Albany International Retains Salt Lake Site After CH-53K Deal, Raises Q3 EPS Outlook

Key Points

• Albany International will retain its Salt Lake City structures facility after amending its CH-53K agreement with Sikorsky. The revised contract raises pricing, limits the production commitment and reduces exposure to material-cost inflation, with positive cash flow expected from 2027.
• The company expects to reverse part of its previously disclosed $147 million CH-53K loss reserve in the third quarter and will record about $12 million in depreciation and amortization as the facility returns to held-for-use status.
• Albany raised its third-quarter adjusted EPS outlook to $1.40–$1.50 from $0.60–$0.70 while maintaining consolidated revenue guidance of approximately $320 million–$330 million. Fourth-quarter revenue is projected at $325 million–$335 million, with adjusted EPS of $0.65–$0.75.

Albany International NYSE: AIN said it has completed its strategic review and will retain its Amelia Earhart Drive structures assembly facility in Salt Lake City after reaching an amended agreement with Sikorsky on the CH-53K program.

The company began exploring strategic alternatives for its structures assembly business in October 2025, including a potential sale of all or part of the Salt Lake City operation. President and CEO Gunnar Kleveland said the review was intended to assess alternatives through the lenses of shareholder value, strategic positioning, capital allocation and execution.

Following a 10-month negotiation with Sikorsky, Albany agreed to shorten the CH-53K contract so that it is no longer a life-of-program agreement. The revised terms include higher pricing per ship set and provisions intended to reduce exposure to material-cost inflation, Kleveland said.

Amended Contract Supports Retention of Salt Lake City Site

Kleveland said the amended CH-53K agreement stabilizes aircraft production, offsets projected losses and reduces program risk while allowing Albany to continue serving its largest customer. The agreement is expected to accelerate cash into 2026 and produce positive cash flow beginning in 2027.

The company said the revised arrangement reduces risk by shortening the production-horizon commitment and the total number of aircraft deliveries. Kleveland also cited improved operating performance by the Salt Lake City team and other contract developments as factors supporting the decision to retain the facility.

Those other programs include an extension for composite fuselage frames on Boeing’s 787 Dreamliner, two recently secured defense contracts with a strategic customer, BETA ALIA aircraft advanced-composite parts, and F-35 advanced-composite parts. Albany also referenced a recently announced teaming agreement with Sikorsky related to hypersonic development.

“The site is healthy and has good economics, and it makes sense for us to keep it,” Kleveland said during the call.

Loss Reserve and Accounting Effects

Acting CFO Sean Valashinas discussed the company’s previously disclosed $147 million loss reserve, saying it included an anticipated margin adjustment as well as reserves for costs incurred over the past year, costs expected before the contract amendment takes effect in the latter half of 2027, and costs projected after that point.

Valashinas said Albany will reverse the portion related to the post-amendment period during the third quarter, while continuing to reserve for expected losses until the amendment takes effect. He said the company expects to absorb some additional costs as it progresses through the learning curve on the CH-53K program.

Albany will also recognize approximately $12 million in cumulative depreciation and amortization in the third quarter after the facility’s classification changes from held for sale to held for use. Valashinas said that amount is reflected in the company’s updated outlook.

Updated Third- and Fourth-Quarter Outlook

For the third quarter, Albany maintained its revenue outlook of $165 million to $170 million for Machine Clothing and $155 million to $160 million for Engineered Composites. Consolidated quarterly revenue is still expected to total approximately $320 million to $330 million.

The company raised its third-quarter adjusted earnings-per-share forecast to $1.40 to $1.50 from its prior range of $0.60 to $0.70. Valashinas attributed the increase to the reversal of the reach-forward loss and associated depreciation and amortization changes resulting from the contract amendment. Albany expects a third-quarter effective tax rate of 31.5%.

• Fourth-quarter Machine Clothing revenue: $170 million to $175 million
• Fourth-quarter Engineered Composites revenue: $155 million to $160 million
• Fourth-quarter consolidated revenue: approximately $325 million to $335 million
• Fourth-quarter adjusted EPS: $0.65 to $0.75
• Fourth-quarter effective tax rate: 31.5%

Looking beyond 2026, Kleveland said site profitability should begin increasing incrementally in 2027, initially aided by new business awards and renegotiated contracts. He said the CH-53K program is expected to contribute more meaningfully to profitability by the middle to latter half of 2027, with 2028 representing the first full year of what he described as a healthy margin profile.

For Engineered Composites overall, Kleveland said Albany expects double-digit growth over the next several years and continues to target mid- to upper-teens EBITDA margins. The company did not provide a detailed 2027 segment forecast or disclose specific profitability for the amended CH-53K contract.

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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