Second-Quarter Financial Highlights
- Net sales were $172.3 million, a
decrease of 11.0% compared to Q2 2014. Excluding currency effects,
net sales decreased 5.6% (see Table 1).
- Including a charge of $14.0 million for
a revision in the estimated profitability of AEC’s BR725 contract,
Adjusted EBITDA for Q2 2015 was $18.8 million, compared to $37.3
million in Q2 2014 (see Tables 6 and 7).
- Year-to-date net sales, excluding
currency effects, increased 0.5% compared to 2014 (see Table 8).
Including the $14.0 million charge, year-to-date Adjusted EBITDA
was $60.3 million in 2015, compared to $75.0 million in 2014 (see
Tables 9 and 10).
- Including the $14.0 million charge
($0.28 per share), Q2 2015 income attributable to the Company was a
loss of $0.07 per share. Earnings were reduced by restructuring
charges of $0.02, foreign currency revaluation losses of $0.04, and
income tax adjustments of $0.02 (see Tables 11 and 15).
- Q2 2014 income attributable to the
Company was $0.35 per share. Earnings were reduced by restructuring
charges of $0.04 and income tax adjustments of $0.03, and were
increased by an insurance-recovery gain of $0.03 and foreign
currency revaluation gains of $0.02 (see Tables 12 and 15).
Albany International Corp. (NYSE:AIN) reported that Q2 2015
income before income taxes was a loss of $2.5 million, including
the previously announced BR725 charge of $14.0 million,
restructuring charges of $1.2 million, and losses of $2.3 million
from foreign currency revaluation. Including the impact of these
items and charges of $0.7 million for income tax adjustments,
income attributable to the Company was a loss of $2.2 million.
As previously announced, the Company recorded a $14.0 million
charge ($0.28 per share) for a revision in the estimated
profitability of a legacy contract in the Albany Engineered
Composites segment (AEC). The long-term contract is for the
manufacture of composite components for the Rolls-Royce BR725
engine, which powers the Gulfstream G650 business jet. The
components are manufactured in AEC’s facility in Boerne, Texas.
Q2 2014 income before income taxes was $18.4 million, including
restructuring charges of $2.0 million, gains of $1.0 million from
foreign currency revaluation, and an insurance-recovery gain of
$1.0 million. Including the impact of these items and charges of
$0.8 million for income tax adjustments, income attributable to the
Company was $11.2 million.
Table 1 summarizes net sales and the effect of changes in
currency translation rates:
Table 1
Impact of Net Sales Changes Percent Change Three
Months ended in Currency excluding
June, Percent Translation
Currency
(in thousands)
2015
2014
Change
Rates
Rate Effect
Machine Clothing (MC) $ 150,561 $
172,809 -12.9 % ($9,970 )
-7.1 % Albany Engineered Composites (AEC)
21,728 20,709 4.9 %
(403 ) 6.9 % Total $ 172,289
$ 193,518 -11.0 %
($10,373 ) -5.6 %
Changes in currency translation rates, driven mainly by the
stronger U.S. dollar, resulted in a $10.4 million decline in sales
for the second quarter of 2015. Excluding that effect, MC sales
were down 7.1% compared to Q2 2014, principally due to lower sales
volume in North America and Europe, reflecting sharp declines in
publication grades. Excluding currency translation effects, AEC
sales increased 6.9% to $21.7 million in Q2 2015 due to growth in
the LEAP program.
Q2 2015 gross profit was $54.6 million, or 31.7% net sales,
compared to $75.3 million, or 38.9% of net sales, in the same
period of 2014. The $14.0 million BR725 charge reduced Q2 2015
gross profit margin by 8.1%. Q2 2015 MC gross profit was $68.1
million, or 45.2% of net sales, compared to $73.3 million, or 42.4%
of net sales, in Q2 2014. The decline in MC gross profit was
primarily the result of lower sales volume in North America and
Europe. Even though changes in currency translation rates had a
significant effect on MC net sales, it had only a minor negative
effect on gross profit. AEC gross profit was a loss of $13.1
million in Q2 2015, compared to income of $2.4 million in the same
quarter of 2014. In addition to the $14.0 million charge, the
decline in gross profit was due to unfavorable sales mix in legacy
programs.
Selling, technical, general, and research (STG&R) expenses
were $50.3 million, or 29.2% of net sales, in the second quarter of
2015, compared to $54.4 million, or 28.1% of net sales, in the
second quarter of 2014. The decline in STG&R results
principally from the effects of changes in currency translation
rates and restructuring activities. The revaluation of
nonfunctional-currency assets and liabilities resulted in a loss of
$0.4 million in both quarters.
The following table presents expenses associated with internally
funded research and development by segment:
Table 2
Research and development
expenses by segment Three Months ended June 30,
(in thousands)
2015
2014
Machine Clothing $ 4,779 $ 5,185 Albany
Engineered Composites 2,905
2,267 Corporate expenses 190
199 Total $ 7,874 $ 7,651
The following table summarizes second-quarter operating income
by segment:
Table 3
Operating Income/(loss)
Three Months ended
June 30,
(in thousands)
2015
2014
Machine Clothing $ 33,323
$ 33,879 Albany Engineered Composites
(18,633
)
*
(3,545 ) Corporate expenses
(11,652 ) (11,357 ) Total
$ 3,038 $ 18,977
*Includes $14.0 million BR725 charge
Segment operating income was affected by restructuring, currency
revaluation, and the BR725 charge as shown in Table 4 below.
Table 4
Expenses/(gain) in Q2 2015
Expenses/(gain) in Q2 2014
resulting from
resulting from
(in thousands)
Restructuring
Revaluation
BR725 Charge
Restructuring
Revaluation
Machine Clothing $ 1,211 $ 394
$ - $ 1,297 $ 350 Albany
Engineered Composites - 1
14,000 660
61 Corporate expenses -
2 - -
2 Total $ 1,211 $ 397
$ 14,000 $ 1,957 $ 413
Q2 2015 Other income/expense, net, was expense of $2.8 million,
including losses related to the revaluation of
nonfunctional-currency balances of $1.9 million. Q2 2014 Other
income/expense, net, was income of $2.1 million, including gains
related to the revaluation of nonfunctional-currency balances of
$1.4 million and an insurance-recovery gain of $1.0 million.
The following table summarizes currency revaluation effects on
certain financial metrics:
Table 5
Income/(loss) attributable
to currency revaluation
Three Months ended
June 30,
(in thousands)
2015
2014
Operating income ($397 ) ($413 )
Other income/(expense), net (1,878 )
1,397 Total ($2,275 )
$984
The Company’s income tax rate, excluding tax adjustments, was
43.5% for Q2 2015, compared to 36.5% for the same period of 2014.
The higher tax rate in Q2 2015 was due primarily to the impact of
restructuring charges where the Company is unable to record a tax
benefit related to the expense. Discrete tax charges and the effect
of a change in the estimated tax rate increased second-quarter
income tax expense by $0.7 million in 2015 and $0.8 million in
2014.
The following tables summarize Adjusted EBITDA:
Table 6
Three Months ended June 30, 2015
Albany Corporate Machine Engineered
expenses Total
(in thousands)
Clothing Composites and
other Company Net income/(loss) $
33,323
($18,633
)
*
($16,810 ) ($2,120 ) Interest
expense, net - -
2,702 2,702 Income
tax expense/(benefit) - -
(364 ) (364 )
Depreciation and amortization 10,212
2,869 2,103
15,184
EBITDA
43,535 (15,764 )
(12,369 ) 15,402
Restructuring expenses, net 1,211
- -
1,211 Foreign currency revaluation (gains)/losses
394 1
1,880 2,275 Pretax income
attributable to noncontrolling interest in ASC
- (64 ) -
(64 )
Adjusted EBITDA $
45,140 ($15,827 )
($10,489 ) $
18,824
* Includes $14.0 million BR725 charge
Table 7
Three Months ended June 30, 2014
Albany Corporate Machine Engineered
expenses Total
(in thousands)
Clothing Composites and
other Company Net income $ 33,879
($3,545 ) ($19,157 ) $
11,177 Interest expense, net -
- 2,717
2,717 Income tax expense -
- 7,216
7,216 Depreciation and amortization
11,554 2,453 2,090
16,097
EBITDA
45,433 (1,092 )
(7,134 ) 37,207
Restructuring expenses, net 1,297
660 - 1,957
Foreign currency revaluation losses/(gains)
350 61 (1,395 )
(984 ) Gain on insurance recovery
- - (961 )
(961 ) Pretax loss attributable to noncontrolling interest
in ASC - 45
- 45
Adjusted EBITDA
$ 47,080 ($326
) ($9,490 )
$ 37,264
Capital spending was $18.8 million for Q2 2015, compared to
$12.8 million for Q2 2014. Depreciation and amortization was $15.2
million for Q2 2015, compared to $16.1 million for Q2 2014.
CFO Comments
CFO and Treasurer John Cozzolino commented, “During the quarter,
the Company entered into a new $400 million revolving credit
facility with its principal bank group. The new facility provides
an additional $70 million of available financing and extends
through June 2020 essentially the same favorable terms, including
LIBOR spreads, contained in the previous agreement. At the end of
Q2, $202 million was drawn down from the facility. Up-front fees
associated with the new facility were $1.6 million. Also, in July,
we entered into interest rate swap transactions that extend until
June 2020 our interest rate protection on $110 million to $120
million of our debt.
“Net debt (total debt less cash) increased $8 million to $120
million (see Table 16), as capital expenditures included $9 million
related to the lease buyout of a building in Rochester, New
Hampshire, that houses the Company’s headquarters and AEC’s R&D
center. The Company’s leverage ratio, as defined in our primary
debt agreements, increased from 1.28 at the end of Q1 to 1.55 at
the end of Q2. Capital expenditures for the first six months of the
year were $31 million, and we currently estimate full-year spending
in 2015 to be $60 million to $70 million. Cash paid for income
taxes was about $5 million in Q2, and we estimate cash taxes in
2015 to range from $20 million to $23 million.
“Compared to currency rates in effect during Q2 2014, net sales
were once again negatively impacted by the broadly stronger U.S.
dollar while the impact on Adjusted EBITDA was somewhat positive.
In the future, the currency impact on Adjusted EBITDA could be
significantly different depending on the movement of the U.S.
dollar against any of our key foreign currency net income or
expense exposures.”
CEO Comments
President and CEO Joe Morone said, “Following our good
performance in Q1, Q2 2015 was a weak quarter for Albany
International with sales and EBITDA considerably lower than in the
comparable period in 2014. Nonetheless, year-to-date MC Adjusted
EBITDA and AEC sales are in line with expectations and ahead of
last year’s pace, and we remain on track toward our full-year
outlook of comparable year-over-year Adjusted EBITDA in MC and
5-10% growth in sales in AEC. And of significance for the longer
term, there were several important developments during the quarter,
the most notable being a decision to respond to the rapidly growing
demand for LEAP engines by building a third plant.
“In MC, excluding currency effects, sales were down 7% compared
to Q2 2014, primarily due to a sharply weaker market and lower
sales in the publication grades in North America and Europe. The
other grades performed as expected. And despite the economic
instabilities, sales in China and South America were stable. Year
to date, and excluding currency effects, sales are 2% behind the
first half of 2014 and orders are 3% ahead.
“Q2 Gross profit margins remained strong and well above Q2 2014
levels. This mitigated the impact of the weak sales on adjusted
EBITDA, which declined 4% compared to Q2 2014 and which leaves
year-to-date Adjusted EBITDA 1.5% ahead of the first half of
2014.
“We continued to make good progress during the quarter on the
shift of sales mix away from publication grades. Meanwhile, in the
development of our new technology platform, we ran successful
trials with important customers in the tissue segment, scheduled
initial trials in the packaging sector, and are seeing encouraging
results from initial prototypes across all of our product
lines.
“Turning to AEC, during Q2 we recorded a charge of $14 million
related to composite parts for the BR725 engine, a small, legacy
program, manufactured in our Boerne, Texas, operations and governed
by a contract signed in 2007 that sets very aggressive pricing
levels. As discussed in previous releases, Boerne’s operational
performance has improved dramatically, with strong on-time
deliveries and good yields, including on the BR725 program. But as
we’ve gained more manufacturing experience with the BR725, we’ve
concluded that future costs are likely to be higher than previously
estimated, and given the challenging price levels, this led to the
conclusion that we needed to take the $14 million charge.
“In other respects, AEC performed well, and is firmly on track
both for our full-year forecast of 5-10% growth in sales and for
the LEAP ramp that begins late next year. The most important
development this quarter was the decision to build a third joint
plant with Safran for the LEAP program, this one in Mexico. Annual
production of the LEAP engine is now projected to reach at least
1,900 engines by 2020, and Boeing and Airbus are publically
pressuring CFM to increase production to even higher levels. The
addition of the GE9X fan case, which we will produce in Rochester,
the much higher-than-expected demand for LEAP engines, and the
possibility of still higher levels of demand by next decade all led
to the decision to move forward with plant three as soon as
possible. Groundbreaking is scheduled for next year, with initial
operation targeted for late 2017. We are not at this time altering
our projection of total annual capital spending for the company of,
on average, $70 million. The likely impact of the higher LEAP
demand and third plant will be to stretch the years of peak
spending for LEAP by one to two years, rather than increase peak
spending in any one year.
“As for R&D, this was a very encouraging quarter, with good
progress on a number of potentially important airframe and engine
projects, for both the near and long term. While significant
uncertainties remain on all of them, several are approaching
important development or commercialization decision points.
Likewise, with Ricardo, we are actively engaged with a number of
automotive OEMs in technical assessments of the viability of AEC
technology for application in the high-performance, super-luxury
segment of the automotive market. We expect to have developed a
clear understanding of the near-term commercial viability of our
technology for this market segment within the next six to twelve
months.
“As mentioned above, our outlook for the full-year remains
unchanged. We continue to view macroeconomic uncertainties as the
primary source of downside risk to our outlook, and given recent
developments in such key growth markets as China and Brazil, that
risk appears to be growing. But barring further deterioration in
the macroeconomic environment, we continue to expect MC Adjusted
EBITDA for the second half of the year, and thus full-year Adjusted
EBITDA, to be comparable to last year; and for AEC, we expect a
strong second-half of the year, with full-year revenue at least
5-10% ahead of 2014.
“In sum, this was a weak quarter due primarily to lower MC sales
in the publication grades in North America and Europe, compounded
by the charge for the BR725 program. But in the larger picture, we
remain firmly on track in both businesses -- in the short term,
toward our full-year outlook, and for the longer term, toward our
strategic objectives of steady EBITDA and cash flow in MC, and a
decade or more of double-digit growth in AEC, driven primarily by
LEAP and additionally by new projects emerging from the
pipeline.”
The Company plans a webcast to discuss second-quarter 2015
financial results on Wednesday, August 5, 2015, at 9:00 a.m.
Eastern Time. For access, go to www.albint.com.
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 19 plants in 10 countries, employs 4,000 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 items, such as earnings before
interest, taxes, depreciation and amortization (EBITDA), Adjusted
EBITDA, sales excluding currency effects, income tax rate excluding
adjustments, net debt, net income attributable to the Company,
excluding adjustments (on an absolute and per-share basis), and
certain income and expense items on a per-share basis that could be
considered non-GAAP financial measures. Such items are provided
because management believes that, when presented together with 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. An understanding of the
impact in a particular quarter of specific restructuring costs, or
other gains and losses, on operating income or EBITDA can give
management and investors additional insight into quarterly
performance, especially when compared to quarters in which such
items had a greater or lesser effect, or no effect. All non-GAAP
financial measures in this release relate to the Company’s
continuing operations.
The effect of changes in currency translation rates is
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 Income tax adjustments by adding
discrete tax items to the effect of a change in tax rate for the
reporting period. The Company calculates its income tax rate,
exclusive of income tax adjustments, by removing income tax
adjustments from total Income tax expense, then dividing that
result by Income before income taxes. The Company calculates EBITDA
by removing the following from Net income: Interest expense net,
Income tax expense, Depreciation and amortization, and Income or
loss from Discontinued Operations. Adjusted EBITDA is calculated
by: adding to EBITDA costs associated with restructuring 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; and subtracting Income attributable to the
noncontrolling interest in Albany Safran Composites (ASC). The
Company believes that EBITDA and Adjusted EBITDA provide useful
information to investors because they provide an indication of the
strength and performance of the Company's ongoing business
operations, including its ability to fund discretionary spending
such as capital expenditures and strategic investments, as well as
its ability to incur and service debt. While depreciation and
amortization are operating costs under GAAP, they are noncash
expenses equal to current period allocation of costs associated
with capital and other long-lived investments made in prior
periods.
While restructuring expenses, foreign currency revaluation
losses or gains, pension settlement charges, insurance-recovery
gains, and gains or losses from sales of buildings or investments
have an impact on the Company's net income, removing them from
EBITDA can provide, in the opinion of the Company, a better measure
of operating performance. EBITDA is also a calculation commonly
used by investors and analysts to evaluate and compare the periodic
and future operating performance and value of companies. EBITDA, as
defined by the Company, may not be similar to EBITDA measures of
other companies. Such EBITDA measures may not be 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 estimated effective
annual tax rate 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 8
Net Sales
Six Months ended
June,
Percent
Impact of Changes
in Currency
Translation
Percent Change
excluding Currency
(in thousands)
2015
2014
Change
Rates
Rate Effect
Machine Clothing (MC) $ 309,055 $
336,897 -8.3 % ($21,287 )
-1.9 % Albany Engineered Composites (AEC)
44,558 36,928 20.7 %
(740 ) 22.7 % Total $ 353,613
$ 373,825 -5.4 % ($22,027
) 0.5 %
Table 9
Six Months ended June 30, 2015
Albany Corporate Machine Engineered
expenses Total
(in thousands)
Clothing Composites and
other Company Net income $ 69,013
($22,444
)
*
($36,450 ) $ 10,119 Interest
expense, net - -
5,378 5,378
Income tax expense - -
8,155 8,155
Depreciation and amortization 20,416
5,865 4,257
30,538
EBITDA
89,429 (16,579 )
(18,660 )
54,190 Restructuring expenses, net
10,212 - -
10,212 Foreign currency
revaluation losses/(gains) (2,529 )
(17 ) (551 )
(3,097 ) Gain on sale of investment -
- (872 )
(872 )
Pre-tax income attributable to
noncontrolling interest in ASC
- (90 )
- (90 )
Adjusted EBITDA
$ 97,112
($16,686 ) ($20,083
) $ 60,343
*Includes $14 million BR725 charge
Table 10
Six Months ended June 30, 2014
Albany Corporate Machine Engineered
expenses Total
(in thousands)
Clothing Composites and
other Company Net income $ 70,022
($7,021 ) ($41,131 ) $
21,870 Interest expense, net -
- 5,635
5,635 Income tax expense -
- 14,673
14,673 Depreciation and amortization
23,009 4,775 4,221
32,005
EBITDA
93,031 (2,246 )
(16,602 ) 74,183
Restructuring expenses, net 2,159
980 - 3,139
Foreign currency revaluation losses/(gains)
502 99 (1,901 )
(1,300 ) Gain on insurance recovery
- - (961 )
(961 ) Pre-tax income attributable to noncontrolling
interest in ASC - (13 )
- (13 )
Adjusted EBITDA
$ 95,692 ($1,180
) ($19,464 )
$ 75,048
Table 11
Three Months ended June 30, 2015
Pre-tax After-tax Per Share
(in thousands, except per share
amounts)
amounts Tax Effect Effect
Effect Restructuring and other, net $
1,211 $ 448 $ 763 $ 0.02
Foreign currency revaluation losses 2,275
842 1,433
0.04 Net discrete income tax benefit -
20 20
0.00 Unfavorable effect of change in income tax rate
- 736 736
0.02 Charge for revision in estimated contract
profitability 14,000
5,180 8,820 0.28
Table 12
Three Months ended June 30, 2014
Pre-tax After-tax Per Share
(in thousands, except per share
amounts)
amounts Tax Effect Effect
Effect Restructuring and other, net $
1,957 $ 714 $ 1,243 $
0.04 Foreign currency revaluation gains 984
359 625
0.02 Gain on insurance recovery 961
- 961
0.03 Net discrete income tax charge -
569 569
0.02 Unfavorable effect of change in income tax rate
- 278 278
0.01
Table 13
Six Months ended June 30, 2015
Pre-tax After-tax Per Share
(in thousands, except per share
amounts)
amounts Tax Effect Effect
Effect Restructuring and other, net $
10,212 $ 3,868 $ 6,344 $
0.20 Foreign currency revaluation gains 3,097
1,199 1,898
0.06 Gain on sale of investment 872
331 541
0.02 Net discrete income tax charge -
199 199
0.01 Charge for revision in estimated contract profitability
14,000 5,180
8,820 0.28
Table 14
Six Months ended June 30, 2014
Pre-tax After-tax Per Share
(in thousands, except per share
amounts)
amounts Tax Effect Effect
Effect Restructuring and other, net $
3,139 $ 1,128 $ 2,011 $
0.06 Foreign currency revaluation gains 1,300
469 831
0.03 Gain on insurance recovery 961
- 961
0.03 Net discrete income tax charge -
1,673 1,673
0.05
The following table contains the calculation of net income per
share attributable to the Company, excluding adjustments:
Table 15
Three Months ended
June 30,
Six Months ended
June 30,
Per share amounts (Basic)
2015
2014
2015
2014
Net income/(loss) attributable to the Company, reported
($0.07
)
*
$ 0.35
$
0.31
*
$ 0.69 Adjustments:
Restructuring charges 0.02
0.04 0.20
0.06 Discrete tax charges and effect of
change in income tax rate 0.02
0.03 0.01
0.05 Foreign currency revaluation
(gains)/ losses 0.04
(0.02 ) (0.06 )
(0.03 ) Gain on insurance recovery -
(0.03 ) -
(0.03 ) Gain on the sale of investment
- -
(0.02 ) - Net
income attributable to the Company, excluding adjustments
$ 0.01 $ 0.37
$ 0.44 $ 0.74
*Includes $0.28 per share for BR725
charge
The following table contains the calculation of net debt:
Table 16
June 30, March 31,
December 31, September 30, June 30,
March 31, December 31, (in thousands)
2015 2015 2014
2014 2014 2014
2013 Notes and loans payable $ 543 $
496 $ 661 $ 551 $ 692
$ 797 $ 625 Current maturities of
long-term debt 50,015
50,015 50,015 15
1,265 2,514
3,764 Long-term debt 252,088
232,092 222,096
283,100 283,104 299,108
300,111
Total debt
302,646 282,603
272,772 283,666
285,061 302,419
304,500 Cash and cash equivalents
182,474 170,838
179,802 195,461
206,836 208,379
222,666
Net debt $ 120,172
$ 111,765 $
92,970 $ 88,205
$ 78,225 $ 94,040
$ 81,834
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” 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 and
paper industry trends and conditions during 2015 and in future
years; expectations in 2015 and in future periods of sales, EBITDA,
Adjusted EBITDA, income, gross profit, gross margin 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 AEC
sales growth potential; 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; the timeline for ASC’s planned facility in
Mexico; 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 data) (unaudited) Three Months Ended Six Months
Ended June 30, June 30, 2015 2014
2015 2014 $ 172,289 $ 193,518
Net sales $ 353,613 $ 373,825 117,697 118,175
Cost of goods sold 222,337 223,673
54,592 75,343 Gross profit 131,276 150,152 39,932
40,012 Selling, general, and administrative expenses 75,165 79,169
10,411 14,397 Technical, product engineering, and research expenses
22,712 28,266 1,211 1,957 Restructuring
expenses, net 10,212 3,139 3,038
18,977 Operating income 23,187 39,578 2,702 2,717 Interest expense,
net 5,378 5,635 2,820 (2,133 ) Other
(income)/expenses, net (465 ) (2,600 ) (2,484
) 18,393 Income/(loss) before income taxes 18,274 36,543
(364 ) 7,216 Income tax expense/(benefit)
8,155 14,673 (2,120 ) 11,177 Net
income/(loss) 10,119 21,870 52 (42 ) Net
income/(loss) attributable to the noncontrolling interest 78
30 ($2,172 ) $ 11,219 Net
income/(loss) attributable to the Company $ 10,041 $ 21,840
($0.07 ) $ 0.35 Earnings/(losses) per share
attributable to Company shareholders - Basic $ 0.31 $ 0.69
($0.07 ) $ 0.35 Earnings(losses) per share attributable to Company
shareholders - Diluted $ 0.31 $ 0.68 Shares of the Company
used in computing earnings per share: 31,999 31,832 Basic 31,941
31,809 31,999 31,935 Diluted 32,015 31,913 $ 0.17 $ 0.16
Dividends per share $ 0.33 $ 0.31
ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in
thousands, except share data) (unaudited) June 30, December
31, 2015 2014 ASSETS Cash and cash
equivalents $ 182,474 $ 179,802 Accounts receivable, net 160,997
158,237 Inventories 109,630 107,274 Deferred income taxes 6,661
6,743 Asset held for sale 8,326 9,102 Prepaid expenses and other
current assets 8,739 8,074 Total
current assets 476,827 469,232 Property, plant and
equipment, net 379,139 386,011 Intangibles 270 385 Goodwill 67,489
71,680 Income taxes receivable and deferred 71,817 69,540 Other
assets 27,905 32,456 Total assets $
1,023,447 $ 1,029,304 LIABILITIES AND
SHAREHOLDERS' EQUITY Notes and loans payable $ 543 $ 661 Accounts
payable 32,258 34,787 Accrued liabilities 89,544 95,149 Current
maturities of long-term debt 50,015 50,015 Income taxes payable and
deferred 1,742 2,786 Total current
liabilities 174,102 183,398 Long-term debt 252,088 222,096
Other noncurrent liabilities 98,589 103,079 Deferred taxes and
other credits 6,783 7,163 Total
liabilities 531,562 515,736
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
37,230,013 in 2015 and 37,085,489 in 2014 37 37 Class B Common
Stock, par value $.001 per share; authorized 25,000,000 shares;
issued and outstanding 3,235,048 in 2015 and 2014 3 3 Additional
paid in capital 422,204 418,972 Retained earnings 455,597 456,105
Accumulated items of other comprehensive income: Translation
adjustments (81,263 ) (55,240 ) Pension and postretirement
liability adjustments (50,056 ) (51,666 ) Derivative valuation
adjustment (1,024 ) (861 ) Treasury stock (Class A), at cost
8,455,293 shares in 2015 and 8,459,498 in 2014 (257,391 )
(257,481 ) Total Company shareholders' equity 488,107
509,869 Noncontrolling interest 3,778 3,699
Total equity 491,885 513,568
Total liabilities and shareholders' equity $ 1,023,447 $
1,029,304
ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF
CASH FLOW (in thousands) (unaudited) Three Months Ended Six
Months Ended June 30, June 30, 2015 2014
2015 2014
OPERATING ACTIVITIES
($2,120 ) $ 11,177
Net income/(loss)
$ 10,119 $ 21,870
Adjustments to reconcile net income/(loss)
to net cash provided by operating activities:
13,373 14,276 Depreciation 26,897 28,383 1,811 1,821 Amortization
3,641 3,622 (5,920 ) 2,946 Change in long-term liabilities,
deferred taxes and other credits (6,197 ) 2,732 263 728 Provision
for write-off of property, plant and equipment 415 729 - (961 )
Gain on disposition or involuntary conversion of assets (1,056 )
(961 ) (342 ) (106 ) Excess tax benefit of options exercised (603 )
(145 ) 419 405 Compensation and benefits paid or payable in Class A
Common Stock 995 947
Changes in operating assets and
liabilities that provide/(use) cash:
4,212 3,333 Accounts receivable (9,487 ) 14,297 (4,061 ) (1,963 )
Inventories (7,131 ) (10,959 ) 1,715 1,762 Prepaid expenses and
other current assets (990 ) (386 ) (158 ) (7 ) Income taxes prepaid
and receivable (74 ) 14 (4,853 ) 555 Accounts payable (1,341 ) (739
) (933 ) 170 Accrued liabilities (2,520 ) (12,679 ) 475 651 Income
taxes payable 77 (1,059 ) 7,062 (2,098 )
Other, net 4,607 (4,129 ) 10,943
32,689 Net cash provided by operating activities
17,352 41,537
INVESTING ACTIVITIES
(18,455 ) (12,799 ) Purchases of property, plant and equipment
(30,666 ) (27,402 ) (304 ) (21 ) Purchased software (337 ) (315 )
- 961 Proceeds from sale or involuntary
conversion of assets 2,797 961
(18,759 ) (11,859 ) Net cash used in investing activities
(28,206 ) (26,756 )
FINANCING ACTIVITIES
24,346 235 Proceeds from borrowings 39,620 4,670 (4,303 ) (17,593 )
Principal payments on debt (9,746 ) (24,109 ) (1,630 ) - Debt
acquisition costs (1,630 ) - 1,039 261 Proceeds from options
exercised 1,724 387 342 106 Excess tax benefit of options exercised
603 145 (5,107 ) (4,774 ) Dividends paid
(10,205 ) (9,539 ) 14,687 (21,765 ) Net
cash provided by/(used in) financing activities 20,366
(28,446 )
4,765 (608 )
Effect of exchange rate changes on cash
and cash equivalents
(6,840 ) (2,165 ) 11,636 (1,543 )
Increase/(decrease) in cash and cash
equivalents
2,672 (15,830 ) 170,838 208,379
Cash and cash equivalents at beginning of
period
179,802 222,666 $ 182,474 $
206,836
Cash and cash equivalents at end of
period
$ 182,474 $ 206,836
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150804006931/en/
Albany International Corp.InvestorsJohn Cozzolino,
518-445-2281john.cozzolino@albint.comorMediaSusan Siegel,
603-330-5866susan.siegel@albint.com
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