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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net revenues $ 329,482 $ 311,399 $ 640,815 $ 600,173 Cost of goods sold 221,581 213,892 433,120 406,180 Gross profit 107,901 97,507 207,695 193,993 Selling, general, and administrative expenses 56,068 58,502 114,367 112,314 Technical and research expenses 11,722 12,552 24,679 24,448 Restructuring expenses, net 7,973 4,183 11,138 6,698 Operating income 32,138 22,270 57,511 50,533 Interest expense, net 6,068 5,150 11,535 8,805 Other expense/(income), net 39 3,534 ( 3,154 ) 4,517 Income before income taxes 26,031 13,586 49,130 37,211 Income tax expense 8,327 4,254 15,977 10,530 Net income 17,704 9,332 33,153 26,681 Net income attributable to the noncontrolling interest 290 149 458 143 Net income attributable to the Company $ 17,414 $ 9,183 $ 32,695 $ 26,538 Earnings per share attributable to Company shareholders - Basic $ 0.61 $ 0.31 $ 1.15 $ 0.87 Earnings per share attributable to Company shareholders - Diluted $ 0.61 $ 0.31 $ 1.14 $ 0.87 Shares of the Company used in computing earnings per share: Basic 28,361 29,928 28,341 30,373 Diluted 28,588 30,090 28,568 30,535 Dividends declared per Class A share $ 0.28 $ 0.27 $ 0.56 $ 0.54 The accompanying notes are an integral part of the consolidated financial statements 1 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 17,704 $ 9,332 $ 33,153 $ 26,681 Other comprehensive income, before tax: Foreign currency translation and other adjustments 2,492 40,149 ( 2,355 ) 53,272 Pension settlement/curtailment — ( 3,200 ) — ( 1,600 ) Amortization of pension liability adjustments: Prior service credit ( 39 ) ( 37 ) ( 78 ) ( 74 ) Net actuarial loss 366 306 734 593 Payments and amortization related to interest rate swaps included in earnings ( 153 ) ( 79 ) ( 286 ) ( 271 ) Derivative valuation adjustment 1,021 ( 101 ) 1,678 ( 594 ) Income taxes related to items of other comprehensive income: Pension settlement/curtailment — 844 — 422 Amortization of prior service credit 11 12 23 23 Amortization of net actuarial loss ( 97 ) ( 93 ) ( 213 ) ( 181 ) Payments and amortization related to interest rate swaps included in earnings 82 20 132 34 Derivative valuation adjustment ( 526 ) 38 ( 774 ) 74 Comprehensive income 20,861 47,191 32,014 78,379 Comprehensive income attributable to the noncontrolling interest 386 304 507 88 Comprehensive income attributable to the Company $ 20,475 $ 46,887 $ 31,507 $ 78,291 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) June 30, 2026 December 31, 2025 Assets Cash and cash equivalents $ 77,349 $ 112,350 Accounts receivable, net 252,133 235,084 Contract assets, net 77,287 87,102 Inventories 146,158 121,589 Income taxes prepaid and receivable 41,191 43,937 Prepaid expenses and other current assets 40,402 34,990 Assets held for sale 306,722 293,783 Total current assets 941,242 928,835 Property, plant and equipment, net 467,424 482,568 Intangibles, net 19,667 21,428 Goodwill 160,552 162,507 Deferred income taxes 66,319 68,499 Other assets 56,161 54,872 Total assets $ 1,711,365 $ 1,718,709 Liabilities and Shareholders' Equity Accounts payable $ 75,075 $ 64,499 Accrued liabilities 133,829 139,385 Income taxes payable 24,524 35,090 Liabilities held for sale 187,108 203,323 Total current liabilities 420,536 442,297 Long-term debt 450,669 455,663 Other noncurrent liabilities 85,983 86,850 Deferred income taxes 2,088 1,797 Total liabilities 959,276 986,607 Commitments and Contingencies (Note 17) 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; 41,056,929 issued in 2026 and 40,989,106 in 2025 41 41 Additional paid in capital 464,148 460,472 Retained earnings 993,170 976,373 Accumulated items of other comprehensive income: Translation adjustments ( 121,743 ) ( 119,008 ) Pension and postretirement liability adjustments ( 23,065 ) ( 23,911 ) Derivative valuation adjustment 131 ( 619 ) Treasury stock (Class A), at cost; 12,685,782 shares in 2026 and 12,685,782 in 2025 ( 566,993 ) ( 567,139 ) Total shareholders' equity 745,689 726,209 Noncontrolling interest 6,400 5,893 Total equity 752,089 732,102 Total liabilities and shareholders' equity $ 1,711,365 $ 1,718,709 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) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net income $ 33,153 $ 26,681 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 32,853 40,085 Amortization 1,294 2,957 Change in deferred taxes 2,179 ( 2,761 ) Loss/(gain) on disposal of property, plant and equipment 324 ( 66 ) Non-cash interest expense 515 513 Compensation and benefits paid or payable in Class A Common Stock 5,009 3,654 Provision/(recovery) for credit losses from uncollected receivables and contract assets ( 101 ) 1,021 Foreign currency remeasurement loss/(gain) on intercompany loans ( 3,788 ) 7,171 Gain on sale of assets — ( 1,566 ) Changes in operating assets and liabilities that provided/(used) cash: Accounts receivable ( 12,899 ) ( 4,490 ) Contract assets ( 8,778 ) ( 15,329 ) Inventories ( 22,912 ) ( 8,179 ) Prepaid expenses and other current assets ( 5,195 ) ( 2,565 ) Income taxes prepaid and receivable 2,769 743 Accounts payable 14,488 26,878 Accrued liabilities ( 23,259 ) ( 23,314 ) Income taxes payable ( 11,034 ) ( 17,191 ) Noncurrent receivables — ( 201 ) Other noncurrent liabilities 288 ( 2,927 ) Other, net ( 1,914 ) 3,719 Net cash provided by operating activities 2,992 34,833 Cash flows from investing activities: Purchases of property, plant and equipment ( 21,170 ) ( 29,526 ) Purchased software ( 12 ) ( 1,005 ) Proceeds received from sale of assets — 3,243 Proceeds from sale of investment 1,660 — Net cash used in investing activities ( 19,522 ) ( 27,288 ) Cash flows from financing activities: Proceeds from borrowings 83,000 171,995 Repayment of borrowings ( 85,000 ) ( 58,046 ) Purchase of Treasury shares — ( 120,448 ) Taxes paid in lieu of share issuance ( 1,333 ) ( 1,316 ) Dividends paid ( 15,867 ) ( 16,693 ) Net cash used in financing activities ( 19,200 ) ( 24,508 ) Effect of exchange rate changes on cash and cash equivalents 729 8,369 Decrease in cash and cash equivalents ( 35,001 ) ( 8,594 ) Cash and cash equivalents at beginning of period 112,350 115,283 Cash and cash equivalents at end of period $ 77,349 $ 106,689 4 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) (unaudited) Supplemental disclosure of cash flow information: Cash paid for interest, net $ 12,451 $ 10,710 Cash paid for income taxes $ 23,056 $ 26,278 The accompanying notes are an integral part of the consolidated financial statements 5 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 normally required for the annual financial statements prepared in accordance with 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, 2025. 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 credit losses, rebates and sales allowances, inventory allowances, financial instruments, including derivatives, pension and other postretirement benefits, stock-based compensation, assets and liabilities held-for-sale, 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 Not Yet Adopted In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements. The ASU clarifies the applicability of Topic 270 and the form and content of interim financial statements. In addition, it requires entities to disclose material events occurring since the last annual reporting period. The guidance will be effective for interim periods beginning January 1, 2028 and can be applied on a prospective or retrospective basis. We are evaluating the disclosure impact of this guidance; however, the standard will not have an impact on the company’s consolidated financial position, results of operations or cash flows. In November 2025, the FASB issued ASU No. 2025‑09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The ASU makes targeted amendments to hedge accounting guidance intended to better align hedge accounting results with an entity’s risk management activities, including changes related to cash flow hedges, forecasted transactions, and certain debt‑related hedging strategies. The guidance is effective for the Company for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU No. 2025-06 to improve the accounting for costs related to internal-use software. The new guidance eliminates project stages and requires capitalizing software costs to begin when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. Additionally, disclosures for property, plant and equipment will be required for all capitalized software costs. The guidance is effective in the first quarter of 2028 with early adoption permitted as of the beginning of an annual reporting period. Upon adoption, the guidance may be applied prospectively, retrospectively or using a modified transition approach. We are evaluating the impact of this guidance on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03 to improve the disclosure of expenses in commonly presented expense captions. The new guidance requires a public entity to provide tabular disclosure, on an annual and interim basis, of amounts for the following expense categories: (1) purchases of inventory, (2) employee compensation, (3) depreciation and (4) intangible asset amortization, as included in each relevant expense caption. Additionally, on an 6 Index annual and interim basis, a qualitative description is required for amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. A relevant expense caption is an expense caption presented on the face of the income statement that contains any of the expense categories noted. The guidance also requires certain amounts that are currently required to be disclosed to be included in the same tabular disclosure as these disaggregation requirements. Furthermore, on an annual and interim basis, a public entity is required to separately disclose selling expenses and annually, disclose a description of the selling expenses. The guidance is effective for 2027 annual reporting, and in the first quarter of 2028 for interim reporting, with early adoption permitted, to be applied on a prospective basis, with retrospective application permitted. We are evaluating the impact of this guidance on our consolidated financial statements. 2. Reportable Segments The Company is organized based on the nature of its products and is composed of two reportable segments, Machine Clothing ("MC") and Albany Engineered Composites ("AEC"), each overseen by a segment president. These segments are reflective of how the Company's Chief Executive Officer, who is its Chief Operating 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. The Company has not aggregated operating segments for purposes of identifying reportable segments. 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 are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure. Albany Engineered Composites: The Albany Engineered Composites segment provides highly engineered, advanced composite solutions 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. 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, 2025, approximately 35 % of AEC's revenues were related to U.S. government contracts or programs. The following tables show data by reportable segment that is regularly provided to the CODM, reconciled to consolidated totals included in the financial statements along with other segment data: Reconciliation of Net Revenues to Operating Income(loss): Three Months Ended June 30, 2026 (in thousands) MC AEC Corporate Total Net revenues $ 178,710 $ 150,772 $ — $ 329,482 Cost of goods sold 97,763 123,818 — 221,581 Gross profit 80,947 26,954 — 107,901 Selling, general and administrative expenses 33,490 11,315 11,263 56,068 Technical and research expenses 6,363 4,210 1,149 11,722 Restructuring expenses, net 6,389 — 1,584 7,973 Operating income/(loss) $ 34,705 $ 11,429 $ ( 13,996 ) $ 32,138 7 Index Three Months Ended June 30, 2025 (in thousands) MC AEC Corporate Total Net revenues $ 180,926 $ 130,473 $ — $ 311,399 Cost of goods sold 97,167 116,725 — 213,892 Gross profit 83,759 13,748 — 97,507 Selling, general and administrative expenses 35,669 11,777 11,056 58,502 Technical and research expenses 7,373 4,125 1,054 12,552 Restructuring expenses, net 3,015 520 648 4,183 Operating income/(loss) $ 37,702 $ ( 2,674 ) $ ( 12,758 ) $ 22,270 Six Months Ended June 30, 2026 (in thousands) MC AEC Corporate Total Net revenues $ 344,662 $ 296,153 $ — $ 640,815 Cost of goods sold 188,653 244,467 — 433,120 Gross profit 156,009 51,686 — 207,695 Selling, general and administrative expenses 66,739 22,901 24,727 114,367 Technical and research expenses 13,548 8,758 2,373 24,679 Restructuring expenses, net 9,065 — 2,073 11,138 Operating income/(loss) $ 66,657 $ 20,027 $ ( 29,173 ) $ 57,511 Six Months Ended June 30, 2025 (in thousands) MC AEC Corporate Total Net revenues $ 355,623 $ 244,550 $ — $ 600,173 Cost of goods sold 191,962 214,218 — 406,180 Gross profit 163,661 30,332 — 193,993 Selling, general and administrative expenses 68,550 21,903 21,861 112,314 Technical and research expenses 14,616 7,799 2,033 24,448 Restructuring expenses, net 4,362 1,688 648 6,698 Operating income/(loss) $ 76,133 $ ( 1,058 ) $ ( 24,542 ) $ 50,533 Schedule of Depreciation and Amortization Expenses: Three months ended June 30, Six months ended June 30, (in thousands) 2026 2025 2026 2025 Depreciation and amortization Machine Clothing $ 8,422 $ 7,973 $ 16,724 $ 15,679 Albany Engineered Composites 8,561 13,455 17,350 26,750 Corporate 35 323 73 613 Consolidated depreciation and amortization $ 17,018 $ 21,751 $ 34,147 $ 43,042 As a result of the Amelia Earhart Drive facility meeting the held-for-sale accounting criteria, the facility's assets and liabilities were classified as held-for-sale in the consolidated balance sheets as of December 31, 2025 and June 30, 2026. Upon classification as held for sale, the Company ceased depreciation and amortization of the related long-lived assets in accordance with applicable accounting guidance. Reconciliation of Operating Income/(loss) to Income before income taxes: Three months ended June 30, Six months ended June 30, (in thousands) 2026 2025 2026 2025 Consolidated Operating income/(loss) $ 32,138 $ 22,270 $ 57,511 $ 50,533 Reconciling items: Interest income ( 693 ) ( 1,405 ) ( 1,575 ) ( 3,043 ) Interest expense 6,761 6,555 13,110 11,848 Other (income)/expense, net 39 3,534 ( 3,154 ) 4,517 Income before income taxes $ 26,031 $ 13,586 $ 49,130 $ 37,211 8 Index The following table presents assets by reportable segment: (in thousands) June 30, 2026 December 31, 2025 Segment assets Machine Clothing $ 683,630 $ 618,476 Albany Engineered Composites 439,591 491,802 Reconciling items: Cash 77,349 112,350 Income taxes prepaid and receivable, and Deferred income taxes 107,510 112,436 Prepaid expenses and other current assets, and Other assets 96,563 89,862 Assets held for sale $ 306,722 $ 293,783 Consolidated total assets 1,711,365 1,718,709 The following table presents capital expenditures by reportable segment: Six months ended June 30, (in thousands) 2026 2025 Capital expenditures and purchased software Machine Clothing $ 11,112 $ 13,010 Albany Engineered Composites 8,337 17,521 Corporate 1,733 — Total capital expenditures and purchased software $ 21,182 $ 30,531 3. 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. The LEAP engine is used on the Airbus A320neo, A321neo, Boeing 737 MAX, and COMAC C919 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) were $ 53.8 million and $ 44.4 million for the three months ended June 30, 2026 and 2025, respectively and $ 102.1 million and $ 83.8 million for the six months ended June 30, 2026 and 2025. The total of Accounts receivable and Contract assets due from SAFRAN amounted to $ 53.4 million and $ 60.8 million as of June 30, 2026 and December 31, 2025, respectively. 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 projections, 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 revenue by $ 2.7 million during the second quarter of 2026 and $ 1.5 million for the first six months of 2026. The cumulative changes in the estimated profitability of long-term contracts increased operating income by $ 0.2 million during the second quarter of 2026 and decreased operating income by $ 1.6 million for the six months ended June 30, 2026. The increase in profitability during the second quarter of 2026 was primarily driven by a few large complex programs, including adjustments of $ 0.9 million for various CH-53K programs, primarily based on changes to future overhead rates over the remainder of the contract. The decrease in profitability during the six months ended June 30, 2026 was primarily driven by a few large complex programs, including adjustments of $ 2.2 million for various CH-53K programs, primarily based on changes to future overhead rates over the remainder of the contract. 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 June 30, 2026: 9 Index Three months ended June 30, 2026 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 177,658 $ 1,052 $ 178,710 Albany Engineered Composites: ASC — 52,249 52,249 Other AEC 4,035 94,488 98,523 Total Albany Engineered Composites $ 4,035 $ 146,737 $ 150,772 Total revenues $ 181,693 $ 147,789 $ 329,482 The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2025: Three months ended June 30, 2025 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 179,904 $ 1,022 $ 180,926 Albany Engineered Composites: ASC — 44,846 44,846 Other AEC 3,060 82,567 85,627 Total Albany Engineered Composites $ 3,060 $ 127,413 $ 130,473 Total revenues $ 182,964 $ 128,435 $ 311,399 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: Six months ended June 30, 2026 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 342,558 $ 2,104 $ 344,662 Albany Engineered Composites: ASC — 99,358 99,358 Other AEC 7,044 189,751 196,795 Total Albany Engineered Composites $ 7,044 $ 289,109 $ 296,153 Total revenues $ 349,602 $ 291,213 $ 640,815 10 Index Six months ended June 30, 2025 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 353,580 $ 2,043 $ 355,623 Albany Engineered Composites: ASC — 83,766 83,766 Other AEC 7,137 153,647 160,784 Total Albany Engineered Composites $ 7,137 $ 237,413 $ 244,550 Total revenues $ 360,717 $ 239,456 $ 600,173 Three months ended June 30, Six months ended June 30, (in thousands) 2026 2025 2026 2025 Americas PMC $ 82,735 $ 87,488 $ 158,844 $ 170,334 Eurasia PMC 77,294 71,161 147,050 139,358 Engineered Fabrics 18,681 22,277 38,768 45,931 Total Machine Clothing Net revenues $ 178,710 $ 180,926 $ 344,662 $ 355,623 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 $ 977.5 million related primarily to firm fixed price contracts in the AEC segment. Of the remaining performance obligations as of June 30, 2026, we expect to recognize as revenue approximately $ 81.7 million during 2026, $ 191.4 million during 2027, $ 153.4 million during 2028, and the remainder thereafter. 4 . 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 six months ended June 30, 2026 and 2025, was as follows: Pension plans Other postretirement benefits (in thousands) 2026 2025 2026 2025 Components of net periodic benefit cost/(income): Service cost $ 475 $ 552 $ 19 $ 20 Interest cost 3,049 2,947 663 707 Expected return on assets ( 1,407 ) ( 2,250 ) — — Curtailment cost/(income) — ( 3,770 ) — — Settlement cost/(income) — 2,170 — — Amortization of prior service cost/(income) ( 17 ) ( 13 ) ( 61 ) ( 61 ) Amortization of net actuarial loss 726 609 8 ( 16 ) Net periodic benefit cost $ 2,826 $ 245 $ 629 $ 650 The amount of net periodic benefit cost/(credit) is determined at the beginning of each year and generally only varies from quarter to quarter when a significant event occurs, such as a curtailment or a settlement. There were no material curtailments or settlements during the six months ended June 30, 2026. In the first six months of 2025, we took action 11 Index to settle certain pension plan liabilities related to an MC pension plan in Switzerland, resulting in a net gain totaling $ 1.6 million. Service cost for defined benefit pension and postretirement plans is 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. 5. Restructuring At MC, restructuring actions were taken in 2026 and 2025 to consolidate production activities across multiple facilities. For the three and six months ended June 30, 2026, restructuring expenses were related to transfers of fixed assets to other locations including overseas, workforce reductions, and manufacturing expenses related to ceased production. For the three months ended June 30, 2025, these actions were related to workforce reductions of $ 3.0 million. For the six months ended June 30, 2025, restructuring charges were related to workforce reductions, fixed asset impairments and related costs and inventory write-off costs of $ 6.1 million offset by a $ 1.8 million pension curtailment gain. At AEC, restructuring activities in prior year were related to reorganizational and workforce reduction costs, which resulted in restructuring expenses of $ 0.5 million and $ 1.7 million for the three and six months ended June 30, 2025, respectively. AEC did not incur any restructuring costs for the three and six months ended June 30, 2026. The following table summarizes charges reported in the Consolidated Statements of Income under "Restructuring expenses, net" and "Cost of goods sold": Three months ended June 30, Six months ended June 30, (in thousands) 2026 2025 2026 2025 Machine Clothing $ 6,389 $ 3,015 $ 9,065 $ 4,618 Albany Engineered Composites — 520 — 1,688 Corporate 1,584 648 2,073 648 Total $ 7,973 $ 4,183 $ 11,138 $ 6,954 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": Six months ended June 30, 2026 Total restructuring costs incurred Termination and other costs Asset Transfer Costs (in thousands) Machine Clothing $ 9,065 $ 4,665 $ 4,400 Albany Engineered Composites — — — Corporate 2,073 2,073 — Total $ 11,138 $ 6,738 $ 4,400 Six months ended June 30, 2025 Total restructuring costs incurred Termination and other costs Impairment of assets Pension Curtailment (Gain)/Loss (in thousands) Machine Clothing $ 4,618 $ 5,655 $ 723 $ ( 1,760 ) Albany Engineered Composites 1,688 1,688 — — Corporate 648 648 — — Total $ 6,954 $ 7,991 $ 723 $ ( 1,760 ) 12 Index The table below presents the year-to-date changes in restructuring liabilities for 2026 and 2025: (in thousands) December 31, 2025 Restructuring charges accrued Payments and other June 30, 2026 Total restructuring and other liabilities $ 2,766 $ 11,138 $ ( 12,433 ) $ 1,471 (in thousands) December 31, 2024 Restructuring charges accrued Payments and other June 30, 2025 Total restructuring and other liabilities $ 4,996 $ 7,991 $ ( 8,441 ) $ 4,546 6. Other (Income)/Expense, net The components of Other (income)/expense, net are: Three months ended June 30, Six months ended June 30, (in thousands) 2026 2025 2026 2025 Currency transaction losses/(gains) $ ( 539 ) $ 5,654 $ ( 2,691 ) $ 8,806 Derivative instruments losses/(gains) ( 236 ) ( 735 ) ( 1,454 ) ( 3,261 ) Components of net periodic pension and postretirement cost other than service cost 1,478 ( 498 ) 2,961 323 Other losses/(gains) ( 664 ) ( 887 ) ( 1,970 ) ( 1,351 ) Total other (income)/expense, net $ 39 $ 3,534 $ ( 3,154 ) $ 4,517 Currency transaction losses/(gains), included within other (income)/expense, net were primarily the result of both realized and unrealized losses/(gains) on intercompany loans. In addition, changes in the fair value of derivative instruments included gains driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. 7. Income Taxes The Company's effective income tax rate for the three and six months ended June 30, 2026 and 2025, is as follows: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Effective income tax rate 32.0 % 31.3 % 32.5 % 28.3 % Income tax expense for the quarter was computed in accordance with ASC 740-270, Income Taxes – Interim Reporting. Under this method, loss jurisdictions subject to valuation allowances cannot recognize a tax benefit with regard to their generated losses and are excluded from the annual effective tax rate calculation as their taxes will be recorded discretely in each quarter. Our 2026 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 32.5 % and 28.3 % for the six months ended June 30, 2026 and 2025, respectively. The effective rate for the six months ended June 30, 2026 was higher than the effective tax rate for the six months ended June 30, 2025, primarily due to unfavorable discrete tax items recognized in the current year, partially offset by favorable discrete tax items in the current year. The Company is subject to audit in the U.S. and various foreign jurisdictions. Our open tax years for major jurisdictions generally range from 2020-2025. 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. 13 Index 8. 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 June 30, Six months ended June 30, (in thousands, except earnings per share) 2026 2025 2026 2025 Net income attributable to the Company $ 17,414 $ 9,183 $ 32,695 $ 26,538 Weighted average number of shares: Weighted average number of shares used in calculating basic net income per share 28,361 29,928 28,341 30,373 Effect of dilutive stock-based compensation plans: Restricted stock units and multi-year awards 227 162 227 162 Weighted average number of shares used in calculating diluted net income per share 28,588 30,090 28,568 30,535 Net income attributable to the Company per share: Basic $ 0.61 $ 0.31 $ 1.15 $ 0.87 Diluted $ 0.61 $ 0.31 $ 1.14 $ 0.87 9. Accumulated Other Comprehensive Income ("AOCI") The table below presents changes in the components of AOCI for the period from December 31, 2025 to June 30, 2026: (in thousands) Translation adjustments Pension and postretirement liability adjustments Derivative valuation adjustment Total Accumulated Other Comprehensive Income/(Loss) December 31, 2025 $ ( 119,008 ) $ ( 23,911 ) $ ( 619 ) $ ( 143,538 ) Foreign currency translation and other adjustments ( 2,735 ) 380 904 ( 1,451 ) Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income/(Loss), net of tax — — ( 154 ) ( 154 ) Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income/(Loss), net of tax — 466 — 466 Net current period other comprehensive income/(loss) ( 2,735 ) 846 750 ( 1,139 ) June 30, 2026 $ ( 121,743 ) $ ( 23,065 ) $ 131 $ ( 144,677 ) 14 Index The table below presents changes in the components of AOCI for the period from December 31, 2024 to June 30, 2025: (in thousands) Translation adjustments Pension and postretirement liability adjustments Derivative valuation adjustment Total Accumulated Other Comprehensive Income/(Loss) December 31, 2024 $ ( 181,555 ) $ ( 14,328 ) $ ( 106 ) $ ( 195,989 ) Foreign currency translation and other adjustments 55,971 ( 2,699 ) ( 520 ) 52,752 Pension settlement expense, net of tax — ( 1,178 ) — ( 1,178 ) Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income/(Loss), net of tax — — ( 237 ) ( 237 ) Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income/(Loss), net of tax — 360 — 360 Net current period other comprehensive income/(loss) 55,971 ( 3,517 ) ( 757 ) 51,697 June 30, 2025 $ ( 125,584 ) $ ( 17,845 ) $ ( 863 ) $ ( 144,292 ) The components of AOCI that are reclassified to the Consolidated Statements of Income/(Loss) 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/(Loss) that were affected for the three and six months ended June 30, 2026, and the Consolidated Statements of Income/(Loss) for the three and six months ended June 30, 2025: Three months ended June 30, Six months ended June 30, (in thousands) 2026 2025 2026 2025 Pre-tax Derivative valuation reclassified from Accumulated Other Comprehensive Income/(Loss): Interest (income)/expense, net related to interest rate swaps included in Income/(loss) before taxes (a) $ ( 153 ) $ ( 79 ) $ ( 286 ) $ ( 271 ) Income tax effect 82 20 132 34 Effect on net income due to items reclassified from Accumulated Other Comprehensive Income/(Loss) $ ( 71 ) $ ( 59 ) $ ( 154 ) $ ( 237 ) Pre-tax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income: Pension settlement/curtailment $ — $ ( 3,200 ) $ 0 $ ( 1,600 ) Amortization of prior service credit $ ( 39 ) $ ( 37 ) $ ( 78 ) $ ( 74 ) Amortization of net actuarial loss 366 306 734 593 Total pre-tax amount reclassified (b) 327 ( 2,931 ) 656 ( 1,081 ) Income tax effect ( 86 ) 763 ( 190 ) 264 Effect on net income due to items reclassified from Accumulated Other Comprehensive Income $ 241 $ ( 2,168 ) $ 466 $ ( 817 ) (a) Reported as Interest expense, net in our Consolidated Statements of Income, are payments related to the interest rate swap agreements and amortization of swap buyouts (see Note 15, Financial Instruments , and Note 16, Fair-Value Measurements , of the Notes to the Consolidated Financial Statements). (b) Reported as Other (income)/expense, net in our Consolidated Statements of Income, the accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 4, Pension, Postretirement, and Other Benefit Plans , of the Notes to the Consolidated Financial Statements). 10. Noncontrolling Interest Effective October 31, 2013, Safran S.A. (Safran) acquired a 10 percent equity interest in Albany Safran Composites, LLC ("ASC"). 15 Index 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. On April 1, 2025, Heimbach sold its 85 % controlling interest in Arcari to the minority shareholder and recorded a gain of $ 1.6 million included in Other (income) expense on the sale. In connection with the sale, the corresponding value of the noncontrolling interest was reduced to zero . The Company did not retain any ownership in Arcari as a result of the sale and accordingly there was no impact on operating results during the three and six months ended June 30, 2026. The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiaries: ASC Noncontrolling Interest Six months ended June 30, (in thousands, except percentages) 2026 2025 Net income of Albany Safran Composites (ASC) $ 5,442 $ 3,175 Less: Return attributable to the Company's preferred holding 859 892 Net income of ASC available for common ownership $ 4,583 $ 2,283 Ownership percentage of noncontrolling shareholder 10 % 10 % Net income attributable to the noncontrolling interest $ 458 $ 228 Noncontrolling interest, beginning of year $ 5,893 $ 4,983 Net income attributable to noncontrolling interest 458 228 Changes in other comprehensive income attributable to the noncontrolling interest 49 286 ASC Noncontrolling interest, end of interim period $ 6,400 $ 5,497 Arcari Noncontrolling interest, end of interim period $ 0 $ — Total Noncontrolling interest, end of interim period $ 6,400 $ 5,497 11. 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 June 30, 2026 and December 31, 2025, Accounts receivable consisted of the following: (in thousands) June 30, 2026 December 31, 2025 Trade and other accounts receivable $ 237,576 $ 221,592 Bank promissory notes 18,165 17,844 Allowance for expected credit losses ( 3,608 ) ( 4,352 ) Accounts receivable, net $ 252,133 $ 235,084 12. 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 June 30, 2026 and December 31, 2025, Contract assets and Contract liabilities consisted of the following: 16 Index (in thousands) June 30, 2026 December 31, 2025 Contract assets $ 77,758 $ 87,573 Allowance for expected credit losses ( 471 ) ( 471 ) Contract assets, net $ 77,287 $ 87,102 Contract liabilities $ 36,585 $ 33,397 Contract assets, net decreased $ 9.8 million during the six months ended June 30, 2026, primarily due to a decrease in unbilled revenue related to commercial and defense programs. There were no impairment losses related to our Contract assets during the six months ended June 30, 2026 and June 30, 2025. Contract liabilities increased $ 3.2 million for the period ended June 30, 2026 compared to December 31, 2025, primarily due to amounts invoiced to customers for contracts that were in a contract liability position exceeding the revenue recognition from satisfied performance obligations. Revenue recognized for the six months ended June 30, 2026 and 2025 that was included in the Contract liability balance at the beginning of the year was $ 20.8 million and $ 4.8 million, respectively. 13. Inventories As of June 30, 2026 and December 31, 2025, Inventories consisted of the following: (in thousands) June 30, 2026 December 31, 2025 Raw materials $ 69,844 $ 60,311 Work in process 57,326 46,952 Finished goods 18,988 14,326 Total inventories $ 146,158 $ 121,589 14. 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 June 30, 2026 and December 31, 2025: June 30, 2026 (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 $ ( 208 ) $ — AEC Technology 10 - 15 6,356 ( 4,311 ) 2,045 AEC Intellectual property 15 1,250 ( 548 ) 702 AEC Customer relationships 8 - 15 69,465 ( 64,753 ) 4,712 Heimbach Developed technology 9 8,751 ( 2,815 ) 5,936 Total Finite-lived intangible assets $ 86,030 $ ( 72,635 ) $ 13,395 Indefinite-lived intangible assets: Heimbach Trade name $ 6,272 $ — $ 6,272 MC Goodwill 68,482 — 68,482 AEC Goodwill 113,899 ( 21,829 ) 92,070 Total Indefinite-lived intangible assets: $ 188,653 $ ( 21,829 ) $ 166,824 17 Index December 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 $ ( 208 ) $ — AEC Technology 10 - 15 6,530 ( 4,114 ) 2,416 AEC Intellectual property 15 1,250 ( 505 ) 745 AEC Customer relationships 8 - 15 69,560 ( 64,331 ) 5,229 Heimbach Developed technology 9 9,291 ( 2,709 ) 6,582 Total Finite-lived assets $ 86,839 $ ( 71,867 ) $ 14,972 Indefinite-lived intangible assets: Heimbach Trade name $ 6,456 $ — $ 6,456 MC Goodwill 69,911 — 69,911 AEC Goodwill 114,428 ( 21,832 ) 92,596 Total Indefinite-lived intangible assets: $ 190,795 $ ( 21,832 ) $ 168,963 As of June 30, 2026 and December 31, 2025, $ 13.4 million of finite-lived assets and $ 21.8 million of AEC goodwill related to the Amelia Earhart Drive facility were reclassified to held for sale. The changes in intangible assets, net and goodwill from December 31, 2025 to June 30, 2026, were as follows: (in thousands) December 31, 2025 Amortization Currency Translation June 30, 2026 Finite-lived intangible assets: AEC Trademarks and trade names $ — $ — $ — $ — AEC Technology 2,416 ( 299 ) ( 72 ) 2,045 AEC Intellectual property 745 ( 43 ) — 702 AEC Customer relationships 5,229 ( 472 ) ( 45 ) 4,712 Heimbach Developed technology 6,582 ( 480 ) ( 166 ) 5,936 Total Finite-lived intangible assets $ 14,972 $ ( 1,294 ) $ ( 283 ) $ 13,395 Indefinite-lived intangible assets: Heimbach Trade name $ 6,456 $ — $ ( 184 ) $ 6,272 MC Goodwill 69,911 — ( 1,429 ) 68,482 AEC Goodwill 92,596 — ( 526 ) 92,070 Total Indefinite-lived assets: $ 168,963 $ — $ ( 2,139 ) $ 166,824 Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually. 15. Financial Instruments The following table represents the Company's outstanding debt: (in thousands, except interest rates) June 30, 2026 December 31, 2025 Borrowings under the Amended Credit Agreement USD borrowings $ 348,000 $ 350,000 EUR borrowings 102,669 105,663 Total bank debt 450,669 455,663 Less: Current maturities of long-term debt — — Long-term debt $ 450,669 $ 455,663 18 Index 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 June 30, 2026, 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 1.625 %. As of June 30, 2026, there was $ 450.7 million of borrowings outstanding under the Amended Credit Agreement and we had borrowings available of $ 349.3 million, based on our maximum leverage ratio and our Consolidated EBITDA (as defined in the Amended Credit Agreement). As of June 30, 2026 and December 31, 2025, the USD interest rate in effect was 5.48 % and 5.56 %, respectively, including the effect of interest rate swaps; at the end of June 30, 2026 and December 31, 2025, the EUR interest rate in effect was 3.83 % and 3.73 %, respectively, including the effect of interest rate swaps. 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 June 30, 2026, our leverage ratio wa s 1.71 to 1.00 and our interest coverage ratio was 8.07 to 1.00. As of June 30, 2026, 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 reference rate component of future interest payments associated with outstanding borrowings under the Company’s Amended Credit Agreement. On April 15, 2026, the Company entered into a USD and a EUR forward starting interest rate swap agreement with starting dates of November 15, 2026 and November 14, 2026, respectively. These instruments are intended to replace the Company's existing interest rate swap agreements upon their maturity on those same dates and are entered into for the purpose of managing the Company's exposure to variability in cash flows attributable to changes in benchmark interest rates. Changes in fair value during the forward period, from the trade date through the respective starting dates, will be recorded in other comprehensive income (loss). The USD forward starting interest rate swap agreement has a three-year tenor and matures on November 15, 2029. The swap has the effect of fixing the SOFR portion of the interest rate on $ 80 million of USD indebtedness drawn under the Amended Credit Facility. Under this interest rate swap agreement, the Company pays a fixed rate of 3.516 % and the counterparty pays a floating rate based on the one-month term SOFR rate, reset monthly. The EUR forward starting interest rate swap agreement has a three-year tenor and matures on November 14, 2029. The swap has the 19 Index effect of fixing the EURIBOR portion of the interest rate on € 25 million of EUR indebtedness drawn under the Amended Credit Facility. Under this agreement, the Company pays a fixed rate of 2.602 % and the counterparty pays a floating rate based on the one-month EURIBOR rate, reset monthly. 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. These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 16, Fair-Value Measurements . No cash collateral was received or pledged in relation to the swap agreements. 16. 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 June 30, 2026 or at December 31, 2025, other than certain pension assets as indicated in our December 31, 2025 Annual Report on Form 10-K. Debt is carried at cost, which approximates fair value. 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: June 30, 2026 December 31, 2025 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 $ 11,404 $ — $ 10,584 $ — Other Assets: Common stock of unaffiliated foreign public company (a) — — 1,098 — Interest rate swaps — 629 — 768 Liabilities: Foreign currency option contracts — 340 — — (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. 20 Index 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 are recorded as a component of Derivative valuation adjustment in the Shareholders’ equity section of the Consolidated Balance Sheets. As of June 30, 2026, 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 $( 0.3 ) million for the six months ended June 30, 2026 and $( 0.3 ) million for the six months ended June 30, 2025. 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 June 30, Six months ended June 30, (in thousands) 2026 2025 2026 2025 Derivatives not designated as hedging instruments: Foreign currency options (gains)/losses $ ( 91 ) $ ( 735 ) $ ( 1,174 ) $ ( 3,261 ) 17. 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 3,660 claims as of June 30, 2026. 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 Twelve months ended December 31, 2025 3,646 28 59 3,677 $ 173 Six months ended June 30, 2026 3,677 37 20 3,660 $ 40 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 21 case and funded settlements under a standard reservation of rights. As of June 30, 2026, we had resolved, by means of settlement or dismissal, 38,116 claims at a total cost of $ 10.9 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 June 30, 2026, 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. 18. Changes in Shareholders’ Equity The following tables summarize changes in Shareholders’ Equity for the three and six month periods ended June 30, 2026: 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 March 31, 2026 41,041 41 460,629 983,704 ( 147,834 ) 12,686 ( 567,139 ) 6,014 735,415 Net income — — — 17,414 — — — 290 17,704 Stock issued under incentive compensation plans 1 — — — — — — — — Taxes paid in lieu of share issuance — — ( 30 ) — — — — — ( 30 ) Stock-based compensation — — 2,667 — — — — — 2,667 Shares issued to Directors 15 — 882 — — — — — 882 Purchase of Treasury shares — — — — — — — — — Share repurchase excise tax adjustment — — — — — — 146 — 146 Dividends declared on Class A Common Stock, $ 0.28 per share — — — ( 7,944 ) — — — — ( 7,944 ) Dividends paid to noncontrolling interests — — — — — — — — — Cumulative translation adjustments — — — 2,471 — — 96 2,567 Pension and postretirement liability adjustments — — — 262 — — — 262 Derivative valuation adjustment and other — — — ( 4 ) 424 — — — 420 June 30, 2026 41,057 41 464,148 993,170 ( 144,677 ) 12,686 ( 566,993 ) 6,400 752,089 22 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, 2025 40,989 $ 41 $ 460,472 $ 976,373 $ ( 143,538 ) 12,686 $ ( 567,139 ) $ 5,893 $ 732,102 Net income — — — 32,695 — — — 458 33,153 Stock issued under incentive compensation plans 53 — — — — — — — — Taxes paid in lieu of share issuance — — ( 1,333 ) — — — — — ( 1,333 ) Stock-based compensation — — 4,127 — — — — — 4,127 Shares issued to Directors 15 — 882 — — — — — 882 Share repurchase excise tax adjustment — — — — — — 146 — 146 Dividends declared on Class A Common Stock, $ 0.56 per share — — — ( 15,883 ) — — — — ( 15,883 ) Cumulative translation adjustments — — — — ( 2,735 ) — — 49 ( 2,686 ) Pension and postretirement liability adjustments — — — — 846 — — — 846 Derivative valuation adjustment and other — — — ( 15 ) 750 — — — 735 June 30, 2026 41,057 $ 41 $ 464,148 $ 993,170 $ ( 144,677 ) 12,686 $ ( 566,993 ) $ 6,400 $ 752,089 The following tables summarize changes in Shareholders’ Equity for the three month and six month periods ended June 30, 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 (in thousands) Shares Amount Shares Amount March 31, 2025 40,973 $ 41 $ 455,584 $ 1,074,863 $ ( 182,150 ) 10,770 $ ( 448,363 ) $ 5,193 $ 905,168 Net income — — 9,183 — — — 149 9,332 Compensation and benefits paid or payable in shares — — 243 — — — — — 243 Shares issued to Directors' 11 — 760 — — — — — 760 Purchase of Treasury shares (a) — — — — — 746 ( 51,295 ) — ( 51,295 ) Dividends declared on Class A Common Stock, $ 0.27 per share — — — ( 8,024 ) — — — — ( 8,024 ) Cumulative translation adjustments — — — 38,835 — — 67 38,902 Pension and postretirement liability adjustments — — — ( 855 ) — — — ( 855 ) Derivative valuation adjustment and other — — — ( 88 ) ( 122 ) — — 88 ( 122 ) June 30, 2025 40,984 $ 41 $ 456,587 $ 1,075,934 $ ( 144,292 ) 11,516 $ ( 499,658 ) $ 5,497 $ 894,109 23 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, 2024 40,917 $ 41 $ 452,933 $ 1,065,763 $ ( 195,989 ) 9,845 $ ( 379,210 ) $ 5,409 $ 948,947 Net income/(loss) — — — 26,538 — — — 143 26,681 Compensation and benefits paid or payable in shares 56 — 2,894 — — — — — 2,894 Shares issued to Directors 11 — 760 — — — — — 760 Purchase of Treasury shares (a) — — — — — 1,671 ( 120,448 ) — ( 120,448 ) Dividends declared on Class A Common Stock, $ 0.54 per share — — — ( 16,286 ) — — — — ( 16,286 ) Dividends paid to noncontrolling interests — — — — — — — ( 88 ) ( 88 ) Cumulative translation adjustments — — — — 55,971 — — ( 55 ) 55,916 Pension and postretirement liability adjustments — — — — ( 3,517 ) — — — ( 3,517 ) Derivative valuation adjustment — — — ( 81 ) ( 757 ) — — 88 ( 750 ) June 30, 2025 40,984 $ 41 $ 456,587 $ 1,075,934 $ ( 144,292 ) 11,516 $ ( 499,658 ) $ 5,497 $ 894,109 (a) On February 21, 2025, the Company's Board of Directors authorized the Company to repurchase shares up to $ 250 million (excluding any fees, commissions, taxes or other expenses related to such purchases), which replaces the 2021 authorization. 19. Held for Sale During the fourth quarter of 2025, we announced plans to commence a strategic review of the Amelia Earhart Drive facility in Salt Lake City. This review is progressing according to our planned timeline, and we have received multiple indications of interest with regards to a sale of the facility. We continue to engage closely with our customers throughout the strategic assessment process. This review is expected to be completed by the end of 2026. The Company has determined that the Amelia Earhart Drive facility met held-for-sale accounting criteria. Accordingly, the facility's assets and liabilities were classified as held-for-sale in the consolidated balance sheets for all periods presented. Upon classification as held for sale, the Company ceased depreciation and amortization of the related long-lived assets in accordance with applicable accounting guidance. The following table presents the assets and liabilities classified as held-for-sale at June 30, 2026 and December 31, 2025: (in thousands) June 30, 2026 December 31, 2025 Accounts receivable, net $ 22,567 $ 27,159 Contract assets, net 87,027 68,550 Inventories 14,665 16,422 Prepaid expenses and other current assets 511 697 Property, plant and equipment, net 94,583 93,525 Intangibles, net 13,384 13,384 Goodwill 21,829 21,829 Other assets 52,156 52,217 Total assets held for sale $ 306,722 $ 293,783 Accounts payable $ 20,496 $ 16,408 Accrued liabilities 96,611 115,448 Other noncurrent liabilities 58,258 59,724 Deferred income taxes 11,743 11,743 Total liabilities held for sale $ 187,108 $ 203,323 24 20. 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. 25