ALBANY INTERNATIONAL CORP /DE/ 10-Q

ITEM 1. FINANCIAL STATEMENTS ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2025 2024 Net revenues $ 288,774 $ 313,330 Cost of goods sold 192,288 204,644 Gross profit 96,486 108,686 Selling, general, and administrative expenses 53,812 54,835 Technical and research expenses 11,896 12,665 Restructuring expenses, net 2,515 2,209 Operating income 28,263 38,977 Interest expense/(income), net 3,655 3,319 Other expense/(income), net 983 ( 2,982 ) Income before income taxes 23,625 38,640 Income tax expense 6,276 11,271 Net income 17,349 27,369 Net (loss)/income attributable to the noncontrolling interest ( 6 ) 78 Net income attributable to the Company $ 17,355 $ 27,291 Earnings per share attributable to Company shareholders - Basic $ 0.56 $ 0.87 Earnings per share attributable to Company shareholders - Diluted $ 0.56 $ 0.87 Shares of the Company used in computing earnings per share: Basic 30,823 31,209 Diluted 30,984 31,291 Dividends declared per Class A share $ 0.27 $ 0.26 The accompanying notes are an integral part of the consolidated financial statements 1 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (in thousands) (unaudited) Three Months Ended March 31, 2025 2024 Net income $ 17,349 $ 27,369 Other comprehensive income/(loss), before tax: Foreign currency translation 13,123 ( 11,831 ) Pension settlement/curtailment 1,600 — Amortization of pension liability adjustments: Prior service credit ( 37 ) ( 38 ) Net actuarial loss 287 178 Payments and amortization related to interest rate swaps included in earnings ( 192 ) ( 4,038 ) Derivative valuation adjustment ( 493 ) 1,194 Income taxes related to items of other comprehensive income/(loss): Pension settlement/curtailment ( 422 ) — Amortization of prior service credit 11 11 Amortization of net actuarial loss ( 88 ) ( 54 ) Payments and amortization related to interest rate swaps included in earnings 14 1,022 Derivative valuation adjustment 36 ( 302 ) Comprehensive income 31,188 13,511 Comprehensive income attributable to the noncontrolling interest ( 216 ) 124 Comprehensive income attributable to the Company $ 31,404 $ 13,387 The accompanying notes are an integral part of the consolidated financial statements 2 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (unaudited) March 31, 2025 December 31, 2024 Assets Cash and cash equivalents $ 119,354 $ 115,283 Accounts receivable, net 272,461 246,688 Contract assets, net 156,069 166,557 Inventories 161,082 145,845 Income taxes prepaid and receivable 19,392 19,187 Prepaid expenses and other current assets 39,954 37,132 Total current assets 768,312 730,692 Property, plant and equipment, net 564,966 563,431 Intangibles, net 37,563 38,127 Goodwill 178,837 176,261 Deferred income taxes 26,369 28,757 Other assets 112,029 111,428 Total assets $ 1,688,076 $ 1,648,696 Liabilities and Shareholders' Equity Accounts payable $ 83,000 $ 66,095 Accrued liabilities 122,895 141,904 Current maturities of long-term debt — — Income taxes payable 2,022 18,367 Total current liabilities 207,917 226,366 Long-term debt 416,429 318,531 Other noncurrent liabilities 141,555 138,830 Deferred taxes and other liabilities 17,007 16,022 Total liabilities 782,908 699,749 Commitments and Contingencies (Note 16) Shareholders' Equity: Preferred stock, par value $ 5.00 per share; authorized 2,000,000 shares; none issued — — Class A Common Stock, par value $ 0.001 per share; authorized 100,000,000 shares; 40,972,665 issued in 2025 and 40,917,539 in 2024 41 41 Additional paid in capital 455,584 452,933 Retained earnings 1,074,863 1,065,763 Accumulated items of other comprehensive income: Translation adjustments ( 164,419 ) ( 181,555 ) Pension and postretirement liability adjustments ( 16,990 ) ( 14,328 ) Derivative valuation adjustment ( 741 ) ( 106 ) Treasury stock (Class A), at cost; 10,770,189 shares in 2025 and 9,844,746 in 2024 ( 448,363 ) ( 379,210 ) Total shareholders' equity 899,975 943,538 Noncontrolling interest 5,193 5,409 Total equity 905,168 948,947 Total liabilities and shareholders' equity $ 1,688,076 $ 1,648,696 The accompanying notes are an integral part of the consolidated financial statements 3 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net income $ 17,349 $ 27,369 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 19,585 20,556 Amortization 1,706 1,748 Change in deferred taxes and other liabilities 3,578 ( 675 ) Impairment of property, plant and equipment 473 49 Non-cash interest expense 256 256 Compensation and benefits paid or payable in Class A Common Stock 2,651 810 Provision for credit losses from uncollected receivables and contract assets 269 365 Foreign currency remeasurement loss/(gain) on intercompany loans 2,886 ( 792 ) Fair value adjustment on foreign currency contracts — 280 Changes in operating assets and liabilities that provided/(used) cash: Accounts receivable ( 20,713 ) ( 17,061 ) Contract assets 11,421 2,982 Inventories ( 12,873 ) 1,917 Prepaid expenses and other current assets ( 2,624 ) ( 6,525 ) Income taxes prepaid and receivable ( 70 ) ( 721 ) Accounts payable 17,482 7,730 Accrued liabilities ( 21,164 ) ( 22,739 ) Income taxes payable ( 17,080 ) ( 5,466 ) Noncurrent receivables ( 200 ) ( 178 ) Other noncurrent liabilities ( 1,046 ) 506 Other, net 233 ( 814 ) Net cash provided by operating activities 2,119 9,597 Cash flows from investing activities: Purchases of property, plant and equipment ( 15,597 ) ( 26,859 ) Purchased software — ( 21 ) Net cash used in investing activities ( 15,597 ) ( 26,880 ) Cash flows from financing activities: Proceeds from borrowings 96,998 43,237 Principal payments on debt ( 3,007 ) ( 60,750 ) Purchase of Treasury shares ( 69,153 ) — Taxes paid in lieu of share issuance ( 1,316 ) ( 2,446 ) Dividends paid ( 8,431 ) ( 8,110 ) Net cash provided by/(used in) financing activities 15,091 ( 28,069 ) Effect of exchange rate changes on cash and cash equivalents 2,458 ( 2,656 ) Increase/(decrease) in cash and cash equivalents 4,071 ( 48,008 ) Cash and cash equivalents at beginning of period 115,283 173,420 Cash and cash equivalents at end of period $ 119,354 $ 125,412 The accompanying notes are an integral part of the consolidated financial statements 4 Index ALBANY INTERNATIONAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Significant Accounting Policies Basis of Presentation In the opinion of management, the accompanying consolidated financial information reflects all adjustments necessary for a fair presentation of Albany International Corp.'s ("Albany", the "Registrant", the "Company", "we", "us", or "our") financial position, results of operations and cash flows for the interim periods presented, but does not include all disclosures required by the accounting principles generally accepted in the United States ("GAAP"). All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used in the accounting for, among others, revenue recognition, contract profitability, allowances for doubtful accounts, rebates and sales allowances, inventory allowances, financial instruments, including derivatives, pension and other postretirement benefits, stock-based compensation, goodwill and intangible assets, contingencies, income taxes, and other accruals. 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. Estimates and assumptions are reviewed periodically, and the effects of any revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Recent Accounting Pronouncements In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. 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. The adoption of this standard on January 1, 2025 did not have any impact 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 5 Index 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. While there has been no resolution of the stay, the Company is currently evaluating the final rule to determine its impact on the Company's disclosures. 2. Reportable Segments and Revenue Recognition 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 ("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 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. Effective December 31, 2024, the Company adopted provisions of ASU 2023-07, which expanded the content and frequency of segment disclosures required under ASC 280. Machine Clothing: The Machine Clothing segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel products, nonwovens, fiber cement and for several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels are substantially the same in each region of the world in which we operate. We design, manufacture, and market paper machine clothing (used in the manufacture of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products and technical textiles. Albany Engineered Composites: The Albany Engineered Composites segment provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, the SAFRAN Group (“SAFRAN”) owns a 10 percent noncontrolling interest. 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, where revenue is determined by a cost-plus-fee agreement. The LEAP engine is used on the Airbus A320neo, A321neo , Boeing 737 MAX, and COMAC 919 aircraft. AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM International's LEAP engine). AEC net sales to SAFRAN were $ 39.4 million and $ 50.1 million in the first three months of 2025 and 2024, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $ 74.0 million and $ 78.5 million as of March 31, 2025 and December 31, 2024, respectively. Other significant programs for AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing commercial programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine. For the year ended December 31, 2024, approximately 36 percent of AEC's revenues were related to U.S. government contracts or programs. 6 Index The following tables show data by reportable segment that is regularly provided to the CODM, reconciled to consolidated totals included in the financial statements: Three Months Ended March 31, 2025 (in thousands) MC AEC Corporate Total Net revenues $ 174,697 $ 114,077 $ — $ 288,774 Cost of goods sold $ 94,795 $ 97,493 $ — $ 192,288 Gross profit $ 79,902 $ 16,584 $ — $ 96,486 Selling, general and administrative expenses $ 32,881 $ 10,126 $ 10,805 $ 53,812 Technical and research expenses $ 7,243 $ 3,674 $ 979 $ 11,896 Restructuring expenses, net $ 1,347 $ 1,168 $ — $ 2,515 Operating income/(loss) $ 38,431 $ 1,616 $ ( 11,784 ) $ 28,263 Three Months Ended March 31, 2024 (in thousands) MC AEC Corporate Total Net revenues $ 185,217 $ 128,113 $ — $ 313,330 Cost of goods sold $ 100,562 $ 104,082 $ — $ 204,644 Gross profit $ 84,655 $ 24,031 $ — $ 108,686 Selling, general and administrative expenses $ 32,767 $ 11,540 $ 10,528 $ 54,835 Technical and research expenses $ 7,520 $ 5,145 $ — $ 12,665 Restructuring expenses, net $ 21 $ 2,188 $ — $ 2,209 Operating income/(loss) $ 44,347 $ 5,158 $ ( 10,528 ) $ 38,977 7 Index Three months ended March 31, (in thousands) 2025 2024 Net revenues Machine Clothing $ 174,697 $ 185,217 Albany Engineered Composites 114,077 128,113 Consolidated revenues $ 288,774 $ 313,330 Gross profit Machine Clothing $ 79,902 $ 84,655 Albany Engineered Composites 16,584 24,031 Consolidated gross profit $ 96,486 $ 108,686 Depreciation and amortization Machine Clothing $ 7,706 $ 8,511 Albany Engineered Composites 13,295 13,503 Corporate 290 290 Consolidated depreciation and amortization $ 21,291 $ 22,304 Operating income/(loss) Machine Clothing $ 38,431 $ 44,347 Albany Engineered Composites 1,616 5,158 Corporate ( 11,784 ) ( 10,528 ) Consolidated Operating income $ 28,263 $ 38,977 Reconciling items: Interest income ( 1,638 ) ( 1,123 ) Interest expense 5,293 4,442 Other (income)/expense, net 983 ( 2,982 ) Income before income taxes $ 23,625 $ 38,640 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. F or the three months ended March 31, 2025, Selling, general and administrative expenses include global information system costs of $ 4.0 million, $ 3.9 million, and $ 0.5 million for MC, AEC and Corporate, respectively. For the three months ended March 31, 2024, Selling, general and administrative expenses include global information system costs of $ 3.8 million, $ 4.0 million, and $ 0.5 million for MC, AEC and Corporate, respectively. The following table presents assets by reportable segment: (in thousands) March 31, 2025 December 31, 2024 Segment assets Machine Clothing $ 621,691 $ 600,603 Albany Engineered Composites $ 749,287 $ 736,306 Reconciling items: Cash $ 119,354 $ 115,283 Income taxes prepaid, receivable and deferred 45,761 47,944 Prepaid and Other assets 151,983 148,560 Consolidated total assets $ 1,688,076 $ 1,648,696 8 Index The following table presents capital expenditures by reportable segment: Three months ended March 31, (in thousands) 2025 2024 Capital expenditures and purchased software Machine Clothing $ 6,232 $ 6,357 Albany Engineered Composites 9,365 20,523 Corporate expenses — — Total capital expenditures and purchased software $ 15,597 $ 26,880 Revenue Recognition: Products and services provided under long-term contracts represent a significant portion of revenues in the Albany Engineered Composites segment and we account for these contracts over time, primarily using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be materially different if the underlying circumstances were to change. 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. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, material costs, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors. The cumulative changes in the estimated profitability of long-term contracts decreased operating income by $ 7.0 million for the first three months of 2025. The negative change in the estimated profitability in the first quarter of 2025 was driven by a few large complex programs, including approximately $ 2.0 million for various CH-53K programs, approximately $ 1.7 million on our Gulfstream program, approximately $ 0.9 million on our F-35 program, and $ 2.4 million, net, on all other programs. Adjustments in the estimated profitability of long-term contracts decreased operating income by $ 0.9 million for the first three months of 2024. We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes. The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended March 31, 2025: Three months ended March 31, 2025 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 173,676 $ 1,021 $ 174,697 Albany Engineered Composites: ASC — 38,920 38,920 Other AEC 4,077 71,080 75,157 Total Albany Engineered Composites 4,077 110,000 114,077 Total revenues $ 177,753 $ 111,021 $ 288,774 The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended March 31, 2024: 9 Index Three months ended March 31, 2024 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 184,235 $ 982 $ 185,217 Albany Engineered Composites: ASC — 49,739 49,739 Other AEC 5,757 72,617 78,374 Total Albany Engineered Composites 5,757 122,356 128,113 Total revenues $ 189,992 $ 123,338 $ 313,330 The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing ("PMC") and engineered fabrics); and for PMC, the geographical region to which the paper machine clothing was sold: Three months ended March 31, (in thousands) 2025 2024 Americas PMC $ 82,846 $ 83,501 Eurasia PMC 68,197 76,190 Engineered Fabrics 23,654 25,526 Total Machine Clothing Net revenues $ 174,697 $ 185,217 We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year and certain contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $ 1.1 billion and $ 752 million as of March 31, 2025 and 2024, respectively, and related primarily to firm fixed price contracts in the AEC segment. Of the remaining performance obligations as of March 31, 2025, we expect to recognize as revenue approximately $ 117 million during 2025, $ 150 million during 2026, $ 142 million during 2027, and the remainder thereafter. 10 Index 3 . Pensions and Other Postretirement Benefit Plans The Company has defined benefit pension plans covering certain U.S. and non-U.S. employees. The Company also provides certain postretirement benefits to retired employees in the U.S. and Canada. The Company accrues the cost of providing these benefits during the active service period of the employees. The composition of the net periodic benefit cost/(income) for the three months ended March 31, 2025 and 2024, was as follows: Pension plans Other postretirement benefits (in thousands) 2025 2024 2025 2024 Components of net periodic benefit cost/(income): Service cost $ 371 $ 497 $ 10 $ 12 Interest cost 1,450 1,532 353 354 Expected return on assets ( 1,232 ) ( 1,358 ) — — Curtailment cost/(income) ( 3,770 ) — — — Settlement cost/(income) 2,170 — — — Amortization of prior service cost/(income) ( 6 ) ( 7 ) ( 31 ) ( 31 ) Amortization of net actuarial loss 295 187 ( 8 ) ( 9 ) Net periodic benefit cost/(credit) $ ( 722 ) $ 851 $ 324 $ 326 The amount of net benefit cost/(credit) is determined at the beginning of each year and generally only varies from quarter to quarter when a significant event occurs, such as a curtailment or a settlement. In the first three months of 2025, we took action to settle certain pension plan liabilities related to an MC pension plan in Switzerland. This resulted in a net gain totaling $ 1.6 million related to curtailments and settlements.There were no material curtailments or settlements during the first three months of 2024. Service cost for defined benefit pension and postretirement plans are reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net periodic benefit cost are included in the line item Other (income)/expense, net in the Consolidated Statements of Income. 4. Restructuring At MC, restructuring actions were taken in 2024 and 2025 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, at the Company's Heimbach paper machine clothing facility in Olten, Switzerland and at the Company's MC manufacturing facility in Ballo, Italy. These actions drove $ 3.3 million of restructuring charges during the first three months of 2025, of which $ 3.1 million in restructuring expenses related to workforce reductions, fixed asset impairments and related costs, as well as charges of $ 0.2 million in Cost of goods sold for the write-off of inventory, offset by a $ 1.8 million pension curtailment gain. We expect to incur additional restructuring expenses related to these actions throughout the remainder of the year. At AEC, restructuring activities were related to reorganizational costs as well as a reduction in the workforce within AEC, which resulted in restructuring expenses of $ 1.2 million for the first three months of 2025 and $ 2.2 million for the first three months of 2024. The following table summarizes charges reported in the Consolidated Statements of Income under "Restructuring expenses, net": Three months ended March 31, (in thousands) 2025 2024 Machine Clothing $ 1,347 $ 21 Albany Engineered Composites 1,168 2,188 Corporate expenses — — Total $ 2,515 $ 2,209 11 Index The following tables summarize charges by type of expense reported in the Consolidated Statements of Income under "Restructuring expenses, net" and "Cost of goods sold": Three months ended March 31, 2025 Total restructuring costs incurred Termination and other costs Impairment of assets Pension Curtailment (Gain)/Loss (in thousands) Machine Clothing $ 1,603 $ 2,640 $ 723 $ ( 1,760 ) Albany Engineered Composites 1,168 1,168 — — Corporate expenses — — — — Total $ 2,771 $ 3,808 $ 723 $ ( 1,760 ) Three months ended March 31, 2024 Total restructuring costs incurred Termination and other costs Impairment of assets Pension Curtailment (Gain)/Loss (in thousands) Machine Clothing $ 21 $ 21 $ — $ — Albany Engineered Composites 2,188 2,188 — — Corporate expenses — — — — Total $ 2,209 $ 2,209 $ — $ — The table below presents the year-to-date changes in restructuring liabilities for 2025 and 2024: (in thousands) December 31, 2024 Restructuring charges accrued Payments Currency translation /other March 31, 2025 Total termination and other costs $ 4,996 $ 3,808 $ ( 4,160 ) $ 24 $ 4,668 (in thousands) December 31, 2023 Restructuring charges accrued Payments Currency translation /other March 31, 2024 Total termination and other costs $ — $ 2,209 $ ( 221 ) $ ( 1 ) $ 1,987 5. Other (Income)/Expense, net The components of Other (income)/expense, net are: Three months ended March 31, (in thousands) 2025 2024 Currency transaction losses/(gains) $ 3,152 $ ( 1,292 ) Derivative instruments losses/(gains) ( 2,526 ) ( 118 ) Bank fees and amortization of debt issuance costs 76 43 Components of net periodic pension and postretirement cost other than service cost 821 668 Other ( 540 ) ( 2,283 ) Total other (income)/expense, net $ 983 $ ( 2,982 ) Other (income)/expense, net, included foreign currency related transactions which resulted in losses of $ 3.2 million in the three months ended March 31, 2025, as compared to gains of $ 1.3 million in the same periods last year. In addition, changes in the fair value of derivative instruments included gains of $ 2.5 million in the three months ended March 31, 2025, as compared to gains of $ 0.1 million in the same period last year, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. 12 Index 6. Income Taxes The Company's effective income tax rate for the three months ended March 31, 2025 and 2024, is as follows: Three months ended March 31, 2025 2024 Effective income tax rate 26.6 % 29.2 % Income tax expense for the quarter was computed in accordance with ASC 740-270, Income Taxes – Interim Reporting. Under this method, loss jurisdictions which cannot recognize a tax benefit with regard to their generated losses are excluded from the annual effective tax rate calculation and their taxes will be recorded discretely in each quarter. Our 2025 estimated annual effective tax rate primarily reflects the 21% federal tax rate, the impact of state and local taxation, the impact of taxation upon foreign operations, and forecasted permanent differences. Our actual effective tax rates were 26.6 % and 29.2 % for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate for the three months ended March 31, 2025 included a net discrete tax benefit of $ 1.3 million. This discrete tax benefit is mostly attributable to the true-up for prior year's estimated taxes, a net decrease in valuation allowances and a net decrease in uncertain tax positions. The rate for the three months ended March 31, 2025 was lower than the three months ended March 31, 2024 mainly due to the favorable discrete tax adjustment related to a decrease in valuation allowance in the current period. The Company is subject to audit in the U.S. and various foreign jurisdictions. Our open tax years for major jurisdictions generally range from 2013-2024. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. It is reasonably possible that within the next 12 months, unrecognized tax benefits could decrease by up to $ 2.2 million based on current estimates. 7. Earnings Per Share The amounts used in computing earnings per share and the weighted average number of shares of potentially dilutive securities are as follows: Three months ended March 31, (in thousands, except earnings per share) 2025 2024 Net income attributable to the Company $ 17,355 $ 27,291 Weighted average number of shares: Weighted average number of shares used in calculating basic net income per share 30,823 31,209 Effect of dilutive stock-based compensation plans: Restricted stock units and multi-year awards 161 82 Weighted average number of shares used in calculating diluted net income per share 30,984 31,291 Net income attributable to the Company per share: Basic $ 0.56 $ 0.87 Diluted $ 0.56 $ 0.87 13 Index 8. Accumulated Other Comprehensive Income ("AOCI") The table below presents changes in the components of AOCI for the period from December 31, 2024 to March 31, 2025: (in thousands) Translation adjustments Pension and postretirement liability adjustments Derivative valuation adjustment Total Other Comprehensive Income December 31, 2024 $ ( 181,555 ) $ ( 14,328 ) $ ( 106 ) $ ( 195,989 ) Other comprehensive income/(loss) before reclassifications, net of tax 17,136 ( 4,013 ) ( 457 ) 12,666 Pension settlement/curtailment, net of tax — 1,178 — 1,178 Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax — — ( 178 ) ( 178 ) Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax — 173 — 173 Net current period other comprehensive income 17,136 ( 2,662 ) ( 635 ) 13,839 March 31, 2025 $ ( 164,419 ) $ ( 16,990 ) $ ( 741 ) $ ( 182,150 ) The table below presents changes in the components of AOCI for the period from December 31, 2023 to March 31, 2024: (in thousands) Translation adjustments Pension and postretirement liability adjustments Derivative valuation adjustment Total Other Comprehensive Income December 31, 2023 $ ( 124,901 ) $ ( 17,346 ) $ 9,079 $ ( 133,168 ) Other comprehensive income/(loss) before reclassifications, net of tax ( 12,116 ) 285 892 ( 10,939 ) Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax — — ( 3,016 ) ( 3,016 ) Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax — 97 — 97 Net current period other comprehensive income ( 12,116 ) 382 ( 2,124 ) ( 13,858 ) March 31, 2024 $ ( 137,017 ) $ ( 16,964 ) $ 6,955 $ ( 147,026 ) The components of AOCI that are reclassified to the Consolidated Statements of Income relate to our pension and postretirement plans and interest rate swaps. The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the Consolidated Statements of Income that were affected for the three months ended March 31, 2025 and 2024: 14 Index Three months ended March 31, (in thousands) 2025 2024 Pre-tax Derivative valuation reclassified from Accumulated Other Comprehensive Income: Interest (income)/expense, net related to interest rate swaps included in Income before taxes $ ( 192 ) $ ( 4,038 ) Income tax effect 14 1,022 Effect on net income due to items reclassified from Accumulated Other Comprehensive Income $ ( 178 ) $ ( 3,016 ) Pre-tax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income: Pension settlement/curtailment $ 1,600 $ — Amortization of prior service credit $ ( 37 ) $ ( 38 ) Amortization of net actuarial loss 287 178 Total pre-tax amount reclassified (a) 1,850 140 Income tax effect ( 499 ) ( 43 ) Effect on net income due to items reclassified from Accumulated Other Comprehensive Income $ 1,351 $ 97 (a) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 3. Pensions and Other Postretirement Benefit Plans ). 9. Noncontrolling Interests Effective October 31, 2013, Safran S.A. (Safran) acquired a 10 percent equity interest in Albany Safran Composites, LLC ("ASC"). On August 31, 2023, the Company acquired all the outstanding shares of Heimbach, a privately held manufacturer of paper machine clothing with headquarters in Düren, Germany. In July 2021, Heimbach acquired 85 % of Arcari, SRL (“Arcari”). Arcari is a manufacturer of textile and plastic industrial technical products and conveyor belts. For the three months ended March 31, 2025, the net income/(loss) attributable to Arcari’s noncontrolling interest was less than $ 0.1 million and the noncontrolling interest balance as of March 31, 2025 was $ 0.3 million. The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiaries: ASC Noncontrolling Interest Three months ended March 31, (in thousands, except percentages) 2025 2024 Net income of Albany Safran Composites (ASC) $ 940 $ 1,014 Less: Return attributable to the Company's preferred holding 441 308 Net income of ASC available for common ownership $ 499 $ 706 Ownership percentage of noncontrolling shareholder 10 % 10 % Net income attributable to the noncontrolling interest $ 50 $ 71 Noncontrolling interest, beginning of year $ 4,983 $ 5,423 Net income attributable to noncontrolling interest 50 71 Changes in other comprehensive income attributable to the noncontrolling interest ( 136 ) 57 ASC Noncontrolling interest, end of interim period $ 4,897 $ 5,551 Arcari Noncontrolling interest, end of interim period $ 296 $ 525 Total Noncontrolling interest, end of interim period $ 5,193 $ 6,076 15 Index 10. Accounts Receivable Accounts receivable, net includes Trade and other accounts receivable and Bank promissory notes, net of Allowance for expected credit losses. In connection with certain revenues in Asia, the Company accepts a bank promissory note as customer payment. The notes may be presented for payment at maturity, which is less than one year. As of March 31, 2025 and December 31, 2024, Accounts receivable consisted of the following: (in thousands) March 31, 2025 December 31, 2024 Trade and other accounts receivable $ 256,115 $ 231,136 Bank promissory notes 20,853 19,637 Allowance for expected credit losses ( 4,507 ) ( 4,085 ) Accounts receivable, net $ 272,461 $ 246,688 As of March 31, 2025 and December 31, 2024, the Company had trade accounts receivable from SAFRAN of $ 73.2 million and $ 77.7 million, respectively. As of March 31, 2025 and December 31, 2024, the Company did not have any Noncurrent receivables and related Allowance for expected credit losses. 11. Contract Assets and Liabilities Contract assets include unbilled amounts typically resulting from revenues under contracts when the over time method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to Accounts receivable, net when the entitlement to pay becomes unconditional and the customer is invoiced. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract liabilities are included in Accrued liabilities in the Consolidated Balance Sheets. Contract assets and Contract liabilities are reported on the Consolidated Balance Sheets in a net position on a contract-by-contract basis at the end of each reporting period. As of March 31, 2025 and December 31, 2024, Contract assets and Contract liabilities consisted of the following: (in thousands) March 31, 2025 December 31, 2024 Contract assets $ 156,852 $ 167,397 Allowance for expected credit losses ( 783 ) ( 840 ) Contract assets, net $ 156,069 $ 166,557 Contract liabilities $ 7,682 $ 6,085 Contract assets, net decreased $ 10.5 million during the three months ended March 31, 2025. The decrease was primarily due to invoicing to customers for satisfied performance obligations for contracts that were in a contract asset position, primarily related to commercial and space programs. There were no impairment losses related to our Contract assets during the three months ended March 31, 2025 and March 31, 2024. Contract liabilities increased $ 1.6 million for the period ended March 31, 2025 compared to December 31, 2024, primarily due to the amounts invoiced to customers for contracts that were in a contract liability position exceeding the revenue recognized from satisfied performance obligations. Revenue recognized for the three months ended March 31, 2025 and 2024 that was included in the Contract liability balance at the beginning of the year was $ 4.2 million and $ 3.5 million, respectively. 16 Index 12. Inventories Costs included in inventories are raw materials, labor, supplies and allocable depreciation and overhead. Raw material inventories are valued on an average cost basis. Other inventory cost elements are valued at cost, using the first-in, first-out method. The Company writes down the inventories for estimated obsolescence and to lower of cost or net realizable value based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related write-down represents the new cost basis of such inventories. As of March 31, 2025 and December 31, 2024, Inventories consisted of the following: (in thousands) March 31, 2025 December 31, 2024 Raw materials $ 80,546 $ 76,559 Work in process 65,127 54,917 Finished goods 15,409 14,369 Total inventories $ 161,082 $ 145,845 13. Goodwill and Other Intangible Assets The following table sets forth the gross carrying value, accumulated amortization and net values of intangible assets and goodwill as of March 31, 2025 and December 31, 2024: March 31, 2025 (in thousands) Amortization life in years Gross carrying amount Accumulated amortization and other Net carrying amount Finite-lived assets: AEC Trademarks and trade names 6 - 15 $ 208 $ ( 200 ) $ 8 AEC Technology 10 - 15 6,048 ( 3,398 ) 2,650 AEC Intellectual property 15 1,250 ( 443 ) 807 AEC Customer relationships 8 - 15 69,298 ( 48,203 ) 21,095 Heimbach Developed technology 9 8,884 ( 1,832 ) 7,052 Total Finite-lived intangible assets $ 85,688 $ ( 54,076 ) $ 31,612 Indefinite-lived intangible assets: Heimbach Trade name $ 5,951 $ — $ 5,951 MC Goodwill 65,873 — 65,873 AEC Goodwill 112,964 — 112,964 Total Indefinite-lived intangible assets: $ 184,788 $ — $ 184,788 17 Index December 31, 2024 (in thousands) Amortization life in years Gross carrying amount Accumulated amortization and other Net carrying amount Finite-lived assets: AEC Trademarks and trade names 6 - 15 $ 208 $ ( 197 ) $ 11 AEC Technology 10 - 15 5,820 ( 3,140 ) 2,680 AEC Intellectual property 15 1,250 ( 422 ) 828 AEC Customer relationships 8 - 15 69,175 ( 47,283 ) 21,892 Heimbach Developed technology 9 8,547 ( 1,543 ) 7,004 Total Finite-lived assets $ 85,000 $ ( 52,585 ) $ 32,415 Indefinite-lived intangible assets: Heimbach Trade name $ 5,712 $ — $ 5,712 MC Goodwill 63,988 — 63,988 AEC Goodwill 112,273 — 112,273 Total Indefinite-lived intangible assets: $ 181,973 $ — $ 181,973 The changes in intangible assets, net and goodwill from December 31, 2024 to March 31, 2025, were as follows: (in thousands) December 31, 2024 Other Changes Amortization Currency Translation March 31, 2025 Finite-lived intangible assets: AEC Trademarks and trade names $ 11 $ — $ ( 3 ) $ — $ 8 AEC Technology 2,680 — ( 142 ) 112 2,650 AEC Intellectual property 828 — ( 21 ) — 807 AEC Customer relationships 21,892 — ( 870 ) 73 21,095 Heimbach Developed technology 7,004 — ( 233 ) 281 7,052 Total Finite-lived intangible assets $ 32,415 $ — $ ( 1,269 ) $ 466 $ 31,612 Indefinite-lived intangible assets: Heimbach Trade name $ 5,712 $ — $ — $ 239 $ 5,951 MC Goodwill 63,988 — — 1,885 65,873 AEC Goodwill 112,273 — — 691 112,964 Total Indefinite-lived assets: $ 181,973 $ — $ — $ 2,815 $ 184,788 18 Index 14. Financial Instruments Debt principally consists of a revolving credit agreement and foreign bank debt assumed in the 2023 acquisition of Heimbach. The following table represents the Company's outstanding debt: (in thousands, except interest rates) March 31, 2025 December 31, 2024 Borrowings under the Amended Credit Agreement (1) USD borrowings $ 319,000 $ 225,000 EUR borrowings 97,390 93,485 Foreign bank debt 39 46 Total bank debt 416,429 318,531 Less: Current maturities of long-term debt — — Long-term debt $ 416,429 $ 318,531 (1) The credit facility matures in August 2028. At the end of March 31, 2025 and December 31, 2024, the USD interest rate in effect was 5.79 % and 5.77 %, respectively, including the effect of interest rate swaps; at the end of March 31, 2025 and December 31, 2024, the EUR interest rate in effect was 3.83 % and 4.09 %, respectively, including the effect of interest rate swaps. Amended Credit Agreement 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. 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 Simple SOFR Spread < 1.00 :1.00 0.275 % 0.500 % 1.500 % ≥ 1.00 :1.00 and < 2.00 :1.00 0.300 % 0.625 % 1.625 % ≥ 2.00 :1.00 and < 3.00 :1.00 0.325 % 0.750 % 1.750 % ≥ 3.00 :1.00 0.350 % 1.000 % 2.000 % As of March 31, 2025, 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 1.50 %. As of March 31, 2025, there was $ 416.4 million of borrowings outstanding under the Amended Credit Agreement and we had borrowings available of $ 383.6 million, based on our maximum leverage ratio and our Consolidated EBITDA (as defined in the Amended Credit Agreement). Under the Amended Credit Agreement, we are required to maintain a leverage ratio (as defined in the 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 Credit Agreement) of greater than 3.00 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 March 31, 2025, our leverage ratio was 1.35 to 1.00 and our interest coverage ratio was 13.39 to 1.00. As of March 31, 2025, we were in compliance with all applicable covenants. We anticipate continued compliance in each of the next four quarters while continuing to monitor future compliance based on current and future economic conditions. The borrowings are guaranteed by certain of the Company’s subsidiaries, including all significant U.S. subsidiaries (subject to certain exceptions), as defined in the Amended Credit Agreement. Our ability to borrow additional amounts under the Amended Credit Agreement is conditional upon the absence of any defaults, as well as the absence of any material adverse change (as defined in the Amended Credit Agreement). Interest Rate Swaps From time to time, the Company enters into interest rate swap contracts to manage the interest rate risk associated with its outstanding variable-interest rate borrowings. Such contracts are intended to economically hedge the 19 Index reference rate component of future interest payments associated with outstanding borrowings under the Company’s Amended Credit Agreement. 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. In 2021, we entered into interest rate swap agreements for the period of October 17, 2022 through October 27, 2024, to hedge $ 350 million of variable-interest rate indebtedness. These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 15, Fair-Value Measurements . No cash collateral was received or pledged in relation to the swap agreements. . 15. Fair-Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 - Quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. We had no Level 3 financial assets or liabilities at March 31, 2025 or at December 31, 2024, other than certain pension assets as indicated in our December 31, 2024 Annual Report on Form 10-K. The following table presents the fair-value hierarchy for our Level 1 and Level 2 financial and non-financial assets and liabilities, which are measured at fair value on a recurring basis: 20 Index March 31, 2025 December 31, 2024 Quoted prices in active markets Significant other observable inputs Quoted prices in active markets Significant other observable inputs (in thousands) (Level 1) (Level 2) (Level 1) (Level 2) Fair Value Assets: Cash equivalents $ 8,745 $ — $ 11,273 $ — Foreign currency option contracts — — — — Foreign currency forward contracts — — — — Other Assets: Common stock of unaffiliated foreign public company (a) 759 — 631 — Interest rate swaps — — 149 Liabilities: Other Non-Current Liabilities Foreign currency forward contracts — — Interest rate swaps ( 662 ) — ( 218 ) (a) Original cost basis $ 0.5 million. Cash equivalents include short-term securities that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities. The interest rate swaps are accounted for as hedges of future cash flows. The fair value of our interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve, and is included in Other assets and/or Other noncurrent liabilities in the Consolidated Balance Sheets. 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. as of March 31, 2025, these interest rate swaps were determined to be highly effective hedges of interest rate cashflow risk. Amounts accumulated in Other comprehensive income are reclassified as interest expense/(income), net when the related interest payments (that is, the hedged forecasted transactions), affect earnings. Interest expense/(income) related to payments under the active swap agreements totaled $( 0.2 ) million for the three months ended March 31, 2025 and $( 4.0 ) million for the three months ended March 31, 2024. We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results. 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 current assets and Accrued liabilities, as applicable. Changes in fair value of these instruments are recorded as gains or losses within Other (income)/expense, net. When exercised, the foreign currency instruments are net-settled with the same financial institution that bought or sold them. For all positions, whether options or forward contracts, there is a risk from the possible inability of the financial institution to meet the terms of the contracts and the risk of unfavorable changes in interest and currency rates, which may reduce the value of the instruments. We seek to mitigate risk by evaluating the creditworthiness of counterparties and by monitoring the currency exchange and interest rate markets while reviewing the hedging risks and contracts to ensure compliance with our internal guidelines and policies. (Gains)/losses related to changes in fair value of derivative instruments that were recognized in Other (income)/expense, net in the Consolidated Statements of Income were as follows: Three months ended March 31, (in thousands) 2025 2024 Derivatives not designated as hedging instruments: Foreign currency options (gains)/losses $ ( 2,526 ) $ ( 118 ) 21 16. Commitments and Contingencies Asbestos Litigation Albany International Corp. is a defendant in suits brought in various courts in the United States by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. We were defending 3,653 claims as of March 31, 2025. The following table sets forth the number of claims filed, the number of claims settled, dismissed or otherwise resolved, and the aggregate settlement amount during the periods presented: (in thousands, except number of claims) Opening Number of Claims Claims Dismissed, Settled, or Resolved New Claims Closing Number of Claims Amounts Paid to Settle or Resolve For the period ended December 31, 2024 3,606 10 50 3,646 $ 13 For the period ended March 31, 2025 3,646 11 18 3,653 $ 30 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. 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. Our insurance carrier has defended each case and funded settlements under a standard reservation of rights. As of March 31, 2025, we had resolved, by means of settlement or dismissal, 38,062 claims at a total cost of $ 10.6 million. Of this amount, almost 100 % was paid by our insurance carrier, who has confirmed that we have approximately $ 140 million of remaining coverage under primary and excess policies that should be available with respect to current and future asbestos claims. The Company’s subsidiary, Brandon Drying Fabrics, Inc. (“Brandon”), is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant, despite never having manufactured any fabrics containing asbestos. While Brandon was defending against 7,675 claims as of March 31, 2025, only twelve claims have been filed against Brandon since January 1, 2012, and only $ 15,000 in settlement costs have been incurred since 2001. Brandon was acquired by the Company in 1999 and has its own insurance policies covering periods prior to 1999. Since 2004, Brandon’s insurance carriers have covered 100 % of indemnification and defense costs, subject to policy limits and a standard reservation of rights. In some of these asbestos cases, the Company is named both as a direct defendant and as the “successor in interest” to Mount Vernon Mills (“Mount Vernon”). We acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products. We deny any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, we have successfully moved for dismissal in a number of actions. We currently do not anticipate, based on currently available information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results of operations, or cash flows of the Company. Although we cannot predict the number and timing of future claims, based on the foregoing factors, the trends in claims filed against us, and available insurance, we also do not currently anticipate that potential future claims will have a material adverse effect on our financial position, results of operations, or cash flows. 22 17. Changes in Shareholders’ Equity The following table summarizes changes in Shareholders’ Equity for the period December 31, 2024 to March 31, 2025: Class A Common Stock Additional paid-in capital Retained earnings Accumulated items of other comprehensive income Class A Treasury Stock Noncontrolling Interest Total Shareholders' Equity Shares Amount Shares Amount December 31, 2024 40,917 $ 41 $ 452,933 $ 1,065,763 $ ( 195,989 ) 9,845 $ ( 379,210 ) $ 5,409 $ 948,947 Net income — — — 17,355 — — — ( 6 ) 17,349 Compensation and benefits paid or payable in shares 56 — 2,651 — — — — — 2,651 Purchase of Treasury shares (a) — — — — — 925 ( 69,153 ) — ( 69,153 ) Dividends declared on Class A Common Stock, $ 0.27 per share — — — ( 8,262 ) — — — — ( 8,262 ) Dividends paid to noncontrolling interests — — — — — — — ( 88 ) ( 88 ) Cumulative translation adjustments — — — — 17,136 — — ( 122 ) 17,014 Pension and postretirement liability adjustments — — — — ( 2,662 ) — — — ( 2,662 ) Derivative valuation adjustment and other — — — 7 ( 635 ) — — — ( 628 ) March 31, 2025 40,973 $ 41 $ 455,584 $ 1,074,863 $ ( 182,150 ) 10,770 $ ( 448,363 ) $ 5,193 $ 905,168 The following table summarizes changes in Shareholders’ Equity for the period December 31, 2023 to March 31, 2024: Class A Common Stock Additional paid-in capital Retained earnings Accumulated items of other comprehensive income Class A Treasury Stock Noncontrolling Interest Total Shareholders' Equity (in thousands) Shares Amount Shares Amount December 31, 2023 40,856 $ 41 $ 448,218 $ 1,010,942 $ ( 133,168 ) 9,662 $ ( 364,665 ) $ 5,952 $ 967,320 Net income — — — 27,291 — — — 78 27,369 Compensation and benefits paid or payable in shares 42 — 810 — — — — — 810 Dividends declared on Class A Common Stock, $ 0.26 per share — — — ( 8,122 ) — — — — ( 8,122 ) Cumulative translation adjustments — — — — ( 12,116 ) — — 46 ( 12,070 ) Pension and postretirement liability adjustments — — — — 382 — — — 382 Derivative valuation adjustment — — — — ( 2,124 ) — — — ( 2,124 ) March 31, 2024 40,898 $ 41 $ 449,028 $ 1,030,111 $ ( 147,026 ) 9,662 $ ( 364,665 ) $ 6,076 $ 973,565 (a) In 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. 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 replaced the 2021 authorization. In 2025, the Company repurchased 925,443 shares totaling $ 69.2 million. 18. Subsequent Events We evaluated subsequent events through the issuance date of these financial statements in Form 10-Q. No material subsequent events were identified that require disclosure. 23