Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of the Company. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes.
Forward-looking Statements
This quarterly report and the documents incorporated or deemed to be incorporated by reference in this quarterly report contain statements concerning our future results and performance and other matters that are “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” "forecast," ”look for,” “will,” “should,” “guidance,” “guide” and similar expressions identify forward-looking statements, which generally are not historical in nature. Because forward-looking statements are subject to certain risks and uncertainties, (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or prior Quarterly Reports on Form 10-Q) actual results may differ materially from those expressed or implied by such forward-looking statements.
There are a number of risks, uncertainties, and other important factors that could cause actual results to differ materially from the forward-looking statements, including, but not limited to:
• Conditions in the industries in which our Machine Clothing and Albany Engineered Composites segments compete, along with the general risks associated with macroeconomic conditions, including higher interest rates, inflationary pressures, or the effects of another pandemic, for an extended period of time;
• Some of the Company’s competitors in the Machine Clothing segment have the capability to make and sell paper machines and papermaking equipment as well as other engineered fabrics;
• Machine Clothing and Albany Engineered Composites segments are subject to significant risks related to the potential manufacture and sale of defective or non-conforming products;
• Deterioration of global economic conditions could have an adverse impact on the Company's segments and overall business and results of operations;
• In the Albany Engineered Composites segment, new and unique risks introduced by the U.S. Government's Department of Defense ("DoD") Cybersecurity Maturity Model Certification ("CMMC") program;
• Across the entire Company, increasing labor, raw material, energy, or logistics and costs due to supply chain constraints and inflationary pressures. These challenges have only increased as a result of the ongoing Russia-Ukraine war and the conflict in the Middle East;
• We may be unable to maintain effective systems of internal controls while consolidating dispersed corporate functions to our corporate headquarters in New Hampshire;
• Our ability to attract and retain business and employees may depend on our reputation in the marketplace;
• Across both segments, potential port strikes could cause additional disruptions to our supply chain;
• Harm caused by changes in our relationships or contracts with suppliers and customers;
• In the Machine Clothing segment, greater than anticipated declines in the demand for publication grades of paper, or lower than anticipated growth in other paper grades;
• In the Albany Engineered Composites segment, longer-than-expected timeframe for the aerospace industry to utilize existing inventories, unanticipated reductions in demand, delays, technical difficulties, and cancellations in aerospace programs that are expected to generate revenue and drive long-term growth;
• Inability of our Machine Clothing or Albany Engineered Composite segments to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as a result of geopolitical crises, natural disaster, public health crises and epidemics/pandemics, regulatory or otherwise);
• Changes in geopolitical conditions impacting countries where the Company does or intends to do business, including the effects of the implementation of trade tariffs on imported goods;
• Failure to achieve or maintain anticipated profitable growth;
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• The Company's insurance coverage may be inadequate to cover significant risk exposures;
• Failure to achieve our strategic initiatives and other goals, including, but not limited to, our sustainability goals;
• In the Albany Engineered Composites segment, the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others;
• In the Albany Engineered Composites segment, risks and uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to manufacture the products to the detailed specifications required and recover start-up costs and other investments in the programs;
• In the Albany Engineered Composites segment, risks associated with changes in estimates and assumptions that could result in a decline in program gross margins or turn a profitable program into a loss program;
• Adverse impacts from inflation, an economic slowdown or recession and by disruption in capital and credit markets that might impede our access to credit, increase our borrowing costs and impair the financial soundness of our customers and suppliers;
• Expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy and other goals;
• Adverse impacts from fluctuations in foreign currency exchange rates;
• Harm caused by customer purchase reductions, payment defaults or contract non-renewal;
• In the Albany Engineered Composites segment, future funding and compliance risks associated with our contracts with government entities, OEM customers or prime contractors on contracts with government entities;
• Costly and disruptive legal disputes and settlements and the Company's ability to provide adequate insurance coverage;
• Increasing operational and compliance costs associated with increasing environmental, social and governance regulatory requirements, as well as the risk of noncompliance;
• Future levels of indebtedness and capital expenditures;
• Impairment of goodwill and other intangible assets;
• Adverse impacts from changes in tax legislation or challenges to our tax positions;
• Cybersecurity incidents or significant computer system compromises or data breaches to our information technology systems, processes, sites and cloud-based providers;
• Disruptions or challenges arising from the implementation or upgrading of new information technology systems;
• Significant changes in critical estimates and assumptions related to pension and other post-retirement benefit costs and liabilities;
• Significant problems with information systems or networks;
• Failure to adequately integrate acquired companies into our business systems and processes within the expected timeframe or, failure to or delayed realization of anticipated benefits of the acquisition could adversely impact the Company’s business, financial condition and results of operations;
• Failure to adequately protect our proprietary technology or intellectual property, which would allow competitors or others to take advantage of our research and development efforts;
• Impacts on our stock price and trading volume if securities or industry analysis do not publish research or publish inaccurate or unfavorable research about our business, or by future sales of shares by our existing stockholders and the impact of any changes in cash dividend payments;
• The impact of shareholder activism on our operations, strategy, and overall performance; and
• Other risks and uncertainties detailed in this report and other periodic reports.
Further information concerning important factors that could cause actual events or results to be materially different from the forward-looking statements can be found in the “Business Environment Overview and Trends” sections of this quarterly report, as well as in the Item 1A-“Risk Factors” section of our most recent Annual Report on Form 10-K.
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Although we believe the expectations reflected in our other forward-looking statements are based on reasonable assumptions, it is not possible to foresee or identify all factors that could have a material and negative impact on our future performance. The forward-looking statements included or incorporated by reference in this report are made on the basis of our assumptions and analyses, as of the time the statements are made, in light of our experience and perception of historical conditions, expected future developments, and other factors believed to be appropriate under the circumstances.
Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained or incorporated by reference in this report to reflect any change in our expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.
Business Environment Overview and Trends
We conduct our business under two reportable segments: Machine Clothing (“MC”) and Albany Engineered Composites (“AEC”) each rooted in similar materials sciences know-how that forms a common approach to customer value proposition in design and manufacturability. MC competes on the basis of its deep industry knowledge, customer reputation and customer service and global advanced textile manufacturing capabilities, which has enabled it to develop a robust and market leading product offering that can be tailored to customer-specific requirements. AEC competes on the basis of its innovative technology solutions, extensive composite manufacturing capabilities and capacity that enable it to offer high quality specific part and assembly solutions that achieve its customers’ application performance requirements.
Machine Clothing Segment
The MC segment expects revenues to continue to decline for publication grade paper into 2025 and beyond, however, we see an offsetting effect due to growth in demand across Europe for packaging, and to a lesser degree, tissue grade products and continued softness in Asia. The MC segment's backlog continues to be stable.
MC believes it is well-positioned in key markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, technical product support, and manufacturing technology. Some of the markets in which MC's products are sold are expected to have volume trends that are in line with global GDP. MC continues to face pricing pressures in all markets. Despite these market pressures on revenue growth, the MC segment is expected to improve earnings in the future through cost controls and manufacturing productivity efficiencies.
Albany Engineered Composites Segment
The AEC segment continues to ramp-up production levels on commercial, defense, and space programs. In the first quarter of 2025, the Company updated its labor, material input and scrap assumptions and estimates of certain long-term programs that resulted in a negative cumulative change in estimated profitability in the amount of $7.0 million. The negative cumulative change in profitability was primarily driven by a few large complex programs, including $2.0 million for various CH-53K programs, $1.7 million on our Gulfstream program, $0.9 million on our F-35 program, and $2.4 million, net on all other programs.
Also, please refer to the Business Environment Overview and Trends in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024. The Annual Report on Form 10-K, along with the Company's other filings, can be found on the Securities and Exchange Commission's website, www.sec.gov, as well as on the Company's website: www.albint.com.
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Consolidated Results of Operations
Net Revenues
The following table summarizes our Net revenues by business segment:
Three months ended March 31,
(in thousands, except percentages)
2025 2024 % Change
Machine Clothing $ 174,697 $ 185,217 (5.7) %
Albany Engineered Composites
114,077 128,113 (11.0) %
Total $ 288,774 $ 313,330 (7.8) %
The following tables provide a comparison of 2025 Net revenues, excluding currency translation effects, to 2024 Net revenues:
(in thousands, except percentages)
Net revenues as reported, Q1 2025 (Decrease)/ increase due to changes in currency translation rates Q1 2025 revenues on same basis as Q1 2024 currency translation rates Net revenues as reported, Q1 2024 % Change compared to Q1 2024, excluding currency rate effects
Machine Clothing $ 174,697 $ (2,516) $ 177,213 $ 185,217 (4.3) %
Albany Engineered Composites
114,077 (486) 114,563 128,113 (10.6) %
Total $ 288,774 $ (3,002) $ 291,776 $ 313,330 (6.9) %
Net revenues decreased 7.8% compared to the first quarter of 2024, driven by lower Net revenues in publication, tissue and pulp grades within MC and a decrease in Net revenues in AEC due to a reduction in certain commercial and space programs.
MC's Net revenues decreased 5.7% compared to the first quarter of 2024 driven by lower revenues in publications, tissue and pulp grades. In addition, changes in currency translation rates had the effect of decreasing Net revenues $2.5 million.
AEC's Net revenues decreased 11.0% compared to the first quarter of 2024, primarily driven by demand reductions on certain commercial and space programs, which was partially offset by higher revenues on CH-53K and other programs. Changes in currency translation rates had the effect of decreasing Net revenues $0.5 million.
Gross Profit
The following table summarizes Gross profit by business segment:
Three months ended March 31,
(in thousands, except percentages)
2025 2024
Machine Clothing $ 79,902 $ 84,655
Albany Engineered Composites
16,584 24,031
Total $ 96,486 $ 108,686
% of Net revenues 33.4 % 34.7 %
The decrease in 2025 Gross profit, as compared to the same period last year, was driven by increased cost assumptions that adjusted the expected profitability of certain long-term contracts in the AEC segment. Gross profit as a percentage of revenues by segment was as follows:
• MC's gross profit margin remained consistent with the prior year, yielding 45.7% in both 2024 and 2025.
• AEC's gross profit margin decreased from 18.8% in 2024 to 14.5% in 2025, driven primarily by cumulative changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025, as compared to a decrease of $0.9 million during the same period last year.
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Selling, General, and Administrative ("SG&A")
The following table summarizes SG&A expenses by business segment:
Three months ended March 31,
(in thousands, except percentages)
2025 2024
Machine Clothing $ 32,881 $ 32,767
Albany Engineered Composites
10,126 11,540
Corporate expenses 10,805 10,528
Total
$ 53,812 $ 54,835
% of Net revenues 18.6 % 17.5 %
Consolidated SG&A expenses decreased 1.9% as compared to the first quarter of 2024, however, as a percentage of Net revenues, SG&A expenses increased from 17.5% in 2024 to 18.6% in 2025.
• MC SG&A expenses increased $0.1 million as compared to the first quarter of 2024, with a $3.1 million increase due to changes in currency translation rates, offset by a $3.0 million decrease in travel, service, and personnel-related costs.
• In AEC, SG&A expenses decreased $1.4 million, compared to the first quarter of 2024 primarily driven by lower incentive compensation and personnel-related costs.
• Corporate SG&A expenses increased $0.3 million, compared to the first quarter of 2024 principally due to higher incentive compensation and personnel-related costs, offset by a decrease in professional fees and smaller impact from changes in currency translation rates.
Technical and Research
The following table summarizes technical and research expenses by business segment:
Three months ended March 31,
(in thousands, except percentages)
2025 2024
Machine Clothing $ 7,243 $ 7,520
Albany Engineered Composites
3,674 5,145
Corporate expenses 979 —
Total
$ 11,896 $ 12,665
% of Net revenues 4.1 % 4.0 %
Consolidated Technical and research expenses decreased 6.1% as compared to the first quarter of 2024 and as a percentage of Net revenues increased from 4.0% in 2024 to 4.1% in 2025.
• MC Technical and research expenses decreased $0.3 million as compared to the first quarter of 2024 due to lower personnel and development related costs, in addition to increased allocated costs to Corporate.
• AEC Technical and research expenses decreased $1.5 million as compared to the first quarter of 2024, due to decreases in research material and labor costs, in addition to increased allocated costs to Corporate.
• Corporate expenses in the first quarter of 2025 relate primarily to new business ventures initiatives and allocated costs from MC and AEC in 2025.
Restructuring Expense, net
In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, Operating income was affected by Restructuring expense, net, of $2.5 million in the three months ended March 31, 2025, compared to $2.2 million in the first quarter of 2024.
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The following table summarizes Restructuring expenses, net by business segment:
Three months ended March 31,
(in thousands, except percentages) 2025 2024
Machine Clothing $ 1,347 $ 21
Albany Engineered Composites 1,168 2,188
Corporate expenses — —
Consolidated total $ 2,515 $ 2,209
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 related 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 and $2.2 million for the first three months of 2025 and 2024, respectively.
Operating Income
The following table summarizes operating income/(loss) by business segment:
Three months ended March 31,
(in thousands, except percentages) 2025 2024
Machine Clothing $ 38,431 $ 44,347
Albany Engineered Composites 1,616 5,158
Corporate expenses (11,784) (10,528)
Total $ 28,263 $ 38,977
% of Net revenues 9.8 % 12.4 %
Changes in operating income were primarily attributable to the drivers noted above.
Other Earnings Items
Three months ended March 31,
(in thousands) 2025 2024
Interest expense, net $ 3,655 $ 3,319
Other (income)/expense, net 983 (2,982)
Income tax expense 6,276 11,271
Net (loss)/income attributable to the noncontrolling interest
(6) 78
Interest Expense/(Income), net
Interest expense, net, increased over the prior year primarily due to higher average debt balances, in part offset by a larger amount of interest income earned on cash equivalents during the current year. See Note 14. Financial Instruments in the Notes to Consolidated Financial Statements for further discussion of borrowings and interest rates.
Other (Income)/Expense, net
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 losses of $1.3 million in the same period 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.
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Effective Income Tax Rate
Three months ended March 31,
2025 2024
Effective income tax rate 26.6 % 29.2 %
The Company has operations that constitute a taxable presence in 22 countries outside of the United States. The majority of these countries had income tax rates that were above the United States federal tax rate of 21 percent during the periods reported. The jurisdictional location of earnings is a significant component of our effective tax rate each year. The rate impact of this component is influenced by the specific location of non-U.S. earnings and the level of our total earnings. From period to period, the jurisdictional mix of earnings can vary as a result of operating fluctuations in the normal course of business, as well as the extent and location of other income and expense items, such as pension settlement and restructuring charges.
The tax rate is affected by recurring items, such as the income tax rate in the U.S. and non-U.S. jurisdictions and the mix of pre-tax income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign pre-tax earnings, and by discrete items that may occur in any given year but are not consistent from year to year. The Company’s effective tax rate for the first quarter of 2025 was 26.6%, lower compared to 29.2% for the same period in 2024, mainly due to favorable discrete tax adjustments in the current period exceeding favorable discrete tax adjustments in the prior period. For more information, see Note 6 , Income Taxes, in the Notes to the Consolidated Financial Statements.
The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15 percent intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. Although we do not expect these rules to materially increase our global tax costs in 2025, there remains uncertainty as to the final Pillar Two model rules. We will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.
Segment Results of Operations
Machine Clothing Segment
The MC segment accounted for 60% of our consolidated revenues during the three months ended March 31, 2025. A summary of selected financial results for MC is as follows:
Review of Operations
Three months ended March 31,
(in thousands, except percentages)
2025 2024
Net revenues $ 174,697 $ 185,217
Gross profit
79,902 84,655
% of Net revenues 45.7 % 45.7 %
SG&A expenses
32,881 32,767
Technical and research expenses
7,243 7,520
Operating income 38,431 44,347
Net Revenues
For the three months ended March 31, 2025, Net revenues decreased $10.5 million or 5.7% as compared to the the first quarter of 2024, driven by a decrease in publication, tissue and pulp grades. In addition, changes in currency translation rates had the effect of decreasing Net revenues $2.5 million.
Gross Profit
For the three months ended March 31, 2025, Gross profit decreased by $4.8 million, however the gross profit margin was unchanged at 45.7% for the first quarter of both 2024 and 2025.
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Operating Income
For the three months ended March 31, 2025, Operating income decreased as compared to the first three months of 2024, decreasing $5.9 million or 13.3%. The weaker Gross profit performance was slightly offset by lower Technical and Research expenses. SG&A expenses increased $0.1 million as compared to 2024, with a $3.1 million increase due to changes in currency translation rates, offset by a $3.0 million decrease in travel, service, and personnel-related costs. Technical and research expenses decreased $0.3 million as compared to 2024 due to lower personnel and development costs, along with an increase in allocated costs to Corporate. In addition, Restructuring expenses increased $1.3 million related to recent announcements to cease operations at multiple manufacturing facilities, further reducing Operating income.
Albany Engineered Composites ("AEC") Segment
The AEC segment accounted for 40% of our consolidated revenues during the three months ended March 31, 2025, respectively. A summary of selected financial results for AEC is as follows:
Review of Operations
Three months ended March 31,
(in thousands, except percentages)
2025 2024
Net revenues $ 114,077 $ 128,113
Gross profit
16,584 24,031
% of Net revenues 14.5 % 18.8 %
SG&A expenses
10,126 11,540
Technical and research expenses
3,674 5,145
Operating income 1,616 5,158
Net Revenues
For the three months ended March 31, 2025, Net revenues decreased 14.0 million or 11.0% as compared to the first quarter of 2024. This decrease is primarily driven by demand reductions on certain commercial and space programs, which was partially offset by higher revenues on CH-53K and other programs. Changes in currency translation rates had the effect of Net revenues $0.5 million.
AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 32 percent and 36 percent of segment revenue for the first three months of 2025 and 2024, respectively.
In addition, AEC has long-term contracts in which the selling price is fixed. In accounting for those contracts, we estimate the profit margin expected at the completion of the contract and recognize a pro-rata share of that profit during the course of the contract using a cost-to-cost approach. Changes in estimated contract profitability will affect revenue and gross profit when the change occurs, which could have a significant favorable or unfavorable effect on revenue and gross profit in any reporting period. 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. Contract losses are determined considering all direct and indirect contract costs, exclusive of any selling, general or administrative cost allocations, which are treated as period expenses. Expected losses on projects include losses on contract options that are probable of exercise, excluding profitable options that often follow.
Gross Profit
For the three months ended March 31, 2025, Gross profit decreased $7.4 million as compared to the same period last year, and as a percentage of revenues decreased from 18.8% in 2024 to 14.5% in 2025. This decrease in Gross profit was driven primarily by changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025 due to increased cost assumptions. For the three months ended March 31, 2024, adjustments in the estimated profitability of long-term contracts decreased Gross profit $0.9 million.
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Operating Income
For the three months ended March 31, 2025, Operating income decreased $3.5 million, principally due to reduced Gross profit as noted above. This was offset by a decrease in SG&A expenses of $1.4 million, primarily driven by decreased incentive compensation and personnel-related costs. Technical and research expenses decreased $1.5 million compared to the first quarter of 2024, attributable to decreases in research and material costs, combined with allocations to Corporate. Restructuring expenses decreased $1.0 million compared to the same period in the prior year.
Working Capital, Liquidity and Capital Structure
Cash Flow Summary
Three months ended March 31,
(in thousands)
2025 2024
Net income $ 17,349 $ 27,369
Depreciation and amortization 21,291 22,304
Changes in working capital (a) (25,847) (27,171)
Changes in other noncurrent liabilities and deferred taxes 2,532 (169)
Other operating items (13,206) (12,736)
Net cash provided by operating activities 2,119 9,597
Net cash used in investing activities (15,597) (26,880)
Net cash provided/used in financing activities
15,091 (28,069)
Effect of exchange rate changes on cash and cash equivalents 2,458 (2,656)
Decrease in cash and cash equivalents
4,071 (48,008)
Cash and cash equivalents at beginning of year 115,283 173,420
Cash and cash equivalents at end of period
$ 119,354 $ 125,412
(a) Includes Accounts receivable, Contract assets, Inventories, Accounts payable, and Accrued liabilities.
Net cash provided by operating activities during the first three months of 2025 was $2.1 million, compared to $9.6 million in the same period last year. The decrease was primarily driven by a reduction in the gross profit of both segments, resulting in a lower net income compared to the first three months of 2024. This was offset by a slightly lower change in working capital, along with favorable changes in other noncurrent liabilities and deferred taxes.
Net cash used in investing activities included capital expenditures totaling $15.6 million and $26.9 million for the first three months of 2025 and 2024, respectively, with investments focused on aerospace program support, continued maintenance capex and capital designed to improve operating efficiencies across the Company.
Net cash provided in financing activities was $15.1 million for the first three months of 2025 as compared to net cash used of $28.1 million for the first three months of 2024. The increase in net cash provided during 2025 was due to increased borrowings from the revolving credit facility and lesser principal payments on debt, partially offset by an increase in share repurchases.
Liquidity and Capital Structure
We finance our business activities principally with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below.
Under our $800 million unsecured committed Amended Credit Agreement, $416.4 million of borrowings were outstanding as of March 31, 2025. In addition, we have borrowings outstanding at our Heimbach subsidiary that are considered immaterial in the aggregate.
As of March 31, 2025, we had cash and cash equivalents of $119.4 million and available borrowings under our Amended Credit Agreement of $383.6 million, for a total liquidity of approximately $503.0 million. We believe cash flows from operations and the availability of funds under our Amended Credit Agreement will be adequate to fund our operations and business needs over the next twelve months. For more information on credit agreements, see Note 14. Financial Instruments in the Notes to Consolidated Financial Statements.
As of March 31, 2025, $88.4 million of our total cash and cash equivalents were held by non-U.S. subsidiaries. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were
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in excess of $140.0 million, as of March 31, 2025 and are intended to remain indefinitely invested in foreign operations. Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there can be no assurance that we will be able to cost effectively repatriate funds in the future. Repatriating such cash from certain jurisdictions, which is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes.
We have also returned cash to shareholders through dividends and share repurchases. During the first three months of 2025, we paid $8.4 million in dividends and repurchased 925,443 shares for a total cost of $69.2 million.
During the first quarter of 2025, the Company decided to consolidate headquarters in Portsmouth, NH. This change impacts approximately 100 employees, will take place over the next year and a half, and will cost an estimated $7.0 million over that period related to retention, relocation, severance, and professional costs.
Off-Balance Sheet Arrangements
The Company is party to certain off-balance sheet arrangements, including certain guarantees. The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $10 million. There were no material changes in the Company’s off-balance sheet arrangements during the first quarter of 2025.
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