Albany International Q2 2026 Earnings Report

Albany International EPS Results

• Actual EPS: $0.82
• Consensus EPS: $0.74
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: $0.31

Albany International Revenue Results

• Actual Revenue: $329.48 million
• Expected Revenue: $340.10 million
• Beat/Miss: Missed by -$10.62 million
• YoY Revenue Growth: +5.80%

Albany International Announcement Details

• Quarter: Q2 2026
• Date: 8/4/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 4, 2026
• Conference Call Time: 9:00AM ET

Albany International (NYSE:AIN) Corp. is a global developer and manufacturer of advanced engineered materials and process technologies. The company serves customers in the paper, aerospace and other industrial markets through two primary business segments: Machine Clothing and Albany Engineered Composites.

The Machine Clothing segment produces custom-designed fabrics, belts and related products used in paper manufacturing and other industrial processes. These products support applications such as forming, pressing and drying paper, helping manufacturers improve production efficiency and product quality.

Albany Engineered Composites develops and manufactures lightweight composite components and assemblies, primarily for the aerospace industry. Its offerings include structural components and other specialized composite products designed for commercial and military aircraft, as well as selected industrial applications.

Founded in 1895, Albany International is headquartered in Rochester, New Hampshire, and serves customers in North America, Europe, Asia and other international markets. The company operates manufacturing and service locations in multiple regions to support its global customer base.

Albany International Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second-quarter profitability improved, with adjusted EBITDA rising to $57.8 million from $51.9 million and adjusted EPS exceeding the company’s forecast range despite slightly lower-than-expected revenue.
• Positive Sentiment: Engineered Composites revenue reached a quarterly record of $150.8 million, up 16% year over year, while adjusted EBITDA increased to $20 million as LEAP, Boeing, CH-53K, missile, and other aerospace programs ramped.
• Negative Sentiment: Machine Clothing demand remains mixed, particularly in North and South America amid paper-industry consolidation and capacity reductions; the company now expects full-year segment revenue to be slightly below 2025 levels.
• Positive Sentiment: Albany reported strong longer-term aerospace and defense opportunities, including a new Pratt & Whitney geared turbofan contract, expanded missile and hypersonic-materials demand, and potential capacity investments to support future growth.
• Neutral Sentiment: Free cash flow was a $14.5 million use in the quarter due to inventory builds supporting program ramps and seasonal customer deliveries, while the strategic review of the Salt Lake City site advanced to eight final candidates with a decision expected after the bidding process.

Presentation

[Operator]

Hello, everyone. Thank you for joining us, and welcome to Albany International's second quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference call over to Karen Blomquist, Director of Investor Relations. Karen, please go ahead.

[Karen Blomquist, Director of Investor Relations at Albany International]

Thank you, operator. Good morning, everyone. Welcome to Albany International's second quarter 2026 earnings call. As a reminder for those listening on the call, please refer to our press release issued this morning detailing our quarterly financial results. Contained in the text of the release is a notice regarding our forward-looking statements and the use of certain non-GAAP financial measures and their reconciliation to GAAP. For the purposes of this conference call, those same statements apply to our verbal remarks this morning. Additionally, our remarks today may reference our earnings presentation, which is available on the Investor Relations section of our website, albint.com. Today, we will make certain statements that are forward-looking and contain a number of risks and uncertainties which could cause actual results to differ from those expressed or implied.

[Karen Blomquist, Director of Investor Relations at Albany International]

For a full discussion of these risks and uncertainties, please refer to both our earnings release of August 4th, 2026, as well as our SEC filings, including our 10-Q and our 10-K. Now I will turn the call over to Gunnar Kleveland, our President and CEO, who will provide opening remarks. Gunnar?

[Gunnar Kleveland, President and CEO at Albany International]

Thank you, Karen. Good morning and welcome, everyone. Thank you for joining our second quarter earnings call. Before providing an overview of our performance for the quarter, I'd like to summarize our recent visit to the Farnborough International Airshow. Over the course of the week, we had highly productive engagements where we met with leading aerospace and defense OEMs, government officials to discuss the growing demand for advanced composite manufacturing solutions. Notably, the Department of Defense requested time with our team to explore how our differentiated commercial capabilities, including out-of-autoclave processing technologies, can support faster production rates and lighter-weight solutions for critical defense applications such as solid rocket motors and titanium replacement. Also, as announced at the show, AEC has been selected as the collaboration partner on the Aerospace Technology Institute's Advanced Wing Enabling Ultra-Efficient Propulsion 2 project.

[Gunnar Kleveland, President and CEO at Albany International]

We're excited to work with Airbus and the other partners to apply our advanced composite technologies to help develop composite wing applications for the next generation single-aisle aircraft. We'll share more as the project gets underway. In addition, we continue to rapidly develop our high-temperature ceramic matrix composite capabilities utilizing our advanced 3D woven and infusion technologies in support of solid rocket motors and hypersonic missile applications. We will have exciting news to share in the coming months as we grow our collaborative partnerships and expand our facilities to support the significant opportunities on this front. Turning to our second quarter highlights. Our performance reflects a more focused and disciplined operating model built around the actions we have taken over the past few years to strengthen and de-risk the business.

[Gunnar Kleveland, President and CEO at Albany International]

Across the company, our focus is on areas where we have a clear competitive advantage in industrial weaving and material science, which drive more durable, higher return growth. In the quarter, we delivered Adjusted EPS that exceeded our forecast range, despite modestly lower than expected consolidated revenue. On an Adjusted EBITDA basis, we achieved the strongest results we've had in the past two years. We executed well, and profitability strengthened with good execution across both segments. We're now seeing the benefits of our refined operating model in Albany Engineered Composites that is focused on our proprietary 3D woven components.

[Gunnar Kleveland, President and CEO at Albany International]

Our major programs are continuing to ramp, we're winning new business, execution has improved, and the portfolio contains materially less program risk. This is translating to stronger, healthier, and more reliable growth. Next, I'd like to discuss the results by segment, beginning with Machine Clothing. Revenue for the quarter was $178.7 million.

[Gunnar Kleveland, President and CEO at Albany International]

Underlying sales and volume were broadly consistent with our plan. We incurred additional downtime related to the machine we are replacing. To restore capacity on a permanent basis, we relocated a machine from one of our closed European facilities to the U.S. The machine has now arrived on-site and the reassembly is underway, with completion expected by the end of the year. We expect this action to strengthen our production capabilities and support our ongoing efforts to recover lost volume and customer demand. Excluding the effect of the machine downtime, demand trends are mixed across geographies. By region, China continued to show stabilization, while Europe remained a source of strength. In the Americas, volume was below expectations as we're seeing some moderation tied to customer facility closures and consolidations, lower inventory levels, and a softer demand environment in South America.

[Gunnar Kleveland, President and CEO at Albany International]

Ongoing geopolitical uncertainty and elevated energy costs across the paper manufacturing value chain could extend the challenges affecting the region. The situation remains fluid, and we're closely monitoring potential implications for demand and market conditions. During the second quarter, Will and I had the opportunity to spend time in China with our incredible team there. We're encouraged by the focus on safety, operational excellence, and the commitment to winning in a changing market environment. We still have limited visibility in the market, but are encouraged by more stable volumes in that region for the past three quarters. By grade, tissue, and packaging, demand remains favorable, particularly in Asia. These areas of strength are partially offset by long-term secular decline in publication grades and softer pulp demand in South America. Adjusted EBITDA for Machine Clothing was $50 million, roughly flat with the prior year period.S

[Gunnar Kleveland, President and CEO at Albany International]

A stable demand, continued execution, and benefits from integration activities largely offset the impact of additional equipment downtime and modestly lower volume. Turning to Engineered Composites. Revenue for the quarter was $150.8 million, compared to $130.5 million in the prior year. The 16% increase was driven by higher production rates across multiple programs, including LEAP, Boeing programs, and CH-53K. As we work to scale on a strategic next generation contract with a defense prime, the tooling which we anticipated receiving in the second quarter has shifted into the back half of the year. This shift caused revenue to be slightly lower than our expectations. As an update on our strategic review, we are progressing according to our planned timeline and have received multiple indications of interest. While at the same time, our team's focus remains on executing for Sikorsky and supporting the efforts of the DoD.

[Gunnar Kleveland, President and CEO at Albany International]

We continue to engage closely with our customer throughout the strategic assessment process. We will ultimately make the decision that we believe maximizes value for our shareholders. Looking ahead, we remain confident in the growth prospects for Engineered Composites. Demand across our core commercial aerospace and defense programs remains strong. We continue to see production rates built across multiple platforms. Missile demand also remains elevated. We are working closely with our customer to increase output within our current capabilities. In addition, new programs continue to advance and represent important long-term growth opportunities for the segment, like the recently announced collaboration with A&P Technology that combines their leading braiding capabilities with our resin transfer molding expertise to support current and next generation aero-engine programs, as well as a broad range of additional opportunities.

[Gunnar Kleveland, President and CEO at Albany International]

Taken together, we believe Engineered Composites remains well-positioned for long-term growth as we scale higher value programs and increase new program categories and sales. As we look to the balance of 2026, our priorities remain clear. We are focused on disciplined execution, continued recovery in Machine Clothing, and scaling Engineered Composites around higher value programs where Albany has a clear differentiation. While the operating environment remains fluid, we believe the actions we have taken to strengthen the business are creating greater stability, improved visibility, and a stronger foundation for profitable growth. We remain committed to driving improved cash generation, investing in innovation, and returning capital to shareholders in a balanced and disciplined manner. I would like to thank our employees for their continued dedication, as well as our customers, partners, and shareholders for their ongoing support.

[Gunnar Kleveland, President and CEO at Albany International]

With that, I will turn the call over to Will to review the financial results in more detail.

[Will Station, EVP and CFO at Albany International]

Thank you, Gunnar, and good morning. Before turning to the financials, I would like to remind you that a reconciliation of GAAP to non-GAAP measures discussed today can be found in this morning's press release. Second quarter revenue was $329.5 million, representing a growth of 5.8% year-over-year. This increase was driven primarily by higher activity levels in Engineered Composites as key programs continue to ramp, moderated by a modest decline in Machine Clothing. Adjusted EBITDA for the quarter was $57.8 million, compared to $51.9 million in the prior year, reflecting a margin of 17.6%. The year-over-year improvement was driven by stronger profitability in Engineered Composites and continued strong margin performance in Machine Clothing, partially offset by lower Machine Clothing volumes. In Machine Clothing, revenue was relatively in line with expectations, despite additional downtime of a machine in North America. Demand remained mixed across the geographies we serve.

[Will Station, EVP and CFO at Albany International]

We saw continued stability in Europe, signs of stabilization in China, and a softer demand in North and South America. In the Americas, customer consolidation and capacity rationalization actions taken by paper makers over the past year have reduced volume levels in certain markets. Adjusted EBITDA for the segment was $50 million, with a margin of 28%. While lower volume pressured revenue, the business continued to deliver strong margins, reflecting disciplined cost management, operational execution, and the ongoing benefits from integration and efficiency initiatives. In Engineered Composites, segment revenue was $150.8 million, which marked a quarterly record for the segment. Performance was strong across all of our major programs, but modestly trailed our forecast range due to delayed tooling for a next generation contract with a defense prime. Segment growth year-over-year was widespread across programs, including higher volume of LEAP, Boeing 787, and missile programs.

[Will Station, EVP and CFO at Albany International]

Adjusted EBITDA for the segment was $20 million, or 13.3% of sales, compared to $11.1 million, or 8.5% of sales last year. The year-over-year improvement was driven by higher production rates across multiple programs, including LEAP, Boeing programs, CH-53K, and missile programs, as well as improved operational execution. Gross profit for the quarter was $107.9 million, with a margin of 32.7%, compared to the 31.3% in the prior year. Higher consolidated gross profit reflects strong execution and cost controls in Machine Clothing, a favorable mix of aerospace and defense programs, and the lack of EAC adjustments in the current year. Operating income was $32.1 million, representing a margin of 9.8%, compared to 7.2% last year. The improvement was primarily driven by stronger gross profit. Interest expense increased to $6.1 million due to higher debt balances throughout the quarter.

[Will Station, EVP and CFO at Albany International]

Other income was a net expense of $39,000 in 2026, compared to a net expense of $3.5 million in the prior year, primarily driven by greater stability in the US dollar. The effective tax rate for the quarter was 32%, compared to 31.3% in the prior year. Free cash flow was a net use of $14.5 million, compared to a net gain of $17.8 million in the prior year. The year-over-year decrease was driven by inventory growth to support a ramp-up in Engineered Composites, as well as an increased inventories in Machine Clothing to support continued deliveries to customers during the seasonal shutdowns in Europe. Capital expenditures totaled $11.9 million, focused on facility optimization and investments tied to key customer programs. R&D expense was $11.7 million, reflecting our continued commitment to innovation.

[Will Station, EVP and CFO at Albany International]

We ended the quarter with $77.3 million in cash and $450.7 million in total debt, resulting in a net debt of approximately $373.3 million. Including revolver availability, we have approximately $427 million of available capital, providing flexibility to support ongoing investments and return capital to shareholders. Turning to our outlook and beginning with Machine Clothing. The demand environment remains fluid and mixed by geography. We continue to see stable demand in Europe, signs of stabilization in China at current levels, and softer demand in North and South America. Given these trends and the impact of customer consolidation and capacity rationalization across parts of the paper industry, we now expect full-year Machine Clothing revenue to be slightly down compared to 2025. In Engineered Composites, we expect continued year-over-year growth supported by ongoing program ramps across both commercial and defense platforms.

[Will Station, EVP and CFO at Albany International]

We also expect the timing of certain tooling shipments that moved out of the second quarter to benefit the second half of the year. For the third quarter, we expect consolidated revenue in the range of $320 million-$330 million. We anticipate Adjusted EPS in the range of $0.60-$0.70, and an effective tax rate of approximately 31.5%. While we're taking a more cautious view of Machine Clothing revenue, we remain confident in the underlying margin profile of the business and our ability to manage costs while continuing to support our customers. Now I'd like to open the call up for questions. Operator?

[Operator]

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Peter Arment with Baird. Your line is open. Please go ahead.

[Peter Arment, Analyst at Baird]

Thanks. Good morning, Gunnar, Will. Thanks for your time. Gunnar, could you maybe give us a little bit more of a high-level update on AEC? LEAP seems like it's synced up and performing well, but also want to try to understand some of the new defense program wins and how those ramp, and also any color on the GTF contract win, which was pretty significant. Thanks.

[Gunnar Kleveland, President and CEO at Albany International]

Yes. Good morning, Peter. The ramp-up on LEAP obviously follows the ramp-up both from Boeing and Airbus and delivers what we are seeing of engines you're seeing coming from Safran and GE. The ramp-up is significant. We are, this summer, moving to seven days a week, 24-hour operations across our three sites. We're improving our efficiency and output throughout the year. We expect that program to continue to ramp and settle sometime late in 2027, depending on how the program. Right now, we're looking at 2028 as a potential for 75 aircraft a month from Airbus. We'll assess that as well. Across the other programs, there's a continuing ramp on the commercial aircraft, the Boeing programs, whether that is tanks or the one-piece frames. It's a good challenge to have to continue to ramp and the team is executing well.

[Gunnar Kleveland, President and CEO at Albany International]

On our current programs for the defense, we've mentioned there are some new programs coming online. I can't really talk about that, but it's good business for us and new programs both on aircraft as well as missiles. JASSM, LRASM, we're continuing to ramp up. As we mentioned last quarter, we have Department of Defense visiting us in Salt Lake City and looking at our capacity and working through our prime there, being Lockheed Martin, on how we can ramp up. I think the last part of your question was on Pratt & Whitney. Very excited to have the Pratt & Whitney contract on the Geared Turbofan. It is a complement of resin transfer molded parts in the inlets of the two-engine variants. We'll be making that in Mexico.

[Gunnar Kleveland, President and CEO at Albany International]

It's a significant portion, or it's a significant addition to our portfolio. We are pulling up in Mexico, and we'll be starting production early next year.

[Peter Arment, Analyst at Baird]

Thank you for that. Just on Salt Lake, could you give us a little more of expectations on where things stand on the sale? Obviously, you're going through the process, and obviously, it's been hard to handicap from here. How is that process going, and when do you think you'll have a resolution? Thanks.

[Gunnar Kleveland, President and CEO at Albany International]

The process is going exactly to the plan that we had laid out. We had a multitude of IOIs received. We have down-selected to eight final candidates. That tells you the interest in the site. At the same time, I want to remind everyone that this is a strategic review of the site, and we are continuing to work with Sikorsky. In the end, we'll make the decision that is best for our shareholders. Clearly, we're going through the sales process, and it's moving at the rate that we expected as we're finalizing the bidding in the coming weeks.

[Peter Arment, Analyst at Baird]

Got it. I'll leave it there. Thanks, Gunnar.

[Operator]

Your next question comes from Andrew Siena with Bank of America. Your line is open. Please go ahead.

[Andrew Siena, Analyst at Bank of America]

Good morning. This is Andrew on for Ron. Thanks for taking our questions.

[Gunnar Kleveland, President and CEO at Albany International]

Good morning.

[Andrew Siena, Analyst at Bank of America]

We're seeing strong demand in Engineered Composites, and it sounds like that momentum was reinforced in the field based on the talks you guys had at Farnborough. I guess, thinking longer term, how much growth in Engineered Composites can be supported with current capacity? If demand for critical materials composites stays elevated, is investment in production going to be necessary to support elevated demand?

[Gunnar Kleveland, President and CEO at Albany International]

Right now, what we're seeing in the immediate future, we can use our current facilities and equipment. You're right. With the demand that we are seeing, there'll be investment in the short to medium term to meet that demand. I do not expect it to happen in a very short timeframe. As these come to fruition, right now, there is so much demand that if we do win it all, that might change in the next year. Like I mentioned, this is a good challenge to have. We have a great team, and we have expansion opportunities within our current sites.

[Andrew Siena, Analyst at Bank of America]

Got it. I appreciate that color. I guess, just to follow up in a little bit of a different direction here. Can you talk a bit about the equipment failure that impacted the Machine Clothing business? I guess, how long was it down? What caused it? Any color, if you're able to quantify the financial impact, I would appreciate it. Thanks.

[Will Station, EVP and CFO at Albany International]

I would say it drove a modest impact for the quarter. As we stated, the miss in revenue for the quarter was completely attributable to that machine failure. We are in the process of replacing that equipment. The team is performing well, and we're planning to catch up that lost volume by the end of the year. A modest impact. Team recovered from it. It wasn't down a long period of time. We will catch up the volume by the end of the year.

[Andrew Siena, Analyst at Bank of America]

Got it. Thank you. I'll pass it back there.

[Gunnar Kleveland, President and CEO at Albany International]

Thank you.

[Operator]

A reminder, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Alexandra Mandery with Truist Securities. Your line is open. Please go ahead.

[Alexandra Mandery, Analyst at Truist Securities]

Good morning, Gunnar and Will, and thanks for taking my question. In Machine Clothing, can you provide more color on the cyclical declines in Americas, including maybe what products are being impacted and when you expect demand to pick back up?

[Gunnar Kleveland, President and CEO at Albany International]

Good morning, Alexandra. What we have seen in the U.S. late last year and the beginning of this year was an adjustment by the paper makers to what they saw in demand. They took out some of the older equipment, and we were affected by that, which is what we're seeing through this year. The result of the paper makers taking that supply out is that they are now, if you're following several of the paper makers, they're increasing pricing. It was a good decision by them to move to consolidate and curtail. What happens for us is that there is a lull between when these machines are down and we get new belts on the new equipment. The good part, and what we see for future, is that these machines need to run at very high speed, where we have a competitive advantage.

[Gunnar Kleveland, President and CEO at Albany International]

When they run at high speed, it's more likely for the paper makers to make money. As we look at the outlook past the next quarter, towards the end of fourth quarter and into next year, we see a pretty healthy order backlog. That means we're getting back into these newer and more advanced machines, which is what we expected. We're seeing that lull as these curtailments happened late last year and beginning of this year.

[Will Station, EVP and CFO at Albany International]

Hey, I would just add to it, we're obviously taking a prudent view of our outlook for Q3. We're maintaining our pricing. We're maintaining our cost discipline. The margins are still strong in that business. We're continuing to add values to our customers, overall, we're happy with the performance. As Gunnar mentioned, we're just adapting to the market outlook and what's taking place in the market as you think of the Q3 guide.

[Alexandra Mandery, Analyst at Truist Securities]

Can you provide any updates on the overcapacity issue in Asia in terms of visibility? Has it increased there?

[Gunnar Kleveland, President and CEO at Albany International]

I think in Asia, they haven't done what was done in the Americas. In fact, we've seen growth. There's some growth in tissue, which makes a lot of sense. That is a strong place where we have a strong position as well. The overcapacity is being handled, but it's being handled with lower speeds, basically, on the machines. If you look at the paper makers there, they're not making money or breaking even. The lower output is going to last for a while until the demand is back. We mentioned a little bit, that's probably a little geopolitical as well. We expect it to come back to a healthy level over the medium term. That's why we're saying we're still uncertain about when Asia is going to come back.

[Gunnar Kleveland, President and CEO at Albany International]

It's still moderated compared to what we saw, for example, one year ago or two years ago.

[Alexandra Mandery, Analyst at Truist Securities]

Thank you.

[Operator]

Your next question call comes from the line of Chigusa Katoku with JPMorgan. Your line is open. Please go ahead.

[Chigusa Katoku, Analyst at JPMorgan]

Hi. Good morning. Thanks for taking my question. I just wanted to ask about your progress on the negotiations with Lockheed. Also, maybe you had discussed it earlier, just more color on, I think right now the asset is in held for sale, you expect to divest by the end of this year, any progress there? Are you leaning more toward divesting or renegotiating with Lockheed and keeping the asset? Thank you.

[Gunnar Kleveland, President and CEO at Albany International]

Hey, good morning, Chigusa. Yes, the process is continuing. It's on track to our schedule. We have down-selected on the sales process to eight. That progress, that's going according to our plan. Of course, we're continuing to talk to Sikorsky as part of our assessment of the site and the viability for us to keep it. We are getting close to being able to announce something, we're going to let the process play out, we'll make a decision that is what's best for our shareholders and the best return. We're doing the math, or Will is doing the math, making sure that we're making a good decision here. It's progressing to plan, Chigusa.

[Chigusa Katoku, Analyst at JPMorgan]

Okay, great. Thanks for that. Then maybe you addressed it earlier, I'm sorry if I missed it, what kind of impact did the free cash flow, I think there was an outflow this quarter versus seasonally it should be an inflow. Thank you.

[Will Station, EVP and CFO at Albany International]

Yeah. The best way to think about it is it's related to working capital timing. As we stated, in Europe, we are operating a stronger overall demand backdrop and build excess inventory in the region with their seasonal shutdown. We expect as we end Q3 and move into Q4, our cash flow is going to be consistent with what we've done historically, and Q2 was just really working capital timing.

[Chigusa Katoku, Analyst at JPMorgan]

Okay, thanks for the color.

[Will Station, EVP and CFO at Albany International]

Yep.

[Operator]

A reminder, if you would like to ask a question, please press star one on your telephone keypad. Please stand by while we compile the Q&A roster. There are no further questions at this time. I will now turn the call back over to Gunnar Kleveland for closing remarks.

[Gunnar Kleveland, President and CEO at Albany International]

Okay, thank you. Thank you, everyone, for joining us on the call today. We appreciate your continued interest in Albany International. Thank you, and have a good day.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Karen Blomquist, Director of Investor Relations
• Gunnar Kleveland, President and CEO
• Will Station, EVP and CFO

Analysts

• Peter Arment, Analyst at Baird
• Andrew Siena, Analyst at Bank of America
• Alexandra Mandery, Analyst at Truist Securities
• Chigusa Katoku, Analyst at JPMorgan