What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-04-29 · 199 added, 99 removed, 575 unchanged (34% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net revenues $ 331,994 $ 274,123 $ 645,324 $ 543,219

8 unchanged sentences

Income before income taxes 34,298 46,906 72,938 84,613

Income taxes 11,271 10,621

Income tax expense 9,578 20,080 20,849 30,701

Net income 24,720 26,826 52,089 53,912

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 24,720 $ 26,826 $ 52,089 $ 53,912

18 unchanged sentences

(in thousands, except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 116,439 $ 173,420

46 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income $ 52,089 $ 53,912

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

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

Depreciation 41,247 32,299

4 unchanged sentences

Compensation and benefits paid or payable in Class A Common Stock 4,243 2,274

Provision for credit losses from uncollected receivables and contract assets 365 309

Provision/(recovery) for credit losses from uncollected receivables and contract assets ( 174 ) 493

Foreign currency remeasurement gain on intercompany loans ( 2,580 ) ( 3,198 )

Fair value adjustment on foreign currency options 280 58

Fair value adjustment on foreign currency contracts 3,109 ( 123 )

Gain on sale of assets ( 512 ) —

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

10 unchanged sentences

Other, net 494 2,881

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

Net cash provided by operating activities 92,989 14,675

Cash flows from investing activities:

1 unchanged sentence

Purchased software ( 40 ) ( 72 )

Proceeds received from sale of assets 1,029 —

Net cash used in investing activities ( 45,627 ) ( 34,971 )

14 unchanged sentences

Basis of Presentation

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").

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 does not include 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.

21 unchanged sentences

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

In March 2024, the FASB issued Accounting Standards Update No.

2024-01, "Compensation - Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards" (ASU 2024-01), which clarifies how an entity determines whether profits interest or similar awards should be considered within the scope of ASC 718 as a share-based payment arrangement or under ASC 710 or other ASC topics in a manner similar to a cash bonus or profit-sharing arrangement.

The guidance is effective for annual periods beginning after December 15, 2024, and interim periods beginning within those annual periods.

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

ASU 2024-01 should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments.

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

3 unchanged sentences

Machine Clothing:

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.

The Machine Clothing 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.

5 unchanged sentences

Albany Engineered Composites:

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

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

The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, the SAFRAN Group (“SAFRAN”) owns a 10 percent noncontrolling interest.

2 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 $ 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.

AEC net sales to SAFRAN were $ 101.3 million and $ 93.5 million in the first six months of 2024 and 2023, respectively.

The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $ 85.8 million and $ 93.8 million as of June 30, 2024 and December 31, 2023, respectively.

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

3 unchanged sentences

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

Three months ended March 31,

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

(in thousands)

2024 2023 2024 2023

Machine Clothing

11 unchanged sentences

Interest expense

3,909 4,944 8,351 9,340

Other (income)/expense, net 5,657 ( 4,511 ) 2,675 ( 4,966 )

Income before income taxes $ 34,298 $ 46,906 $ 72,938 $ 84,613

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.

Second quarter 2024 results include Heimbach, which was acquired August 31, 2023.

Heimbach contributed $ 39.8 million and $ 77.7 million of net revenues and $ 0.5 million and $( 2.4 ) million of operating income/(loss) for the three and six months ended June 30, 2024, respectively.

Corporate expenses include global information system costs of $ 8.1 million and $ 6.8 million for the three months ended June 30, 2024 and 2023, respectively, and $ 16.4 million and $ 13.0 million for the six months ended June 30, 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 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.

Changes in the estimated profitability of long-term contracts decreased operating income by $ 5.0 million for the second quarter of 2024 and decreased operating income $ 7.6 million for the first half of 2024.

Adjustments in the estimated profitability of long-term contracts decreased operating incomes by $ 1.9 million and decreased operating income by $ 4.0 million for the second quarter and first half of 2023, respectively .

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 March 31, 2024:

Three months ended March 31, 2024

The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2024:

Three months ended June 30, 2024

(in thousands)

8 unchanged sentences

Total revenues $ 198,604 $ 133,390 $ 331,994

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

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

Three months ended June 30, 2023

(in thousands)

8 unchanged sentences

Total revenues $ 161,784 $ 112,339 $ 274,123

The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2024:

Six months ended June 30, 2024

(in thousands)

Point in Time Revenue

Recognition Over Time Revenue

Recognition Total

Machine Clothing $ 376,831 $ 1,964 $ 378,795

Albany Engineered Composites:

ASC — 100,031 100,031

Other AEC 11,766 154,732 166,498

Total Albany Engineered Composites 11,766 254,763 266,529

Total revenues $ 388,597 $ 256,727 $ 645,324

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

Six months ended June 30, 2023

(in thousands) Point in Time Revenue

Recognition Over Time Revenue

Recognition Total

Machine Clothing $ 310,551 $ 1,888 $ 312,439

Albany Engineered Composites:

ASC — 91,949 91,949

Other AEC 9,304 129,527 138,831

Total Albany Engineered Composites 9,304 221,476 230,780

Total revenues $ 319,855 $ 223,364 $ 543,219

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 March 31,

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

(in thousands)

2024 2023 2024 2023

Americas PMC $ 88,533 $ 94,154 $ 172,034 $ 177,532

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 $ 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.

Remaining performance obligations on contracts that had an original duration of greater than one year totaled $ 1.1 billion and $ 792 million as of June 30, 2024 and 2023, respectively, and related primarily to firm fixed price contracts in the AEC segment.

Of the remaining performance obligations as of June 30, 2024, we expect to recognize as revenue approximately $ 86 million during 2024, $ 191 million during 2025, $ 155 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 three months ended March 31, 2024 and 2023, was as follows:

The composition of the net periodic benefit cost/(income) for the six months ended June 30, 2024 and 2023, was as follows:

Pension plans

13 unchanged sentences

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.

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

There were no material curtailments or settlements during the first six 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.

1 unchanged sentence

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.

Restructuring costs at MC in the second quarter of 2024 were related primarily to actions taken to cease operations at the Company's MC forming fabric manufacturing facility in Chungju, South Korea.

This led to a $ 1.0 million charge to Restructuring expenses, net related to workforce reductions and a $ 0.5 million charge recorded to Cost of goods sold for the write-off of inventory.

We expect to incur additional restructuring expenses related to this action throughout the remainder of the year.

At AEC, restructuring activities were related to reductions in workforce at various AEC locations.

Restructuring charges for the second quarter of 2023 were not significant.

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands) 2024 2023 2024 2023

1 unchanged sentence

Albany Engineered Composites 922 — 3,110 —

Corporate expenses 115 — 115 —

Total $ 2,103 $ 125 $ 4,312 $ 145

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:

The following tables summarizes charges by type of expense reported in the Consolidated Statements of Income under "Restructuring expenses, net" and "Cost of goods sold":

Six months ended June 30, 2024 Total

restructuring

costs incurred Termination

costs Impairment of assets

(in thousands)

Machine Clothing $ 1,605 $ 1,087 $ 518

Albany Engineered Composites 3,110 3,110 —

Corporate expenses 115 115 —

Total $ 4,830 $ 4,312 $ 518

Six months ended June 30, 2023 Total

restructuring

costs incurred Termination

costs Impairment of assets

(in thousands)

Machine Clothing $ 145 $ 145 $ —

Albany Engineered Composites — — —

Corporate expenses — — —

Total $ 145 $ 145 $ —

The table below presents the year-to-date changes in restructuring liabilities for 2024 and 2023:

(in thousands) December 31, 2023 Restructuring

charges accrued Payments Currency

translation /other March 31, 2024

translation /other June 30, 2024

Total termination and other costs $ — $ 4,312 $ ( 1,381 ) $ ( 7 ) $ 2,924

1 unchanged sentence

charges accrued Payments Currency

translation /other March 31, 2023

translation /other June 30, 2023

Total termination and other costs $ — $ 145 $ ( 147 ) $ 2 $ —

1 unchanged sentence

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

Three months ended March 31,

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

(in thousands)

2024 2023 2024 2023

Currency transaction (gains)/losses $ 150 $ ( 4,193 ) $ ( 1,142 ) $ ( 4,133 )

Derivative instruments losses/(gains) 4,391 ( 138 ) 4,273 ( 123 )

Bank fees and amortization of debt issuance costs

Components of net periodic pension and postretirement cost other than service cost 664 ( 120 ) 1,332 ( 245 )

( 2,401 ) ( 449 )

Other 375 ( 93 ) ( 1,909 ) ( 556 )

Total other (income)/expense, net $ 5,657 $ ( 4,511 ) $ 2,675 $ ( 4,966 )

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,

Other (income)/expense, net, included foreign currency related transactions which resulted in losses of $ 0.2 million and gains of $ 1.1 million in the three and six months ended June 30, 2024, respectively, as compared to gains of $ 4.2 million and $ 4.1 million in the same period last year.

In addition, changes in the fair value of derivative instruments included losses of $ 4.4 million and $ 4.3 million in the three and six months ended June 30, 2024, as compared to gains of $ 0.1 million and $ 0.1 million in the same period last year, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso.

Net periodic pension and postretirement costs, other than service costs, were $ 0.7 million and $ 1.3 million in the three and six months ended June 30, 2024, respectively, as compared to benefits of $ 0.1 million and $ 0.2 million in the same period last year.

Other (income)/expense, net, also included net proceeds of $ 0.5 million from the divestiture of assets related to Heimbach during the three and six months ended June 30, 2024, as well as bank fees, amortization of debt issuance costs, and rental income.

The Company's effective income tax rate for the three and six months ended June 30, 2024 and 2023, is as follows:

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

2024 2023 2024 2023

Effective income tax rate 27.9 % 42.8 % 28.6 % 36.3 %

1 unchanged sentence

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.

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.

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

Our actual effective tax rates were 27.9 % and 42.8 % for the three months ended June 30, 2024 and 2023, respectively.

Our actual effective tax rates were 28.6 % and 36.3 % for the six months ended June 30, 2024 and 2023, respectively.

The effective tax rate for the three months ended June 30, 2024 included a net discrete tax benefit of $ 1.4 million, which decreased our effective tax rate by 4.2 %.

This discrete tax benefit is mostly attributable to the true-up of prior year estimated taxes and the release of an uncertain tax position due to a favorable audit settlement.

The rate for the second quarter of 2024 was lower than the second quarter of 2023 mainly due to favorable discrete tax adjustments in the current period compared to unfavorable discrete tax adjustments in the prior period.

The effective tax rate for the six months ended June 30, 2024 included a net discrete tax benefit of $ 2.5 million, which decreased our effective tax rate by 3.4 %.

This discrete tax benefit is mostly attributable to the true-up for prior year estimated taxes, an increase in the valuation allowance and a net decrease in uncertain tax positions.

The rate for the six months ended June 30, 2024 was lower than the six months ended June 30, 2023 mainly due to favorable discrete tax adjustments in the current period compared to unfavorable discrete tax adjustments in the prior period.

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

3 unchanged sentences

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.

It is reasonably possible that within the next 12 months, unrecognized tax benefits could decrease by up to $ 1.4 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 March 31,

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

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

(in thousands, except earnings per share) 2024 2023 2024 2023

Net income attributable to the Company $ 24,624 $ 26,672 $ 51,915 $ 53,561

9 unchanged sentences

Accumulated Other Comprehensive Income ("AOCI")

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

The table below presents changes in the components of AOCI for the period from December 31, 2023 to June 30, 2024:

(in thousands)

7 unchanged sentences

Net current period other comprehensive income ( 29,403 ) 628 ( 4,964 ) ( 33,739 )

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:

June 30, 2024 $ ( 154,304 ) $ ( 16,718 ) $ 4,115 $ ( 166,907 )

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

(in thousands) Translation

6 unchanged sentences

Net current period other comprehensive income 11,313 ( 1,640 ) ( 2,513 ) 7,160

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

June 30, 2023 $ ( 135,538 ) $ ( 17,423 ) $ 15,194 $ ( 137,767 )

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 months ended March 31, 2024 and 2023:

Three months ended March 31,

The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the Consolidated Statements of Income that were affected for the three and six ended June 30, 2024 and 2023:

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

(in thousands)

2024 2023 2024 2023

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 )

Interest expense/(income), net related to interest rate swaps included in Income before taxes

$ ( 4,180 ) $ ( 3,678 ) $ ( 8,218 ) $ ( 6,901 )

Income tax effect 1,001 931 2,023 1,746

4 unchanged sentences

Amortization of net actuarial loss

176 347 354 693

Total pre-tax amount reclassified (a)

138 ( 683 ) 278 ( 1,368 )

Income tax effect ( 42 ) 209 ( 85 ) 419

9 unchanged sentences

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

For the six months ended June 30, 2024, the net income/(loss) attributable to Arcari’s noncontrolling interest was less than $ 0.1 million and the noncontrolling interest balance at June 30, 2024 was $ 0.6 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 Three months ended March 31,

ASC Noncontrolling Interest Six months ended June 30,

(in thousands, except percentages) 2024 2023

15 unchanged sentences

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

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

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

As of June 30, 2024 and December 31, 2023, Accounts receivable consisted of the following:

(in thousands) June 30, 2024 December 31, 2023

Trade and other accounts receivable $ 263,781 $ 272,351

4 unchanged sentences

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

As of June 30, 2024 and December 31, 2023, Noncurrent receivables consisted of the following:

(in thousands) June 30, 2024 December 31, 2023

Noncurrent receivables $ — $ 4,414

7 unchanged sentences

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

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

As of June 30, 2024 and December 31, 2023, Contract assets and Contract liabilities consisted of the following:

(in thousands) June 30, 2024 December 31, 2023

Contract assets $ 190,193 $ 183,189

3 unchanged sentences

Contract liabilities $ 7,657 $ 7,127

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.

Contract assets, net increased $ 7.0 million during the six months ended June 30, 2024.

The modest increase was primarily due to an increase in unbilled revenue, primarily related to commercial and space programs.

There were no impairment losses related to our Contract assets during the six months ended June 30, 2024 and June 30, 2023.

Contract liabilities decreased $ 0.5 million during the six months ended June 30, 2024, primarily due to revenue recognized from satisfied performance obligations exceeding customer advance payments for commercial and defense programs.

Revenue recognized for the six months ended June 30, 2024 and 2023 that was included in the Contract liability balance at the beginning of the year was $ 3.8 million an d $ 11.7 million, respectively.

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

4 unchanged sentences

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

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

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

As of June 30, 2024 and December 31, 2023, Inventories consisted of the following:

(in thousands) June 30, 2024 December 31, 2023

Raw materials $ 82,412 $ 79,611

5 unchanged sentences

Goodwill and Other Intangible Assets

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

The following table sets forth the gross carrying value, accumulated amortization and net values of intangible assets and goodwill as of June 30, 2024 and December 31, 2023:

June 30, 2024

(in thousands) Amortization

39 unchanged sentences

$ 186,251 $ — $ 186,251

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

The changes in intangible assets, net and goodwill from December 31, 2023 to June 30, 2024, were as follows:

(in thousands) December 31, 2023 Other

Changes Amortization Currency

Translation March 31, 2024

Translation June 30, 2024

Finite-lived intangible assets:

11 unchanged sentences

$ 186,251 $ — $ — $ ( 2,122 ) $ 184,129

In the second quarter of 2024, management performed the quantitative assessment approach in conducting its annual evaluation of goodwill and indefinite-lived trademark intangibles and concluded that no impairment provision was required.

Our goodwill has been allocated to and is tested for impairment at a level referred to as the reporting unit, which management determined to be the business segment level.

As part of the quantitative assessment, management used the income and market approach to determine fair value by considering projected cash flows and market multiples for the Machine Clothing reporting unit and the AEC reporting unit.

Management performed the quantitative assessments and concluded that each reporting unit’s fair value continued to significantly exceed its carrying value.

In addition, there were no amounts at risk due to the estimated spread between the fair and carrying values.

Accordingly, no impairment charges were recorded.

Financial Instruments

1 unchanged sentence

The following table represents the Company's outstanding debt:

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

(in thousands, except interest rates) June 30, 2024 December 31, 2023

Borrowings under the Amended Credit Agreement(1) $ 370,000 $ 446,000

4 unchanged sentences

(1) the credit facility matures in August 2028.

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.

At the end of June 30, 2024 and December 31, 2023, the interest rate in effect was 2.75 % and 3.49 %, respectively, including the effect of interest rate hedging transactions, as described below.

Amended Credit Agreement

9 unchanged sentences

0.350 % 1.000 % 2.000 %

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).

As of June 30, 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 June 30, 2024, there was $ 370 million of borrowings outstanding under the Amended Credit Agreement and we had borrowings available of $ 430 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.

1 unchanged sentence

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 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.

As of June 30, 2024, our leverage ratio was 0.98 to 1.00 (as defined in the Amended Credit Agreement) and our interest coverage ratio was 14.70 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.

As of June 30, 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.

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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 %.

We pay a fixed blended rate of 0.88 % 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 June 17, 2024 was 5.33 %.

As of June 30, 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.

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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 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.

The bank debt is held by several European financial institutions, with maturity dates ranging from February 1, 2025 to June 30, 2031.

At June 30, 2024 and December 31, 2023, the foreign debt was $ 7.1 million and $ 10.9 million, respectively, of which $ 2.7 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 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.

We had no Level 3 financial assets or liabilities at June 30, 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:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in thousands)

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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 $( 4.0 ) million for the three months ended March 31, 2024, and $( 3.2 ) million for the three months ended March 31, 2023.

Interest expense/(income) related to payments under the active swap agreements totaled $( 8.2 ) million for the six months ended June 30, 2024, and $( 6.9 ) million for the six months ended June 30, 2023.

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

Foreign currency instruments are entered into periodically and consist of foreign currency option contracts and forward contracts that are valued using quoted prices in active markets obtained from independent pricing sources.

These instruments are measured using market foreign exchange prices and are recorded in the Consolidated Balance Sheets as Other current assets and Accounts payable, as applicable.

These instruments are measured using market foreign exchange prices and are recorded in the Consolidated Balance Sheets as Other current assets and Accrued liabilities, as applicable.

Changes in fair value of these instruments are recorded as gains or losses within Other (income)/expense, net.

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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 March 31,

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

(in thousands) 2024 2023 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 3,613 claims as of March 31, 2024.

We were defending 3,623 claims as of June 30, 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:

3 unchanged sentences

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

For the period ended June 30, 2024 3,606 5 22 3,623 $ 10

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.

2 unchanged sentences

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

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.

As of June 30, 2024, we had resolved, by means of settlement or dismissal, 38,046 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 7,676 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.

While Brandon was defending against 7,676 claims as of June 30, 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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We acquired certain assets from Mount Vernon in 1993.

Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many years prior to this acquisition.

Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many

years prior to this acquisition.

Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products.

5 unchanged sentences

Changes in Shareholders’ Equity

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

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2023 to June 30, 2024:

Additional paid-in capital

13 unchanged sentences

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

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

Net income — — — 24,624 — — — 96 24,720

Compensation and benefits paid or payable in shares — — 2,530 — — — — — 2,530

Shares issued to Directors' 10 — 903 — — — — — 903

Dividends declared on Class A Common Stock, $ 0.26 per share

— — — ( 8,123 ) — — — — ( 8,123 )

Cumulative translation adjustments — — — — ( 17,287 ) — — ( 366 ) ( 17,653 )

Pension and postretirement liability adjustments — — — — 246 — — — 246

Derivative valuation adjustment — — — — ( 2,840 ) — — — ( 2,840 )

June 30, 2024 40,908 $ 41 $ 452,461 $ 1,046,612 $ ( 166,907 ) 9,662 $ ( 364,665 ) $ 5,806 $ 973,348

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

Additional paid-in capital

13 unchanged sentences

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

Net income — — — 26,672 — — — 154 26,826

Compensation and benefits paid or payable in shares — — 811 — — — — — 811

Shares issued to Directors' — — 828 — — ( 12 ) 258 — 1,086

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

— — — ( 7,795 ) — — — — ( 7,795 )

Cumulative translation adjustments — — — — ( 2,568 ) — — 179 ( 2,389 )

Pension and postretirement liability adjustments — — — — ( 724 ) — — — ( 724 )

Derivative valuation adjustment — — — — 389 — — — 389

June 30, 2023 40,842 $ 41 $ 443,556 $ 969,292 $ ( 137,767 ) 9,663 $ ( 364,665 ) $ 5,262 $ 915,719

Business Combination

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.

For the three and six months ended June 30, 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.

We evaluated subsequent events through the issuance date of these financial statements in Form 10-Q.

No material subsequent events were identified that require disclosure.

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