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Consolidated Net Sales: $332 million, up 21.1% year-over-year.
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Machine Clothing Revenue: $194 million, increased 21.6% year-over-year.
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Engineered Composites (AEC) Revenue: $138 million, up 20.5% year-over-year.
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Free Cash Flow: $64 million generated in the second quarter.
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Gross Profit: $112 million, up 9.4% from the previous year.
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Machine Clothing Gross Margin: Decreased from 50.8% to 45.9% year-over-year.
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AEC Gross Margin: Decreased from 19.0% to 17% year-over-year.
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Adjusted EBITDA: $63 million, compared to $65 million in the prior year.
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Machine Clothing Adjusted EBITDA: $62 million, a 5% increase year-over-year.
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AEC Adjusted EBITDA: $23 million, nearly 12% improvement year-over-year.
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GAAP Net Income: $25 million, compared to $27 million last year.
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GAAP Diluted EPS: $0.79 per share, compared to $0.85 last year.
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Adjusted Diluted EPS: $0.89, unchanged from the previous year.
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Operating Cash Flow: $83 million, offset by $19 million in capital expenditures.
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Cash Balance: Over $116 million with $430 million borrowing capacity.
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Net Leverage: Below 1x.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Albany International Corp (NYSE:AIN) reported strong free cash flow of $64 million in the second quarter.
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Machine Clothing revenues grew year-over-year to $194 million, driven by the Heimbach acquisition.
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The company received over $200 million in new orders for its Engineered Composites segment, contributing to a year-to-date total of over $900 million.
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Adjusted EBITDA margins in Machine Clothing improved by 220 basis points sequentially.
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The successful implementation of SAP at Heimbach was completed without operational disruption, aiding integration plans.
Negative Points
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Machine Clothing gross margin decreased from 50.8% to 45.9% due to the inclusion of Heimbach.
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Adjusted EBITDA margins for Engineered Composites were lower at 16.9%, down by 130 basis points from the previous year.
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The company faced inefficiencies related to program ramp-up, impacting profitability.
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Foreign exchange hedging losses of $4 million were recorded, affecting financial results.
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LEAP program revenues are expected to be slightly down due to adjustments in production plans with Safran.
Q & A Highlights
Q: Could you talk about the organic performance in North America for Machine Clothing, given the fluctuations between Q1 and Q2? A: The year-over-year comparison was challenging, but overall, North America is up for the first half of the year, indicating a strong market in the U.S. – Gunnar Kleveland, President and CEO
Q: What is the status of your footprint consolidation efforts? Are they completed for the year? A: We are continuing with our consolidation efforts, which are on plan and will extend through 2025, with more actions to come. – Gunnar Kleveland, President and CEO
Q: With LEAP revenues expected to be slightly down, which programs are offsetting this decline? A: The CH-53K and JASSM military programs are offsetting the decline. Additionally, new orders in Space and engine components will contribute to growth, helping us maintain our guidance. – Gunnar Kleveland, President and CEO
Q: Can you provide more details on the $900 million in year-to-date orders for AEC? A: The $900 million represents new orders taken this year, which will contribute to our backlog primarily in 2025 and beyond. Our current backlog for AEC is about $1.2 billion. – Gunnar Kleveland, President and CEO and Robert Starr, CFO
Q: How are you managing the potential impact of an extended strike at Boeing on LEAP production? A: We have factored in some downside risk for lower LEAP production, which would be affected by a strike. However, the extent of the impact would depend on the strike’s duration. – Robert Starr, CFO
Q: How is the hiring situation, particularly in Salt Lake, to meet the ramp-up across programs? A: Hiring in Salt Lake has been challenging, but we are nearly at the required headcount for the current ramp-up. Retention is now the focus, and hiring is not an issue at other sites. – Gunnar Kleveland, President and CEO
Q: Can you elaborate on the LEAP production forecast and its impact on 2025? A: For 2024, we anticipate a $5 million reduction in LEAP revenues with a $1 million EBITDA impact. Planning for 2025 is ongoing, and we are aligned with Safran to adjust output as needed. – Robert Starr, CFO
Q: What gives you confidence in achieving a 21% margin run rate for AEC in the second half? A: Confidence comes from a shift in program mix to higher-margin Space programs, overcoming operational challenges, and restructuring activities that improve cost structure. – Robert Starr, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.