Albany International(US:AIN)2025-07-30 20:37Revenue Performance - Net revenues for the three months ended June 30, 2025, decreased by 6.2% to $311.4 million compared to $332.0 million in the same period of 2024[110] - For the six months ended June 30, 2025, total net revenues decreased by 7.0% to $600.2 million compared to $645.3 million in the same period of 2024[114] - Machine Clothing segment revenues decreased by 6.5% to $180.9 million for Q2 2025, primarily due to reduced demand in Asia and unplanned equipment downtime[112] - Albany Engineered Composites segment revenues decreased by 5.7% to $130.5 million for Q2 2025, driven by reductions in certain commercial and space programs[113] - Machine Clothing segment revenues for the first half of 2025 decreased by 6.1% to $355.6 million, impacted by reduced demand in Asia and equipment downtime[115] - Albany Engineered Composites segment revenues for the first half of 2025 decreased by 8.2% to $244.6 million, primarily due to reductions in commercial and space programs[116] - For the three months ended June 30, 2025, net revenues decreased by $12.7 million or 6.5% compared to the same period in 2024, primarily due to reduced demand in Asia and unplanned equipment downtime[144] - For the six months ended June 30, 2025, net revenues for the Machine Clothing segment decreased by $23.2 million or 6.1% compared to the same period in 2024[145] Profitability and Margins - Gross profit for the three months ended June 30, 2025, was $97,507 thousand, a decrease from $112,383 thousand in 2024, representing a decline of 13.2%[117] - Albany Engineered Composites (AEC) gross profit margin decreased from 17.0% in 2024 to 10.5% in 2025, primarily due to cumulative changes in estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025[120] - Machine Clothing (MC) gross profit margin increased slightly from 45.9% in 2024 to 46.3% in 2025[120] - Gross profit for the three months ended June 30, 2025, decreased by $5.1 million, but the gross profit margin increased to 46.3% from 45.9% in the same period of 2024[146] - Operating income for the three months ended June 30, 2025, was $22,270 thousand, down from $42,905 thousand in 2024, reflecting a decrease of 48.2%[133] - Operating income for the three months ended June 30, 2025, decreased by $12.0 million or 24.2% compared to the same period in 2024, impacted by higher SG&A expenses[148] - AEC incurred a net operating loss of $2,674 thousand for the three months ended June 30, 2025, compared to a profit of $5,446 thousand in 2024[133] Expenses and Cost Management - Selling, General, and Administrative (SG&A) expenses increased by 5.4% for the three months ended June 30, 2025, with SG&A as a percentage of net revenues rising from 16.7% in 2024 to 18.8% in 2025[121] - Consolidated technical and research expenses increased by 5.8% for the three months ended June 30, 2025, with expenses as a percentage of net revenues rising from 3.6% in 2024 to 4.0% in 2025[124] - The company faces pricing pressures across all markets but aims to improve earnings through cost controls and manufacturing efficiencies[106] - The company announced plans to consolidate its corporate headquarters, impacting approximately 100 employees, with an estimated cost of $7.0 million over the next year and a half[167] Cash Flow and Liquidity - For the six months ended June 30, 2025, net cash provided by operating activities was $34.8 million, a decrease from $93.0 million in the same period of 2024, primarily due to lower gross profit[160] - As of June 30, 2025, the company had cash and cash equivalents of $106.7 million and total liquidity of approximately $462.0 million[164] - During the six months ended June 30, 2025, the company paid $16.7 million in dividends and repurchased shares for a total cost of $120.4 million[166] Tax and Interest Expenses - The effective income tax rate for the three months ended June 30, 2025, was 31.3%, up from 27.9% in 2024, mainly due to favorable discrete tax adjustments in the prior period[139] - Interest expense, net, increased to $5,150 thousand for the three months ended June 30, 2025, compared to $2,950 thousand in 2024, primarily due to higher average debt balances[136] - An increase of one percentage point in weighted average interest rates would increase interest expense by $2.6 million[172] Foreign Currency Exposure - The total net assets of non-U.S. operations and long-term intercompany loans in nonfunctional currencies amount to approximately $586.3 million[170] - A hypothetical 10% adverse change in foreign currency exchange rates could result in a potential loss in fair value of $58.6 million[170] - The company has exposure to various nonfunctional currency balances totaling $143.4 million, with a net foreign currency asset of $14.6 million as of June 30, 2025[170] - A hypothetical 10% change in currency rates could lead to an adjustment of approximately $1.5 million in the income statement[170] - The company has unhedged variable rate debt totaling $266.843 million as of June 30, 2025, with USD borrowings at an interest rate of 6.0% and EUR borrowings at 3.5%[172] - The company may enter into interest rate swap agreements to manage interest rate risk and fix rates on variable debt[172]