Albany International NYSE: AIN reported first-quarter 2026 revenue of $311.3 million, up 7.8% year-over-year, as growth in Engineered Composites more than offset softer Machine Clothing volumes in Asia. The company delivered adjusted EBITDA of $48.2 million, down from $55.7 million a year ago, as the revenue mix shifted toward Engineered Composites, which CFO Will Station said carries “structurally lower margins,” and as foreign exchange and Machine Clothing volume headwinds weighed on results.
CEO highlights: operational focus, stable end markets, and supply chain monitoring
President and CEO Gunnar Kleveland said the company entered 2026 as “a more focused and disciplined organization with a clear strategy centered on our core strengths,” emphasizing safety, quality, and on-time delivery. Kleveland also addressed the conflict in the Middle East, saying Albany has been “continuously monitoring and working closely with our suppliers and customers,” and that the company had not seen impacts to date beyond “slight adjustment to delivery routes.” He added that raw materials are generally protected through long-term or customer-directed contracts.
Kleveland said demand conditions across end markets “stabilized in the Q1,” while noting increased demand tied to certain weapons programs. He said the company is “maximizing production on key programs” and highlighted that Engineered Composites volume increased across key programs due to higher production rates and actions taken over the past 12 months.
Segment performance: Machine Clothing steady outside China; Engineered Composites grows
Machine Clothing posted first-quarter revenue of $166 million versus $174.7 million in the prior-year quarter. Station said the decline reflected “continued softness in Asia markets, particularly in China.” Kleveland noted results came in ahead of internal expectations across regions, including North America, Europe, and China, but he cautioned that “visibility beyond the near term remains limited” in China despite recent stabilization and improved order rates.
Machine Clothing adjusted EBITDA was $43 million, representing a 25.9% margin. The company attributed the year-over-year margin decline primarily to foreign exchange and lower volume in Asia. Station said that on a constant-currency basis, margins were stable overall, supported by efficiency initiatives and integration progress. Kleveland said the company saw a “meaningful improvement across Europe” as it continues to realize benefits of integration activities.
Engineered Composites revenue rose to $145.4 million from $114.1 million a year earlier. Management cited broad-based growth across programs, with Kleveland pointing to incremental contributions from the S35 missile systems, LEAP, 787, and CH-53K. Station said the quarterly outperformance was driven by the “timing of program ramps and strong execution,” enabling Albany to meet “higher than anticipated demand” in the period.
Engineered Composites adjusted EBITDA was $16.9 million, up from $15.4 million, with margin declining to 11.7% from 13.5% a year ago. Both Kleveland and Station said the margin outcome was in line with expectations and driven largely by mix. Kleveland stated that CH-53K aft program revenue is now booked at “zero margin following the actions taken in the Q3 of 2025.”
Equipment failure recovery and China outlook in Machine Clothing
Management revisited an equipment failure disclosed earlier, which caused unplanned downtime at a Machine Clothing facility. Kleveland said the team took corrective actions and recovered “more of the lost production” in the first quarter than initially anticipated. Assuming equipment performance remains stable, he said Albany believes it is “well-positioned to recover the remaining lost volume by the end of the year.” He added the company is relocating a machine from a nearby facility to create a long-term solution in place by year-end.
On China, Kleveland said the country has seen significant investment in new paper machines over the last several years, resulting in overproduction that has created uncertainty about the timing of a return to normal conditions. He also raised the question of whether there is “too much production capability in China” given continued new builds. Kleveland said a positive area has been tissue, where the company is seeing an increase, and he said certain process belts continue to be favored in that market. Still, he said Albany is taking “a conservative outlook for the year” regarding China.
New business and strategic review of Salt Lake City facility
In Engineered Composites, Kleveland announced a new contract with Pratt & Whitney for composite engine components for its Geared Turbofan. Kleveland said the program “relies extensively on advanced composite materials” to meet fuel efficiency, noise reduction, and weight targets, which he said aligns with Albany’s strengths in high-performance composite structures.
He also said that for JASSM and LRASM missiles, Albany has been asked by its customer to increase production “to the highest level achievable within our current capabilities,” including overtime.
Regarding the strategic review of the Amelia Earhart Drive facility in Salt Lake City, which houses the CH-53K program, Kleveland said the company has completed a standalone analysis with PwC but said it remains “too early” to share conclusions. Station and Kleveland both said the process remains on schedule. During Q&A with Baird analyst Peter Arment, Kleveland said performance out of the Salt Lake facility “has been very good” and that Albany remains close to its customer and committed to delivering through the process. He said the company is finalizing marketing materials to engage more directly with interested parties that have contacted Albany and Guggenheim.
Financial details and second-quarter outlook
Gross profit was $99.8 million, with a margin of 32.1% compared to 33.4% a year ago, which Station attributed to revenue mix. Operating income was $25.4 million, or an 8.1% margin, down from 9.8% last year, driven by higher non-recurring and restructuring expenses. Net interest expense increased to $5.5 million, reflecting higher borrowing costs. Other income was a net benefit of $3.2 million, driven primarily by foreign currency and derivative impacts. The effective tax rate increased to 33.1% from 26.6% due largely to the absence of favorable discrete items.
Free cash flow was a net use of $3.6 million compared to a net use of $13.5 million in the prior-year period, which Station said reflected improved customer collections. Capital expenditures were $9.3 million, focused on facility optimization and key customer programs, while R&D expense was $13 million. Albany ended the quarter with $122.6 million in cash and $477 million in total debt, for net debt of about $354 million. Station said the company had approximately $446 million of available capital when including revolver availability.
Looking ahead, Station said current trends support a stable outlook across both segments. For the second quarter, Albany expects consolidated revenue in a range of $335 million to $345 million and adjusted EPS of $0.70 to $0.80, with an effective tax rate of about 31.5%. In Machine Clothing, the company expects modest sequential improvement in the second quarter following typical first-quarter seasonality and anticipates recovering the remaining lost volume through the year assuming no additional equipment downtime. In Engineered Composites, Station said the company expects continued growth supported by ongoing program ramps across commercial and defense platforms, with margin levels “normalizing relative to the prior year.”
About Albany International NYSE: AIN
Albany International Corp. is a global advanced materials company specializing in engineered textiles and composites. Its business is organized into two primary segments: Process Media and Engineered Composites. The Process Media segment designs, manufactures and services press, forming and drying fabrics used in the production of paper and packaging materials, helping paper manufacturers improve efficiency, quality and sustainability. The Engineered Composites segment produces lightweight composite structures and components for aerospace and industrial applications, serving commercial and military aircraft programs as well as industrial markets that require high-performance, durable materials.
In the Process Media segment, Albany's products include forming fabrics, press felts and dryer fabrics engineered to withstand extreme moisture and temperature conditions.
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