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Albany International Reports Fourth-Quarter 2022 Results

Albany International Corp. (NYSE:AIN) today reported operating results for its fourth quarter of 2022, which ended December 31, 2022.

"We are pleased to report another strong quarter to close 2022," said Bill Higgins, President and Chief Executive Officer. "Our teams successfully addressed multiple challenges throughout the past year. We overcame supply chain challenges and managed inflationary pressures while serving customers, winning new business, and developing new products. Full year Revenue, Gross profit, Operating income, and Adjusted EBITDA all moved higher compared to 2021's results.

"Our Engineered Composites segment grew its top line 37%, the result of recovering LEAP production and new business wins, headlined by expanded content on the CH-53K helicopter program.

"Our Machine Clothing segment's execution and financial results continued to be impressive. The segment delivered excellent profitability in 2022 with Adjusted EBITDA margins exceeding 37% despite the inflationary environment."

For the fourth-quarter ended December 31, 2022:

  • Net sales were $268.8 million, up 12.0%, or 15.5% after adjusting for currency translation, when compared to the prior year, driven by growth in the Engineered Composites segment.
  • Gross profit of $97.1 million was 1.1% higher than the $96.1 million reported for the same period of 2021, mainly due to higher net sales in the lower margin Engineered Composites segment.
  • Selling, Technical, General, and Research (STG&R) expenses were $59.3 million, compared to $53.2 million in the same period of 2021. The increase was driven by higher foreign currency revaluation expense, incentive compensation costs, and investments in sales and marketing activities.
  • Operating income was $37.9 million, compared to $41.7 million in the prior year, a decrease of 9.2%.
  • The effective tax rate for the quarter was 42.1% compared to a 27.3% effective tax rate in the fourth quarter of 2021, due to a shift in taxable income to higher tax rate jurisdictions and unfavorable effects of discrete items.
  • Net income attributable to the Company was $18.1 million ($0.58 per share), compared to $28.6 million ($0.89 per share) in the fourth quarter of 2021. Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $0.75 per share, compared to $0.86 per share for the same period of last year.
  • Adjusted EBITDA (a non-GAAP measure) was $58.4 million, compared to $60.6 million in the fourth quarter of 2021, a decrease of 3.6%.

Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures.

"We are in a solid position as we enter 2023 with a strong balance sheet and healthy order books," said Stephen Nolan, Chief Financial Officer. "We expect to sustain strong results consistent with our long-term goals for both of our businesses in the coming year."

Outlook for Full-Year 2023

Albany International announces its initial financial guidance for the full-year 2023:

  • Total company revenue between $1.01 and $1.05 billion;
  • Effective income tax rate, including tax adjustments, between 28% and 30%;
  • Total company depreciation and amortization between $70 and $75 million;
  • Capital expenditures in the range of $90 to $100 million;
  • GAAP and Adjusted earnings per share between $3.10 and $3.60;
  • Total company Adjusted EBITDA between $225 to $255 million;
  • Machine Clothing revenue between $590 to $610 million;
  • Machine Clothing Adjusted EBITDA between $205 and $225 million;
  • Albany Engineered Composites (AEC) revenue between $420 to $440 million; and
  • Albany Engineered Composites Adjusted EBITDA between $80 to $90 million.
 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net sales

$

268,786

 

 

$

239,918

 

 

$

1,034,887

 

 

$

929,240

 

Cost of goods sold

 

171,694

 

 

 

143,843

 

 

 

645,105

 

 

 

550,849

 

 

 

 

 

 

 

 

 

Gross profit

 

97,092

 

 

 

96,075

 

 

 

389,782

 

 

 

378,391

 

Selling, general, and administrative expenses

 

49,388

 

 

 

43,228

 

 

 

168,713

 

 

 

160,127

 

Technical and research expenses

 

9,957

 

 

 

10,006

 

 

 

39,941

 

 

 

38,922

 

Restructuring expenses, net

 

(162

)

 

 

1,101

 

 

 

106

 

 

 

1,331

 

 

 

 

 

 

 

 

 

Operating income

 

37,909

 

 

 

41,740

 

 

 

181,022

 

 

 

178,011

 

Interest expense, net

 

2,664

 

 

 

3,370

 

 

 

14,000

 

 

 

14,891

 

Pension settlement expense

 

 

 

 

 

 

 

49,128

 

 

 

 

Aviation Manufacturing Jobs Protection (AMJP) grant

 

 

 

 

 

 

 

 

 

 

(5,832

)

Other expense/(income), net

 

3,805

 

 

 

(1,194

)

 

 

(14,086

)

 

 

3,021

 

 

 

 

 

 

 

 

 

Income before income taxes

 

31,440

 

 

 

39,564

 

 

 

131,980

 

 

 

165,931

 

Income tax expense

 

13,199

 

 

 

10,788

 

 

 

35,472

 

 

 

47,163

 

 

 

 

 

 

 

 

 

Net income

 

18,241

 

 

 

28,776

 

 

 

96,508

 

 

 

118,768

 

Net income/(loss) attributable to the noncontrolling interest

 

111

 

 

 

140

 

 

 

746

 

 

 

290

 

Net income attributable to the Company

$

18,130

 

 

$

28,636

 

 

$

95,762

 

 

$

118,478

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Company shareholders - Basic

$

0.58

 

 

$

0.89

 

 

$

3.06

 

 

$

3.66

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Company shareholders - Diluted

$

0.58

 

 

$

0.88

 

 

$

3.04

 

 

$

3.65

 

 

 

 

 

 

 

 

 

Shares of the Company used in computing earnings per share:

 

 

 

 

 

 

 

Basic

 

31,111

 

 

 

32,285

 

 

 

31,339

 

 

 

32,348

 

 

 

 

 

 

 

 

 

Diluted

 

31,267

 

 

 

32,398

 

 

 

31,455

 

 

 

32,463

 

 

 

 

 

 

 

 

 

Dividends declared per share, Class A and Class B

$

0.25

 

 

$

0.21

 

 

$

0.88

 

 

$

0.81

 

 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

December 31, 2022

 

December 31, 2021

ASSETS

 

 

 

Cash and cash equivalents

$

291,776

 

 

$

302,036

 

Accounts receivable, net

 

200,018

 

 

 

191,985

 

Contract assets, net

 

148,695

 

 

 

112,546

 

Inventories

 

139,050

 

 

 

117,882

 

Income taxes prepaid and receivable

 

7,938

 

 

 

1,958

 

Prepaid expenses and other current assets

 

50,962

 

 

 

32,394

 

Total current assets

$

838,439

 

 

$

758,801

 

 

 

 

 

Property, plant and equipment, net

 

445,658

 

 

 

436,417

 

Intangibles, net

 

33,811

 

 

 

39,081

 

Goodwill

 

178,217

 

 

 

182,124

 

Deferred income taxes

 

15,196

 

 

 

26,376

 

Noncurrent receivables, net

 

27,913

 

 

 

31,849

 

Other assets

 

103,021

 

 

 

81,416

 

Total assets

$

1,642,255

 

 

$

1,556,064

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Accounts payable

$

69,707

 

 

$

68,954

 

Accrued liabilities

 

126,385

 

 

 

124,325

 

Current maturities of long-term debt

 

 

 

 

 

Income taxes payable

 

15,224

 

 

 

14,887

 

Total current liabilities

 

211,316

 

 

 

208,166

 

 

 

 

 

Long-term debt

 

439,000

 

 

 

350,000

 

Other noncurrent liabilities

 

108,758

 

 

 

107,794

 

Deferred taxes and other liabilities

 

15,638

 

 

 

12,499

 

Total liabilities

 

774,712

 

 

 

678,459

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued

 

 

 

 

 

Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,785,434 issued in 2022 and 40,760,577 in 2021

 

41

 

 

 

41

 

Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; none issued and outstanding in 2022 and 104 in 2021

 

 

 

 

 

Additional paid in capital

 

441,540

 

 

 

436,996

 

Retained earnings

 

931,318

 

 

 

863,057

 

Accumulated items of other comprehensive income:

 

 

 

Translation adjustments

 

(146,851

)

 

 

(105,880

)

Pension and postretirement liability adjustments

 

(15,783

)

 

 

(38,490

)

Derivative valuation adjustment

 

17,707

 

 

 

(1,614

)

Treasury stock (Class A), at cost; 9,674,542 shares in 2022 and 8,665,090 in 2021

 

(364,923

)

 

 

(280,143

)

Total Company shareholders' equity

 

863,049

 

 

 

873,967

 

Noncontrolling interest

 

4,494

 

 

 

3,638

 

Total equity

 

867,543

 

 

 

877,605

 

Total liabilities and shareholders' equity

$

1,642,255

 

 

$

1,556,064

 

 

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

$

18,241

 

 

$

28,776

 

 

$

96,508

 

 

$

118,768

 

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

 

 

 

 

 

 

 

Depreciation

 

15,616

 

 

 

16,645

 

 

 

62,480

 

 

 

65,130

 

Amortization

 

1,525

 

 

 

2,263

 

 

 

6,569

 

 

 

9,125

 

Change in deferred taxes and other liabilities

 

7,086

 

 

 

5,159

 

 

 

(8,496

)

 

 

12,181

 

Impairment of property, plant, equipment, and inventory

 

(802

)

 

 

293

 

 

 

1,808

 

 

 

856

 

Non-cash interest expense

 

278

 

 

 

282

 

 

 

1,118

 

 

 

875

 

Non-cash portion of pension settlement expense

 

 

 

 

 

 

 

42,657

 

 

 

 

Compensation and benefits paid or payable in Class A Common Stock

 

1,245

 

 

 

914

 

 

 

4,527

 

 

 

3,146

 

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

 

523

 

 

 

(141

)

 

 

1,408

 

 

 

(1,299

)

Foreign currency remeasurement (gain)/loss on intercompany loans

 

2,195

 

 

 

(2,599

)

 

 

(4,434

)

 

 

(3,150

)

Fair value adjustment on foreign currency options

 

(100

)

 

 

 

 

 

(509

)

 

 

169

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Accounts receivable

 

5,959

 

 

 

6,558

 

 

 

(14,301

)

 

 

(7,734

)

Contract assets

 

767

 

 

 

3,276

 

 

 

(36,434

)

 

 

25,446

 

Inventories

 

354

 

 

 

(104

)

 

 

(24,541

)

 

 

(9,942

)

Prepaid expenses and other current assets

 

(1,401

)

 

 

(3,442

)

 

 

(4,134

)

 

 

(998

)

Income taxes prepaid and receivable

 

(3,826

)

 

 

1,536

 

 

 

(6,005

)

 

 

3,944

 

Accounts payable

 

3,491

 

 

 

5,180

 

 

 

8,572

 

 

 

9,492

 

Accrued liabilities

 

15,850

 

 

 

11,537

 

 

 

3,226

 

 

 

(774

)

Income taxes payable

 

(2,456

)

 

 

608

 

 

 

183

 

 

 

(477

)

Noncurrent receivables

 

935

 

 

 

1,523

 

 

 

3,911

 

 

 

4,355

 

Other noncurrent liabilities

 

(4,173

)

 

 

(8,131

)

 

 

(10,133

)

 

 

(13,713

)

Other, net

 

(400

)

 

 

(1,157

)

 

 

4,234

 

 

 

2,075

 

Net cash provided by operating activities

 

60,907

 

 

 

68,976

 

 

 

128,214

 

 

 

217,475

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(42,727

)

 

 

(21,039

)

 

 

(93,675

)

 

 

(52,793

)

Purchased software

 

(789

)

 

 

(512

)

 

 

(2,673

)

 

 

(906

)

Net cash used in investing activities

 

(43,516

)

 

 

(21,551

)

 

 

(96,348

)

 

 

(53,699

)

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from borrowings

 

17,000

 

 

 

 

 

 

162,000

 

 

 

8,000

 

Principal payments on debt

 

(25,000

)

 

 

 

 

 

(73,000

)

 

 

(56,009

)

Principal payments on finance lease liabilities

 

 

 

 

(371

)

 

 

(654

)

 

 

(1,438

)

Debt acquisition costs

 

 

 

 

 

 

 

 

 

 

 

Purchase of Treasury shares

 

 

 

 

(23,449

)

 

 

(84,780

)

 

 

(23,449

)

Taxes paid in lieu of share issuance

 

 

 

 

 

 

 

(770

)

 

 

(998

)

Proceeds from options exercised

 

 

 

 

 

 

 

17

 

 

 

153

 

Dividends paid

 

(6,533

)

 

 

(6,476

)

 

 

(26,465

)

 

 

(25,894

)

Net cash used in financing activities

 

(14,533

)

 

 

(30,296

)

 

 

(23,652

)

 

 

(99,635

)

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

12,436

 

 

 

(1,310

)

 

 

(18,474

)

 

 

(3,421

)

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

15,294

 

 

 

15,819

 

 

 

(10,260

)

 

 

60,720

 

Cash and cash equivalents at beginning of period

 

276,482

 

 

 

286,217

 

 

 

302,036

 

 

 

241,316

 

Cash and cash equivalents at end of period

$

291,776

 

 

$

302,036

 

 

$

291,776

 

 

$

302,036

 

Financial tables and reconciliation of non-GAAP measures to comparable GAAP measures

The following tables present Net sales and the effect of changes in currency translation rates:

(in thousands, except percentages)

Net sales as reported, Q4 2022

 

(Decrease) due to changes in currency translation rates

 

Q4 2022 sales on same basis as Q4 2021 currency translation rates

 

Net sales as reported, Q4 2021

 

% Change compared to Q4 2021, excluding currency rate effects

Machine Clothing

$

150,340

 

$

(6,303

)

 

$

156,643

 

$

156,717

 

%

Albany Engineered Composites

 

118,446

 

 

(1,979

)

 

 

120,425

 

 

83,201

 

44.7

%

Consolidated total

$

268,786

 

$

(8,282

)

 

$

277,068

 

$

239,918

 

15.5

%

 

 

 

 

 

 

 

 

 

 

(in thousands, except percentages)

Net sales as reported, YTD 2022

 

Increase due to changes in currency translation rates

 

YTD 2022 sales on same basis as 2021 currency translation rates

 

Net sales as reported, YTD 2021

 

% Change compared to 2021, excluding currency rate effects

Machine Clothing

$

609,461

 

$

(20,848

)

 

$

630,309

 

$

619,015

 

1.8

%

Albany Engineered Composites

 

425,426

 

 

(7,610

)

 

 

433,036

 

 

310,225

 

39.6

%

Consolidated total

$

1,034,887

 

$

(28,458

)

 

$

1,063,345

 

$

929,240

 

14.4

%

The following tables present Gross profit and Gross profit margin:

(in thousands, except percentages)

Gross profit,

Q4 2022

 

Gross profit margin, Q4 2022

 

Gross profit,

Q4 2021

 

Gross profit margin, Q4 2021

Machine Clothing

$

74,851

 

49.8

%

 

$

82,030

 

52.3

%

Albany Engineered Composites

 

22,241

 

18.8

%

 

 

14,045

 

16.9

%

Consolidated total

$

97,092

 

36.1

%

 

$

96,075

 

40.0

%

(in thousands, except percentages)

Gross profit,

YTD 2022

 

Gross profit margin, YTD 2022

 

Gross profit,

YTD 2021

 

Gross profit margin, YTD 2021

Machine Clothing

$

312,285

 

51.2

%

 

$

322,457

 

52.1

%

Albany Engineered Composites

 

77,497

 

18.2

%

 

 

55,934

 

18.0

%

Consolidated total

$

389,782

 

37.7

%

 

$

378,391

 

40.7

%

A reconciliation from Net income/(loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the current-year and comparable prior-year periods has been calculated as follows:

Three months ended December 31, 2022

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

44,462

 

$

10,891

 

$

(37,112

)

$

18,241

 

Interest expense, net

 

 

 

 

 

2,664

 

 

2,664

 

Income tax expense

 

 

 

 

 

13,199

 

 

13,199

 

Depreciation and amortization expense

 

4,767

 

 

11,410

 

 

964

 

 

17,141

 

EBITDA (non-GAAP)

 

49,229

 

 

22,301

 

 

(20,285

)

 

51,245

 

Restructuring expenses, net

 

(163

)

 

 

 

1

 

 

(162

)

Foreign currency revaluation (gains)/losses (a)

 

3,170

 

 

(83

)

 

7,663

 

 

10,750

 

Acquisition/integration costs

 

 

 

251

 

 

 

 

251

 

Dissolution of business relationships in Russia

 

(79

)

 

 

 

 

 

(79

)

IP address sales

 

 

 

 

 

(3,420

)

 

(3,420

)

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(184

)

 

 

 

(184

)

Adjusted EBITDA (non-GAAP)

$

52,157

 

$

22,285

 

$

(16,041

)

$

58,401

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

34.7

%

 

18.8

%

 

 

 

21.7

%

 

 

 

 

 

 

 

 

 

 

Three months ended December 31, 2021

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

53,923

 

$

3,141

 

$

(28,288

)

$

28,776

 

Interest expense, net

 

 

 

 

 

3,370

 

 

3,370

 

Income tax expense

 

 

 

 

 

10,788

 

 

10,788

 

Depreciation and amortization expense

 

4,919

 

 

13,076

 

 

913

 

 

18,908

 

EBITDA (non-GAAP)

 

58,842

 

 

16,217

 

 

(13,217

)

 

61,842

 

Restructuring expenses, net

 

1,009

 

 

72

 

 

20

 

 

1,101

 

Foreign currency revaluation (gains)/losses (a)

 

(151

)

 

(313

)

 

(1,998

)

 

(2,462

)

Acquisition/integration costs

 

 

 

255

 

 

 

 

255

 

AMJP grant

 

 

 

138

 

 

 

 

138

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(304

)

 

 

 

(304

)

Adjusted EBITDA (non-GAAP)

$

59,700

 

$

16,065

 

$

(15,195

)

$

60,570

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

38.1

%

 

19.3

%

 

 

 

25.2

%

Twelve months ended December 31, 2022

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

206,214

 

$

31,579

 

$

(141,285

)

$

96,508

 

Interest expense, net

 

 

 

 

 

14,000

 

 

14,000

 

Income tax expense

 

 

 

 

 

35,472

 

 

35,472

 

Depreciation and amortization expense

 

19,483

 

 

46,202

 

 

3,364

 

 

69,049

 

EBITDA (non-GAAP)

 

225,697

 

 

77,781

 

 

(88,449

)

 

215,029

 

Restructuring expenses, net

 

92

 

 

 

 

14

 

 

106

 

Foreign currency revaluation (gains)/losses (a)

 

(520

)

 

672

 

 

(9,981

)

 

(9,829

)

Dissolution of business relationships in Russia

 

1,494

 

 

 

 

781

 

 

2,275

 

Pension settlement expense

 

 

 

 

 

49,128

 

 

49,128

 

IP address sales

 

 

 

 

 

(3,420

)

 

(3,420

)

Acquisition/integration costs

 

 

 

1,057

 

 

 

 

1,057

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(817

)

 

 

 

(817

)

Adjusted EBITDA (non-GAAP)

$

226,763

 

$

78,693

 

$

(51,927

)

$

253,529

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

37.2

%

 

18.5

%

 

%

 

24.5

%

 

 

 

 

 

Twelve months ended December 31, 2021

(in thousands)

Machine Clothing

Albany Engineered

Composites

Corporate expenses

and other

Total Company

Net income/(loss) (GAAP)

$

215,654

 

$

16,160

 

$

(113,046

)

$

118,768

 

Interest expense, net

 

 

 

 

 

14,891

 

 

14,891

 

Income tax expense

 

 

 

 

 

47,163

 

 

47,163

 

Depreciation and amortization expense

 

20,191

 

 

50,402

 

 

3,662

 

 

74,255

 

EBITDA (non-GAAP)

 

235,845

 

 

66,562

 

 

(47,330

)

 

255,077

 

Restructuring expenses, net

 

1,202

 

 

32

 

 

97

 

 

1,331

 

Foreign currency revaluation (gains)/losses (a)

 

(307

)

 

50

 

 

(1,185

)

 

(1,442

)

AMJP grant

 

 

 

1,101

 

 

(5,832

)

 

(4,731

)

Acquisition/integration costs

 

 

 

1,166

 

 

 

 

1,166

 

Pre-tax (income) attributable to noncontrolling interest

 

 

 

(510

)

 

 

 

(510

)

Adjusted EBITDA (non-GAAP)

$

236,740

 

$

68,401

 

$

(54,250

)

$

250,891

 

Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)

 

38.2

%

 

22.0

%

 

 

 

27.0

%

Per share impact of the adjustments to earnings per share are as follows:

Three months ended December 31, 2022

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

(162

)

$

(41

)

$

(121

)

$

0.00

 

Foreign currency revaluation (gains)/losses (a)

 

10,750

 

 

3,247

 

 

7,503

 

 

0.24

 

Dissolution of business relationships in Russia

 

(79

)

 

(9

)

 

(70

)

 

0.00

 

IP address sales

 

(3,420

)

 

(872

)

 

(2,548

)

 

(0.08

)

Acquisition/integration costs

 

251

 

 

75

 

 

176

 

 

0.01

 

 

 

 

 

 

Three months ended December 31, 2021

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

1,101

 

$

332

 

$

769

 

$

0.02

 

Foreign currency revaluation (gains)/losses (a)

 

(2,462

)

 

(655

)

 

(1,807

)

 

(0.06

)

Acquisition/integration costs

 

255

 

 

76

 

 

179

 

 

0.01

 

AMJP grant

 

138

 

 

42

 

 

96

 

 

0.00

 

 

 

 

 

 

Year ended December 31, 2022

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

106

 

$

34

 

$

72

 

$

0.01

 

Foreign currency revaluation (gains)/losses (a)

 

(9,829

)

 

(2,582

)

 

(7,247

)

 

(0.23

)

Dissolution of business relationships in Russia

 

2,275

 

 

305

 

 

1,970

 

 

0.06

 

Pension settlement expense

 

49,128

 

 

11,947

 

 

37,181

 

 

1.20

 

Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b)

 

 

 

5,217

 

 

(5,217

)

 

(0.17

)

IP address sales

 

(3,420

)

 

(872

)

 

(2,548

)

 

(0.08

)

Acquisition/integration costs

 

1,057

 

 

316

 

 

741

 

 

0.04

 

 

 

 

 

 

Year ended December 31, 2021

(in thousands, except per share amounts)

Pre tax

Amounts

Tax

Effect

After tax

Effect

Per share

Effect

Restructuring expenses, net

$

1,331

 

$

399

 

$

932

 

$

0.02

 

Foreign currency revaluation (gains)/losses (a)

 

(1,442

)

 

(323

)

 

(1,119

)

 

(0.04

)

AMJP grant

 

(4,731

)

 

(1,404

)

 

(3,327

)

 

(0.11

)

Acquisition/integration costs

 

1,166

 

 

349

 

 

817

 

 

0.04

 

 

The following table provides a reconciliation of Earnings per share to Adjusted Earnings per share:

 

Three months ended December 31,

Twelve months ended December 31,

Per share amounts (Basic)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Earnings per share (GAAP)

$

0.58

 

$

0.89

 

$

3.06

 

$

3.66

 

Adjustments, after tax:

 

 

 

 

Restructuring expenses, net

 

 

 

0.02

 

 

0.01

 

 

0.02

 

Foreign currency revaluation (gains)/losses (a)

 

0.24

 

 

(0.06

)

 

(0.23

)

 

(0.04

)

Dissolution of business relationships in Russia

 

 

 

 

 

0.06

 

 

 

Pension settlement charge

 

 

 

 

 

1.20

 

 

 

Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b)

 

 

 

 

 

(0.17

)

 

 

IP address sales

 

(0.08

)

 

 

 

(0.08

)

 

 

AMJP grant

 

 

 

 

 

 

 

(0.11

)

Acquisition/integration costs

 

0.01

 

 

0.01

 

 

0.04

 

 

0.04

 

Adjusted Earnings per share (non-GAAP)

$

0.75

 

$

0.86

 

$

3.89

 

$

3.57

 

 

(a) Foreign currency revaluation (gains)/losses represent unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies on the balance sheet date.

(b) Our Adjusted EPS excluded the benefit from the reclassification of stranded income tax effects caused by the TCJA associated with the US pension plan liability that was eliminated in September 2022, and would not be indicative of ongoing or expected future income tax rate at the Company. Management believes excluding pension settlement expense and its income tax impact, including the stranded income tax effects, from its Adjusted EBITDA and Adjusted EPS for the year ended December 31, 2022 would provide investors a transparent view and enhanced ability to better assess the Company's ongoing operational and financial performance.

The calculations of net debt are as follows:

(in thousands)

December 31, 2022

September 30, 2022

June 30, 2022

March 31, 2022

December 31, 2021

Current maturities of long-term debt

$

$

$

$

$

Long-term debt

 

439,000

 

447,000

 

485,000

 

427,000

 

350,000

Total debt

 

439,000

 

447,000

 

485,000

 

427,000

 

350,000

Cash and cash equivalents

 

291,776

 

276,482

 

320,870

 

307,415

 

302,036

Net debt (non GAAP)

$

147,224

$

170,518

$

164,130

$

119,585

$

47,964

The calculation of net leverage ratio as of December 31, 2022 is as follows:

Total Company

 

Twelve months ended

(in thousands)

December 31, 2022

Net income/(loss) (GAAP)

$

96,508

 

Interest expense, net

 

14,000

 

Income tax expense

 

35,472

 

Depreciation and amortization expense

 

69,049

 

EBITDA (non-GAAP)

 

215,029

 

Restructuring expenses, net

 

106

 

Foreign currency revaluation (gains)/losses (a)

 

(9,829

)

Dissolution of business relationships in Russia

 

2,275

 

Pension settlement expense

 

49,128

 

IP address sales

 

(3,420

)

Acquisition/integration costs

 

1,057

 

Pre-tax (income) attributable to noncontrolling interest

 

(817

)

Adjusted EBITDA (non-GAAP)

$

253,529

 

(in thousands, except for net leverage ratio)

December 31, 2022

Net debt (non-GAAP)

$

147,224

Adjusted EBITDA (non-GAAP)

 

253,529

Net leverage ratio (non-GAAP)

 

0.58

 

 

The tables below provide a reconciliation of initial outlook for the full-year 2023 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures:

Initial Outlook Full Year 2023 Adjusted EBITDA

Machine Clothing

 

AEC

(in millions)

Low

High

 

Low

High

Net income attributable to the Company (GAAP) (c)

$

185

 

$

205

 

 

$

32

 

$

41

 

Income attributable to the noncontrolling interest

 

 

 

 

 

 

(1

)

 

(1

)

Interest expense, net

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

20

 

 

20

 

 

 

48

 

 

49

 

EBITDA (non-GAAP)

 

205

 

 

225

 

 

79

 

 

89

 

Restructuring expenses, net (c)

 

 

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (c)

 

 

 

 

 

 

 

 

 

Acquisition/integration costs (c)

 

 

 

 

 

 

 

 

 

Pre-tax (income)/loss attributable to non-controlling interest

 

 

 

 

 

 

1

 

 

1

 

Adjusted EBITDA (non-GAAP)

$

205

 

$

225

 

$

80

 

$

90

 

(c) Interest, Other income/expense and Income taxes are not allocated to the business segments

 

 

 

 

 

 

 

 

 

 

 

Initial Outlook Full Year 2023 Adjusted EBITDA

Total Company

 

 

 

(in millions)

Low

High

 

 

 

Net income attributable to the Company (GAAP) (c)

$

98

 

$

113

 

 

 

 

Income attributable to the noncontrolling interest

 

(1

)

 

(1

)

 

 

 

Interest expense, net

 

17

 

 

18

 

 

 

 

Income tax expense

 

40

 

 

49

 

 

 

 

Depreciation and amortization

 

70

 

 

75

 

 

 

 

EBITDA (non-GAAP)

 

224

 

 

254

 

 

 

 

Restructuring expenses, net (d)

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (d)

 

 

 

 

 

 

 

Acquisition/integration costs (d)

 

 

 

 

 

 

 

Pre-tax (income)/loss attributable to non-controlling interest

 

1

 

 

1

 

 

 

 

Adjusted EBITDA (non-GAAP)

$

225

 

$

255

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

Forecast of Full Year 2023 Earnings per share (basic) (e)

Low

High

 

 

 

Net income attributable to the Company (GAAP) (c)

$

3.10

 

$

3.60

 

 

 

 

Restructuring expenses, net (d)

 

 

 

 

 

 

 

Foreign currency revaluation (gains)/losses (d)

 

 

 

 

 

 

 

Acquisition/integration costs (d)

 

 

 

 

 

 

 

Adjusted Earnings per share (non-GAAP)

$

3.10

 

$

3.60

 

 

 

 

 

 

 

 

 

 

(d) Due to the uncertainty of these items, we are unable to forecast these items for 2023.

 

(e) Calculations based on estimated shares outstanding of approximately 31.2 million.

 

About Albany International Corp.

Albany International is a leading developer and manufacturer of engineered components, using advanced materials processing and automation capabilities, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed, consumable fabrics and process belts essential for the manufacture of all grades of paper products. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for demanding aerospace applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 23 facilities in 11 countries, employs approximately 4,200 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com.

Non-GAAP Measures

This release, including the conference call commentary associated with this release, contains certain non-GAAP measures, that should not be considered in isolation or as a substitute for the related GAAP measures. Such non-GAAP measures include net sales and percent change in net sales, excluding the impact of currency translation effects ; EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin; Net debt; Net leverage ratio; and Adjusted earnings per share (or Adjusted EPS). Management believes that these non-GAAP measures provide additional useful information to investors regarding the Company’s operational performance.

Presenting Net sales and change in Net sales, after currency effects are excluded, provides management and investors insight into underlying sales trends. Net sales, or percent changes in net sales, excluding currency rate effects, are calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. These amounts are then compared to the U.S. dollar amount as reported in the current period.

EBITDA (calculated as net income excluding interest, income taxes, depreciation and amortization), Adjusted EBITDA, and Adjusted EPS are performance measures that relate to the Company’s continuing operations. The Company defines Adjusted EBITDA as EBITDA excluding costs or benefits that are not reflective of the Company’s ongoing or expected future operational performance. Such excluded costs or benefits do not consist of normal, recurring cash items necessary to generate revenues or operate our business. Adjusted EBITDA margin represents Adjusted EBITDA expressed as a percentage of net sales.

The Company defines Adjusted EPS as basic earnings per share (GAAP), adjusted by the after tax per share amount of costs or benefits not reflective of the Company’s ongoing or expected future operational performance. The income tax effects are calculated using the applicable statutory income tax rate of the jurisdictions where such costs or benefits were incurred or the effective tax rate applicable to total company results.

The Company’s Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS may not be comparable to similarly titled measures of other companies.

Net debt aids investors in understanding the Company’s debt position if all available cash were applied to pay down indebtedness.

Net leverage ratio informs the investors of the Company's financial leverage at the end of the reporting period, providing an indicator of the Company's ability to repay its debt.

We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Forward-Looking Statements

This press release may contain statements, estimates, guidance or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “look for,” “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 Quarterly Report on Form 10-Q), actual results may differ materially from those expressed or implied by such forward-looking statements.

Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic conditions, including inflationary cost pressures, as well as global events, which include but are not limited to, the ongoing COVID-19 pandemic and the Russia-Ukraine military conflicts; paper-industry trends and conditions during 2022 and in future years; expectations in 2022 and in future periods of sales, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net sales), Adjusted EPS, income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, and for the Company as a whole; the timing and impact of production and development programs in the Company’s AEC business segment and the sales growth potential of key AEC programs, as well as AEC as a whole; the amount and timing of capital expenditures, future tax rates and cash paid for taxes, depreciation and amortization; future debt and net debt levels and debt covenant ratios; and changes in currency rates and their impact on future revaluation gains and losses. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period. Such statements are based on current expectations, and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Statements expressing management’s assessments of the growth potential of its businesses, or referring to earlier assessments of such potential, are not intended as forecasts of actual future growth, and should not be relied on as such. While management believes such assessments to have a reasonable basis, such assessments are, by their nature, inherently uncertain. This release and earlier releases set forth a number of assumptions regarding these assessments, including historical results, independent forecasts regarding the markets in which these businesses operate, and the timing and magnitude of orders for our customers’ products. Historical growth rates are no guarantee of future growth, and such independent forecasts and assumptions could prove materially incorrect in some cases.

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