Albany International Corp. (NYSE:AIN) (the “Company”) has agreed
to acquire Harris Corporation’s composite aero-structures division
(the “Division”) for total consideration of $210 million including
the assumption of a $23 million capital lease. Harris had acquired
the Division through its 2015 acquisition of Exelis Inc.
The Division is a leading supplier of advanced composite
products primarily for airframe applications. It has significant
positions on three major growth platforms: Lockheed’s Joint Strike
Fighter (JSF), Boeing’s 787, and Sikorsky’s CH-53K. It also
supplies the vacuum waste tanks for most of Boeing’s 7-Series
aircraft, and components of the airframe of a Lockheed Martin
family of air-to-surface missiles; and it has small positions on
the airframes of the Airbus A350 and 380, and on GEnx engines.
The acquisition is projected to be slightly accretive to Albany
earnings in 2016, with projected 2016 sales in the $80 million to
$90 million range and Adjusted EBITDA in the $13 million to $15
million range. Sales and Adjusted EBITDA are expected to rise
sharply through early next decade with the anticipated ramp-up of
the JSF, 787, and CH-53K programs. Assuming good execution and no
significant slippage in program schedules, sales are projected to
exceed $200 million by 2020, and Adjusted EBITDA margins could
approach 20% by 2020. Subject to these same assumptions, the
Company’s estimated return on invested capital for the acquisition
is projected to exceed Albany’s current cost of capital by 2018 and
reach double-digits by 2020.
The Company views the Division as an attractive stand-alone
growth platform. Nonetheless, AEC and the Division have highly
complementary capabilities, and the Company’s primary motivation
for entering into this transaction is the additional long-term
growth potential created by their combination.
Joe Morone, President and CEO of Albany International,
commented, “The combination of AEC and this aerostructures Division
creates a major force in aerospace composites, which should be able
to realize significant new long-term growth opportunities, in
addition to the already substantial growth that each business is
poised to achieve over the next five years. While we believe this
acquisition would have been justifiable on a stand-alone basis
given the Division’s growth potential, and while we are confident
that AEC and the Division each have the capability to realize their
respective growth potential on their own, we see compelling and
multiple forms of complementarity, all of which point to
opportunity for additional growth late this decade and into next
decade.”
Albany will use existing cash on hand and its revolving credit
facility to finance the transaction. In connection with the
transaction, Albany expects to create additional borrowing capacity
by increasing its existing revolving credit facility from $400
million to $550 million prior to the closing of the transaction;
terms of the new credit facility are expected to be similar to the
terms of the current facility.
The transaction, which is conditional on regulatory and other
customary conditions, is expected to be completed by the end of the
first quarter or early second quarter of 2016.
The Company plans a webcast to discuss the acquisition on
Monday, February 29, 2016, at 12:00 p.m. noon 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 3,900 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.
About Harris Corporation
Harris Corporation is a leading technology innovator, solving
our customers’ toughest mission-critical challenges by providing
solutions that connect, inform and protect. Harris supports
customers in more than 125 countries, has approximately $8 billion
in annual revenue and 22,000 employees worldwide. The company is
organized into four business segments: Communication Systems, Space
and Intelligence Systems, Electronic Systems, and Critical
Networks. Learn more at harris.com.
This press release contains certain items, such as earnings
before interest, taxes, depreciation and amortization (EBITDA) and
Adjusted EBITDA that could be considered ‘non-GAAP’ financial
measures under SEC rules. We think such items provide useful
information to investors regarding the Company’s operational
performance. 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). Expectations of EBITDA and Adjusted
EBITDA are made based on estimates of ranges of amounts in future
periods and cannot be reconciled to the nearest GAAP measure.
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,” “could” 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, expectations in 2016 and in future
periods of sales, earnings, Adjusted EBITDA, margins, return on
invested capital and other financial items related to the Company’s
composites acquisition and the Company as a whole. Furthermore, a
change in any one or more of the foregoing factors could have a
material effect on the Company’s financial results in any period.
Such statements are based on current expectations, and the Company
undertakes no obligation to publicly update or revise any
forward-looking statements.
Statements expressing management’s assessments of the growth
potential of its businesses, or referring to earlier assessments of
such potential, are not intended as forecasts of actual future
growth, and should not be relied on as such. While management
believes such assessments to have a reasonable basis, such
assessments are, by their nature, inherently uncertain. This
release and earlier releases set forth a number of assumptions
regarding these assessments, including historical results,
independent forecasts regarding the markets in which these
businesses operate, and the timing and magnitude of orders for our
customers’ products. Historical growth rates are no guarantee of
future growth, and such independent forecasts and assumptions could
prove materially incorrect, in some cases.
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version on businesswire.com: http://www.businesswire.com/news/home/20160229005599/en/
Albany International Corp.InvestorsJohn Cozzolino,
518-445-2281john.cozzolino@albint.comorMediaSusan Siegel,
603-330-5866susan.siegel@albint.com
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