50 ) —

Arcari Noncontrolling interest, end of interim period

4 unchanged sentences

The notes may be presented for payment at maturity, which is less than one year.

As of September 30, 2023 and December 31, 2022, Accounts receivable consisted of the following:

(in thousands) September 30,

2023 December 31,

As of March 31, 2024 and December 31, 2023, Accounts receivable consisted of the following:

(in thousands) March 31, 2024 December 31, 2023

Trade and other accounts receivable $ 287,862 $ 272,351

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Accounts receivable, net $ 305,495 $ 287,781

On August 31, 2023, the Company acquired all of the outstanding shares of Heimbach, which resulted in an increase of $ 52.7 million to Accounts receivable, based on preliminary fair values at the date of acquisition.

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 September 30, 2023 and December 31, 2022, Noncurrent receivables consisted of the following:

(in thousands) September 30,

2023 December 31,

The Company had Noncurrent receivables in the AEC segment that represent revenue earned, which had extended payment terms.

In 2023, the payment terms were amended and the Noncurrent receivables are now included in Trade and other accounts receivable.

As of March 31, 2024 and December 31, 2023, Noncurrent receivables consisted of the following:

(in thousands) March 31, 2024 December 31, 2023

Noncurrent receivables $ — $ 4,414

Allowance for expected credit losses

( 127 ) ( 140 )

Noncurrent receivables, net $ — $ 4,392

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 include unbilled amounts typically resulting from revenues under contracts when the over time 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.

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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 September 30, 2023 and December 31, 2022, Contract assets and Contract liabilities consisted of the following:

(in thousands) September 30,

2023 December 31,

As of March 31, 2024 and December 31, 2023, Contract assets and Contract liabilities consisted of the following:

(in thousands) March 31, 2024 December 31, 2023

Contract assets $ 180,122 $ 183,189

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Contract liabilities $ 6,034 $ 7,127

Contract assets, net increased $ 17.1 million during the nine months ended September 30, 2023.

The increase was primarily due to an increase in unbilled revenue related to the satisfaction of performance obligations, in excess of the amounts billed to customers for contracts that were in a contract asset position.

There were no impairment losses related to our Contract assets during the nine months ended September 30, 2023 and September 30, 2022.

Contract liabilities decreased $ 11.5 million during the nine months ended September 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 nine months ended September 30, 2023 and 2022 that was included in the Contract liability balance at the beginning of the year was $ 14.4 million and $ 5.0 million, respectively.

Contract assets, net decreased $ 3.1 million during the three months ended March 31, 2024.

The decrease was primarily due to a decrease in unbilled revenue primarily related to commercial and defense programs, partially offset by an increase in unbilled revenue on space programs.

There were no impairment losses related to our Contract assets during the three months ended March 31, 2024 and March 31, 2023.

Contract liabilities decreased $ 1.1 million during the three months ended March 31, 2024, primarily due to revenue recognized from satisfied performance obligations exceeding customer advance payments for commercial and defense programs.

Revenue recognized for the three months ended March 31, 2024 and 2023 that was included in the Contract liability balance at the beginning of the year was $ 3.5 million an d $ 6.7 million, respectively.

Costs included in inventories are raw materials, labor, supplies and allocable depreciation and overhead.

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Once established, the original cost of the inventory less the related write-down represents the new cost basis of such inventories.

As of September 30, 2023 and December 31, 2022, Inventories consisted of the following:

(in thousands) September 30, 2023 December 31, 2022

As of March 31, 2024 and December 31, 2023, Inventories consisted of the following:

(in thousands) March 31, 2024 December 31, 2023

Raw materials $ 77,391 $ 79,611

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$ 166,025 $ 169,567

On August 31, 2023, the Company acquired all of the outstanding shares of Heimbach, which resulted in an increase of $ 41.5 million to Inventories, based on preliminary fair values at the date of acquisition.

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 revenue multiples.

Under the income approach, we determine fair value based on the 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.

On August 31, 2023, the Company acquired Heimbach.

The assets acquired include intangible assets of $ 14.5 million consisting of the Heimbach trade name and developed technology.

The preliminary fair value of the Heimbach trade name of $ 6.0 million is considered an indefinite-lived asset.

The preliminary fair value of the developed technology of $ 8.5 million is being amortized over 9 years.

There was no excess purchase price over the fair value and therefore, there was no goodwill reported as part of the acquisition.

Business Combination for additional information.

The following table sets forth the gross carrying value, accumulated amortization and net values of intangible assets and goodwill as of March 31, 2024 and December 31, 2023:

March 31, 2024

(in thousands) Amortization

life in years Gross carrying amount Accumulated amortization Net carrying amount

Finite-lived assets:

AEC Trademarks and trade names 6 - 15

$ 208 $ ( 189 ) $ 19

AEC Technology 10 - 15

6,033 ( 2,824 ) 3,209

AEC Intellectual property 15

1,250 ( 360 ) 890

AEC Customer relationships 8 - 15

69,290 ( 44,721 ) 24,569

Heimbach Developed technology 9

8,789 ( 572 ) 8,217

Total Finite-lived intangible assets $ 85,570 $ ( 48,666 ) $ 36,904

Indefinite-lived intangible assets:

Heimbach Trade name $ 5,935 $ — $ 5,935

MC Goodwill 65,785 — 65,785

AEC Goodwill 112,919 — 112,919

Total Indefinite-lived intangible assets:

$ 184,639 $ — $ 184,639

December 31, 2023

(in thousands) Amortization

life in years Gross carrying amount Accumulated amortization Net carrying amount

Finite-lived assets:

AEC Trademarks and trade names 6 - 15

$ 208 $ ( 186 ) $ 22

AEC Technology 10 - 15

6,161 ( 2,735 ) 3,426

AEC Intellectual property 15

1,250 ( 339 ) 911

AEC Customer relationships 8 - 15

69,360 ( 43,875 ) 25,485

Heimbach Developed technology 9

9,042 ( 310 ) 8,732

Total Finite-lived assets $ 86,021 $ ( 47,445 ) $ 38,576

Indefinite-lived intangible assets:

Heimbach Trade name $ 6,070 $ — $ 6,070

MC Goodwill 66,873 — 66,873

AEC Goodwill 113,308 — 113,308

Total Indefinite-lived intangible assets:

$ 186,251 $ — $ 186,251

The changes in intangible assets, net and goodwill from December 31, 2023 to March 31, 2024, were as follows:

(in thousands) December 31, 2023 Other

Changes Amortization Currency

Translation March 31, 2024

Finite-lived intangible assets:

AEC Trademarks and trade names $ 22 $ — $ ( 3 ) $ — $ 19

AEC Technology 3,426 — ( 142 ) ( 75 ) 3,209

AEC Intellectual property 911 — ( 21 ) — 890

AEC Customer relationships 25,485 — ( 870 ) ( 46 ) 24,569

Heimbach Developed technology 8,732 — ( 262 ) ( 253 ) 8,217

Total Finite-lived intangible assets $ 38,576 $ — $ ( 1,298 ) $ ( 374 ) $ 36,904

Indefinite-lived intangible assets:

Heimbach Trade name $ 6,070 $ — $ — $ ( 135 ) $ 5,935

MC Goodwill 66,873 — — ( 1,088 ) 65,785

AEC Goodwill 113,308 — — ( 389 ) 112,919

Total Indefinite-lived assets:

$ 186,251 $ — $ — $ ( 1,612 ) $ 184,639

Financial Instruments

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The following table represents the Company's outstanding debt:

(in thousands, except interest rates) September 30, 2023 December 31, 2022

(in thousands, except interest rates) March 31, 2024 December 31, 2023

Borrowings under the Amended Credit Agreement(1) $ 429,000 $ 446,000

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(1) the credit facility matures in August 2028.

At the end of the September 30, 2023 and December 31, 2022, the interest rate in effect was 3.60 % and 3.16 %, respectively, including the effect of interest rate hedging transactions, as described below.

At the end of March 31, 2024 and December 31, 2023, the interest rate in effect was 3.34 % and 3.49 %, respectively, including the effect of interest rate hedging transactions, as described below.

Amended Credit Agreement

On August 16, 2023, we entered into a $ 800 million unsecured committed Five-Year Revolving Credit Facility Agreement (the “Amended Credit Agreement”), which amended and restated the prior $ 700 million committed Four-Year Revolving Credit Facility Agreement, entered into on October 27, 2020 (the “Prior Agreement”).

The Amended Credit Agreement contains customary terms, as well as affirmative covenants, negative covenants and events of default that are substantially comparable to those in the Prior Agreement.

The Borrowings are guaranteed by certain of the Company's subsidiaries, including all significant U.S.

subsidiaries (subject to certain exceptions), as were borrowings under the Prior Agreement.

On June 23, 2023, we entered into the first Amendment to the Prior 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 Prior Agreement, including the representations and warranties, events of default, affirmative and negative covenants.

These amendments are also reflected in the Amended Credit Agreement.

On August 16, 2023, we entered into a $ 800 million unsecured committed Five-Year Revolving Credit Facility Agreement (the “Amended Credit Agreement”).

The applicable interest rate for borrowings under the Amended Credit Agreement 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:

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0.350 % 1.000 % 2.000 %

As of September 30, 2023, the applicable interest rate for borrowings under the Amended Credit Agreement was based on one-month term SOFR plus the spread, which was 1.625 %.

As of September 30, 2023, there was $ 461 million of borrowings outstanding under the Amended Credit Agreement.

As of September 30, 2023, we had borrowings available of $ 339 million, based on our maximum leverage ratio and our Consolidated EBITDA (as defined in the Amended Credit Agreement).

As of March 31, 2024, the applicable interest rate for borrowings under the Amended Credit Agreement was based on one-month term SOFR plus the spread, which was 1.625 %.

As of March 31, 2024, there was $ 429 million of borrowings outstanding under the Amended Credit Agreement and we had borrowings available of $ 371 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 including affirmative covenants, negative covenants and events of default.

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We are also required to maintain a minimum interest coverage ratio (as defined in the Credit Agreement) of greater than 3.00 to 1.00.

As of September 30, 2023, our leverage ratio was 1.48 to 1.00 (as defined in the Amended Credit Agreement) and our interest coverage ratio was 13.95 to 1.00.

If our leverage ratio exceeds 3.50 to 1.00, then we are restricted in

paying dividends to a maximum amount of $ 40 million in a calendar year.

As of September 30, 2023, we were in compliance with all applicable covenants.

As of March 31, 2024, our leverage ratio was 1.17 to 1.00 (as defined in the Amended Credit Agreement) and our interest coverage ratio was 14.38 to 1.00.

If our leverage ratio exceeds 3.50 to 1.00, then we are restricted in paying dividends to a maximum amount of $ 40 million in a calendar year.

As of March 31, 2024, we were in compliance with all applicable covenants.

We anticipate continued compliance in each of the next four quarters while continuing to monitor 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.

The borrowings are guaranteed by certain of the Company’s subsidiaries, including all significant U.S.

subsidiaries (subject to certain exceptions), 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 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 Prior 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.

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 Swap Agreements) through October 27, 2024 on $ 350 million of borrowings under the Amended Credit Agreement and the counterparties will pay a floating rate based on the one-month term SOFR at each monthly calculation date, which on September 18, 2023 was 5.33 %.

The effective date of the amended Swap agreements was July 17, 2023.

As of September 18, 2023, the all-in-rate on the $ 350 M of debt was 2.51 %.

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.

The interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14.

Fair-Value Measurements .

Interest Rate Swaps

In 2021, we entered into interest rate swap agreements for the period of October 17, 2022 through October 27, 2024.

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.

We amended the swap agreements on June 29, 2023 replacing the LIBOR (in preparation for the cessation of LIBOR) with SOFR and adjusting the spread.

We pay a fixed blended rate of 0.8828 % through October 27, 2024 on $ 350 million and the counterparties pay a floating rate based on the one-month term SOFR at each monthly calculation date, which on March 18, 2024 was 5.33 %.

As of March 31, 2024 , the all-in rate on the $ 350 M of debt was 2.51 %.

Upon the expiration of the interest rate swap on October 27, 2024, our interest cost will increase significantly.

Beginning in October 2024, our interest cost will be calculated using a floating rate based on the one-month term SOFR.

The interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 15, Fair-Value Measurements .

No cash collateral was received or pledged in relation to the swap agreements.

Indebtedness under the Amended Credit Agreement is ranked equally in right of payment to all unsecured senior debt.

Assumed Foreign Bank Debt

Foreign Bank Debt

On August 31, 2023, the Company acquired Heimbach.

The Company assumed Heimbach’s bank debt in the amount of $ 32.7 million.

The bank debt is held by several European financial institutions, with fixed interest rates ranging from 0.9 % to 2.93 % and maturity dates ranging from September 25, 2023 to June 30, 2031.

Certain bank agreements allowed for the repayment of the debt upon demand by certain financial institutions in the event of a change in control.

Some or all of the assumed bank debt could become due upon notification by any of the financial institutions before the maturity date of the bank agreements.

At September 30, 2023, the foreign debt assumed was $ 29.6 million, of which $ 27.2 million was classified as Current maturities on long-term debt.

The bank debt is held by several European financial institutions, with maturity dates ranging from June 30, 2024 to June 30, 2031.

At March 31, 2024 and December 31, 2023, the foreign debt was $ 10.1 million and $ 10.9 million, respectively, of which $ 4.4 million and $ 4.2 million, respectively, was classified as Current maturities on long-term debt.

Fair-Value Measurements

7 unchanged sentences

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 September 30, 2023 or at December 31, 2022.

We had no Level 3 financial assets or liabilities at March 31, 2024 or at December 31, 2023, other than certain pension assets as indicated in our December 31, 2023 Annual Report on Form 10-K.

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:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands)

2 unchanged sentences

— 1,533 — 1,725

Foreign currency forward contracts

Other Assets:

7 unchanged sentences

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 included in Other assets and/or Other noncurrent liabilities in the Consolidated Balance Sheets.

The fair value of our interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve, and is 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 September 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 $( 10.9 ) million for the nine months ended September 30, 2023, and $ 2.8 million for the nine months ended September 30, 2022.

Interest expense/(income) related to payments under the active swap agreements totaled $( 4.0 ) million for the three months ended March 31, 2024, and $( 3.2 ) million for the three months ended March 31, 2023.

We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results.

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(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 September 30, Nine months ended September 30,

Three months ended March 31,

(in thousands) 2024 2023

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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 3,604 claims as of September 30, 2023.

We were defending 3,613 claims as of March 31, 2024.

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:

2 unchanged sentences

Amounts Paid to

As of December 31, 2022 3,609 43 32 3,598 $ 125

As of September 30, 2023 3,598 11 17 3,604 $ 74

For the period ended December 31, 2023 3,598 19 27 3,606 $ 74

For the period ended March 31, 2024 3,606 4 11 3,613 $ 9

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.

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Our insurance carrier has defended each case and funded settlements under a standard reservation of rights.

As of September 30, 2023, we had resolved, by means of settlement or dismissal, 38,035 claims at a total cost of $ 10.7 million.

As of March 31, 2024, we had resolved, by means of settlement or dismissal, 38,045 claims at a total cost of $ 10.7 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.

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(“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 7,690 claims as of September 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.

While Brandon was defending against 7,676 claims as of March 31, 2024, 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.

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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.

Changes in Shareholders’ Equity

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2022 to September 30, 2023:

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2023 to March 31, 2024:

Additional paid-in capital

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March 31, 2024 40,898 $ 41 $ 449,028 $ 1,030,111 $ ( 147,026 ) 9,662 $ ( 364,665 ) $ 6,076 $ 973,565

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, 2023 40,842 $ 41 $ 443,556 $ 969,292 $ ( 137,767 ) 9,663 $ ( 364,665 ) $ 5,262 $ 915,719

Net income — — — 27,109 — — — 45 27,154

Compensation and benefits paid or payable in shares 15 — 2,914 — — ( 1 ) — — 2,914

Dividends declared on Class A Common Stock, $ 0.25 per share

— — — ( 7,799 ) — — — — ( 7,799 )

Initial equity related to Noncontrolling interest in Arcari — — — — — — — 1,632 1,632

Cumulative translation adjustments — — — — ( 15,639 ) — — ( 145 ) ( 15,784 )

Pension and postretirement liability adjustments — — — — 34 — — — 34

Derivative valuation adjustment — — — — ( 2,237 ) — — — ( 2,237 )

September 30, 2023 40,857 $ 41 $ 446,470 $ 988,602 $ ( 155,609 ) 9,662 $ ( 364,665 ) $ 6,794 $ 921,633

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2021 to September 30, 2022:

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2022 to March 31, 2023:

Additional paid-in capital

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Compensation and benefits paid or payable in shares 58 — 378 — — — — — 378

Options exercised — — 7 — — — — — 7

Purchase of Treasury shares (a) — — — — — 515 ( 43,937 ) — ( 43,937 )

Dividends declared on Class A Common Stock, $ 0.25 per share

4 unchanged sentences

March 31, 2023 40,842 $ 41 $ 441,917 $ 950,415 $ ( 134,864 ) 9,675 $ ( 364,923 ) $ 4,929 $ 897,515

Net income — — — 39,201 — — — 168 39,369

Compensation and benefits paid or payable in shares 4 — 902 — — — — — 902

Shares issued to Directors' — — 800 — — ( 13 ) 285 — 1,085

Purchase of Treasury shares (a) — — — — — 508 ( 41,128 ) — ( 41,128 )

Dividends declared on Class A Common Stock, $ 0.21 per share

— — — ( 6,529 ) — — — — ( 6,529 )

Cumulative translation adjustments — — — — ( 39,661 ) — — ( 91 ) ( 39,752 )

Pension and postretirement liability adjustments — — — — 234 — — — 234

Derivative valuation adjustment — — — — 3,349 — — — 3,349

June 30, 2022 40,785 $ 41 $ 439,450 $ 916,805 $ ( 173,700 ) 9,675 $ ( 364,923 ) $ 4,109 $ 821,782

Net income — — — 10,694 — — — 129 10,823

Compensation and benefits paid or payable in shares — — 835 — — — — — 835

Options exercised — — 10 — — — — — 10

Dividends declared on Class A Common Stock, $ 0.21 per share

— — — ( 6,533 ) — — — — ( 6,533 )

Cumulative translation adjustments — — — — ( 38,450 ) — — ( 56 ) ( 38,506 )

Pension and postretirement liability adjustments — — — — ( 629 ) — — — ( 629 )

Settlement of certain pension liabilities — — — — 26,198 — — — 26,198

Derivative valuation adjustment — — — — 6,208 — — — 6,208

September 30, 2022 40,785 $ 41 $ 440,295 $ 920,966 $ ( 180,373 ) 9,675 $ ( 364,923 ) $ 4,182 $ 820,188

(a) In October 2021, the Company's Board of Directors authorized the Company to repurchase shares of up to $ 200 million through open market purchases, privately negotiated transactions or otherwise, and to determine the prices, times and amounts.

During the nine months ended September 30, 2022, the Company repurchased 1,022,717 shares totaling $ 85.1 million.

The Company did not repurchase shares during the nine months ended September 30, 2023.

Business Combination

On August 31, 2023, the Company acquired all of the outstanding shares of Heimbach, a privately-held manufacturer of paper machine clothing with headquarters in Düren, Germany.

Heimbach is a global supplier of paper machine clothing for the production of all grades of paper and cardboard on all machine types as well as high-tech textile products used in a variety of sectors, such as the food processing, chemicals, construction materials and automotive industries.

Heimbach is now a division under the MC segment.

The Paper Machine Clothing ("PMC") industry has attractive dynamics and the acquisition of Heimbach provides increased scale and complementary technology that further drives the Machine Clothing segment's differentiated manufacturing, sales and service network.

The acquisition was funded using cash on-hand.

The following table summarizes the total consideration paid, excluding debt assumed, for the acquisition of Heimbach:

(in thousands) August 31, 2023

Cash consideration $ 145,816

Indemnity release ( 1,750 )

Total consideration paid $ 144,066

The acquisition was accounted for under the acquisition method in accordance with ASC 805, Business Combinations.

The assets acquired and the liabilities assumed were recorded based on their preliminary fair values at the date of acquisition as follows:

(in thousands) August 31, 2023

Assets acquired:

Cash and cash equivalents $ 12,347

Accounts receivables 52,704

Inventories 41,538

Property, plant and equipment 126,057

Other intangible assets 14,464

Other current assets 7,452

Other noncurrent assets 6,694

Total assets acquired $ 261,256

Liabilities assumed:

Assumed debt $ 32,700

Accounts payable 8,243

Accrued liabilities 27,257

Other noncurrent liabilities 36,313

Income taxes payable 288

Deferred tax liabilities 10,757

Total liabilities assumed $ 115,558

Net assets acquired $ 145,698

Noncontrolling interest $ ( 1,632 )

Total consideration $ 144,066

For the three and nine months ended September 30, 2023, the Company incurred acquisition related costs of $ 1.6 million and $ 2 million, respectively.

These costs are included in Selling, general and administrative expenses in the Consolidated statements of income.

The preliminary fair values of the property, plant and equipment of $ 126.1 million were determined using the cost-approach and a market-approach because the selected approaches were appropriate for the valuation analysis and

sufficient information was available for their use.

The Company recorded $ 1.1 million of depreciation expense for the three and nine months ended September 30, 2023.

The preliminary fair values of the identifiable intangible assets totaling $ 14.5 million, consisting of the Heimbach trade name and developed technology, was determined using the income approach, specifically, a relief from royalty method.

The fair value of the trade name was $ 6.0 million and is considered an indefinite-lived asset because of Heimbach's rich brand heritage and customer service to the paper machine clothing industry dating back to 1811.

The fair value of the developed technology was $ 8.5 million and includes intellectual property-related technologies as well as know-how developed by Heimbach;

and is being amortized over its economic period of benefit, which is 9 years.

This amortization period represents the estimated useful life of the asset.

The Company recorded $ 0.1 million of intangible amortization for the three and nine months ended September 30, 2023.

The preliminary fair values of the assets acquired includes $ 3.2 million and $ 0.1 million of operating and finance lease right-of-use assets, respectively.

The preliminary fair values of the liabilities assumed includes $ 3.2 million and $ 0.1 million of operating and finance lease liabilities, respectively, of which, $ 1.1 million and $ 0.1 million of operating and finance lease liabilities, respectively, are current liabilities.

Debt assumed included $ 32.7 million aggregate outstanding amount of bank debt with several European financial institutions with fixed interest rates ranging from 0.9 % to 2.93 % and maturity dates ranging from September 25, 2023 to June 30, 2031.

Bank agreements allowed for the repayment of the debt upon demand by certain financial institutions in the event of a change in control.

Some of the assumed bank debt may become due upon notification by

those financial institutions before the maturity date of the bank agreements.

At September 30, 2023, the foreign debt assumed was $ 29.6 million, of which $ 27.2 million was classified as Current maturities on long-term debt.

The preliminary fair value of the liabilities assumed include $ 35.3 million of pension liabilities for various defined benefit plans.

Heimbach's results of operations have been included in the Company's financial statements for the period subsequent to the completion of the acquisition on August 31, 2023.

Heimbach contributed $ 15.6 million of revenue and a $( 0.5 ) million operating loss for the period ended September 30, 2023.

On August 31, 2023, the Company acquired all the outstanding shares of Heimbach, a privately-held manufacturer of paper machine clothing with headquarters in Düren, Germany.

For the three months ended March 31, 2024, there were no material adjustments to the assets acquired and liabilities assumed.

Subsequent Events

On April 19, 2024, we announced a plan to discontinue manufacturing at our Chungju, South Korea operation, and to transfer production to other international manufacturing facilities owned by the Company.

This action will enable the Company to align forming fabric capacity with the local market demand and the needs of customers.

The company remains committed to the local papermaking industry and will continue to provide customers with strong expertise in Product Application, Sales and Marketing Service through the current Sales, Service & Application teams located in South Korea.

The Company estimates the cash outflows associated with this restructuring to be approximately $ 6 million, which will include employee-related costs, asset write-offs, and equipment transfer costs.

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 1. Financial Statements