Albany International(US:AIN)2022-10-25 17:14Financial Data and Key Metrics Changes - Total company net sales for Q3 2022 were $260.6 million, an increase of 12.1% compared to $232.4 million in Q3 2021, with a 16.5% increase on a constant currency basis [14] - GAAP EPS was $0.34, down from $0.95 in the previous year, while adjusted EPS rose to $1.15 from $0.83 [20] - Adjusted EBITDA increased by 13% to $68.1 million compared to the same period last year [20] Business Segment Data and Key Metrics Changes - Engineered Composites segment saw a 41.6% increase in net sales, primarily driven by growth in LEAP and CH-53K programs [15] - Machine Clothing segment reported a 3.8% increase in net sales on a constant currency basis, with gross margins slightly up at 51.7% [14][16] - Adjusted EBITDA for Machine Clothing was $59.1 million, roughly flat compared to the previous year, while Engineered Composites adjusted EBITDA was $21.5 million, up from $16.3 million [20] Market Data and Key Metrics Changes - Global demand for paper machine clothing remained steady, with sales higher year-over-year in the Americas, Asia, and Europe [7] - The company noted healthy order bookings despite challenges from COVID lockdowns in China and the war in Ukraine [7] Company Strategy and Development Direction - The company aims to leverage its strong balance sheet for investments in new product development and organic growth [12] - Machine Clothing's strategy focuses on higher growth and value-added markets, while Engineered Composites is diversifying its customer base and pursuing new opportunities in defense and commercial applications [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of both business segments despite ongoing inflation and supply chain challenges [12] - The outlook for the Machine Clothing segment remains strong, with expectations of flat revenues for the full year due to currency impacts being offset by pricing and increased demand [22][23] Other Important Information - A significant pension settlement charge of $49.1 million impacted GAAP reported income [13] - The company completed the purchase of group annuity contracts to eliminate liabilities associated with US defined benefit pension plans [13] Q&A Session Summary Question: Follow-up on Machine Clothing margin outlook - Management acknowledged ongoing supply chain challenges and inflationary pressures but expressed confidence in managing costs effectively [30][31] Question: Drivers behind fourth quarter guidance - Management indicated that currency effects, seasonal shipping challenges, and rising input costs would impact fourth quarter performance [38][39] Question: Update on 787 program and production ramp - Management noted that production for the 787 remains idle, with no clear timeline for resumption [50][51] Question: LEAP program expectations for next year - Management confirmed no pinch points in production capacity and indicated that they would set production plans in collaboration with Safran [62][64] Question: Channel inventory status - Management reported no excess inventory in the channel and noted healthy order trends going into Q4 [66] Question: Growth opportunities in AEC - Management highlighted ongoing growth in LEAP and CH-53K programs, with several smaller defense opportunities also in the pipeline [68][72]