What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-26 · 362 added, 398 removed, 1674 unchanged (31% of the section changed)

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We identified the evaluation of estimated total contract costs at completion for AEC revenue recognition for certain firm-fixed-price contracts as a critical audit matter.

A high degree of auditor judgment was required to evaluate the estimates of total contract costs at completion because of the varied nature and inherent complexities of the contractual performance obligations.

A high degree of auditor judgment was required to evaluate the

estimates of total contract costs at completion because of the varied nature and inherent complexities of the contractual performance obligations.

The following are the primary procedures we performed to address this critical audit matter.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement Schedule II - Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated February 26, 2025 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Heimbach during 2023, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, Heimbach’s internal control over financial reporting associated with 14 percent of total consolidated assets (of which 8 percent related to property, plant, and equipment, net, and intangible assets included within the scope of the assessment) and 4 percent of total consolidated revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2023.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Heimbach.

Basis for Opinion

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Pension settlement expense — — 49,128

Aviation Manufacturing Jobs Protection (AMJP) grant — — ( 5,832 )

Other (income)/expense, net

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At December 31,

(in thousands, except share data)

(in thousands, except share and per share data)

Current assets:

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Fair value adjustment on foreign currency options — ( 139 ) ( 509 )

Gain on sale of assets ( 513 ) — —

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

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Purchased software ( 958 ) ( 869 ) ( 2,673 )

Proceeds received from sale of assets 1,027 — —

Net cash used in investing activities ( 80,180 ) ( 217,899 ) ( 96,348 )

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Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of Albany International Corp.

Basis of Consolidation and Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and include the accounts of Albany International Corp.

and its subsidiaries (the Company, Albany, we, us, or our) after elimination of intercompany transactions.

On August 31, 2023, the Company completed the acquisition of Heimbach GmbH ("Heimbach"), a privately-held manufacturer of paper machine clothing and technical textiles, as further described in Note 24, Business Combination , of the Notes to the Consolidated Financial Statements .

Certain prior year amounts have been reclassified in order to conform to current year presentation.

Global information system costs previously included in Corporate expenses are allocated to the segments.

Management believes this presentation better reflects the performance of the segments and is how management will review segment performance on a going forward basis.

See Note 3, Reportable Segments and Geographical Data, of the Notes to the Consolidated Financial Statements for more information on our segments.

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

The Company owns 90 percent of the common equity of Albany Safran Composites, LLC ("ASC") which is reported within the AEC segment.

The Company also owns 85 percent of Arcari, SRL ("Arcari"), a manufacturer of textile and plastic industrial technical products and conveyor belts, which is a subsidiary of Heimbach GmbH, the paper machine clothing manufacturer recently acquired by the Company and reported within the MC segment.

The Company owns 90 % of the common equity of Albany Safran Composites, LLC ("ASC") which is reported within the Albany Engineered Composites segment.

The Company also owns 85 % of Arcari, SRL ("Arcari"), a manufacturer of textile and plastic industrial technical products and conveyor belts, which is a subsidiary of Heimbach GmbH, the paper machine clothing manufacturer recently acquired by the Company and reported within the Machine Clothing segment.

Additional information regarding noncontrolling interest is included in Note 10, Noncontrolling Interest , of the Notes to the Consolidated Financial Statements.

A subsidiary within our Machine Clothing segment has held a 50 percent interest as partner in a joint venture (“JV”) that supplies paper machine clothing products to local papermakers in Russia.

Our consolidated financial statements included our original investment in the entity, plus our share of undistributed earnings or losses, in the account “Other Assets.” In March 2022, we ceased doing business in Russia, including providing notice to our JV partner of our intent to exit the venture, resulting in the full write-off of the net book value of our investment.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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.

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Our estimates are based on historical experience and on various other assumptions, which are believed to be reasonable under the circumstances.

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

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

Revenue Recognition

In our MC business segment, we recognize revenue at the point in time when we satisfy our performance obligations related to the manufacture and delivery of products.

In our AEC business segment, revenue from most long-term contracts is generally recognized over time using an input method as the measure of progress.

The classification of revenue in excess of progress billings on long-term contracts is included in Contract assets, net, which are rights to consideration that are conditional on something other than the passage of time, such as completion of remaining performance obligations.

We are required to limit our estimate of contract values to the period of the legally enforceable contract.

In our Machine Clothing ("MC") business segment, we recognize revenue at the point in time when we satisfy our performance obligations related to the manufacture and delivery of products.

In our Albany Engineered Composites ("AEC") business segment, revenue from most long-term contracts is generally recognized over time using an input method as the measure of progress.

The amount of revenue in excess of progress billings on long-term contracts is included in Contract assets, net, which represent rights to consideration that are conditional on something other than the passage of time, such as completion of remaining performance obligations.

For over time contracts, we are required to limit our estimate of contract values to the period of the legally enforceable contract.

While certain contracts are expected to be profitable over the course of the program life when including expected renewals, our estimate of contract revenues and costs is limited to the estimated value of enforceable rights and obligations, excluding anticipated renewals.

This contract period may result in a loss contract provision at contract inception.

Expected losses on projects include losses on contract options that are probable of exercise, excluding profitable

Expected losses on projects include losses on contract options that are probable of exercise, excluding

ALBANY INTERNATIONAL CORP.

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Accounting Policies — (continued)

options that often follow.

profitable options that may follow.

For contracts with anticipated losses, a provision for the entire amount of the estimated remaining loss is charged against income in the period in which the loss becomes known.

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When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs.

The sum of net adjustments to the estimated profitability of long-term contracts decreased AEC Operating income by $ 4.1 million in 2023, and increased AEC Operating income by $ 0.5 million and $ 6.2 million in 2022 and 2021, respectively.

The unfavorable effects in 2023 related to additional reserves taken on certain contracts and inflationary factors decreasing anticipated margins.

The favorable effects in 2022 and 2021 were largely due to changes in customer demand and to a lesser extent, efficiency improvements during the ramp-up of several programs.

Additional accounting policies related to revenue from contracts with customers are set forth in Note 2, Revenue Recognition , of the Notes to the Consolidated Financial Statements.

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Selling, General, and Administrative ("SG&A") Expenses

Selling, general, and administrative expenses are primarily comprised of wages, incentive compensation, benefits, travel, professional fees, revaluation of trade foreign currency balances, information system costs, and other costs, and are expensed as incurred.

Selling, general, and administrative expenses are primarily comprised of wages, incentive compensation, benefits, travel, professional fees, revaluation of trade foreign currency balances, global information system costs, and other costs, and are expensed as incurred.

Selling expense includes costs related to contract acquisition and provisions for expected credit losses on financial assets measured at amortized cost.

General and administrative expenses include corporate expenses of $ 73.1 million in 2023, $ 56.8 million in 2022 and $ 53.7 million in 2021.

Corporate expenses include global information system costs of $ 27.3 million in 2023, $ 22.7 million in 2022 and $ 21.2 million in 2021.

Technical and Research Expenses

Technical and research expenses are charged to operations as incurred and consist primarily of compensation, supplies, and professional fees incurred in connection with intellectual property.

Total company technical and research expense was $ 40.6 million in 2023, $ 39.9 million in 2022, and $ 38.9 million in 2021.

The AEC segment participates in both company-sponsored, and customer-funded research and development.

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For customer-funded research and development in which we anticipate funding to exceed expenses, we include amounts charged to the customer in Net revenues, while expenses are included in Cost of goods sold.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

Restructuring Expense

We may incur expenses related to exiting a line of business or restructuring of our operations or organizational structure, which could include employee termination costs, costs to consolidate or close facilities, or costs to terminate contractual relationships.

Restructuring expenses may also include impairment of Property, plant and equipment, as described below under “Property, Plant and Equipment”.

Employee termination costs include severance pay and social costs for periods after employee service is completed.

Restructuring expenses may also include impairment of Property, plant and equipment, as described below under “Property, Plant and Equipment.” Employee termination costs include severance pay and social costs for periods after employee service is completed.

Termination costs related to an ongoing benefit arrangement are recognized when the amount becomes probable and estimable.

Termination costs related to a one-time benefit arrangement are recognized at the communication date to employees.

Termination costs related to a one-

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

time benefit arrangement are recognized at the communication date to employees.

Costs related to contract termination, relocation of employees, outplacement and the consolidation or the closure of facilities, are recognized when incurred.

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We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date.

For those tax positions where it is more likely than not that a tax benefit will be sustained, we have determined the amount of the tax benefit to be recognized by estimating the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those tax positions where it is more likely than not that a tax benefit will be sustained, we have determined the amount of the tax benefit to be recognized by estimating the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.

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Gains and losses on long-term intercompany loans not intended to be repaid in the foreseeable future are recorded in other comprehensive income.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

The following table summarizes foreign currency transaction gains and losses recognized in the income statement:

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Total transaction (gains)/losses $ ( 8,395 ) $ 1,265 $ ( 10,550 )

The following table presents foreign currency gains on long-term intercompany loans that were recognized in Other comprehensive income:

(in thousands) 2023 2022 2021

Loss/(gain), before tax, on long-term intercompany loan $ — $ — $ ( 66 )

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

Cash and Cash Equivalents

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Accounts Receivable

Accounts receivable includes trade receivables and bank promissory notes.

Accounts receivable includes trade and other accounts receivables and Bank promissory notes.

In connection with certain sales in Asia Pacific, the Company accepts a bank promissory note as customer payment.

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The estimate reflects the risk of loss due to credit default, even when the risk is remote, and considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable expected future economic conditions.

The Company also has Noncurrent receivables in the AEC segment that represent revenue earned which have extended payment terms.

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

See additional information set forth in Note 11, Accounts Receivable , of the Notes to the Consolidated Financial Statements.

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See additional information set forth in Note 12, Contract Assets and Liabilities , of the Notes to the Consolidated Financial Statements.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

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

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To assess whether a contract conveys the right to control the use of an identified asset, we assess whether:

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

• The contract involves the use of an identified asset.

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The Company relies on bank financing as an important source of liquidity for business activities.

Outstanding debt is classified as current or long-term based on the maturity of the of the Company's financing arrangements.

Outstanding debt is classified as current or long-term based on the maturity of the Company's financing arrangements.

See additional information set forth in Note 17, Financial Instruments , of the Notes to the Consolidated Financial Statements.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

Property, Plant and Equipment

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We capitalize internal and external costs incurred related to the software development stage .

Capitalized salaries, travel, and consulting costs related to the software development were not material in 2023 and 2022.

Capitalized salaries, travel, and consulting costs related to the software development totaled $ 1.2 million in 2024 and was not material in 2023.

We review the carrying value of property, plant and equipment and other long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset group may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.

See additional information set forth in Note 14, Property, Plant and Equipment, Net , of the Notes to the Consolidated Financial Statements.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

Business Combinations

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Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

Otherwise, we perform a quantitative impairment test.

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

In the second quarter of 2023, management applied the qualitative assessment approach in performing its annual evaluation of goodwill for the Company's MC reporting unit and two AEC reporting units and concluded that each reporting unit’s fair value continued to exceed its carrying value by a significant margin.

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.

Impairment assessments inherently involve management judgments regarding a number of assumptions such as those described above.

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These costs are normally considered a fulfillment activity, rather than a performance obligation.

Fulfillment activities that create resources that will be used in satisfying performance obligations in the future, and are expected to be recovered, are capitalized to Other assets, which is classified as a noncurrent asset in the Consolidated Balance Sheets.

Fulfillment activities that create resources that will be used in satisfying performance obligations in the future, and are expected to be recovered, are capitalized to

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

Other assets, which is classified as a noncurrent asset in the Consolidated Balance Sheets.

The capitalized costs are amortized into Cost of goods sold over the period over which the asset is expected to contribute to future cash flows, which includes anticipated renewal periods.

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We monitor our exposure to these risks and evaluate, on an ongoing basis, the risk of potentially large adverse effects versus the costs associated with hedging such risks.

We may use interest rate swaps in the management of interest rate exposures and foreign currency derivatives to manage foreign currency exposure related to assets and liabilities (including net investments in subsidiaries located

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

outside the U.S.) denominated in foreign currencies.

When we enter into a derivative contract, we make a determination whether the transaction is deemed to be a hedge for accounting purposes.

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As described in Note 4, Pension, Postretirement, and Other Benefit Plans , of the Notes to the Consolidated Financial Statements, we have pension and postretirement benefit plans covering substantially all employees.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

The pension plans are generally trusteed or insured, and accrued amounts are funded as required in accordance with governing laws and regulations.

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A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support with no future related costs is recognized in the Consolidated Statements of Income of the period in which it becomes receivable.

During the third quarter of 2021, the Company was awarded an Aviation Manufacturing Jobs Protection Program ("AMJP") grant of $ 5.8 million, under the American Rescue Plan of the U.S.

Department of Transportation.

The AMJP grant is an income related grant, the purpose of which is to provide payroll assistance to eligible U.S.

aircraft manufacturing/repair businesses who were impacted due to the COVID-19 pandemic downturn during 2020.

In order to receive the grant, AEC was required to make several commitments, including a commitment that the Company would not involuntarily furlough or lay-off employees within this segment during the period the grant was intended to cover.

All conditions were met and the Company recognized $ 5.8 million in its Consolidated Statements of Income for the year ended December 31, 2021.

The Company received $ 2.9 million in cash during 2021 and the remainder

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

during 2022 and reflected cash received as an operating activity within the Consolidated Statements of Cash Flows over the periods cash was received.

Recent Accounting Pronouncements

New Accounting Standards Adopted

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

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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.

The adoption of this standard had an impact on the segment disclosures presented in this Annual Report on Form 10-K, however, there was no impact to the results of operations, cash flows, and financial condition.

See Note 3, Reportable Segments and Geographic Data , of the Notes to the Consolidated Financial Statements for additional information.

New Accounting Standards Not Yet Adopted

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

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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.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounting Policies — (continued)

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

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

2024-03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses" (ASU 2024-03), which requires a public business entity to disclose specific information about certain costs and expenses in the notes to the financial statements for interim and annual reporting periods.

The objective of the disclosure requirements is to provide disaggregated information of the public entity's expenses to help investors better understand the entity's performance;

better assess the entity's prospects for future cash flows;

and compare an entity's performance over time and with that of other entities.

The disaggregation of relevant expense captions presented on the face of the income statement may include but is not limited to the following natural expenses:

(1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization.

The guidance is effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027.

Early adoption is permitted.

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

In March 2024, the U.S.

Securities and Exchange Commission ("SEC") adopted the final rule under SEC Release No.

33-11275, "The Enhancement and Standardization of Climate-Related Disclosures for Investors".

This rule would require registrants to disclose certain climate-related information in registration statements and annual reports.

In April 2024, the SEC voluntarily stayed the final rule as a result of legal challenges that are pending judicial review.

The disclosure requirements would apply to the Company's fiscal year beginning January 1, 2025, pending resolution of the stay.

The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.

Revenue Recognition

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In our AEC segment, we primarily enter into contracts to manufacture and deliver highly engineered advanced composite products to our customers.

A significant portion of AEC revenue is earned under short duration, firm-fixed-price orders that are placed under a master agreement containing general terms and conditions applicable to all orders placed under the master agreement.

A significant portion of AEC revenue is earned under a mix of short duration and long duration, firm-fixed-price orders that are placed under master agreements that contain general terms and conditions applicable to all orders placed under the master agreements.

We assess each contract at its inception to determine whether it should be combined with other contracts.

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When any adjustments of estimated contract revenue or costs are required, any changes from prior estimates are included in revenues or earnings in the period in which the change occurs.

The sum of net adjustments to the estimated profitability of long-term contracts decreased AEC Operating income by $ 43.2 million and $ 4.1 million in 2024 and 2023, respectively, and increased AEC Operating income by $ 0.5 million in 2022.

The unfavorable effects in 2024 related to higher labor, material and scrap costs.

The negative change in estimated profitability in 2024 was primarily driven by a few large complex programs, including approximately $ 25.5 million for the various CH-53K programs, $ 11.4 million on our Gulfstream program, $ 3.9 million on our F-35 program, and $ 2.2 million on our GE Platforms program.

The unfavorable effects in 2023 related to additional reserves taken on certain contracts and inflationary factors decreasing anticipated margins.

The favorable effects in 2022 were largely due to changes in customer demand and to a lesser extent, efficiency improvements during the ramp-up of several programs.

In other AEC contracts, revenue is recognized at a point in time because the products are offered to multiple customers, or we do not have an enforceable right to payment until the product is shipped or delivered to the location specified by the customer in the contract.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Revenue Recognition — (continued)

AEC’s largest source of revenue is derived from the LEAP contract (see Note 10, Noncontrolling Interest , of the Notes to the Consolidated Financial Statements) under a cost-plus-fee agreement.

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Terms vary with product, competitive conditions, and the country of operation.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Revenue Recognition — (continued)

The following table provides a summary of the composition of each business segment:

Segment Reporting Unit Principal Product or Service Principal Locations

Segment Product Group Principal Product or Service Principal Locations

Machine Clothing (MC) Machine Clothing Paper machine clothing:

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Total net revenues $ 765,496 $ 465,119 $ 1,230,615

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Revenue Recognition — (continued)

For the year ended December 31, 2023

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Total net revenues $ 687,536 $ 460,373 $ 1,147,909

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Revenue Recognition — (continued)

For the year ended December 31, 2022

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Contracts in the MC segment are generally for periods of less than a year.

Most contracts in the AEC segment are short duration firm-fixed-price orders representing performance obligations with an original maturity of less than one year.

Remaining performance obligations on contracts that had an original duration of greater than one year totaled $ 1.2 billion as of December 31, 2023, $ 553 million as of December 31, 2022, and $ 278 million as of December 31, 2021, and related primarily to firm contracts in the AEC segment.

Most contracts in the AEC segment are a mix of short duration and long duration firm-fixed-price orders, many representing performance obligations with an original maturity of less than one year.

Remaining performance obligations on contracts that had an original duration of greater than one year totaled $ 1.1 billion as of December 31, 2024, $ 1.2 billion as of December 31, 2023, and $ 553 million as of December 31, 2022, and related primarily to firm contracts in the AEC segment.

Of the remaining performance obligations as of December 31, 2024, we expect to recognize as revenue approximately $ 151 million during 2025, $ 147 million during 2026, $ 143 million during 2027, and the remainder thereafter.

Reportable Segments and Geographic Data

The Company is organized based on the nature of its products and is composed of two reportable segments each overseen by a Segment President.

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

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 Decision Maker

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Reportable Segments and Geographic Data — (continued)

("CODM"), reviews operating results for the purpose of allocating resources and assessing performance.

Our CODM evaluates each segment's performance based on metrics such as net revenues, gross profit, and other key financial data, to assess performance and allocate resources that align with company-wide goals.

Annual incentive targets are established for the segment presidents based on these metrics, in addition to Earnings before interest, taxes, depreciation, and amortization (EBITDA) and cash flows, which are reviewed in summary each month, and in more depth each quarter.

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

As of December 31, 2023, the operating segments were Machine Clothing (“MC”), and Albany Engineered Composites ("AEC”).

Effective December 31, 2024, the Company adopted the provisions of ASU 2023-07, which expanded the content and frequency of segment disclosures required under ASC 280.

The accounting policies of the segments are the same as those described in Note 1, Accounting Policies , of the Notes to the Consolidated Financial Statements.

Corporate expenses include wages and benefits for corporate headquarters personnel, costs related to information systems development and support, and professional fees related to legal, audit, and other activities.

These costs are not allocated to the reportable segments because the decision-making for these functions lies outside of the segments.

Corporate expenses are not allocated to the reportable segments, except certain global information system costs discussed below, because the decision-making for these functions lies outside of the segments.

Machine Clothing:

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Reportable Segments and Geographic Data — (continued)

The MC segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, pulp, nonwovens, fiber cement and several other industrial applications.

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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, 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.

Albany Engineered Composites :

The AEC 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, SAFRAN Group ("Safran"), owns a 10 percent noncontrolling interest, AEC, through ASC, is the exclusive supplier to the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract.

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

AEC’s largest aerospace customer is SAFRAN and sales to SAFRAN (consisting primarily of fan blades and cases for CFM’s LEAP engine) accounted for approximately 16 percent of the Company’s consolidated Net revenues in 2023.

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

AEC, through ASC, is the exclusive supplier to the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract.

The LEAP engine is used on the Airbus A320neo, A321neo, Boeing 737 MAX, and COMAC 919 aircraft.

AEC’s largest aerospace customer is SAFRAN and sales to SAFRAN (consisting primarily of fan blades and cases for CFM’s LEAP engine) accounted for approximately 14 % of the Company’s consolidated Net revenues in 2024.

In 2024, SAFRAN leased manufacturing space from AEC for the GE9X program.

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The total of Accounts receivable, Contract assets and Noncurrent receivable due from SAFRAN amounted to $ 78.5 million and $ 93.8 million as of December 31, 2024 and 2023, 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 Boeing commercial programs, and specialty components for the Rolls Royce lift fan on the F-35.

In 2023, approximately 39 percent of AEC net revenues were related to U.S.

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

AEC also supplies vacuum waste tanks for 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.

In 2024, approximately 36 % of AEC net revenues were related to U.S.

government contracts or programs.

The following tables show data by reportable segment that is regularly provided to the CODM, reconciled to consolidated totals included in the financial statements:

ALBANY INTERNATIONAL CORP.

1 unchanged sentence

Reportable Segments and Geographic Data — (continued)

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

Year ended December 31, 2024

(in thousands) MC AEC Corporate Total

Net revenues $ 749,907 $ 480,708 $ — $ 1,230,615

Cost of goods sold 403,863 424,976 — 828,839

Gross profit 346,044 55,732 — 401,776

Selling, general and administrative expenses 123,120 47,421 40,341 210,882

Technical and research expenses 29,832 16,265 — 46,097

Restructuring expenses, net 9,460 3,649 329 13,438

Operating income/(loss) $ 183,632 $ ( 11,603 ) $ ( 40,670 ) $ 131,359

Certain prior year amounts have been reclassified in order to conform to current year presentation.

Global information system costs previously included in Corporate expenses are allocated to the segments.

Management believes this presentation better reflects the performance of the segments and is how management will review segment performance on a going forward basis.

For the year ended December 31, 2024, Selling, general and administrative expenses include global information systems costs of $ 15.2 million, $ 15.7 million and $ 1.0 million for MC, AEC and Corporate, respectively.

Global information systems costs were previously included in Corporate expenses.

Year ended December 31, 2023

(in thousands) MC AEC Corporate Total

Net revenues $ 670,768 $ 477,141 $ — $ 1,147,909

Cost of goods sold 339,210 384,981 — 724,191

Gross profit 331,558 92,160 — 423,718

Selling, general and administrative expenses 118,196 48,833 47,886 214,915

Technical and research expenses 24,651 15,976 — 40,627

Restructuring expenses, net 282 — — 282

Operating income/(loss) $ 188,429 $ 27,351 $ ( 47,886 ) $ 167,894

For the year ended December 31, 2023, Selling, general and administrative expenses include global information systems costs of $ 10.9 million, $ 14.2 million and $ 2.1 million for MC, AEC and Corporate, respectively.

Global information systems costs were previously included in Corporate expenses.

Year ended December 31, 2022

(in thousands) MC AEC Corporate Total

Net revenues $ 609,461 $ 425,426 $ — $ 1,034,887

Cost of goods sold 297,176 347,929 — 645,105

Gross profit 312,285 77,497 — 389,782

Selling, general and administrative expenses 91,393 42,339 34,981 168,713

Technical and research expenses 24,588 15,353 — 39,941

Restructuring expenses, net 92 — 14 106

Operating income/(loss) $ 196,212 $ 19,805 $ ( 34,995 ) $ 181,022

For the year ended December 31, 2022, Selling, general and administrative expenses include global information systems costs of $ 10.0 million, $ 11.8 million and $ 1.0 million for MC, AEC and Corporate, respectively.

Global information systems costs were previously included in Corporate expenses.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Reportable Segments and Geographic Data — (continued)

Years ended December 31,

7 unchanged sentences

$ 1,230,615 $ 1,147,909 $ 1,034,887

Machine Clothing

346,044 331,558 312,285

Albany Engineered Composites

55,732 92,160 77,497

Consolidated total $ 401,776 $ 423,718 $ 389,782

Depreciation and amortization

20 unchanged sentences

Pension settlement expense — — 49,128

AMJP grant — — ( 5,832 )

Other (income)/expense, net

2 unchanged sentences

$ 117,089 $ 160,456 $ 131,980

Results for the year ended December 31, 2023 include the newly acquired Heimbach for the period of ownership, which began September 1, 2023.

Heimbach contributed Net revenues of $ 51.2 million and reduced Operating income by $ 6.3 million, which included depreciation expense on Property, plant, and equipment, net of $ 4.0 million, and amortization expense on Intangibles, net of $ 0.3 million.

Interest income, Interest expense, Pension settlement expense, Other income/expense, and Income taxes are not allocated to the business segments.

Results for the years ended December 31, 2024 and December 31, 2023 include Heimbach, which was acquired August 31, 2023.

Heimbach contributed Net revenues of $ 141.6 million and $ 51.2 million in 2024 and 2023, respectively.

Heimbach reduced MC's Operating income by $ 20.0 million and $ 6.3 million in 2024 and 2023, respectively.

Depreciation expense for Heimbach on Property, plant, and equipment, net was $ 12.4 million and $ 4.0 million in 2024 and 2023, respectively;

and amortization expense on Intangibles, net was $ 1.0 million and $ 0.3 million in 2024 and 2023, respectively.

In the third quarter of 2022, we took actions to settle certain pension plan liabilities in the U.S., leading to charges totaling $ 49.1 million, which were included as Corporate expenses and other.

This led to a reduction of unfunded pension liabilities of $ 6.2 million.

A subsidiary within our MC segment has been a partner in a JV that supplies paper machine clothing products to local papermakers in Russia.

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

As a result, in 2022, we recognized $ 1.5 million expense in the consolidated statement of operations, representing reserves against the risk of uncollectible customer receivables and obsolescence of certain inventory destined for Russian customers.

We also wrote down the net book value of our investment in the aforementioned JV to reflect our intent to exit such venture, resulting in $ 0.8 million impairment loss during the first quarter of 2022.

In the measurement of assets utilized by each reportable segment, we include Inventories, Accounts receivable, net, Contract assets, net, Noncurrent receivables, net, Property, plant and equipment, net, Intangibles, net and Goodwill.

ALBANY INTERNATIONAL CORP.

1 unchanged sentence

Reportable Segments and Geographic Data — (continued)

The table below presents restructuring costs by reportable segment (also see Note 5, Restructuring , of the Notes to the Consolidated Financial Statements):

Years ended December 31,

(in thousands)

2023 2022 2021

Restructuring expenses, net

Machine Clothing

$ 282 $ 92 $ 1,202

Albany Engineered Composites

Corporate expenses

Total restructuring expenses, net

$ 282 $ 106 $ 1,331

The following table presents assets and capital expenditures by reportable segment:

22 unchanged sentences

$ 81,207 $ 84,429 $ 96,348

In 2022, the Company extended the lease of its primary manufacturing facility in Salt Lake City, Utah, which resulted in a lease classification change from Finance to Operating and included a non-cash increase of $ 37.1 million to both Other assets and to Other noncurrent liabilities in the Consolidated Balance Sheets.

Due to the non-cash nature of the transaction, those increases are excluded from amounts reported in the Consolidated Statements of Cash Flows.

ALBANY INTERNATIONAL CORP.

9 unchanged sentences

Switzerland 109,751 115,207 119,069

Germany 86,991 32,239 4,461

France 81,141 77,573 76,826

Brazil 69,527 66,175 62,925

China 67,732 65,135 63,914

Brazil 66,943 69,527 66,175

Mexico 57,928 58,874 58,519

Germany 32,239 4,461 5,308

Other countries 109,597 79,854 59,144

15 unchanged sentences

Voluntary Savings Plan

The Company maintains a voluntary savings plan covering substantially all employees in the United States.

The Company maintains a voluntary savings plan covering all employees in the United States.

The Plan, known as the Prosperity Plus Savings Plan, is a qualified plan under section 401(k) of the U.S.

Internal Revenue Code.

The Company matches, in the form of cash, between 50 percent and 100 percent of employee contributions up to a defined maximum.

The Company matches, in the form of cash, between 50 % and 100 % of employee contributions up to a defined maximum.

The investment of employee contributions to the plan is self-directed.

1 unchanged sentence

The plan allows for discretionary matching contributions.

The Company uses such discretion to provide profit sharing contributions to eligible plan participants.

The Company uses such discretion to provide profit sharing contributions to plan participants.

Such contributions are based on Company performance and vary from year to year and contributions are generally made in the first quarter following the Company’s fiscal year-end.

The Company’s profit-sharing plan covers substantially all employees in the United States.

The Company’s profit-sharing plan covers all employees in the United States.

After the close of each year, the Board of Directors reviews and approves the amount of the profit-sharing contribution.

12 unchanged sentences

Pension Plus Plan, a qualified defined benefit pension plan was terminated in 2021 and settled during 2022, leading to charges totaling $ 49.1 million.

Outside the U.S., the Company sponsors defined benefit pension plans covering certain employees, including employees at our newly acquired Heimbach GmbH, and certain postretirement life insurance benefits to retired employees in Canada.

Outside the U.S., the Company sponsors defined benefit pension plans covering certain employees and certain postretirement life insurance benefits to retired employees in Canada.

Accounting guidance requires the recognition of the funded status of each defined benefit and other postretirement benefit plan.

8 unchanged sentences

The Company amortizes gains and losses in excess of a “corridor” over the average future service of the plan’s current participants.

The corridor is defined as 10 percent of the greater of the plan’s projected benefit obligation or market-related value of plan assets.

The corridor is defined as 10% of the greater of the plan’s projected benefit obligation or market-related value of plan assets.

The market-related value of plan assets is also used to determine the expected return on plan assets component of net periodic cost.

40 unchanged sentences

2.68 % 2.75 % 2.89 % 2.75 %

During 2023, pension benefit obligations increase d by $ 74.6 million, largely related to the acquisition of Heimbach GmbH, which resulted in an increase of $ 64.9 million, in addition to net actuarial losses, which resulted in an increase of $ 6.3 million.

Other postretirement benefit obligations decreased by $ 7.0 million in 2023, primarily driven by net actuarial gains and payments made by the Company to participants of the plan .

During 2022, pension benefit obligations decreased by $ 147 million, $ 91.6 million of which was related to the U.S.

Pension Plus plan settlement and $ 47.0 million of which was driven by net actuarial gains, principally resulting from higher discount rates, in addition to employer contributions of $ 7.9 million.

During 2024, pension benefit obligations decreased by $ 21.2 million, related to several factors including benefit payments made to participants of the plan, which resulted in a decrease of $ 9.4 million, and foreign currency changes, which resulted in a decrease of $ 8.6 million, as well as several other offsetting items.

Other postretirement benefit obligations decreased by $ 2.0 million in 2024 , primarily driven by payments made by the Company to participants of the plan.

During 2023, pension benefit obligations increased by $ 74.6 million, largely related to the acquisition of Heimbach GmbH, which resulted in an increase of $ 64.9 million, in addition to net actuarial losses, which resulted in an increase of $ 6.3 million.

Other postretirement benefit obligations decreased by $ 7.0 million in 2023, primarily driven by net actuarial gains and payments made by the Company to participants of the plan .

46 unchanged sentences

$ 19,433 $ 985 $ 22,380 $ 1,507

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

The composition of the net pension plan funded status as of December 31, 2024 was as follows:

8 unchanged sentences

relates to the Supplemental Executive Retirement Plan.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

The composition of the net periodic benefit plan cost for the years ended December 31, 2024, 2023, and 2022, was as follows:

14 unchanged sentences

Curtailment (gain)/loss

( 37 ) — — — — —

Net periodic benefit cost

7 unchanged sentences

Expected return on plan assets — U.S.

plan N/A 3.07 % 2.74 % N/A N/A N/A

plan N/A N/A 3.07 % N/A N/A N/A

Expected return on plan assets — non-U.S.

4 unchanged sentences

plans 2.89 % 3.08 % 2.70 % 2.75 % 2.75 % 2.75 %

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

Pretax (gains)/losses on plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2024, 2023, and 2022, was as follows:

10 unchanged sentences

26 32 8 124 4,090 3,884

Other — — — — — —

Currency impact

2 unchanged sentences

$ ( 3,321 ) $ 4,600 $ ( 34,613 ) $ ( 523 ) $ ( 2,877 ) $ ( 4,642 )

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

Investment Strategy

10 unchanged sentences

As of December 31, 2024 and 2023, there were no investments expected to be sold at a value materially different than NAV.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

Assets at Fair Value as of December 31, 2024

12 unchanged sentences

Total plan assets $ 103,137

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

Assets at Fair Value as of December 31, 2023

7 unchanged sentences

— — 3,478 3,478

— — 3,451 3,451

Cash and short-term investments

5,740 — — 5,740

Total investments in the fair value hierarchy

12 unchanged sentences

$ 7,597 $ — $ 58 $ ( 47 ) $ — $ 7,608

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

(in thousands)

4 unchanged sentences

$ 2,418 $ — $ 18 $ 5,161 $ — $ 7,597

The asset allocation for the Company’s U.S.

None of the Company's U.S.

pension plans held assets during 2024 or 2023.

The asset allocation for the Company’s non-U.S.

pension plans for 2024 and 2023, and the target allocation, by asset category, are as follows:

United States Plan Non-U.S.

Allocation Percentage of plan assets at plan measurement date Target

Allocation Percentage of plan assets at plan measurement date

1 unchanged sentence

Equity securities

N/A N/A N/A 14 % 13 % 15 %

15 % 15 % 13 %

Debt securities

N/A N/A N/A 71 % 73 % 76 %

N/A N/A N/A 3 % 3 % 1 %

N/A N/A N/A 12 % 11 % 8 %

70 % 70 % 73 %

12 % 12 % 11 %

100 % 100 % 100 %

(1) Other includes hedged equity and absolute return strategies, as well as private equity.

The Company has procedures to closely monitor the performance of these investments and compares asset valuations to audited financial statements of the funds.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

The targeted plan asset allocation is based on an analysis of the actuarial liabilities, a review of viable asset classes, and an analysis of the expected rate of return, risk, and other investment characteristics of various investment asset classes.

13 unchanged sentences

Fair value of plan assets 3,509 17,041

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Pension, Postretirement, and Other Benefit Plans — (continued)

Information about expected cash flows for the pension and other benefit obligations are as follows:

9 unchanged sentences

2029 9,855 2,375

2029 to 2033 50,314 10,873

2030 to 2034 (expected, combined) 49,316 10,418

ALBANY INTERNATIONAL CORP.

1 unchanged sentence

Restructuring

Restructuring activities have decreased in the last two years.

Restructuring expense, net during this period has been related primarily to the winding down of restructuring actions taken in years previous.

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

At MC, restructuring actions were taken throughout 2024 in order to cease operations at several facilities, including at the Company's MC forming fabric manufacturing facility in Chungju, South Korea, at the Company's Heimbach engineered fabric manufacturing facility in Rochdale, UK, and at the Company's Heimbach paper machine clothing facility in Olten, Switzerland.

These actions drove $ 11.2 million of restructuring charges during 2024, of which $ 9.5 million in Restructuring expenses, net was due to workforce reductions, fixed asset impairments, and related costs and $ 1.7 million in Costs of goods sold was due to the write-off of inventory.

We expect to incur additional restructuring expenses related to these actions into 2025.

At AEC, restructuring activities were related to reductions in the workforce at various AEC locations, which resulted in Restructuring expenses of $ 3.6 million in 2024.

Restructuring expenses incurred at MC and AEC during 2023 and 2022 were not significant.

The following table summarizes charges reported in the Consolidated Statements of Income under “Restructuring expenses, net” and "Cost of goods sold":

Year ended December 31, 2024 (in thousands) Total restructuring costs incurred Termination and other costs Impairment of assets

2 unchanged sentences

Albany Engineered Composites

3,649 3,649 —

Total restructuring expense

12 unchanged sentences

$ 106 $ 106 $ —

As of December 31, 2023, there is no remaining balance in Accrued liabilities for restructuring.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Restructuring — (continued)

The table below presents the changes in restructuring liabilities for 2024 and 2023:

3 unchanged sentences

$ — $ 12,276 $ ( 7,378 ) $ 98 $ 4,996

(in thousands)

As of December 31, 2024, we expect that the total $ 5.0 million of Accrued liabilities for restructuring will be paid within one year.

2022 Restructuring charges accrued Payments Currency translation/other December 31, 2023

1 unchanged sentence

$ — $ 282 $ ( 285 ) $ 3 $ —

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Other (Income)/Expense, net

5 unchanged sentences

Sale of IP addresses — — ( 3,420 )

Derivative instruments losses/(gains) 3,459 ( 351 ) ( 509 )

Bank fees and amortization of debt issuance costs 232 180 313

4 unchanged sentences

Other (income)/expense, net included foreign currency related transactions that resulted in gains of $ 3.9 million during 2024 and gains of $ 2.9 million during 2023.

During 2023, the stronger Mexican Peso primarily drove transaction gains on nonfunctional currency monetary liabilities, while during 2022, the weaker Euro primarily drove transaction gains related to nonfunctional currency monetary assets.

In addition, changes in the fair value of derivative instruments included losses of $ 3.5 million during 2024 and gains of $ 0.4 million in 2023, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso.

Net periodic pension and postretirement costs, other than service costs, was $ 2.5 million during 2024 and was a benefit of $ 0.1 million during 2023.

Other (income)/expense, net, also included 2024 bank fees, amortization of debt issuance costs, and rental income.

During 2022, the Company recorded a gain of $ 3.4 million on the sale of IP addresses that the Company had no future critical need to retain.

There were no similar gains of this nature during 2023.

There were no similar gains of this nature during 2023 or 2024.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Provision for income taxes consisted of the following:

15 unchanged sentences

Total income tax expense $ 29,034 $ 48,846 $ 35,472

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Income Taxes — (continued)

A reconciliation of the U.S.

14 unchanged sentences

4.4 ( 1.2 ) ( 0.6 )

Impact of Mexico net operating loss inflation revaluation

Establishment of deferred tax asset for Non-U.S.

Impact of amended tax returns ( 0.8 ) — ( 0.1 )

2 unchanged sentences

Effective income tax rate 24.8 % 30.4 % 26.9 %

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Income Taxes — (continued)

In 2024, the Company recorded a net tax benefit of $ 5.0 million for the establishment of a deferred tax asset for reserves in a foreign jurisdiction in accordance with newly adopted local law.

The Company does not believe it will be able to realize the benefit of these deferred tax assets, as such an offsetting valuation allowance was recorded.

This valuation allowance is included in the change in valuation allowances line above.

In 2024, the Company also recorded new valuation allowances totaling $ 6.7 million and released a valuation allowance of $ 6.3 million in a non-U.S.

jurisdiction due to positive evidence indicating that a full valuation allowance was no longer required.

The remaining increase in valuation allowance is due to increases in deferred tax assets in entities that already had established valuation allowances.

In 2022, the Company recorded a net tax benefit of $ 5.2 million for the release of the residual tax effects that were stranded within other comprehensive income related to the U.S.

1 unchanged sentence

The residual tax effects were created as a result of the remeasurement of deferred tax assets and liabilities originally established in other comprehensive income in accordance with the Tax Cuts and Jobs Act lowering the U.S.

corporate tax rate from 35 percent to 21 percent as of December 31, 2017.

No similar charges were incurred during 2023.

corporate tax rate from 35% to 21% as of December 31, 2017.

No similar charges were incurred during 2023 or 2024.

The Company has operations which constitute a taxable presence in 22 countries outside of the United States.

4 unchanged sentences

During the periods reported, income outside of the U.S.

was heavily concentrated within Brazil ( 34 percent tax rate), China ( 25 percent tax rate), and Mexico ( 30 percent tax rate).

The foreign rate differential of these jurisdictions was partially offset by Switzerland ( 15.2 percent tax rate).

was heavily concentrated within Brazil ( 34 % tax rate), China ( 25 % tax rate), and Mexico ( 30 % tax rate).

The foreign rate differential of these jurisdictions was partially offset by Switzerland ( 15 % tax rate).

As a result, the foreign income tax rate differential was primarily attributable to these tax rate differences.

34 unchanged sentences

Deferred income tax assets, net of valuation allowances, are expected to be realized through the reversal of existing taxable temporary differences and future taxable income.

In 2023, the Company recorded immaterial movements in its valuation allowance, which are included in Schedule II in Item 15, Exhibits and Financial Statement Schedules, of this Annual Report on Form 10-K.

ALBANY INTERNATIONAL CORP.

5 unchanged sentences

State 2033 - 2048 940 357

Indefinite — 448

2025 - 2040 6,192 —

19 unchanged sentences

Increase in gross amounts of tax positions related to current years — 196 37

Decrease due to lapse in statute of limitations ( 656 ) — ( 39 )

Decrease due to settlements with tax authorities

Increase (decrease) due to lapse in statute of limitations

116 ( 656 ) —

Currency translation ( 133 ) 36 ( 174 )

17 unchanged sentences

Effect of dilutive stock-based compensation plans:

Stock options

Long-term incentive plans 105 116 113

Restricted stock units and multi-year awards

Weighted average number of shares used in calculating diluted net income per share

15 unchanged sentences

Other comprehensive income/(loss) before reclassifications ( 40,971 ) — 18,971 ( 22,000 )

Pension/postretirement settlements and curtailments, net of tax — 26,198 — 26,198

Pension/postretirement plan remeasurement, net of tax — ( 2,663 ) — ( 2,663 )

49 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").

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

Under the terms of the transaction agreements, ASC will be the exclusive supplier to SAFRAN of advanced 3D-woven composite parts in accordance with agreed upon scope parameters defined between both companies, for use in aircraft and rocket engines, thrust reversers and nacelles, and aircraft landing and braking systems (the “SAFRAN Applications”).

AEC may develop and supply parts other than advanced 3D-woven composite parts for all aerospace applications, as well as advanced 3D-woven composite parts for any aerospace applications that are not SAFRAN Applications (such as airframe applications) and any non-aerospace applications.

The agreement provides SAFRAN an option to purchase Albany’s remaining 90 percent interest upon the occurrence of certain bankruptcy or performance default events, or if Albany’s Engineered Composites business is sold to a direct competitor of SAFRAN.

The purchase price is based initially on the same valuation of ASC used to determine SAFRAN’s 10 percent equity interest, and increases over time as LEAP production increases.

The agreement provides SAFRAN an option to purchase Albany’s remaining 90 % interest upon the occurrence of certain bankruptcy or performance default events, or if Albany’s Engineered Composites business is sold to a direct competitor of SAFRAN.

The purchase price is based initially on the same valuation of ASC used to determine SAFRAN’s 10 % equity interest, and increases over time as LEAP production increases.

In accordance with the operating agreement, Albany received a $ 28 million preferred holding in ASC which includes a preferred return based on the Company’s revolving credit agreement.

The common shares of ASC are owned 90 percent by Albany and 10 percent by SAFRAN.

The common shares of ASC are owned 90 % by Albany and 10 % by SAFRAN.

ALBANY INTERNATIONAL CORP.

1 unchanged sentence

Noncontrolling Interest — (continued)

manufacturer recently acquired by the Company and reported within the MC segment.

On August 31, 2023, the date of the Heimbach acquisition, the fair value of the noncontrolling interest in Arcari was $ 0.5 million.

Net income/(loss) attributable to Arcari's noncontrolling interest was less than $ 0.1 million during 2023.

acquired by the Company on August 31, 2023 and reported within the MC segment.

As of December 31, 2024, the net income/(loss) attributable to Arcari's noncontrolling interest was less than $ 0.1 million and the noncontrolling interest balance was $ 0.4 million.

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

14 unchanged sentences

(in thousands, except percentages)

Noncontrolling interest, beginning of year

Initial equity related to Noncontrolling interest in Arcari — 509

Net income attributable to noncontrolling interest

Dividends to noncontrolling interests ( 166 ) —

Changes in other comprehensive income attributable to noncontrolling interest

10 unchanged sentences

Accounts receivable, net $ 246,688 $ 287,781

The Company had Noncurrent receivables in the AEC segment that represented revenue earned, for which the customer had extended payment terms beyond one year.

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

The remaining Noncurrent receivables is expected to be collected in the first quarter of 2025.

The Company had Noncurrent receivables in the AEC segment that represented 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 December 31, 2024 and December 31, 2023, Noncurrent receivables were as follows:

7 unchanged sentences

Noncurrent receivables, net $ — $ 4,392

Effective January 1, 2020, the Company adopted the provisions of ASC 326, Current Expected Credit Losses ("CECL").

This accounting update replaced the incurred loss impairment methodology under previous GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

Under this standard, the Company recognizes an allowance for expected credit losses on financial assets measured at amortized cost, such as Accounts receivable, Contract assets and Noncurrent receivables.

The allowance is determined using a CECL model that is based on an historical average three-year loss rate and is measured by financial asset type on a collective (pool) basis when similar risk characteristics exist, at an amount equal to lifetime expected credit losses.

While an expected credit loss allowance is recorded at the same time the financial asset is recorded, the Company monitors financial assets for credit impairment events to assess whether there has been a significant increase in credit risk since initial recognition, and considers both quantitative and qualitative information.

Allowances for expected credit losses are recorded at the same time the financial asset is recorded.

The Company monitors financial assets for credit impairment events to assess whether there has been a significant increase in credit risk since initial recognition, and considers both quantitative and qualitative information.

The risk of loss due to credit default increases when one or more events occur that can have a detrimental impact on estimated future cash flows of that financial asset.

13 unchanged sentences

Accounts receivable expected credit losses $ ( 5,260 ) $ ( 384 ) $ 204 $ 1,355 $ ( 4,085 )

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accounts Receivable— (continued)

(in thousands)

December 31, 2021

(Charge)/ benefit Currency

December 31, 2022 (Charge)/ benefit Currency

December 31, 2023

11 unchanged sentences

(in thousands)

December 31, 2021

(Charge)/ benefit Currency

December 31, 2022 (Charge)/ benefit Currency

December 31, 2023

1 unchanged sentence

$ ( 140 ) $ 123 $ ( 5 ) $ — $ ( 22 )

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Contract Assets and Liabilities

7 unchanged sentences

Contract liabilities $ 6,085 $ 7,127

Contract assets increased $ 33.6 million during the year ended December 31, 2023.

The increase was primarily due to an increase in unbilled revenue related to the satisfaction of performance obligations, notably for the Sikorsky CH-53K program, in excess of the amounts billed.

Contract assets decreased $ 15.7 million during the year ended December 31, 2024.

The decrease was primarily due to a decrease in unbilled revenue related to the satisfaction of performance obligations on larger programs in excess of the amounts billed, notably for the Sikorsky CH-53K and the F-35 programs.

Other than the allowance for expected credit losses, there were no other provisions for losses related to our Contract assets during the years ended December 31, 2024 and 2023.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Contract Assets and Liabilities — (continued)

The following tables present the (increases)/ decreases in the allowance for credit losses for Contract assets:

22 unchanged sentences

$ 145,845 $ 169,567

On August 31, 2023, the Company completed the acquisition of Heimbach.

Included in the fair value of assets acquired was $ 41.9 million of inventories.

See Note 24, Business Combination , of the Notes to the Consolidated Financial Statements for additional information .

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Property, Plant and Equipment, net

12 unchanged sentences

Property, plant and equipment, net $ 563,431 $ 601,989

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Property, Plant and Equipment, net — (continued)

On August 31, 2023, the Company completed the acquisition of Heimbach.

Included in the fair value of assets acquired was $ 125.1 million of property, plant and equipment.

See Note 24, Business Combination , of the Notes to the Consolidated Financial Statements for additional information .

Depreciation expense was $ 82.5 million in 2024, $ 70.4 million in 2023, and $ 62.5 million in 2022.

7 unchanged sentences

Impairment is the condition that exists when the carrying amount of a reporting unit, including goodwill, exceeds its fair value.

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 Engineered Composites 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.

In the second quarter of 2024, management applied the quantitative assessment approach in performing its annual evaluation of goodwill and indefinite-lived trademark intangibles for the Company's Machine Clothing reporting unit and Engineered Composites reporting unit.

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 each reporting unit.

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

Accordingly, no impairment charges were recorded.

In the third quarter of 2023, the Company acquired all the outstanding shares of Heimbach.

In the third and fourth quarters of 2024, the Company revised its estimates and assumptions used in certain program estimates at completion of its AEC reporting unit.

As a result of the changes in estimates, we performed a qualitative assessment of the AEC reporting unit's goodwill for impairment and concluded that goodwill was not impaired.

The excess of the fair value of the AEC reporting unit over its carrying value reduced by approximately 20 % from previous quarters;

and fair value continues to exceed the carrying value by more than 25 %.

In the fourth quarter of 2024, the Company wrote-off the remaining Finite-lived intangible assets balance at our Rochdale, UK location due to restructuring actions being taken to cease operations at the manufacturing facility.

This decision resulted in a non-cash write-off of intangibles for $ 0.3 million, which is presented as other changes in the table below for intangible assets and goodwill in 2024.

On August 31, 2023, the Company acquired all the outstanding shares of Heimbach.

The preliminary fair values of the identifiable intangible assets obtained totaled $ 14.9 million and consisted of the Heimbach trade name and developed technology.

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.

The fair value of the developed technology was $ 8.9 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.

See Note 24, Business Combination , of the Notes to the Consolidated Financial Statements, for additional information.

The fair value of the trade name was $ 6.0 million and is considered an indefinite-lived asset because of

ALBANY INTERNATIONAL CORP.

1 unchanged sentence

Goodwill and Other Intangible Assets — (continued)

Heimbach's rich brand heritage and customer service to the paper machine clothing industry.

The fair value of the developed technology was $ 8.9 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.

See Note 24, Business Combination , of the Notes to the Consolidated Financial Statements of our 2023 Annual Report on Form 10-K, for additional information.

We amortize certain patents, trademarks and names, customer contracts, relationships and technology assets that have finite-lives.

2 unchanged sentences

Amortization life in years

Balance at December 31, 2022 Acquisition

Balance at December 31, 2023 Other Changes

Currency Translation

19 unchanged sentences

$ 186,251 $ — $ — $ ( 4,278 ) $ 181,973

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Goodwill and Other Intangible Assets — (continued)

(in thousands, except for years)

Amortization life in years Balance at December 31,

2021 Other Changes Amortization Currency

2022 Acquisition

Amortization Currency

Translation Balance at December 31,

6 unchanged sentences

994 — ( 83 ) — 911

AEC Customer contracts 6

720 — ( 720 ) — —

AEC Customer relationships 8 - 15

28,899 — ( 3,480 ) 66 25,485

Heimbach Developed technology

— 8,918 ( 310 ) 124 8,732

Total Finite-Lived intangible assets, net $ 33,811 $ 8,918 $ ( 4,452 ) $ 299 $ 38,576

Indefinite-lived intangible assets:

Heimbach Trade name

$ — $ 5,982 $ — $ 88 $ 6,070

65,441 — — 1,432 66,873

112,776 — — 532 113,308

Total Indefinite-lived intangible assets

1 unchanged sentence

As of December 31, 2024, the gross carrying amount and accumulated amortization of Finite-lived intangible assets was $ 86.1 million and $ 53.7 million, respectively.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Goodwill and Other Intangible Assets — (continued)

Amortization expense related to Finite-lived intangible assets was reported in the Consolidated Statement of Income as follows:

5 unchanged sentences

(in thousands)

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Accrued Liabilities

11 unchanged sentences

Professional fees 5,539 3,912

Restructuring

Other 12,718 9,671

Total accrued liabilities $ 141,904 $ 142,988

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Financial Instruments

3 unchanged sentences

Borrowings under the Amended Credit Agreement (1):

USD borrowings

$ 225,000 $ 446,000

EUR borrowings

Foreign bank debt 46 10,885

3 unchanged sentences

(1) The credit facility matures in August 2028.

At the end of the December 31, 2023 and December 31, 2022, the interest rate in effect was 3.49 percent and 3.16 percent, respectively, including the effect of interest rate hedging transactions, as described below.

Principal payments on long-term debt are due in amounts of $ 3.4 million in 2025, $ 1.3 million in 2026, $ 1.2 million in 2027, $ 446.4 million in 2028 and $ 0.4 million in 2029 and beyond.

At the end of the December 31, 2024 and December 31, 2023, the USD interest rate in effect was 5.77 % and 3.49 %, respectively, including the effect of interest rate swaps;

at the end of December 31, 2024, the EURIBOR interest rate was 4.09 %, including the effect of interest rate swaps.

There are no principal payments on long-term debt until 2028, at which time the balance of $ 318.5 million is due.

Cash payments of interest amounted to $ 14.7 million in 2024, $ 18.7 million in 2023 and $ 16.0 million in 2022.

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 0.0 %).

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, and affirmative and negative covenants.

These amendments are also reflected in 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:

On August 16, 2023, we entered into a $ 800 million unsecured committed Five-Year Revolving Credit Facility Agreement, amended on June 28, 2024 (collectively, the “Amended Credit Agreement”), which matures in August of 2028.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Financial Instruments — (continued)

The applicable interest rate for borrowings under the Amended Credit Agreement is based on both Term SOFR and EURIBOR 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:

Leverage Ratio Commitment Fee ABR Spread Term Benchmark/ Daily

6 unchanged sentences

0.350 % 1.000 % 2.000 %

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

As of December 31, 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 December 31, 2024, the applicable interest rate for borrowings under the Amended Credit Agreement was based on one-month term SOFR and one-month EURIBOR, plus the spread, which was 1.500 %.

As of December 31, 2024, there was $ 318 million of borrowings outstanding under the Amended Credit Agreement and we had borrowings available of $ 482 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.

Under the Amended Credit Agreement, we are required to maintain a leverage ratio (as defined in the Amended Credit Agreement) of not greater than 3.75 to 1.00, or 4.25 to 1.00 after a significant acquisition.

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

As of December 31, 2023, our leverage ratio was 1.25 to 1.00 (as defined in the Amended Credit Agreement) and our interest coverage ratio was 14.13 to 1.00.

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

As of December 31, 2024, our leverage ratio was 0.88 to 1.00 and our interest coverage ratio was 14.90 to 1.00.

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

3 unchanged sentences

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

In November, 2024, we entered into two interest rate swap agreements:

A USD interest rate swap agreement and a EUR interest rate swap agreement.

The USD interest rate swap agreement covers the period November 15, 2024 through November 15, 2026.

This transaction has the effect of fixing the SOFR portion of the interest rate (before the credit spread) on $ 125 million of the US indebtedness drawn under the Amended Credit Facility.

Under the terms of this transaction, the Company pays a fixed rate of 3.987 % and our counterparty pays a floating rate based on the one-month SOFR rate at each monthly calculation date.

The EUR interest rate swap agreement covers the period November 14, 2024 through November 15, 2026.

This transaction has the effect of fixing the EURIBOR portion of the interest rate (before the credit spread) on EUR 45 million of the EUR indebtedness drawn under the Amended Credit Facility.

Under the terms of this transaction, the Company pays a fixed rate of 2.277 % and our counterparty pays a floating rate based on the one-month EURIBOR rate at each monthly calculation date.

On June 14, 2021, we entered into interest rate swap agreements for the period October 17, 2022 through October 27, 2024.

2 unchanged sentences

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 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 pay a floating rate based on the one-month term SOFR at each monthly calculation date, which on December 18, 2023 was 5.36 %.

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

As of December 18, 2023, the all-in-rate on the $ 350 million 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 the addition of the spread) on $ 350 million of indebtedness drawn under the Prior 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.

As a result of the amendments, we paid a fixed blended rate of 0.768 % (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

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Financial Instruments — (continued)

counterparties paid a floating rate based on the one-month term SOFR at each monthly calculation date.

These agreements terminated in October, 2024.

These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 18, Fair-Value Measurements , of the Notes to the Consolidated Financial Statements.

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 debt.

Assumed Foreign Bank Debt

With the August 31, 2023 acquisition of Heimbach, the Company assumed bank debt in the amount of $ 32.7 million, held by several European financial institutions with interest rates ranging from 0.98 percent to 5.52 percent and maturity dates ranging from September 25, 2023 to June 30, 2031.

Certain bank agreements allowed for

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

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

As a result, $ 18.6 million of the debt was repaid in the fourth quarter of 2023.

At December 31, 2023, the balance of Heimbach's debt was $ 10.9 million, of which $ 4.2 million was classified as Current maturities on long-term debt.

With the August 31, 2023 acquisition of Heimbach, the Company assumed bank debt in the amount of $ 32.7 million.

At December 31, 2024, the balance of Heimbach's debt was less than $ 0.1 million .

Fair-Value Measurements

21 unchanged sentences

Interest rate swaps — 149 — 12,214

Other Non-Current Liabilities

Interest rate swaps

— ( 218 ) — —

(a) Original cost basis $ 0.5 million

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Fair-Value Measurements — (continued)

Cash equivalents include short-term securities that are considered to be highly liquid and easily tradable.

1 unchanged sentence

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 in the Consolidated Balance Sheets.

Amounts determined to be due within one year are reclassified to Other current assets in the Consolidated Balance Sheets.

Unrealized gains and losses on the

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

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 17, Financial Instruments , of the Notes to the Consolidated Financial Statements for additional information).

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.

In November, 2024, the Company entered into a USD and EUR interest rate swap agreements (see Note 17, Financial Instruments, of the Notes to the Consolidated Financial Statements for additional information).

As of December 31, 2024, these interest rate swaps were determined to be highly effective hedges of interest rate cash flow risk.

1 unchanged sentence

Interest (income)/expense related to payments under the active swap agreements totaled $ 13.4 million in 2024, $( 15.0 ) million in 2023 and $ 0.5 million in 2022.

Additionally, non-cash interest expense (income) related to the remaining amortization of swap buyouts was $( 0.3 ) million in 2021.

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.

From time to time, we enter into 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 assets and Accounts payable, as applicable.

6 unchanged sentences

Derivatives not designated as hedging

Foreign currency options (gains)/losses $ ( 351 ) $ ( 509 ) $ 169

Foreign currency hedging (gains)/losses

$ 3,459 $ ( 351 ) $ ( 509 )

Other Noncurrent Liabilities

7 unchanged sentences

Total other noncurrent liabilities $ 138,830 $ 139,385

On August 31, 2023, the Company completed the acquisition of Heimbach.

Included in the fair value of liabilities assumed was $ 35.3 million of pension liabilities, net, of which $ 33.6 million was recorded to Other noncurrent

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

liabilities, and the remainder was recorded to Accrued liabilities in our Consolidated Balance Sheets.

See Note 24, Business Combination , of the Notes to the Consolidated Financial Statements for additional information .

We are generally the lessee in our lease transactions.

8 unchanged sentences

We have entered into operating and finance leases for offices, manufacturing facilities, warehouses, vehicles, and certain equipment.

Our leases have remaining lease terms of 1 year to 11 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Our leases have remaining lease terms of 2 years to 15 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 2 years.

The components of lease expense were as follows:

18 unchanged sentences

Operating leases $ 17,698 $ 9,114 $ 38,559

Finance leases — — —

The initial recognition of each ROU asset and lease liability at lease commencement is a noncash transaction that is excluded from amounts reported in the Consolidated Statements of Cash Flows.

Due to the non-cash nature of the transaction, those increases are excluded from amounts reported in the Consolidated Statements of Cash Flows.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Leases — (continued)

Supplemental balance sheet information related to leases was as follows:

6 unchanged sentences

Total operating lease liabilities $ 68,669 $ 57,972

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Additional information for leases existing at December 31, 2024 and 2023 was as follows:

27 unchanged sentences

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.

Due to the fact that information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to pending or future claims and therefore are unable to estimate a range of reasonably possible loss in excess of amounts already accrued for pending or future claims.

Due to the fact that information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to pending or future claims and therefore we are unable to estimate a range of reasonably possible loss in excess of amounts already accrued for pending or future claims.

While we believe we have meritorious defenses to these claims, we have settled certain claims for amounts we consider reasonable given the facts and circumstances of each case.

2 unchanged sentences

The total cost of resolving all claims was $ 10.7 million.

Of this amount, almost 100 percent 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.

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.

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.

16 unchanged sentences

Cash payments of $ 3.1 million in 2024, $ 3.9 million in 2023 and $ 4.5 million in 2022 were made as a result of the performance in the preceding year.

In addition, due to the vesting of certain compensation costs for the former CEO who retired during 2023, an additional $ 0.9 million in cash payments were made.

In addition, due to the vesting of certain compensation costs for executives that departed from the Company, additional cash payments were made of $ 0.6 million in 2024 and $ 0.9 million in 2023.

Multi-Year Performance Plan Awards

12 unchanged sentences

The grant date share price is the date when the award is approved by the Compensation Committee of the Board of Directors and is used to measure the cost of the award.

We recognized $ 4.2 million of expense in 2023 associated with these RSU’s which included $ 1.7 million as a result of accelerated vesting for the former CEO who retired during 2023.

The net impact to earnings was $ 3.5 million.

Expense recognized for RSU’s was $ 1.5 million in 2022 and $ 0.6 million in 2021, and the net impact to earnings during these respective years was $ 1.0 million and $ 0.4 million.

We recognized $ 2.6 million of expense in 2024 associated with these RSU’s, for which the net impact to earnings was $ 2.3 million.

Expense recognized for RSU’s was $ 4.2 million in 2023, which included $ 1.7 million as a result of executives that departed during the year, and $ 1.5 million in 2022.

The net impact to earnings during these respective years was $ 3.5 million and $ 1.0 million.

Based on RSU’s outstanding at December 31, 2024, we expect to record approximately $ 1.4 million of expense in 2025 and $ 0.9 million of expense in 2026.

In addition, during 2023, RSU awards with performance conditions were issued as special retention incentives to certain executives.

The 2023 expense for these awards was $ 0.9 million, for which the net impact to earnings was $ 0.8 million.

Special Retention Incentives

During 2024 and 2023, RSU awards with performance conditions were issued as special retention incentives to certain executives.

The expenses for these awards were $ 2.2 million in 2024 and $ 0.9 million in 2023, for which the net impact to earnings was $ 1.9 million in 2024 and $ 0.8 million in 2023.

Based on awards outstanding at December 31, 2024, we expect to record approximately $ 1.2 million of expense in 2025.

4 unchanged sentences

Information with respect to these plans is presented below:

(in thousands, except number of shares and weighted average grant date value per share)

Number of shares Weighted average grant date value

(in thousands, except number of shares and weighted average grant date value per share) Number of shares Weighted average grant date value

per share Year-end intrinsic value

23 unchanged sentences

The total number of shares paid to each independent Director is determined by the share closing price on the day of the Annual Meeting at which the election of Directors occurs.

This resulted in compensation expense of $ 1.1 million in 2023, $ 1.1 million in 2022, and $ 0.8 million in 2021 that was distributed in the form of shares.

This resulted in compensation expense of $ 1.2 million in 2024, $ 1.1 million in 2023, and $ 1.1 million in 2022 in the form of shares.

Shareholders’ Equity

10 unchanged sentences

As of December 31, 2024, the Company has repurchased in total 1,490,904 shares for a total cost of $ 124.0 million.

Of this, 1,022,717 shares were purchased in 2022 for $ 85.1 million and 285,286 shares were purchased in 2021 for $ 24.4 million.

Of this, 182,901 shares were repurchased in 2024 for $ 14.5 million, 1,022,717 shares were purchased in 2022 for $ 85.1 million, and 285,286 shares were purchased in 2021 for $ 24.4 million.

We are currently authorized to repurchase shares up to $ 76.0 million.

5 unchanged sentences

Noncontrolling Interest Total Equity

Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount

January 1, 2022 40,760 $ 41 $ 436,996 $ 863,057 $ ( 145,984 ) 8,665 $ ( 280,143 ) $ 3,638 $ 877,605

4 unchanged sentences

Purchase of Treasury shares (a) — — — — — 1,023 ( 85,065 ) — ( 85,065 )

Dividends declared

Class A Common Stock, $ 0.81 per share

— — — — — ( 25,520 ) — — — — ( 25,520 )

Class B Common Stock, $ 0.81 per share

Dividends declared on Class A Common Stock, $ 0.88 per share

— — — ( 27,501 ) — — — — ( 27,501 )

Conversion of Class B shares to Class A shares (b) 1,618 2 ( 1,618 ) ( 2 ) — — — — — — —

Cumulative translation adjustments — — — — ( 40,971 ) — — 110 ( 40,861 )

Pension and postretirement liability adjustments — — — — ( 3,491 ) — — — ( 3,491 )

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

Derivative valuation adjustment — — — — 19,321 — — — 19,321

4 unchanged sentences

(in thousands) Class A

Common Stock Class B

Common Stock Additional paid-in capital Retained earnings Accumulated items of other

1 unchanged sentence

Treasury Stock Noncontrolling Interest Total Equity

Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount

January 1, 2023 40,785 $ 41 $ 441,540 $ 931,318 $ ( 144,927 ) 9,675 $ ( 364,923 ) $ 4,494 $ 867,543

1 unchanged sentence

Compensation and benefits paid or payable in shares 71 — 5,851 — — — — — 5,851

Options exercised 1 — — — 17 — — — — — 17

Shares issued to Directors' — — 827 — — ( 13 ) 258 — 1,085

Purchase of Treasury shares (c) — — — — — — — 1,023 ( 85,065 ) — ( 85,065 )

Dividends declared

Class A Common Stock, $ 0.81 per share

Dividends declared on Class A Common Stock, $ 1.01 per share

— — — ( 31,496 ) — — — — ( 31,496 )

Initial equity related to Noncontrolling interest in Arcari — — — — — — — 509 509

Cumulative translation adjustments — — — — 21,950 — — 459 22,409

Pension and postretirement liability adjustments — — — — ( 1,563 ) — — — ( 1,563 )

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

Derivative valuation adjustment — — — — ( 8,628 ) — — — ( 8,628 )

5 unchanged sentences

Noncontrolling Interest Total Equity

Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount

January 1, 2024 40,856 $ 41 $ 448,218 $ 1,010,942 $ ( 133,168 ) 9,662 $ ( 364,665 ) $ 5,952 $ 967,320

2 unchanged sentences

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

Dividends declared

Class A Common Stock, $ 1.01 per share

Purchase of Treasury shares (a) — — — — — 183 ( 14,545 ) — ( 14,545 )

Dividends declared on Class A Common Stock, $ 1.05 per share

— — — ( 32,802 ) — — — — ( 32,802 )

Initial equity related to Noncontrolling interest in Arcari — — — — — — — — — 509 509

Dividends paid to noncontrolling interests — — — — — — — ( 166 ) ( 166 )

Cumulative translation adjustments — — — — ( 56,654 ) — — ( 809 ) ( 57,463 )

2 unchanged sentences

December 31, 2024 40,917 $ 41 $ 452,933 $ 1,065,763 $ ( 195,989 ) 9,845 $ ( 379,210 ) $ 5,409 $ 948,947

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Shareholders’ Equity — (continued)

(a) On October 25, 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.

In 2021, the Company repurchased 285,286 shares totaling $ 24.4 million.

(b) Class B Stock had a par value of $ 0.001 , was entitled to 10 votes on all matters submitted to shareholders, and received dividends as approved by the Board of Directors.

In 2021, Standish Family Holdings, LLC executed a secondary offering of Albany shares.

As a result of the offerings, 1.6 million shares of Class B Common Stock previously owned by Standish Family Holdings, LLC were converted to Class A Common Stock and then sold to third parties.

Costs associated with the offering were charged directly to Standish Family Holdings, LLC.

Since December 31, 2022, there were no Class B Common Stock outstanding nor will any Class B shares be issued.

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 MC segment's differentiated manufacturing, sales and service network.

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

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

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Business Combination — (continued)

(in thousands) August 31, 2023

Assets acquired:

Cash and cash equivalents $ 12,347

Accounts receivable 51,569

Inventories 41,864

Property, plant and equipment 125,117

Other intangible assets 14,901

Other current assets 7,745

Other noncurrent assets $ 6,703

Total assets acquired $ 260,246

Liabilities assumed:

Assumed debt $ 32,700

Accounts payable 8,243

Accrued liabilities 27,674

Other noncurrent liabilities 35,910

Income taxes payable 288

Deferred tax liabilities 10,856

Total liabilities assumed $ 115,671

Net assets acquired $ 144,575

Noncontrolling interest $ ( 509 )

Total consideration $ 144,066

For the period ended December 31, 2023, the Company incurred acquisition related costs of $ 4.1 million.

These costs are included in Selling, general and administrative expenses in the Consolidated Statements of Income.

The purchase price allocation for the acquisition was based upon a preliminary valuation and the Company’s estimates and assumptions are subject to change as the Company obtains additional information during the measurement period.

During the fourth quarter of 2023, the Company identified immaterial measurement period adjustments primarily related to fair value estimates.

The measurement period adjustments resulted from the refinement of inputs used to calculate the fair value of trade receivables, inventory, equipment, developed technologies, and accrued expenses based on facts and circumstances that existed as of the Acquisition Date.

The Company is still completing the valuations of certain pension liabilities, which is expected to be completed during the first six months of 2024.

The fair values of property, plant and equipment of $ 125.1 million were determined using the cost-approach because the cost-approach was considered appropriate for the valuation analysis, and because sufficient information was available for this use.

Since August 31, 2023, the Company recorded $ 4.0 million of depreciation expense.

The fair values of the identifiable intangible assets totaling $ 14.9 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 $ 8.9 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.

In 2022, the Company repurchased 1,022,717 shares totaling $ 85.1 million and in 2024, the Company repurchased 182,901 shares totaling $ 14.5 million.

ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

Business Combination — (continued)

amortization period represents the estimated useful life of the asset.

Since August 31, 2023, the Company recorded $ 0.3 million of intangible amortization expense.

The fair values of assets acquired included $ 3.4 million of operating lease right-of-use assets, as well as $ 3.4 million of operating lease liabilities assumed, of which $ 1.2 million was considered current and recorded to Accrued liabilities in our Consolidated Balance Sheets.

Debt assumed included $ 32.7 million aggregate outstanding amount of bank debt with several European financial institutions with interest rates ranging from 0.98 percent to 5.52 percent 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.

During the fourth quarter of 2023, we repaid $ 18.6 million of the debt assumed.

At December 31, 2023, the balance of the foreign debt was $ 10.9 million, of which $ 4.2 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 $ 51.2 million of revenue and a $ 6.3 million operating loss for the period ended December 31, 2023.

Pro Forma Information (Unaudited)

The following table reflects the unaudited pro forma operating results of the Company for the years ended December 31, 2023 and 2022 which assumes the acquisition of Heimbach occurred on January 1, 2022.

The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances.

The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition of Heimbach been effective January 1, 2022, nor are they intended to be indicative of results that may occur in the future.

The underlying pro forma information includes the historical results of the Company and Heimbach adjusted for certain items discussed below.

The pro forma information does not include the effects of any synergies, cost reduction initiatives or anticipated integration costs related to the acquisition.

Years ended December 31,

(in thousands) 2023 2022

Net revenues $ 1,265,379 $ 1,206,420

Net income attributable to the Company $ 109,710 $ 91,583

These pro forma results include adjustments such as inventory step-up, amortization of acquired intangible assets, depreciation of acquired property, plant and equipment and the adoption of U.S.

accounting standards.

Material pro forma adjustments directly attributable to the acquisition of Heimbach for the year ended December 31, 2022 primarily include an increase in cost of goods sold of $ 5.5 million related to the step-up of acquired inventory.

The pro forma information for the year ended December 31, 2023 includes an increase in selling, general and administrative costs of $ 4.1 million for acquisition-related costs.

Subsequent Events

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

No material subsequent events were identified that require disclosure.

On February 21, 2025, the Company's Board of Directors authorized the Company to repurchase shares up to $ 250 million (excluding any fees, commissions, taxes or other expenses related to such purchases), which replaces the 2021 authorization.

The purchases may be made through open market purchases, privately negotiated transactions or otherwise.

The program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company's discretion.

The share repurchase program does not have an expiration date.

The timing and amount of any share repurchases will be based on the Company’s liquidity, general business and market conditions, debt covenant restrictions and other factors, including alternative investment opportunities and capital structure.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 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-K

Item 8. Financial Statements and Supplementary Data