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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Albany International Corp | NYSE:AIN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.01 | 1.21% | 84.67 | 85.52 | 83.395 | 85.05 | 289,734 | 22:57:15 |
Third-quarter Financial Highlights
Albany International Corp. (NYSE:AIN) reported that Q3 2017 Net income attributable to the Company was $15.3 million, including a net benefit of $3.1 million for income tax adjustments. Q3 2016 Net income attributable to the Company was $13.1 million, including favorable income tax adjustments of $0.4 million.
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Q3 2017 Income before income taxes was $19.0 million. During Q3 2017, the Company decided to discontinue the Bear Claw® line of hydraulic fracking components used in the oil and gas industry, which was part of the Harris aerostructures business acquired by AEC in 2016. This decision resulted in a non-cash restructuring charge of $4.5 million for the write-off of intangible assets and equipment, and a $3.2 million charge to Cost of goods sold for the write-off of inventory. Q3 2017 results also include $1.0 million of other restructuring charges, $1.5 million of losses from foreign currency revaluation, and an insurance recovery gain of $2.0 million related to the theft in Japan that was reported in Q4 2016. Q3 2016 income before income taxes was $20.9 million, including restructuring charges of $0.3 million and gains of $0.2 million from foreign currency revaluation.
Table 1 summarizes net sales and the effect of changes in currency translation rates:
Table 1
Net Sales
Three Months ended
September 30,
Percent
Impact ofChanges
inCurrency
Translation
Percent ChangeexcludingCurrency Rate
(in thousands, excluding percentages)
2017
2016
Change
Rates
Effect
Machine Clothing (MC) $ 150,694 $ 143,248 5.2 % $ 1,771 4.0 % Albany Engineered Composites (AEC) 71,447 48,024 48.8 486 47.8 Total $ 222,141 $ 191,272 16.1 % $ 2,257 15.0 %In comparison to Q3 2016, the increase in MC net sales was due to strong performance in the tissue, packaging and pulp grades, which more than offset continuing declines in the publication grades. The increase in AEC net sales was primarily due to growth in the LEAP, 787 fuselage frames and CH-53K programs.
Table 2 summarizes gross profit by segment:
Table 2
Three Months endedSeptember 30, 2017
Three Months endedSeptember 30, 2016
(in thousands, excluding percentages)
Gross profit
Percent of sales
Gross profit
Percent of sales
Machine Clothing $ 73,028 48.5 % $ 68,104 47.5 % Albany Engineered Composites 6,638 9.3 4,556 9.5 Corporate Expenses (231 ) - (240 ) - Total $ 79,435 35.8 % $ 72,420 37.9 %The increase in MC gross profit reflects higher sales and strong productivity. Despite the write-off of Bear Claw® inventory, which reduced AEC gross profit by $3.2 million and gross profit percentage by 4.4%, AEC gross profit increased, reflecting higher sales and improved productivity. Total company gross profit percentage was reduced 1.4% by the Bear Claw® inventory write-off.
Table 3 summarizes selling, technical, general and research (STG&R) expenses by segment:
Table 3
Three Months endedSeptember 30, 2017
Three Months endedSeptember 30, 2016
(in thousands, excluding percentages)
STG&R Expense
Percent of sales
STG&R Expense
Percent of sales
Machine Clothing $30,258 20.1 % $28,276 19.7 % Albany Engineered Composites 10,532 14.7 8,445 17.6 Corporate Expenses 10,839 - 10,553 - Total $51,629 23.2 % $47,274 24.7 %Losses from the revaluation of nonfunctional-currency assets and liabilities increased third-quarter STG&R expenses by $1.3 million in 2017 and $0.1 million in 2016. The increase in third-quarter AEC STG&R expenses is due primarily to higher R&D spending (see table 4) and higher amortization expense related to acquisition accounting adjustments made in Q4 2016.
Table 4 summarizes third-quarter expenses associated with internally funded research and development by segment:
Table 4
Research and development expenses by segmentThree Months endedSeptember 30,
(in thousands)
2017
2016
Machine Clothing $4,229 $3,937 Albany Engineered Composites 3,828 2,656 Total $8,057 $6,593Table 5 summarizes third-quarter operating income by segment:
Table 5
Operating Income/(loss)Three Months endedSeptember 30,
(in thousands)
2017
2016
Machine Clothing $42,674 $40,039 Albany Engineered Composites (9,301 ) (4,529 ) Corporate expenses (11,070 ) (10,690 ) Total $22,303 $24,820Table 6 presents the effect on operating income from restructuring, currency revaluation, and the Bear Claw® inventory write-off:
Table 6
Expenses in Q3 2017resulting from
Expenses/(gain) in Q3 2016resulting from
(in thousands)
Restructuring
Revaluation
Bear Claw®InventoryWrite-off
Restructuring
Revaluation
Machine Clothing $96 $1,114 $-($212
)
$86 Albany Engineered Composites 5,407 137 3,155 640 - Corporate expenses - 5 - (102 ) 4 Total $5,503 $1,256 $3,155 $326 $90AEC restructuring charges in Q3 2017 consisted primarily of non-cash charges (write-off of intangibles and equipment) associated with the decision to exit the Bear Claw® product line. In October 2017, the Company announced that its MC entity in France had initiated discussions with the local works council regarding a potential restructuring. Due to the ongoing nature of those discussions, the Company has not recorded a restructuring charge related to this proposal.
Q3 2017 Other income/expense, net, was income of $1.2 million, including losses related to the revaluation of nonfunctional-currency balances of $0.3 million, and an insurance recovery gain of $2.0 million related to the theft in Japan that was reported in Q4 2016. Q3 2016 Other income/expense, net, was expense of $0.2 million, including income related to the revaluation of nonfunctional-currency balances of $0.3 million.
Table 7 summarizes currency revaluation effects on certain financial metrics:
Table 7
Income/(loss) attributable to currency revaluationThree Months ended September 30,
(in thousands)
2017
2016
Operating income $(1,256 )$(90
) Other income/(expense), net (261 ) 312 Total $(1,517 ) $222The Company’s income tax rate based on income from continuing operations was 36.4% for Q3 2017, compared to 37.5% for Q3 2016. Discrete tax items and the effect of a change in the estimated income tax rate decreased income tax expense by $3.1 million in Q3 2017, principally due to a reduction in net deferred tax asset valuation allowances in certain countries. Discrete tax items and the effect of a change in the estimated income tax rate decreased income tax expense by $0.4 million in Q3 2016.
Tables 8 and 9 provide a reconciliation of operating income and net income to EBITDA and Adjusted EBITDA:
Table 8
Three Months ended September 30, 2017(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $ 42,674 $ (9,301 ) $ (11,070 ) $ 22,303 Interest, taxes, other income/expense - - (7,083 ) (7,083 ) Net income (GAAP) 42,674 (9,301 ) (18,153 ) 15,220 Interest expense, net - - 4,429 4,429 Income tax expense - - 3,809 3,809 Depreciation and amortization 8,380 8,591 1,159 18,130 EBITDA (non-GAAP) 51,054 (710 ) (8,756 ) 41,588 Restructuring expenses, net 96 5,407 - 5,503 Foreign currency revaluation losses 1,114 137 266 1,517 Write-off of inventory in a discontinued product line - 3,155 - 3,155 Pretax loss attributable to non-controlling interest in ASC - 136 - 136 Adjusted EBITDA (non-GAAP) $ 52,264 $ 8,125 $ (8,490 ) $ 51,899Table 9
Three Months ended September 30, 2016(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $ 40,039 $ (4,529 ) $ (10,690 ) $ 24,820 Interest, taxes, other income/expense - - (11,411 ) (11,411 ) Net income (GAAP) 40,039 (4,529 ) (22,101 ) 13,409 Interest expense, net - - 3,681 3,681 Income tax expense - - 7,488 7,488 Depreciation and amortization 9,032 8,027 1,386 18,445 EBITDA (non-GAAP) 49,071 3,498 (9,546 ) 43,023 Restructuring expenses, net (212 ) 640 (102 ) 326 Foreign currency revaluation losses/(gains) 86 - (308 ) (222 ) Pretax (income) attributable to non-controlling interest in ASC - (428 ) - (428 ) Adjusted EBITDA (non-GAAP) $ 48,945 $ 3,710 $ (9,956 ) $ 42,699Payments for capital expenditures were $15.5 million in Q3 2017, compared to $22.5 million in Q3 2016. Depreciation and amortization was $18.1 million in Q3 2017, compared to $18.4 million in Q3 2016.
CFO Comments
CFO and Treasurer John Cozzolino commented, “Cash flow in the third quarter improved compared to the first half of the year. The improvement was primarily the result of strong operating performance and lower capital expenditures. Cash balances increased about $15 million to a total of $153 million, while total debt increased about $10 million to $506 million as of the end of the quarter. The combined effect of those two changes resulted in a $5 million decrease to net debt (total debt less cash, see Table 19) to a balance of $352 million as of the end of the quarter. The Company’s leverage ratio, as defined in our primary debt agreements, was 2.55 at the end of Q3 2017, unchanged from Q2 and well below our limit of 3.50.
”Payments for capital expenditures in Q3 were about $15 million, lower than the previous two quarters due to timing of required cash payments. We expect total company capital expenditures in Q4 and through 2018 to be in the range of $20 - $25 million per quarter, as several key AEC programs continue to ramp.
“The Company’s income tax rate based on income from continuing operations was about 36% in Q3 2017, compared to 35% for the full-year 2016. The Company expects the full-year rate for 2017 to stay at approximately 36%. Cash paid for income taxes was about $3 million in Q3, bringing the year-to-date total to $22 million. For the full year, we estimate cash taxes to range from $25 million to $28 million.”
CEO Comments
CEO Joseph Morone said, “Q3 2017 was an especially strong quarter for Albany International. Aggregate sales, Net income and Adjusted EBITDA grew sharply; MC’s performance was outstanding; and AEC continued its rapid growth, took another incremental step forward in profitability, and made good progress on its multiple ramp-ups and new business development. Both businesses are now on pace to outperform our previously upgraded full-year targets.
“MC sales grew in comparison to both Q3 2016 and Q2 2017, due to a combination of strong performance and good economic conditions, especially in the Americas. The market trends of recent quarters continued. Sales in the publication grades again declined, though only by about 3% compared to Q3 2016, while sales in packaging, tissue and pulp grades grew. Although pricing pressure remained intense, Albany’s pricing was once again stable, except in the publication grades where pricing pressure is greatest. New product performance was outstanding across virtually all product lines, and development of the new technology platform continued to advance impressively. Gross margins remained strong, due to good productivity gains and lower material costs.
“Because of end-of-year seasonal effects and the regression we typically experience after especially strong quarters, Q4 will likely be the weakest quarter of the year. But on a year-over-year basis, because of good backlogs and healthy economic conditions, we expect Q4 2017 to be comparable to Q4 2016. Given the strong year-to-date performance in MC, this means that we now expect full-year Adjusted EBITDA to be at least at the high-end of our normal $180 million to $195 million range.
“In AEC, compared to Q3 2016, sales increased by nearly 50%, driven by growth in the LEAP, 787 fuselage frames, and CH-53K programs. Every AEC plant is now facing the steepest part of their ramp-ups. Each made good progress on quality and yield improvements, and in hiring, training, and installation and qualification of new equipment. It is worth noting in this regard that we are now constructing a second plant in Queretaro, Mexico. The first plant, which is dedicated to LEAP fan blades and is a satellite of the Rochester, New Hampshire LEAP plant, is on schedule to begin production in Q4. The second plant, which we need to handle growing demand for other engine components, will be a satellite of our Boerne, Texas operation and is scheduled to begin production in the second half of next year.
“As expected, the simultaneously high rates of hiring, training and equipment installation across our plants held back productivity in Q3, and will continue to do so for several more quarters. Nonetheless, AEC continues to make steady, incremental progress toward its long-term profitability objective of 18% to 20% Adjusted EBITDA as a percent of sales by 2020. Because of the discontinuation of the non-aerospace Bear Claw® product line, operating income declined compared to Q3 2016. However, Adjusted EBITDA as a percent of sales grew to 11%, compared to 8% in Q3 2016.
“R&D spending grew sharply in the quarter, in support of rapidly accelerating new business development activity. AEC is actively exploring opportunities for near-term growth with existing customers, both on programs already under contract and on programs that would be new for AEC. Good progress was also made on longer-term growth prospects, on both commercial and defense platforms. Given the encouraging progress, we expect to update our projection of AEC’s 2020 revenue potential on our Q4 earnings call.
“As for the near-term outlook for AEC, we expect continued sharp sales growth in Q4, and despite the heavy ramp-up activity, stable or incrementally improved profitability. Last quarter, we revised upward our revenue outlook for the year to the high end of our previously stated outlook of 25% to 35% full-year revenue growth. We now expect full-year revenue growth to be between 35% and 40%.
“In sum, this was an outstanding quarter for Albany, with good performance in both businesses, and a stronger full-year outlook for each business than the already strong, upgraded estimates we provided on our last earnings call.”
About Albany International Corp.
Albany International is a global advanced textiles and materials processing company, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed fabrics and belts essential to production in the paper, nonwovens, and other process industries. Albany Engineered Composites is a rapidly growing supplier of highly engineered composite parts for the aerospace industry. Albany International is headquartered in Rochester, New Hampshire, operates 22 plants in 10 countries, employs 4,400 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.
This release contains certain non-GAAP metrics, including: percent change in net sales excluding currency rate effects (for each segment and the Company as a whole); EBITDA and Adjusted EBITDA (for each segment and the Company as a whole, represented in dollars or as a percentage of net sales); net debt; and net income per share attributable to the Company, excluding adjustments. Such items are provided because management believes that, when reconciled from the GAAP items to which they relate, they provide additional useful information to investors regarding the Company’s operational performance.
Presenting increases or decreases in sales, after currency effects are excluded, can give management and investors insight into underlying sales trends. EBITDA, or net income with interest, taxes, depreciation, and amortization added back, is a common indicator of financial performance used, among other things, to analyze and compare core profitability between companies and industries because it eliminates effects due to differences in financing, asset bases and taxes. An understanding of the impact in a particular quarter of specific restructuring costs, acquisition expenses, currency revaluation, inventory write-offs associated with discontinued businesses, or other gains and losses, on net income (absolute as well as on a per-share basis), operating income or EBITDA can give management and investors additional insight into core financial performance, especially when compared to quarters in which such items had a greater or lesser effect, or no effect. Restructuring expenses in the MC segment, while frequent in recent years, are reflective of significant reductions in manufacturing capacity and associated headcount in response to shifting markets, and not of the profitability of the business going forward as restructured. Net debt is, in the opinion of the Company, helpful to investors wishing to understand what the Company’s debt position would be if all available cash were applied to pay down indebtedness. EBITDA, Adjusted EBITDA and net income per share attributable to the Company, excluding adjustments, are performance measures that relate to the Company’s continuing operations.
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. That amount is then compared to the U.S. dollar amount reported in the current period. The Company calculates EBITDA by removing the following from Net income: Interest expense net, Income tax expense, Depreciation and amortization. Adjusted EBITDA is calculated by: adding to EBITDA costs associated with restructuring, inventory write-offs associated with discontinued businesses and pension settlement charges; adding (or subtracting) revaluation losses (or gains); subtracting (or adding) gains (or losses) from the sale of buildings or investments; subtracting insurance recovery gains in excess of previously recorded losses; subtracting (or adding) Income (or loss) attributable to the non-controlling interest in Albany Safran Composites (ASC); and adding expenses related to the Company’s acquisition of Harris Corporation’s composite aerostructures division. Adjusted EBITDA may also be presented as a percentage of net sales by dividing it by net sales. Net income per share attributable to the Company, excluding adjustments, is calculated by adding to (or subtracting from) net income attributable to the Company per share, on an after-tax basis: restructuring charges; inventory write-offs associated with discontinued businesses; discrete tax charges (or gains) and the effect of changes in the income tax rate; foreign currency revaluation losses (or gains); acquisition expenses; and losses (or gains) from the sale of investments.
EBITDA, Adjusted EBITDA, and net income per share attributable to the Company, excluding adjustments, as defined by the Company, may not be similar to similarly named measures of other companies. Such measures are not considered measurements under GAAP, and should be considered in addition to, but not as substitutes for, the information contained in the Company’s statements of income.
The Company discloses certain income and expense items on a per-share basis. The Company believes that such disclosures provide important insight into underlying quarterly earnings and are financial performance metrics commonly used by investors. The Company calculates the quarterly per-share amount for items included in continuing operations by using the income tax rate based on income from continuing operations and the weighted-average number of shares outstanding for each period. Year-to-date earnings per-share effects are determined by adding the amounts calculated at each reporting period.
Table 10
Net Sales
Nine Months ended
September 30,
Percent
Impact ofChangesin Currency
PercentChangeexcludingCurrency
(in thousands, excluding percentages)
2017
2016
Change
Translation Rates
Rate Effect
Machine Clothing (MC) $440,093 $437,445 0.6 % $(1,311 ) 0.9 % Albany Engineered Composites (AEC) 196,896 129,348 52.2 (263 ) 52.4 Total $636,989 $566,793 12.4 % $(1,574 ) 12.7 %Table 11
Nine Months ended September 30, 2017(in thousands)
MachineClothing
AlbanyEngineeredComposites*
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $ 119,352 $ (32,242 ) $ (33,523 ) $ 53,587 Interest, taxes, other income/expense - - (26,160 ) (26,160 ) Net income (GAAP) 119,352 (32,242 ) (59,683 ) 27,427 Interest expense, net - - 13,042 13,042 Income tax expense - - 12,138 12,138 Depreciation and amortization 25,098 24,613 3,545 53,256 EBITDA (non-GAAP) 144,450 (7,629 ) (30,958 ) 105,863 Restructuring expenses, net 1,012 9,208 - 10,220 Foreign currency revaluation losses 4,427 171 2,318 6,916 Write-off of inventory in a discontinued product line - 3,155 - 3,155 Pretax (income) attributable to non-controlling interest in ASC - (178 ) - (178 ) Adjusted EBITDA (non-GAAP) $ 149,889 $ 4,727 $ (28,640 ) $ 125,976* Includes charge of $15.8 million related to revisions in the estimated profitability of two long-term contracts.
Table 12
Nine Months ended September 30, 2016(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Operating income/(loss) (GAAP) $ 112,583 $ (14,083 ) $ (33,554 ) $ 64,946 Interest, taxes, other income/expense - - (28,120 ) (28,120 ) Net income (GAAP) 112,583 (14,083 ) (61,674 ) 36,826 Interest expense, net - - 9,610 9,610 Income tax expense - - 20,613 20,613 Depreciation and amortization 27,845 17,778 5,601 51,224 EBITDA (non-GAAP) 140,428 3,695 (25,850 ) 118,273 Restructuring expenses, net 5,921 1,787 (55 ) 7,653 Foreign currency revaluation losses/(gains) 1,646 5 (2,355 ) (704 ) Acquisition expenses - 5,367 - 5,367 Pretax loss attributable to non-controlling interest in ASC - 36 - 36 Adjusted EBITDA (non-GAAP) $ 147,995 $ 10,890 $ (28,260 ) $ 130,625Table 13
Three Months ended September 30, 2017(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $5,503 $2,003 $3,500 $0.11 Foreign currency revaluation losses 1,517 552 965 0.03 Write-off of inventory in a discontinued product line 3,155 1,167 1,988 0.06 Unfavorable effect of change in income tax rate - 741 741 0.02 Net discrete income tax benefit - 3,866 3,866 0.12Table 14
Three Months ended September 30, 2016(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 326 $ 122 $ 204 $ 0.01 Foreign currency revaluation gains 222 83 139 0.00 Favorable effect of change in income tax rate - 425 425 0.01 Net discrete income tax charge - 74 74 0.00Table 15
Nine Months ended September 30, 2017(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 10,220 $ 3,721 $ 6,499 $ 0.20 Foreign currency revaluation losses 6,916 2,516 4,400 0.14 Write-off of inventory in a discontinued product line 3,155 1,167 1,988 0.06 Net discrete income tax benefit - 2,281 2,281 0.07 Charge for revision to estimated profitability of AEC contracts 15,821 5,854 9,967 0.31Table 16
Nine Months ended September 30, 2016(in thousands, except per share amounts)
Pretaxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 7,653 $ 2,965 $ 4,688 $ 0.15 Foreign currency revaluation gains 704 256 448 0.01 Acquisition expenses 5,367 1,933 3,434 0.11 Net discrete income tax benefit - 932 932 0.03
Table 17 contains the calculation of net income per share attributable to the Company, excluding adjustments:
Table 17
Three Months endedSeptember 30,
Nine Months endedSeptember 30,
Per share amounts (Basic)
2017
2016
2017
2016
Net income/(loss) attributable to the Company, reported (GAAP) $ 0.47 $ 0.41$
0.85*
$ 1.15 Adjustments: Restructuring charges 0.11 0.01 0.20 0.15 Discrete tax adjustments and effect of change in income tax rate (0.10 ) (0.01 ) (0.07 ) (0.03 ) Foreign currency revaluation losses/(gains) 0.03 - 0.14 (0.01 ) Write-off of inventory in a discontinued product line 0.06 - 0.06 - Acquisition expenses - - - 0.11 Net income attributable to the Company, excluding adjustments (non-GAAP) $ 0.57 $ 0.41 $ 1.18 $ 1.37* Includes charge of $0.31 per share for revisions in estimated profitability of two AEC contracts
Table 18 contains the calculation AEC Adjusted EBITDA as a percentage of sales:
Table 18
Adjusted EBITDA as a percentage of net salesThree months ended
(in thousands, except percentages)
September 30,2017
June 30,2017
March 31,2017
September 30,2016
Adjusted EBITDA (non-GAAP)$8,125
$(8,586)*
$5,188
$3,710
Net sales (GAAP) $71,447 $68,999 $56,450 $48,024 Adjusted EBITDA as a percentage of net sales 11.4% (12.4)% 9.2% 7.7%* Includes charge of $15.8 million in Q2 2017 for revisions in estimated profitability of two AEC contracts.
Table 19 contains the calculation of net debt:
Table 19
(in thousands)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Notes and loans payable$186
$249$274
$312 $343 Current maturities of long-term debt51,765
51,732 51,699 51,666 1,462 Long-term debt453,578
444,030 428,477 432,918 490,003 Total debt505,529
496,011 480,450 484,896 491,808 Cash and cash equivalents153,465
138,792 143,333 181,742 196,170 Net debt$352,064
$357,219 $337,117 $303,154 $295,638Table 20 contains the reconciliation of MC 2017 projected Adjusted EBITDA to MC 2017 projected net income:
Table 20
Machine Clothing Full-Year 2017 Outlook(in millions)
Actual, ninemonths endedSeptember 30,2017
Results for lastquarter of yearto meet low endof normal range
Results forlast quarter ofyear to meethigh-end ofnormal range
Normaltarget rangefor full-year
Net income (non-GAAP) $119 $24 $37 $143 - $156 Depreciation and amortization 25 7 9 (32-34) EBITDA (non-GAAP) $144 $31 $46 $175 - $190 Restructuring expenses 1 * * 1 Foreign currency revaluation losses 4 * * 4 Adjusted EBITDA (non-GAAP) $149 $31 $46 $180 - $195* Due to the uncertainty of these items, management is currently unable to project restructuringexpenses and foreign currency revaluation gains/losses for the remainder of the year.
This press release may contain statements, estimates, 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,” and similar expressions identify forward-looking statements, which generally are not historical in nature. 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) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections.
Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic, geopolitical and paper-industry trends and conditions during 2017 and in future years; expectations in 2017 and in future periods of sales, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net sales), income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, including the acquired composite aerostructures business, 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.
ALBANY INTERNATIONAL CORP.CONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share amounts)(unaudited) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2017 2016 2017 2016 $ 222,141 $ 191,272 Net sales $ 636,989 $ 566,793 142,706 118,852 Cost of goods sold 418,595 343,557 79,435 72,420 Gross profit 218,394 223,236 41,076 38,042 Selling, general, and administrative expenses 123,799 120,997 10,553 9,232 Technical and research expenses 30,788 29,640 5,503 326 Restructuring expenses, net 10,220 7,653 22,303 24,820 Operating income 53,587 64,946 4,429 3,681 Interest expense, net 13,042 9,610 (1,155 ) 242 Other expense/(income), net 980 (2,103 ) 19,029 20,897 Income before income taxes 39,565 57,439 3,809 7,488 Income tax expense 12,138 20,613 15,220 13,409 Net income 27,427 36,826 (49 ) 340 Net income/(loss) attributable to the noncontrolling interest 202 (111 ) $ 15,269 $ 13,069 Net income attributable to the Company $ 27,225 $ 36,937 $ 0.47 $ 0.41 Earnings per share attributable to Company shareholders - Basic $ 0.85 $ 1.15 $ 0.47 $ 0.41 Earnings per share attributable to Company shareholders - Diluted $ 0.85 $ 1.15 Shares of the Company used in computing earnings per share: 32,187 32,104 Basic 32,160 32,079 32,214 32,141 Diluted 32,193 32,118 $ 0.17 $ 0.17 Dividends declared per share, Class A and Class B $ 0.51 $ 0.51ALBANY INTERNATIONAL CORP.CONSOLIDATED BALANCE SHEETS(in thousands, except share data)(unaudited)
September 30,2017
December 31,2016 ASSETS Cash and cash equivalents $ 153,465 $ 181,742 Accounts receivable, net 199,938 171,193 Inventories 157,143 133,906 Income taxes prepaid and receivable 8,133 5,213 Prepaid expenses and other current assets 12,690 9,251 Total current assets 531,369 501,305 Property, plant and equipment, net 451,966 422,564 Intangibles, net 56,997 66,454 Goodwill 166,010 160,375 Income taxes receivable and deferred 81,244 68,865 Contract receivables 29,688 14,045 Other assets 32,343 29,825 Total assets $ 1,349,617 $ 1,263,433 LIABILITIES AND SHAREHOLDERS' EQUITY Notes and loans payable $ 186 $ 312 Accounts payable 45,121 43,305 Accrued liabilities 103,498 95,195 Current maturities of long-term debt 51,765 51,666 Income taxes payable 12,493 9,531 Total current liabilities 213,063 200,009 Long-term debt 453,578 432,918 Other noncurrent liabilities 105,318 106,827 Deferred taxes and other liabilities 13,002 12,389 Total liabilities 784,961 752,143 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; issued 37,392,353 in 2017 and 37,319,266 in 2016 37 37 Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; issued and outstanding 3,233,998 in 2017 and 2016 3 3 Additional paid in capital 428,088 425,953 Retained earnings 533,670 522,855 Accumulated items of other comprehensive income: Translation adjustments (92,523 ) (133,298 ) Pension and postretirement liability adjustments (52,648 ) (51,719 ) Derivative valuation adjustment 917 828 Treasury stock (Class A), at cost 8,431,335 shares in 2017 and 8,443,444 shares in 2016 (256,876 ) (257,136 ) Total Company shareholders' equity 560,668 507,523 Noncontrolling interest 3,988 3,767 Total equity 564,656 511,290 Total liabilities and shareholders' equity $ 1,349,617 $ 1,263,433ALBANY INTERNATIONAL CORP.CONSOLIDATED STATEMENTS OF CASH FLOW(in thousands)(unaudited) Three Months EndedSeptember 30, Nine Months endedSeptember 30, 2017 2016 2017 2016 OPERATING ACTIVITIES $ 15,220 $ 13,409 Net income $ 27,427 $ 36,826 Adjustments to reconcile net income to net cash provided by operating activities: 15,522 16,470 Depreciation 45,367 44,736 2,608 1,975 Amortization 7,889 6,488 (168 ) (275 ) Change in other noncurrent liabilities (2,522 ) (5,010 ) (3,263 ) (1,712 ) Change in deferred taxes and other liabilities (10,620 ) (640 ) 1,086 333 Provision for write-off of property, plant and equipment 1,916 1,409 211 - Non-cash interest expense 634 - 195 350 Compensation and benefits paid or payable in Class A Common Stock 1,865 1,882 4,149 - Write-off of intangible assets in a discontinued product line 4,149 - Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition: (4,645 ) 4,794 Accounts receivable (19,781 ) (6,492 ) (3,944 ) (5,511 ) Inventories (17,210 ) (12,886 ) (599 ) (481 ) Prepaid expenses and other current assets (3,167 ) (3,302 ) - (100 ) Income taxes prepaid and receivable (2,817 ) 1,737 (4,769 ) (4,443 ) Accounts payable (2,704 ) (1,544 ) 5,425 4,418 Accrued liabilities 4,525 (3,736 ) 3,472 4,932 Income taxes payable 2,964 3,999 (8,107 ) - Contract receivables (15,643 ) - (4,495 ) (4,974 ) Other, net (557 ) (10,252 ) 17,898 29,185 Net cash provided by operating activities 21,715 53,215 INVESTING ACTIVITIES - - Purchase of business, net of cash acquired - (187,000 ) (15,319 ) (21,924 ) Purchases of property, plant and equipment (61,724 ) (50,029 ) (147 ) (591 ) Purchased software (538 ) (1,262 ) - 4,686 Proceeds from sale or involuntary conversion of assets - 6,422 (15,466 ) (17,829 ) Net cash used in investing activities (62,262 ) (231,869 ) FINANCING ACTIVITIES 13,076 13,265 Proceeds from borrowings 45,335 232,795 (3,569 ) (871 ) Principal payments on debt (24,711 ) (23,695 ) - - Debt acquisition costs - (1,771 ) - - Swap termination payment - (5,175 ) - - Taxes paid in lieu of share issuance (1,364 ) (1,272 ) 356 64 Proceeds from options exercised 531 454 (5,470 ) (5,457 ) Dividends paid (16,396 ) (16,354 ) 4,393 7,001 Net cash provided by financing activities 3,395 184,982 7,848 1,788 Effect of exchange rate changes on cash and cash equivalents 8,875 4,729 14,673 20,145 (Decrease)/increase in cash and cash equivalents (28,277 )
11,057 138,792 176,025 Cash and cash equivalents at beginning of period 181,742 185,113 $ 153,465 $ 196,170 Cash and cash equivalents at end of period $ 153,465 $ 196,170
View source version on businesswire.com: http://www.businesswire.com/news/home/20171030006174/en/
Albany International Corp.InvestorsJohn Cozzolino, 518-445-2281john.cozzolino@albint.comorMediaHeather Kralik, 801-505-7001heather.kralik@albint.com
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