Third-quarter Financial Highlights
- Net sales were $191.3 million, an
increase of 7.0% compared to Q3 2015. Net sales increased 11.4% as
the result of the Q2 2016 acquisition of Harris Corporation’s
composite aerostructures division (see Tables 1 and 2).
- Q3 2016 net income attributable to the
Company was $13.1 million ($0.41 per share), compared to $9.7
million ($0.30 per share) in Q3 2015. Net income attributable to
the Company, excluding adjustments (a non-GAAP measure), was $0.41
per share, compared to $0.47 in Q3 2015 (see Table 16).
- Adjusted EBITDA (a non-GAAP measure)
was $42.7 million, compared to $42.0 million in Q3 2015 (see Tables
7 and 8).
Albany International Corp. (NYSE:AIN) reported that Q3 2016 net
income attributable to the Company was $13.1 million, compared to
$9.7 million in Q3 2015.
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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. Q3 2016 income before income
taxes also includes $0.4 million of costs related to the
integration of the acquired business. Q3 2015 income before income
taxes was $21.9 million, including restructuring charges of $3.7
million and gains of $1.0 million from foreign currency
revaluation.
As previously reported, in the second quarter of 2016, the
Company completed the acquisition of Harris Corporation’s composite
aerostructures division. Table 1 summarizes key financial metrics
of the acquired business, which is included in the AEC segment.
Table 1
(in thousands, excluding percentages)
Three MonthsendedSeptember 30,2016
Net sales $20,354 Gross profit
1,697 Gross profit percentage 8.3%
Selling, technical, general and research expenses
$3,157 Operating income/(loss) (1,460)
Depreciation and amortization (D&A) 4,480
EBITDA [Operating income/(loss) + D&A]
3,020 Adjusted EBITDA [Operating income/(loss) + D&A]
3,020
Table 2 summarizes net sales and the effect of changes in
currency translation rates:
Table 2
Net Sales
Three Months ended
September 30,
PercentChange
Impact ofChangesin CurrencyTranslation
Rates
Percent ChangeexcludingCurrency
RateEffect
(in thousands, excluding percentages)
2016
2015
Machine Clothing (MC) $ 143,248
$ 154,522 -7.3 % $ 212
-7.4 % Albany Engineered Composites (AEC)
48,024 24,267
97.9 % 29
97.8 % Total $ 191,272
$ 178,789 7.0 % $
241 6.8 %
Against a strong Q3 2015, MC net sales decreased in virtually
every region and grade. The decrease reflects a return to a more
normal seasonal pattern in Q3 2016, combined with weakness in the
publication grades in Europe and Asia. AEC net sales increased
$23.8 million, principally due to the acquisition and growth in
LEAP.
Gross profit declined from $75.7 million in Q3 2015 to $72.4
million in Q3 2016. Gross profit margin in Q3 2016 was 37.9%
(compared to 42.4% in Q3 2015) reflecting the change in the
business mix due to the aerostructures acquisition. As a result of
lower sales, MC gross profit decreased from $74.7 million in Q3
2015 to $68.1 million in Q3 2016, while MC gross profit margin
decreased from 48.4% to 47.5%. AEC gross profit increased to $4.6
million in Q3 2016, compared to $1.4 million in Q3 2015 due to
higher sales.
Q3 2016 selling, technical, general, and research (STG&R)
expenses were $47.3 million, or 24.7% of net sales, including
losses of $0.1 million from the revaluation of
nonfunctional-currency assets and liabilities. Q3 2016 STG&R
also includes $0.4 million of costs related to the integration of
the acquired business. Q3 2015 STG&R expenses were $46.2
million, or 25.8% of net sales including gains of $2.0 million from
the revaluation of nonfunctional-currency assets and liabilities.
The reduction in STG&R as a percentage of net sales is
principally due to the impact of restructuring activities in prior
quarters.
The following table presents third-quarter expenses associated
with internally funded research and development by segment:
Table 3
Research and developmentexpenses by
segmentThree Months endedSeptember 30,
(in thousands)
2016
2015
Machine Clothing $ 3,937
$ 4,775 Albany Engineered Composites
2,656 2,769 Corporate
expenses -
190 Total $ 6,593
$ 7,734
The following table summarizes third-quarter operating income by
segment:
Table 4
Operating Income/(loss)Three Months
endedSeptember 30,
(in thousands)
2016
2015
Machine Clothing $ 40,039
$ 41,956 Albany Engineered Composites
(4,529 )
(4,191 ) Corporate expenses
(10,690
) (11,922 ) Total
$ 24,820 $ 25,843
Segment operating income was affected by restructuring and
currency revaluation, as shown in Table 5 below. AEC restructuring
charges include costs associated with the consolidation of the
Company’s legacy programs into its Boerne, Texas, facility.
Table 5
(in thousands)
Expenses/(gain) in Q3 2016resulting
fromRestructuring Revaluation
Expenses/(gain) in Q3 2015resulting
fromRestructuring Revaluation
Machine Clothing ($212 )
$ 86 $ 3,717
($2,005 ) Albany Engineered Composites
640 -
- - Corporate
expenses (102 )
4 -
4 Total $ 326
$ 90 $ 3,717
($2,001 )
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. Q3 2015 Other
income/expense, net, was expense of $1.2 million, including losses
related to the revaluation of nonfunctional-currency balances of
$1.0 million.
The following table summarizes currency revaluation effects on
certain financial metrics:
Table 6
Income/(loss) attributableto currency
revaluationThree Months endedSeptember 30,
(in thousands)
2016
2015
Operating income ($90 )
$ 2,001 Other income/(expense), net
312
(953 ) Total $ 222
$ 1,048
The Company’s income tax rate based on income from continuing
operations was 37.5% for Q3 2016, compared to 38.0% for the same
period of 2015. Discrete tax charges and the effect of a change in
the estimated tax rate decreased income tax expense by $0.4 million
in 2016, and increased expense by $3.9 million in 2015.
The following tables provide a reconciliation of net income to
EBITDA and Adjusted EBITDA:
Table 7
Three Months ended September 30,
2016
(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
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
(gains)/losses 86
-
(308 ) (222 ) Pretax (income)
attributable to non-controlling interest in ASC
-
(428 ) -
(428 )
Adjusted EBITDA (non-GAAP)
$ 48,945
$ 3,710
($9,956 ) $
42,699
Table 8
Three Months ended September 30,
2015
(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Net income (GAAP) $ 41,956
($4,191 )
($28,085 ) $ 9,680 Interest
expense, net -
- 2,671
2,671 Income tax
expense -
- 12,243
12,243 Depreciation and
amortization 9,660
2,981 2,102
14,743
EBITDA
(non-GAAP) 51,616
(1,210 )
(11,069 ) 39,337
Restructuring expenses, net
3,717 -
- 3,717
Foreign currency revaluation (gains)/losses
(2,005 ) -
957
(1,048 ) Pretax income attributable to non-controlling
interest in ASC -
(25 ) -
(25 )
Adjusted EBITDA
(non-GAAP) $ 53,328
($1,235 ) ($10,112
) $ 41,981
Capital spending was $22.9 million for Q3 2016, compared to $9.3
million for Q3 2015. Depreciation and amortization was $18.4
million for Q3 2016, compared to $14.7 million for Q3 2015. As
noted in Table 1, depreciation and amortization for the acquired
division was $4.5 million in Q3 2016.
CFO Comments
CFO and Treasurer John Cozzolino commented, “As a result of good
operating performance, cash and cash equivalents increased about
$20 million during the quarter to $196 million. Also during the
quarter, total debt increased just over $5 million to $492 million,
resulting in a decrease in net debt (total debt less cash and cash
equivalents, see Table 18) to $296 million. As of the end of Q3,
the Company had utilized $425 million of its $550 million credit
facility, leaving additional borrowing capacity of $125 million.
The Company’s leverage ratio, as defined in our primary debt
agreements, was 2.38 as of the end of the quarter.
“Capital expenditures in Q3 were $23 million and year-to-date
$54 million. We now expect full-year spending in 2016 to be $75
million to $80 million. This amount is lower than previously
estimated as expenditures related to certain AEC projects are now
expected to be incurred in 2017. Cash paid for income taxes was
about $4 million in Q3 and $18 million year-to-date. We estimate
cash taxes for the full year to be about $20 million.”
CEO Comments
President and CEO Joe Morone said, “In Q3 2016, Albany continued
on the trajectory of the last several quarters. MC again generated
strong income and AEC strong sales growth, as both businesses
remained firmly on track toward their full-year and longer-term
objectives.
“Against a very strong Q3 2015, MC sales declined 7%. Unlike a
year ago, in Q3 this year we experienced a normal seasonal pattern
of weakness in the two summer months of the quarter, followed by a
strong finish. Compared to Q3 2015, sales were down in virtually
every region and grade. However, except for declines in publication
grades in Europe and Asia, sales were essentially flat in every
region and grade compared to the previous three quarters.
“New product performance in Q3 across all of our product lines
was especially strong, with the new technology platform having a
significant impact on our competitive position on new machines in
the tissue and nonwoven grades. In the Americas, these grades now
account for 26% of sales compared to 20% of sales in the
publication grades. In Europe and Asia, where market growth in the
packaging grades is a more significant long-term factor than growth
in the tissue grades, new product performance helped drive MC sales
in the packaging grades to 37% of total Eurasian sales in Q3,
compared to 30% in the publication grades.
“MC profitability followed the same pattern as sales. Compared
to the strong Q3 2015, gross margin dropped from 48.4% to 47.5%,
segment net income dropped by 5% and Adjusted EBITDA by 8%. But, in
absolute terms and on a sequential basis, gross margins, net
income, and Adjusted EBITDA remained strong and at roughly the same
levels as the previous three quarters, for all the same reasons --
continuous productivity improvements, good plant utilization, low
material costs, and the cumulative effect of the restructuring
efforts of the previous quarters.
“AEC also performed well. Including our new division, sales were
$48 million for the quarter, which is in line with our expectations
and last quarter’s sales trends (as discussed in Q2, the $54
million of sales last quarter included $7 million of sales from
development tooling reimbursable from customers). Without the new
division, sales would have been $28 million, 14% above Q3 2015
sales. This growth was driven by LEAP. Net income was a loss of
$4.5 million; Adjusted EBITDA, which includes costs related to the
integration of the new division, was $3.7 million, or 7.7% of
sales.
“There were a number of significant developments in the quarter.
The ramp up of LEAP fan blades and cases, which accounted for 35%
of Q3 sales, is proceeding well, with excellent progress on yield,
cost, and capacity. Preparations for Plant 3 in Querétaro, Mexico,
are on schedule. Meanwhile, the market pressure to ramp up
continues to be intense. Performance was also strong on the most
significant other AEC engine programs -- components for the Joint
Strike Fighter (JSF) LiftFan® and the GE9X fan case. Integration of
the legacy AEC programs into Boerne, Texas, is on schedule and
nearing completion.
“As for our new division, the three key long-term growth
programs (JSF airframe parts, 787 fuselage frames, and CH-53K
parts) and the largest legacy program (Boeing waste tanks) had
strong delivery performance and good quality improvement trends in
Q3. Of particular significance, the 787 program, which is the first
of the three key growth programs to start ramping, is on schedule
and meeting customer expectations. On the other hand, we also saw
evidence in Q3 across a number of programs of the execution
challenges facing the division. We remain intensely focused on
integrating the new division into AEC, and on strengthening its
operational capabilities. Both efforts are progressing well and as
planned.
“Finally, our new business development efforts continue along
three fronts – competing for incremental new business on existing
aerospace platforms (commercial and defense, engines and
airframes), collaborative R&D to position AEC to compete on
future new aerospace platforms, and R&D probes into markets
outside of aerospace. Of particular note in Q3 was an example of
progress on the first of these fronts. AEC was awarded a contract
to produce composite components on an existing platform utilizing
conventional 2D laminate composite technology. We expect this
contract will generate sales of $15 million to $20 million per year
by 2020.
“Our outlook for both businesses remains unchanged. For MC,
given current market trends and our solid Q3 performance, we
continue to expect full-year Adjusted EBITDA to be at the upper-end
of our previously discussed range of $180 million to $195 million
(see Table 19 for reconciliation to GAAP segment net income,
including identification of certain items that cannot reasonably be
predicted). The primary risk factor for MC, and for our ability to
maintain performance within this range for the foreseeable future,
continues to be global macro-economic conditions.
“As for AEC, we expect a strong end to the year, driven by
sequential growth in LEAP coupled with steady sequential sales in
the rest of the segment. There is some uncertainty associated with
end-of-year inventory effects; Q4 sales might not be as strong as
we expect if our customers, particularly Safran, delay in pulling
finished goods from inventory. Apart from this short-term
uncertainty, the primary risk factor for AEC for the foreseeable
future continues to be execution, especially in our efforts to
integrate our new division, and to bring it and all of our ramping
programs up to expected levels of operational excellence.
“In sum, this was another good quarter for Albany, with both
businesses remaining firmly on track toward their full-year 2016
and longer-term strategic and financial performance
objectives.”
The Company plans a webcast to discuss third-quarter financial
results on Tuesday, November 1, 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 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); 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, 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,
excluding adjustments, are performance measures that relate to the
Company’s continuing operations.
Percent changes in net sales, excluding currency rate effects,
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 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
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; 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. Net income per share, 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; 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, excluding
adjustments, as defined by the Company, may not be similar to
EBITDA 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 9
Key financial metrics of the acquired
business(in thousands, excluding percentages)
For the periodApril 8, 2016 toSeptember
30,2016
Net sales $ 45,990 Gross profit
6,670 Gross profit
percentage 14.5 % Selling,
technical, general and research expenses
$ 6,421 Operating income
249 Depreciation and amortization (D&A)
7,383 EBITDA [Operating
income/(loss) + D&A] 7,632
Adjusted EBITDA [Operating income/(loss) + D&A]
7,632
Table 10
(in thousands, except percentages)
Net SalesNine Months endedSeptember
30,
PercentChange
Impact ofChangesin
CurrencyTranslationRates
Percent ChangeexcludingCurrency
RateEffect
2016
2015
Machine Clothing $
437,445 $ 463,577
-5.6 % ($1,872 )
-5.2 % Albany Engineered Composites
129,348
68,825 87.9 %
63 87.8 % Total
$ 566,793 $
532,402 6.5 %
($1,809 ) 6.8 %
Table 11
Nine Months
ended September 30, 2016
(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
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 Pre-tax loss attributable to
non-controlling interest in ASC -
36 -
36
Adjusted EBITDA
(non-GAAP) $ 147,995
$ 10,890
($28,260 ) $
130,625
Table 12
Nine Months
ended September 30, 2015
(in thousands)
MachineClothing
AlbanyEngineeredComposites
Corporateexpensesand other
TotalCompany
Net income (GAAP) $ 110,969
($26,635)* ($64,535 )
$ 19,799 Interest expense, net
- -
8,049 8,049 Income
tax expense -
- 20,398
20,398 Depreciation and amortization
30,077 8,845
6,359
45,281
EBITDA (non-GAAP)
141,046 (17,790
) (29,729 )
93,527 Restructuring expenses, net
13,929 -
-
13,929 Foreign currency revaluation losses/(gains)
(4,534 ) (17 )
406 (4,145 ) Gain
on sale of investment -
- (872 )
(872 ) Pre-tax income attributable to non-controlling
interest in ASC -
(115 ) -
(115 )
Adjusted EBITDA (non-GAAP)
$ 150,441
($17,922 ) ($30,195
) $ 102,324
*includes $14 million BR725 charge
Table 13
Three Months
ended September 30, 2016
(in thousands, except per share
amounts)
Pre-taxamounts
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 0.00
Table 14
Three Months
ended September 30, 2015
(in thousands, except per share
amounts)
Pre-taxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 3,717
$ 1,412 $ 2,305
$ 0.07 Foreign currency revaluation gains
1,048 398
650 0.02 Favorable effect
of change in income tax rate -
1,002 1,002
0.03 Net discrete income tax charge
- 4,914
4,914 0.15
Table 15
Nine Months
ended September 30, 2016
(in thousands, except per share
amounts)
Pre-taxamounts
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 16
Nine Months
ended September 30, 2015
(in thousands, except per share
amounts)
Pre-taxamounts
Tax Effect
After-taxEffect
Per ShareEffect
Restructuring expenses, net $ 13,929
$ 5,280 $ 8,649
$ 0.27 Foreign currency revaluation gains
4,145 1,597
2,548 0.08 Gain on sale
of investment 872
331 541
0.02 Net discrete income tax charge
- 5,113
5,113 0.16 Charge for revision
in estimated contract profitability
14,000 5,180
8,820 0.28
The following table contains the calculation of net income per
share attributable to the Company, excluding adjustments:
Table 17
Per share amounts (Basic)
Three Months ended
September 30,
Nine Months ended
September 30,
2016
2015
2016
2015
Net income attributable to the Company, reported (GAAP)
$ 0.41 $
0.30 $ 1.15
$0.62* Adjustments:
Restructuring
expenses, net 0.01
0.07
0.15 0.27
Discrete tax adjustments and effect of change in income tax rate
(0.01 )
0.12 (0.03
) 0.16 Foreign currency
revaluation (gains)/ losses -
(0.02 )
(0.01 )
(0.08 ) Acquisition expenses -
-
0.11
- Gain on the sale of investment
- -
-
(0.02 ) Net income attributable to the Company, excluding
adjustments (non-GAAP) $ 0.41
$ 0.47
$ 1.37 $ 0.95
*includes $0.28 per share for BR725
charge
The following table contains the calculation of net debt:
Table 18
(in thousands)
September 30,2016
June 30,2016
March 31,2016
December 31,2015
September 30,2015
Notes and loans payable $ 343
$ 531 $ 590
$ 587 $ 390
Current maturities of long-term debt
1,462 566
16 16
50,016 Long-term debt
490,003
485,215 255,076
265,080
220,084
Total debt
491,808 486,312
255,682
265,683
270,490 Cash and cash equivalents
196,170
176,025 169,615
185,113
171,780
Net debt $
295,638 $ 310,287
$ 86,067
$ 80,570
$ 98,710
The following table contains the reconciliation of MC 2016
projected Adjusted EBITDA to MC 2016 projected net income:
Table 19
Machine Clothing Full Year 2016 Outlook
(in millions)
Actual, ninemonthsendedSeptember30,
2016
Results forlast quarterof year tomeet
lowend of range
Results forlast quarter ofyear to meethigh
end ofrange
Estimatedrange for fullyear
Adjusted EBITDA (non-GAAP)
$
148 $ 40
$ 50
$ 188 - $198 Less:
Restructuring expenses, net (6 )
* *
(6 ) Less: Foreign currency revaluation
losses (2 )
* *
(2 )
EBITDA (non-GAAP)
$ 140 $
40 $ 50
$ 180 - $190
Less: Depreciation and amortization
(28 ) (9 )
(9 )
(37 ) Net income (GAAP)
$
112 $ 31
$ 41
$ 143 - $153
* Due to the uncertainty of these items, management is currently
unable to project restructuring expenses 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 and
paper- industry trends and conditions during 2016 and in future
years; expectations in 2016 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, 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; 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 EndedSeptember 30,
Nine Months EndedSeptember 30,
2016 2015 2016 2015 Net
sales
$
191,272
$
178,789
$
566,793
$
532,402
Cost of goods sold 118,852 103,045
343,557 325,382
Gross profit 72,420 75,744 223,236 207,020 Selling, general, and
administrative expenses 38,042 35,509 120,997 110,674 Technical,
product engineering, and research expenses 9,232 10,675 29,640
33,387 Restructuring expenses, net 326 3,717
7,653 13,929
Operating income 24,820 25,843 64,946 49,030 Interest
expense, net 3,681 2,671 9,610 8,049 Other (income)/expense, net
242 1,249
(2,103 ) 784 Income before income taxes 20,897 21,923
57,439 40,197 Income tax expense 7,488 12,243
20,613 20,398
Net income 13,409 9,680 36,826 19,799 Net (loss)/income
attributable to the noncontrolling interest 340 22
(111 ) 100 Net
income attributable to the Company $ 13,069 $ 9,658
$ 36,937 $ 19,699 Earnings per
share attributable to Company shareholders - Basic $ 0.41 $ 0.30 $
1.15 $ 0.62 Earnings per share attributable to Company
shareholders - Diluted $ 0.41 $ 0.30 $ 1.15 $ 0.62 Shares of
the Company used in computing earnings per share: Basic 32,104
32,012 32,079 31,965 Diluted 32,141 32,055 32,118 32,028
Dividends per share, Class A and Class B $ 0.17 $ 0.17 $
0.51 $ 0.50
ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in
thousands, except share data) (unaudited) September
30, December 31, 2016 2015 ASSETS Cash and cash equivalents $
196,170 $ 185,113 Accounts receivable, net 170,739 146,383
Inventories 138,688 106,406 Income taxes prepaid and receivable
1,303 2,927 Asset held for sale 5,179 4,988 Prepaid expenses and
other current assets 10,078 6,243 Total
current assets 522,157 452,060 Property, plant and
equipment, net 441,608 357,470 Intangibles, net 57,044 154 Goodwill
134,724 66,373 Income taxes receivable and deferred 78,689 108,945
Other assets 31,400 24,560 Total assets
$ 1,265,622 $ 1,009,562 LIABILITIES AND
SHAREHOLDERS' EQUITY Notes and loans payable $ 343 $ 587 Accounts
payable 36,653 26,753 Accrued liabilities 96,483 91,785 Current
maturities of long-term debt 1,462 16 Income taxes payable
12,176 7,090 Total current liabilities 147,117
126,231 Long-term debt 490,003 265,080 Other noncurrent
liabilities 98,123 101,544 Deferred taxes and other liabilities
5,256 14,154 Total liabilities
740,499 507,009 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 37,315,016 in 2016 and
37,238,913 in 2015 37 37 Class B Common Stock, par value $.001 per
share; authorized 25,000,000 shares; issued and outstanding
3,235,048 in 2016 and 2015 3 3 Additional paid in capital 425,315
423,108 Retained earnings 512,517 491,950 Accumulated items of
other comprehensive income: Translation adjustments (106,439 )
(108,655 ) Pension and postretirement liability adjustments (48,023
) (48,725 ) Derivative valuation adjustment (4,719 ) (1,464 )
Treasury stock (Class A), at cost 8,443,902 shares in 2016 and
8,455,293 shares in 2015 (257,146 ) (257,391 ) Total
Company shareholders' equity 521,545 498,863 Noncontrolling
interest 3,578 3,690 Total equity
525,123 502,553 Total liabilities and
shareholders' equity $ 1,265,622 $ 1,009,562
ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOW (in
thousands) (unaudited)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2016 2015 2016 2015 OPERATING ACTIVITIES Net income $ 13,409
$ 9,680 $ 36,826 $ 19,799 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation 16,470
12,953 44,736 39,850 Amortization 1,975 1,790 6,488 5,431 Change in
other noncurrent liabilities (275 ) (188 ) (6,282 ) (1,732 ) Change
in deferred taxes and other liabilities (1,712 ) 7,322 (640 ) 2,669
Provision for write-off of property, plant and equipment 333 (156 )
1,409 259 Gain on disposition of assets - - - (1,056 ) Excess tax
benefit of options exercised (11 ) - (116 ) (603 ) Compensation and
benefits paid or payable in Class A Common Stock 350 290 1,882
1,285 Fair value adjustment on available-for-sale assets - 3,225 -
3,225 Changes in operating assets and liabilities that
provide/(use) cash, net of impact of business acquisition: Accounts
receivable 4,794 5,100 (6,492 ) (4,387 ) Inventories (5,511 )
(3,626 ) (12,886 ) (10,757 ) Prepaid expenses and other current
assets (481 ) 133 (3,302 ) (857 ) Income taxes prepaid and
receivable (100 ) (518 ) 1,737 (592 ) Accounts payable (4,443 )
(3,126 ) (1,544 ) (4,467 ) Accrued liabilities 4,418 3,381 (3,736 )
861 Income taxes payable 4,932 3,910 3,999 3,987 Other, net
(4,974 ) 1,723 (10,252 ) 6,330
Net cash provided by operating activities 29,174
41,893 51,827 59,245
INVESTING ACTIVITIES Purchase of business, net of cash
acquired - - (187,000 ) - Purchases of property, plant and
equipment (21,924 ) (9,023 ) (50,029 ) (39,689 ) Purchased software
(591 ) (252 ) (1,262 ) (589 ) Proceeds from sale or involuntary
conversion of assets 4,686 -
6,422 2,797 Net cash used in investing
activities (17,829 ) (9,275 ) (231,869 )
(37,481 ) FINANCING ACTIVITIES Proceeds from
borrowings 13,265 5,198 232,795 44,818 Principal payments on debt
(871 ) (37,354 ) (23,695 ) (47,100 ) Debt acquisition costs - (41 )
(1,771 ) (1,671 ) Swap termination payment - - (5,175 ) - Proceeds
from options exercised 64 75 454 1,799 Excess tax benefit of
options exercised 11 - 116 603 Dividends paid (5,457 )
(5,441 ) (16,354 ) (15,646 ) Net cash provided
by/(used in) financing activities 7,012
(37,563 ) 186,370 (17,197 ) Effect of
exchange rate changes on cash and cash equivalents 1,788
(5,749 ) 4,729 (12,589 )
Increase/(decrease) in cash and cash equivalents 20,145 (10,694 )
11,057 (8,022 ) Cash and cash equivalents at beginning of period
176,025 182,474 185,113
179,802 Cash and cash equivalents at end of period $
196,170 $ 171,780 $ 196,170 $ 171,780
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161031006132/en/
Albany International Corp.InvestorsJohn Cozzolino,
518-445-2281john.cozzolino@albint.comorMediaHeather Kralik,
801-505-7001heather.kralik@albint.com
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