UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended:			~~June~~September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from __________ to __________

Commission file number: 1-10026


ALBANY INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)

Delaware


(State or other jurisdiction of incorporation or organization)

216 Airport Drive, Rochester, New Hampshire


(Address of principal executive offices)

14-0462060


(IRS Employer Identification No.)

03867


(Zip Code)

603-330-~~5800~~5850


(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value per share	AIN	The New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 31.23 million shares of Class A Common Stock outstanding as of ~~July~~October 15, 2024.

ALBANY INTERNATIONAL CORP.

TABLE OF CONTENTS

		Page No.
Part I Financial information
Item 1.	Financial Statements
	Consolidated statements of income – three and six months ended June 30, 2024 and 2023	1
	Consolidated statements of income – three and nine months ended September 30, 2024 and 2023	1
	Consolidated statements of comprehensive income/(loss) – three and six months ended June 30, 2024 and 2023	2
	Consolidated statements of comprehensive income/(loss) – three and nine months ended September 30, 2024 and 2023	2
	Consolidated balance sheets as of June 30, 2024 and December 31, 2023	3
	Consolidated balance sheets as of September 30, 2024 and December 31, 2023	3
	Consolidated statements of cash flows – six months ended June 30, 2024 and 2023	4
	Consolidated statements of cash flows – nine months ended September 30, 2024 and 2023	4
	Notes to consolidated financial statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2324
	Forward-looking statements	2324
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3335
Item 4.	Controls and Procedures	3335
Part II Other Information
Item 1.	Legal Proceedings	3436
Item 1A.	Risk Factors	3436
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3436
Item 3.	Defaults upon Senior Securities	3436
Item 4.	Mine Safety Disclosures	3436
Item 5.	Other Information	3436
Item 6.	Exhibits	3537

Index

ITEM 1. FINANCIAL STATEMENTS

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)

Three Months EndedJune 30,

Six Months EndedJune 30,

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2024

2023

2024

2023

Net revenues

~~331~~298,~~994~~386

~~274~~281,~~123~~106

~~645~~943,~~324~~710

~~543~~824,~~219~~325

Cost of goods sold

~~219~~208,~~611~~002

~~171~~179,~~419~~271

~~424~~632,~~255~~257

~~341~~520,~~197~~468

Gross profit

~~112~~90,~~383~~384

~~102~~101,~~704~~835

~~221~~311,~~069~~453

~~202~~303,~~022~~857

Selling, general, and administrative expenses

5552,~~515~~097

4651,~~760~~975

~~110~~162,~~350~~447

95147,~~239~~214

Technical and research expenses

1110,~~860~~844

109,~~318~~708

2435,~~525~~369

2030,~~595~~303

Restructuring expenses, net

2,~~103~~272

~~125~~82

46,~~312~~584

~~145~~227

Operating income

4225,~~905~~171

4540,~~501~~070

81107,~~882~~053

86126,~~043~~113

Interest expense/(income), net

2,~~950~~411

3,~~106~~653

68,~~269~~680

610,~~396~~049

Other (income)/expense, net

53,~~657~~257

~~(4,511)~~56

25,~~675~~932

(4,~~966~~910)

Income before income taxes

3419,~~298~~503

4636,~~906~~361

7292,~~938~~441

84120,~~613~~974

Income tax expense

91,~~578~~282

209,~~080~~207

2022,~~849~~131

3039,~~701~~908

Net income

2418,~~720~~221

2627,~~826~~154

5270,~~089~~310

5381,~~912~~066

Net income attributable to the noncontrolling interest

96192

~~154~~45

~~174~~366

~~351~~396

Net income attributable to the Company

2418,~~624~~029

2627,~~672~~109

5169,~~915~~944

5380,~~561~~670

Earnings per share attributable to Company shareholders - Basic

0.7958

0.8687

12.6624

12.7259

Earnings per share attributable to Company shareholders - Diluted

0.7957

0.8587

12.6623

12.7158

Shares of the Company used in computing earnings per share:

Basic

31,~~242~~251

31,~~174~~185

31,~~225~~234

31,~~152~~163

Diluted

31,~~342~~367

31,~~269~~283

31,~~316~~333

31,~~243~~256

Dividends declared per Class A share

0.26

0.25

0.5278

0.5075

The accompanying notes are an integral part of the consolidated financial statements

Index

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in thousands)

(unaudited)

Three Months EndedJune 30,

Six Months EndedJune 30,

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2024

2023

2024

2023

Net income

2418,~~720~~221

2627,~~826~~154

5270,~~089~~310

5381,~~912~~066

Other comprehensive income/(loss), before tax:

Foreign currency translation

~~(17~~16,~~137)~~211

(215,~~818~~131)

(2812,~~968~~757)

10(4,~~622~~509)

Amortization of pension liability adjustments:

Prior service credit

(3837)

(1,~~030~~031)

(76113)

(23,~~061~~092)

Net actuarial loss

176

~~347~~349

~~354~~530

~~693~~1,042

Payments and amortization related to interest rate swaps included in earnings

(42,~~180~~675)

(3,~~678~~990)

(810,~~218~~893)

(610,~~901~~891)

Derivative valuation adjustment

~~439~~(1,238)

~~4,199~~996

~~1,633~~395

34,~~537~~533

Income taxes related to items of other comprehensive income/(loss):

Amortization of prior service credit

1113

~~316~~315

2235

~~631~~946

Amortization of net actuarial loss

(5355)

(107)

(~~107~~162)

(~~212~~319)

Payments and amortization related to interest rate swaps included in earnings

~~1,001~~658

~~931~~1,009

2,~~023~~681

12,~~746~~755

Derivative valuation adjustment

~~(100)~~305

(~~1,063~~252)

(~~402~~97)

(~~895~~1,147)

Comprehensive income

431,~~839~~579

239,~~923~~312

1849,~~350~~929

6170,~~072~~384

Comprehensive income attributable to the noncontrolling interest

(~~270~~127)

~~333~~(99)

(~~146~~273)

~~768~~669

Comprehensive income attributable to the Company

531,~~109~~706

239,~~590~~411

1850,~~496~~202

6069,~~304~~715

The accompanying notes are an integral part of the consolidated financial statements

Index

ALBANY INTERNATIONAL CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	June 30, 2024		December 31, 2023
	September 30, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	~~116~~127,~~439~~222	$	173,420
Accounts receivable, net	~~280~~271,~~008~~975		287,781
Contract assets, net	~~189~~195,~~242~~782		182,281
Inventories	~~161~~160,~~626~~617		169,567
Income taxes prepaid and receivable	98,~~993~~316		11,043
Prepaid expenses and other current assets	4940,~~143~~399		53,872
Total current assets	~~806~~804,~~451~~311		877,964
Property, plant and equipment, net	~~582~~583,~~167~~455		601,989
Intangibles, net	4140,~~505~~996		44,646
Goodwill	~~178~~180,~~236~~912		180,181
Deferred income taxes	2726,~~203~~979		22,941
Noncurrent receivables, net	—		4,392
Other assets	116,~~259~~548		102,901
Total assets	$	1,~~751~~753,~~821~~201	$	1,835,014
Liabilities and Shareholders' Equity
Accounts payable	$	8477,~~628~~873	$	87,104
Accrued liabilities	~~129~~138,~~511~~700		142,988
Current maturities of long-term debt	~~2,732~~555		4,218
Income taxes payable	71,~~765~~593		14,369
Total current liabilities	~~224~~218,~~636~~721		248,679
Long-term debt	~~374~~361,~~325~~639		452,667
Other noncurrent liabilities	~~151~~154,~~892~~634		139,385
Deferred taxes and other liabilities	2721,~~620~~531		26,963
Total liabilities	~~778~~756,~~473~~525		867,694
Commitments and Contingencies (Note 16)
Shareholders' Equity:
Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued	—		—
Class A Common Stock, par value $0.001 per share; authorized 100,000,000 shares; 40,908,380 issued in 2024 and 40,856,910 in 2023	41		41
Class A Common Stock, par value $0.001 per share; authorized 100,000,000 shares; 40,916,568 issued in 2024 and 40,856,910 in 2023	41		41
Additional paid in capital	452,~~461~~656		448,218
Retained earnings	1,~~046~~056,~~612~~514		1,010,942
Accumulated items of other comprehensive income:
Translation adjustments	(~~154~~137,~~304~~373)		(124,901)
Pension and postretirement liability adjustments	(1617,~~718~~341)		(17,346)
Derivative valuation adjustment	41,~~115~~165		9,079
Treasury stock (Class A), at cost; 9,661,845 shares in 2024 and 2023	(364,665)		(364,665)
Total shareholders' equity	~~967~~990,~~542~~997		961,368
Noncontrolling interest	5,~~806~~679		5,952
Total equity	~~973~~996,~~348~~676		967,320
Total liabilities and shareholders' equity	$	1,~~751~~753,~~821~~201	$	1,835,014

The accompanying notes are an integral part of the consolidated financial statements

Index

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Six Months EndedJune 30,

Nine Months EndedSeptember 30,

2024

2023

Cash flows from operating activities:

Net income

5270,~~089~~310

5381,~~912~~066

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

4161,~~247~~813

3250,~~299~~164

Amortization

35,~~446~~190

34,~~018~~614

Change in deferred taxes and other liabilities

(27,~~391~~552)

(1,~~787~~264)

Impairment of property, plant and equipment

~~120~~1,425

~~532~~577

Non-cash interest expense

~~513~~769

~~565~~1,148

Compensation and benefits paid or payable in Class A Common Stock

4,~~243~~438

25,~~274~~189

Provision/(recovery) for credit losses from uncollected receivables and contract assets

~~(174)~~40

~~493~~641

Foreign currency remeasurement gain on intercompany loans

(2,580)

(3,198)

Foreign currency remeasurement loss/(gain) on intercompany loans

2,263

(4,704)

Fair value adjustment on foreign currency contracts

31,~~109~~105

~~(123)~~581

Gain on sale of assets

(~~512~~515)

—

Changes in operating assets and liabilities that provided/(used) cash:

Changes in operating assets and liabilities that provided/(used) cash, net of impact of business acquisition:

Accounts receivable

417,~~929~~980

(4018,~~131~~172)

Contract assets

(815,~~435~~194)

4(16,~~606~~550)

Inventories

35,~~062~~918

(~~9,174~~293)

Prepaid expenses and other current assets

(2,~~454)~~768

(23,~~700~~030)

Income taxes prepaid and receivable

~~873~~2,602

~~(381)~~1,597

Accounts payable

177,~~679~~316

(56,~~255~~661)

Accrued liabilities

(158,~~367~~320)

(2116,~~570~~454)

Income taxes payable

(511,~~599~~995)

(45,~~943~~810)

Noncurrent receivables

(~~379~~579)

12,~~705~~276

Other noncurrent liabilities

(~~924~~17)

(13,~~922~~602)

Other, net

~~494~~220

2,~~881~~499

Net cash provided by operating activities

92139,~~989~~985

1473,~~675~~812

Cash flows from investing activities:

Purchases of property, plant and equipment

(46,616)

(34,899)

Purchase of business, net of cash acquired

—

(133,470)

Purchased software

(40)

(72)

Purchases of property, plant and equipment

(61,985)

(48,850)

Proceeds received from sale of assets

1,029

—

Purchased software

(101)

(276)

Net cash used in investing activities

(45,627)

(34,971)

Proceeds received from sale of assets

1,033

—

Net cash used in investing activities

(61,053)

(182,596)

Cash flows from financing activities:

Proceeds from borrowings

4348,~~282~~106

6171,~~000~~249

Principal payments on debt

(~~122~~142,~~828~~691)

(1351,~~000~~479)

Taxes paid in lieu of share issuance

(2,446)

(3,136)

Debt acquisition costs

—

(4,108)

Dividends paid

(16,233)

(15,570)

Taxes paid in lieu of share issuance

(2,832)

(3,136)

Net cash (used in)/provided by financing activities

(98,225)

29,294

Dividends paid

(24,356)

(23,365)

Effect of exchange rate changes on cash and cash equivalents

(6,118)

142

Net cash (used in)/provided by financing activities

(121,773)

(10,839)

(Decrease)/increase in cash and cash equivalents

(56,981)

9,140

Effect of exchange rate changes on cash and cash equivalents

(3,357)

(647)

(Decrease)/increase in cash and cash equivalents

(46,198)

(120,270)

Cash and cash equivalents at beginning of period

173,420

291,776

Cash and cash equivalents at end of period

~~116~~127,~~439~~222

~~300~~171,~~916~~506

The accompanying notes are an integral part of the consolidated financial statements

Index

ALBANY INTERNATIONAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Significant Accounting Policies

Basis of Presentation

In the opinion of management, the accompanying consolidated financial information reflects all adjustments necessary for a fair presentation of Albany International Corp.'s ("Albany", the "Registrant", the "Company", "we", "us", or "our") financial position, results of operations and cash flows for the interim periods presented, but does not include all disclosures required by the accounting principles generally accepted in the United States ("GAAP"). All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used in the accounting for, among others, revenue recognition, contract profitability, allowances for doubtful accounts, rebates and sales allowances, inventory allowances, financial instruments, including derivatives, pension and other postretirement benefits, goodwill and intangible assets, contingencies, income taxes, and other accruals. Our estimates are based on historical experience and on various other assumptions, which are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of any revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In March 2024, the FASB issued Accounting Standards Update No. 2024-01, "Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards" (ASU 2024-01), which clarifies how an entity determines whether profits interest or similar awards should be considered within the scope of ASC 718 as a share-based payment arrangement or under ASC 710 or other ASC topics in a manner similar to a cash bonus or profit-sharing arrangement. The guidance is effective for annual periods beginning after December 15, 2024, and interim periods beginning within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. ASU 2024-01 should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments. We are ~~currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.~~

Index

currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In March 2024, the U.S. Securities and Exchange Commission ("SEC") adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule would require registrants to disclose certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the final rule as a result of legal challenges that are pending judicial review. The disclosure requirements would apply to the Company's fiscal year beginning January 1, 2025, pending resolution of the stay. The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.

2. Reportable Segments and Revenue Recognition

The Company is organized based on the nature of its products and is composed of two reportable segments, Machine Clothing ("MC") and Albany Engineered Composites ("AEC"), each overseen by a Segment President. These segments are reflective of how the Company's Chief Executive Officer, who is its Chief Operating ~~Decisions~~Decision Maker ("CODM"), reviews operating results for the purpose of allocating resources and assessing performance. The Company has not aggregated operating segments for purposes of identifying reportable segments.

Machine Clothing:

The Machine Clothing segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel products, nonwovens, fiber cement and for several other industrial applications. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure. We manufacture belts for each section of the paper machine and for every grade of paper. We sell our MC products directly to customer end-users in countries across the globe. MC's products, manufacturing processes, and distribution channels are substantially the same in each region of the world in which we operate.

On August 31, 2023, the Company completed the acquisition of Heimbach GmbH (“Heimbach”), a privately-held manufacturer of paper machine clothing and technical textiles. The financial results of the acquired company are included in the Machine Clothing reportable segment.

Albany Engineered Composites:

The Albany Engineered Composites segment provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, the SAFRAN Group (“SAFRAN”) owns a 10 percent noncontrolling interest. AEC, through ASC, is the exclusive supplier to the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract, where revenue is determined by a cost-plus-fee agreement. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft. AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM International's LEAP engine) accounted for approximately 16 percent of the Company's consolidated Net revenues in 2023.

AEC net sales to SAFRAN were $~~101~~142.32 million and $93140.58 million in the first ~~six~~nine months of 2024 and 2023, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $8589.89 million and $93.8 million as of ~~June~~September 30, 2024 and December 31, 2023, respectively.

Other significant programs for AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing commercial programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine. For the year ended December 31, 2023, approximately 39 percent of AEC revenues were related to U.S. government contracts or programs.

The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023
Net revenues
Machine Clothing	$	193,578	$	159,217	$	378,795	$	312,439
Albany Engineered Composites	138,416		114,906		266,529		230,780
Consolidated revenues	$	331,994	$	274,123	$	645,324	$	543,219
Operating income/(loss)
Machine Clothing	$	53,685	$	53,726	$	101,795	$	102,690
Albany Engineered Composites	9,434		8,668		18,622		18,086
Corporate expenses	(20,214)		(16,893)		(38,535)		(34,733)
Consolidated Operating income	$	42,905	$	45,501	$	81,882	$	86,043
Reconciling items:
Interest income	(959)		(1,838)		(2,082)		(2,944)
Interest expense	3,909		4,944		8,351		9,340
Other (income)/expense, net	5,657		(4,511)		2,675		(4,966)
Income before income taxes	$	34,298	$	46,906	$	72,938	$	84,613

Index

~~Second~~The ~~quarter~~following ~~2024~~tables ~~results~~show ~~include~~data ~~Heimbach,~~by ~~which~~reportable ~~was acquired August 31~~segment, ~~2023.~~reconciled ~~Heimbach~~to ~~contributed~~consolidated ~~$39.8 million~~totals ~~and~~included ~~$77.7 million~~in ~~of net revenues and $0.5 million and $(2.4) million of operating income/(loss) for~~ the ~~three~~financial ~~and six months ended June 30, 2024, respectively.~~ statements:

Corporate expenses include global information system costs of $8.1 million and $6.8 million for the three months ended June 30, 2024 and 2023, respectively, and $16.4 million and $13.0 million for the six months ended June 30, 2024 and 2023, respectively.


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Net revenues
Machine Clothing	$	183,033	$	166,588	$	561,828	$	479,027
Albany Engineered Composites	115,353		114,518		381,882		345,298
Consolidated revenues	$	298,386	$	281,106	$	943,710	$	824,325
Operating income/(loss)
Machine Clothing	$	51,481	$	50,710	$	153,276	$	153,400
Albany Engineered Composites	(10,293)		9,374		8,329		27,460
Corporate expenses	(16,017)		(20,014)		(54,552)		(54,747)
Consolidated Operating income	$	25,171	$	40,070	$	107,053	$	126,113
Reconciling items:
Interest income	(1,019)		(1,826)		(3,101)		(4,770)
Interest expense	3,430		5,479		11,781		14,819


Other (income)/expense, net	3,257		56		5,932		(4,910)
Income before income taxes	$	19,503	$	36,361	$	92,441	$	120,974

Results for 2024 include Heimbach, which was acquired August 31, 2023. Heimbach contributed $27.8 million and $105.5 million of net revenues and $(4.3) million and $(6.7) million of operating loss for the three and nine months ended September 30, 2024, respectively. Heimbach contributed $15.6 million of Net revenues and an operating loss of $(0.5) million for the three and nine months ended September 30, 2023, respectively.

Corporate expenses include global information system costs of $7.8 million and $6.3 million for the three months ended September 30, 2024 and 2023, respectively, and $24.2 million and $19.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Revenue Recognition:

Products and services provided under long-term contracts represent a significant portion of revenues in the Albany Engineered Composites segment and we account for these contracts over time, primarily using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors. ~~Changes~~The cumulative changes in the estimated profitability of long-term contracts decreased operating income by $522.04 million for the ~~second~~third quarter of 2024 and decreased operating income by $728.63 million for the first ~~half~~nine months of 2024. The negative change in the estimated profitability in the third quarter of 2024 was driven by a few large complex programs, including approximately $13.3 million for various CH-53K programs, approximately $6.5 million on our Gulfstream program, approximately $2.2 million on our F-35 program, and $0.4 million, net, on all other programs. Adjustments in the estimated profitability of long-term contracts ~~decreased~~increased operating incomes by $10.9 million and decreased operating income by $4.01 million for the ~~second~~third quarter and first ~~half~~nine months of 2023, respectively.

We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes.

The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2024:

	Three months ended June 30, 2024
(in thousands)	Point in Time RevenueRecognition		Over Time RevenueRecognition		Total
Machine Clothing	$	192,596	$	982	$	193,578
Albany Engineered Composites:
ASC	—		50,292		50,292
Other AEC	6,008		82,116		88,124
Total Albany Engineered Composites	6,008		132,408		138,416
Total revenues	$	198,604	$	133,390	$	331,994

The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2023:

	Three months ended June 30, 2023
(in thousands)	Point in Time RevenueRecognition		Over Time RevenueRecognition		Total
Machine Clothing	$	158,273	$	944	$	159,217
Albany Engineered Composites:
ASC	—		47,417		47,417
Other AEC	3,511		63,978		67,489
Total Albany Engineered Composites	3,511		111,395		114,906
Total revenues	$	161,784	$	112,339	$	274,123

Index

The following table disaggregates revenue for each product group by timing of revenue recognition for the ~~six~~three months ended ~~June~~September 30, 2024:

	Six months ended June 30, 2024
	Three months ended September 30, 2024
(in thousands)	Point in Time RevenueRecognition		Over Time RevenueRecognition		Total
Machine Clothing	$	~~376~~182,~~831~~050	$	~~1,964~~983	$	~~378~~183,~~795~~033
Albany Engineered Composites:
ASC	—		~~100~~40,~~031~~115		~~100~~40,~~031~~115
Other AEC	114,~~766~~142		~~154~~71,~~732~~096		~~166~~75,~~498~~238
Total Albany Engineered Composites	114,~~766~~142		~~254~~111,~~763~~211		~~266~~115,~~529~~353
Total revenues	$	~~388~~186,~~597~~192	$	~~256~~112,~~727~~194	$	~~645~~298,~~324~~386

The following table disaggregates revenue for each product group by timing of revenue recognition for the ~~six~~three months ended ~~June~~September 30, 2023:

	Six months ended June 30, 2023
	Three months ended September 30, 2023
(in thousands)	Point in Time RevenueRecognition		Over Time RevenueRecognition		Total
Machine Clothing	$	~~310~~165,~~551~~643	$	~~1,888~~945	$	~~312~~166,~~439~~588
Albany Engineered Composites:
ASC	—		9146,~~949~~654		9146,~~949~~654
Other AEC	94,~~304~~955		~~129~~62,~~527~~909		~~138~~67,~~831~~864
Total Albany Engineered Composites	94,~~304~~955		~~221~~109,~~476~~563		~~230~~114,~~780~~518
Total revenues	$	~~319~~170,~~855~~598	$	~~223~~110,~~364~~508	$	~~543~~281,~~219~~106

The following table disaggregates ~~MC segment~~ revenue byfor ~~significant~~each product ~~groupings~~group ~~(paper~~by ~~machine~~timing ~~clothing~~of ~~("PMC")~~revenue ~~and~~recognition ~~engineered fabrics); and~~ for ~~PMC,~~ the ~~geographical~~nine ~~region~~months toended ~~which~~September 30, ~~the paper machine clothing was sold~~2024:

	Three months ended June 30,				Six months ended June 30,
	Nine months ended September 30, 2024
(in thousands)	~~2024~~Point in Time RevenueRecognition		~~2023~~Over Time RevenueRecognition		~~2024~~Total		~~2023~~
Americas PMC	$	88,533	$	94,154	$	172,034	$	177,532
Machine Clothing	$	558,881	$	2,947	$	561,828
Eurasia PMC	78,519		48,541		154,709		100,278
Albany Engineered Composites:
Engineered Fabrics	26,526		16,522		52,052		34,629
ASC	—		140,146		140,146
Total Machine Clothing Net revenues	$	193,578	$	159,217	$	378,795	$	312,439
Other AEC	15,908		225,828		241,736
Total Albany Engineered Composites	15,908		365,974		381,882
Total revenues	$	574,789	$	368,921	$	943,710

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year and certain contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $1.1 billion and $792 million as of June 30, 2024 and 2023, respectively, and related primarily to firm fixed price contracts in the AEC segment. Of the remaining performance obligations as of June 30, 2024, we expect to recognize as revenue approximately $86 million during 2024, $191 million during 2025, $155 million during 2026, and the remainder thereafter.

Index

The following table disaggregates revenue for each product group by timing of revenue recognition for the nine months ended September 30, 2023:


	Nine months ended September 30, 2023
(in thousands)	Point in Time Revenue Recognition		Over Time Revenue Recognition		Total
Machine Clothing	$	476,194	$	2,833	$	479,027

Albany Engineered Composites:
ASC	—		138,603		138,603
Other AEC	14,259		192,436		206,695
Total Albany Engineered Composites	14,259		331,039		345,298

Total revenues	$	490,453	$	333,872	$	824,325

The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing ("PMC") and engineered fabrics); and for PMC, the geographical region to which the paper machine clothing was sold:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Americas PMC	$	86,408	$	84,405	$	258,442	$	261,937
Eurasia PMC	70,083		64,493		224,792		164,771
Engineered Fabrics	26,542		17,690		78,594		52,319
Total Machine Clothing Net revenues	$	183,033	$	166,588	$	561,828	$	479,027

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year and certain contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $1.1 billion and $759 million as of September 30, 2024 and 2023, respectively, and related primarily to firm fixed price contracts in the AEC segment. Of the remaining performance obligations as of September 30, 2024, we expect to recognize as revenue approximately $40 million during 2024, $167 million during 2025, $147 million during 2026, and the remainder thereafter.

Index

3. Pensions and Other Postretirement Benefit Plans

The Company has defined benefit pension plans covering certain U.S. and non-U.S. employees. The Company also provides certain postretirement benefits to retired employees in the U.S. and Canada. The Company accrues the cost of providing these benefits during the active service period of the employees.

The composition of the net periodic benefit cost/(income) for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, was as follows:

	Pension plans				Other postretirement benefits
(in thousands)	2024		2023		2024		2023
Components of net periodic benefit cost/(income):
Service cost	$	~~986~~1,473	$	~~565~~986	$	2335	$	3045
Interest cost	34,~~043~~545		23,~~141~~447		~~709~~1,063		~~937~~1,405
Expected return on assets	(24,~~698~~030)		(13,~~955~~063)		—		—
Amortization of prior service cost/(income)	(1420)		(1624)		(6293)		(23,~~045~~068)
Amortization of net actuarial loss	~~372~~556		~~279~~421		(1826)		~~414~~621
Net periodic benefit cost/(credit)	$	12,~~689~~524	$	1,~~014~~767	$	~~652~~979	$	(~~664~~997)

The amount of net benefit cost/(credit) is determined at the beginning of each year and generally only varies from quarter to quarter when a significant event occurs, such as a curtailment or a settlement. There were no material curtailments or settlements during the first ~~six~~nine months of 2024 or 2023.

Service cost for defined benefit pension and postretirement plans are reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net periodic benefit cost are included in the line item Other (income)/expense, net in the Consolidated Statements of Income.

4. Restructuring

~~Restructuring~~At ~~costs~~MC, atrestructuring MCactions were taken in the second ~~quarter~~and third quarters of 2024 ~~were related primarily~~ to ~~actions taken to~~ cease operations at the Company's MC forming fabric manufacturing facility in Chungju, South Korea, and at the Company's Heimbach engineered fabric manufacturing facility in Rochdale, UK. ~~This~~ ~~led~~The toprincipal adriver of $13.03 million ~~charge~~in to Restructuring expenses, net for the first nine months of 2024 related to workforce reductions, fixed asset impairments and arelated costs, as well as charges of $01.53 million ~~charge~~in ~~recorded~~Costs ~~to Cost~~ of goods sold for the write-off of inventory. We expect to incur additional restructuring expenses related to ~~this~~these ~~action~~actions throughout the remainder of the year. Restructuring expenses incurred at MC during 2023 were not significant.

At AEC, restructuring activities were related to reductions in the workforce at various AEC locations., ~~Restructuring~~which ~~charges~~resulted in restructuring expenses of $3.1 million for the ~~second~~first ~~quarter~~nine months of 2024. Restructuring expenses incurred at AEC during 2023 were not significant.

The following table summarizes charges reported in the Consolidated Statements of Income under "Restructuring expenses, net":

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Machine Clothing	$	12,~~066~~207	$	~~125~~82	$	13,~~087~~294	$	~~145~~227
Albany Engineered Composites	~~922~~34		—		3,~~110~~144		—
Corporate expenses	~~115~~31		—		~~115~~146		—
Total	$	2,~~103~~272	$	~~125~~82	$	46,~~312~~584	$	~~145~~227

910

Index

The following tables summarizes charges by type of expense reported in the Consolidated Statements of Income under "Restructuring expenses, net" and "Cost of goods sold":

Six months ended June 30, 2024	Totalrestructuringcosts incurred		Terminationand othercosts		Impairment of assets
Nine months ended September 30, 2024	Totalrestructuringcosts incurred		Terminationand othercosts		Impairment of assets
(in thousands)
Machine Clothing	$	14,~~605~~581	$	13,~~087~~294	$	~~518~~1,287
Albany Engineered Composites	3,~~110~~144		3,~~110~~144		—
Corporate expenses	~~115~~146		~~115~~146		—
Total	$	47,~~830~~871	$	46,~~312~~584	$	~~518~~1,287

Six months ended June 30, 2023	Totalrestructuringcosts incurred		Terminationand othercosts		Impairment of assets
Nine months ended September 30, 2023	Totalrestructuringcosts incurred		Terminationand othercosts		Impairment of assets
(in thousands)
Machine Clothing	$	~~145~~227	$	~~145~~227	$	—
Albany Engineered Composites	—		—		—
Corporate expenses	—		—		—
Total	$	~~145~~227	$	~~145~~227	$	—

The table below presents the year-to-date changes in restructuring liabilities for 2024 and 2023:

(in thousands)

December 31, 2023

Restructuringcharges accrued

Payments

Currencytranslation /other

~~June~~September 30, 2024

Total termination and other costs

—

46,~~312~~584

(14,~~381~~064)

~~(7)~~90

2,~~924~~610

(in thousands)			December 31, 2022			Restructuringcharges accrued			Payments			Currencytranslation /other			~~June~~September 30, 2023
Total termination and other costs			$	—		$	~~145~~227		$	(~~147~~227)		$	2—		$	—

5. Other (Income)/Expense, net

The components of Other (income)/expense, net are:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

2024

2023

2024

2023

Currency transaction (gains)/losses

~~150~~1,834

~~(4,193)~~511

~~(1,142)~~692

(43,~~133~~622)

Derivative instruments losses/(gains)

~~4,391~~(485)

~~(138)~~704

43,~~273~~788

~~(123)~~581

Bank fees and amortization of debt issuance costs

7748

3349

~~121~~169

91140

Components of net periodic pension and postretirement cost other than service cost

~~664~~663

(~~120~~15)

1,~~332~~995

(~~245~~260)

Other

~~375~~1,197

(931,193)

(~~1,909~~712)

(~~556~~1,749)

Total other (income)/expense, net

53,~~657~~257

~~(4,511)~~56

25,~~675~~932

(4,~~966~~910)

Other (income)/expense, net, included foreign currency related transactions which resulted in losses of $01.28 million and ~~gains of~~ $10.17 million in the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively, as compared to ~~gains~~losses of $40.25 million and gains of $43.16 million in the same ~~period~~periods last year. In addition, changes in the fair value of derivative instruments included ~~losses~~gains of $40.45 million and losses of $4.3.8 million in the three and ~~six~~nine months ended ~~June~~ September 30, 2024, as compared to ~~gains~~losses of $0.17 million and $0.16 million in the same period last year, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. Net periodic pension and postretirement costs, other than service costs, were $0.7 million and $1.3 million in the three and six months ended June 30, 2024, respectively, as compared to benefits of $0.1 million and $0.2 million in the same period last year. Other (income)/expense, net, also included net ~~proceeds~~losses of $0.57 million from the divestiture of assets related to Heimbach during the ~~three~~nine ~~and six~~ months ended ~~June~~September 30, 2024, as well as bank fees, amortization of debt issuance costs, and rental income.

1011

Index

6. Income Taxes

The Company's effective income tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, is as follows:

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Effective income tax rate	276.96	%	4225.83	%	2823.69	%	3633.30	%

Income tax expense for the quarter was computed in accordance with ASC 740-270, Income Taxes – Interim Reporting. Under this method, loss jurisdictions which cannot recognize a tax benefit with regard to their generated losses are excluded from the annual effective tax rate calculation and their taxes will be recorded discretely in each quarter.

Our 2024 estimated annual effective tax rate primarily reflects the 21% federal tax rate, the impact of state and local taxation, the impact of taxation upon foreign operations, and forecasted permanent differences. Our actual effective tax rates were 276.96% and 4225.83% for the three months ended ~~June~~September 30, 2024 and 2023, respectively. Our actual effective tax rates were 2823.69% and 3633.30% for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, respectively.

The effective tax rate for the three months ended ~~June~~September 30, 2024 included a net discrete tax benefit of $18.45 million~~, which decreased our effective tax rate by 4~~.~~2%.~~ This discrete tax benefit is mostly attributable to the true-up of prior year estimated taxes and the release of ana ~~uncertain~~valuation ~~tax~~allowance ~~position~~in a non-U.S. jurisdiction due to positive evidence indicating that a ~~favorable~~full ~~audit~~valuation ~~settlement~~allowance was no longer required. The rate for the ~~second~~third quarter of 2024 was lower than the ~~second~~third quarter of 2023 mainly due to favorable discrete tax adjustments in the current period compared to unfavorable discrete tax adjustments in the prior period, partially offset by an unfavorable change in the jurisdictional mix of earnings compared to the prior period.

The effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2024 included a net discrete tax benefit of $211.50 million~~, which decreased our effective tax rate by 3~~.~~4%.~~ This discrete tax benefit is mostly attributable to the true-up for prior year estimated taxes, ana ~~increase~~net decrease in ~~the~~ valuation ~~allowance~~allowances and a net decrease in uncertain tax positions. The rate for the ~~six~~nine months ended ~~June~~September 30, 2024 was lower than the ~~six~~nine months ended ~~June~~September 30, 2023 mainly due to favorable discrete tax adjustments in the current period compared to unfavorable discrete tax adjustments in the prior period, partially offset by an unfavorable change in the jurisdictional mix of earnings compared to the prior period.

The Company is subject to audit in the U.S. and various foreign jurisdictions. Our open tax years for major jurisdictions generally range from 2013-2024. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. It is reasonably possible that within the next 12 months, unrecognized tax benefits could decrease by up to $1.48 million based on current estimates.

1112

Index

7. Earnings Per Share

The amounts used in computing earnings per share and the weighted average number of shares of potentially dilutive securities are as follows:

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
(in thousands, except earnings per share)	2024		2023		2024		2023
Net income attributable to the Company	$	2418,~~624~~029	$	2627,~~672~~109	$	5169,~~915~~944	$	5380,~~561~~670
Weighted average number of shares:
Weighted average number of shares used in calculating basic net income per share	31,~~242~~251		31,~~174~~185		31,~~225~~234		31,~~152~~163
Effect of dilutive stock-based compensation plans:
Restricted stock units and multi-year awards	~~100~~116		9598		9199		9193
Weighted average number of shares used in calculating diluted net income per share	31,~~342~~367		31,~~269~~283		31,~~316~~333		31,~~243~~256
Net income attributable to the Company per share:
Basic	$	0.7958	$	0.8687	$	12.6624	$	12.7259
Diluted	$	0.7957	$	0.8587	$	12.6623	$	12.7158

8. Accumulated Other Comprehensive Income ("AOCI")

The table below presents changes in the components of AOCI for the period from December 31, 2023 to ~~June~~September 30, 2024:

(in thousands)	Translationadjustments		Pension andpostretirementliabilityadjustments		Derivativevaluationadjustment		Total OtherComprehensiveIncome
December 31, 2023	$	(124,901)	$	(17,346)	$	9,079	$	(133,168)
Other comprehensive income/(loss) before reclassifications, net of tax	(2912,~~403~~472)		~~435~~(285)		~~1,231~~298		(2712,~~737~~459)
Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax	—		—		(68,~~195~~212)		(68,~~195~~212)
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax	—		~~193~~290		—		~~193~~290
Net current period other comprehensive income	(2912,~~403~~472)		~~628~~5		(47,~~964~~914)		(3320,~~739~~381)
June 30, 2024	$	(154,304)	$	(16,718)	$	4,115	$	(166,907)
September 30, 2024	$	(137,373)	$	(17,341)	$	1,165	$	(153,549)

The table below presents changes in the components of AOCI for the period from December 31, 2022 to ~~June~~September 30, 2023:

(in thousands)	Translationadjustments		Pension andpostretirementliabilityadjustments		Derivativevaluationadjustment		Total OtherComprehensiveIncome
December 31, 2022	$	(146,851)	$	(15,783)	$	17,707	$	(144,927)
Other comprehensive income/(loss) before reclassifications, net of tax	11(4,~~313~~326)		(~~691~~183)		23,~~642~~386		13(1,~~264~~123)
Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax	—		—		(58,~~155~~136)		(58,~~155~~136)
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax	—		(~~949~~1,423)		—		(~~949~~1,423)
Net current period other comprehensive income	11(4,~~313~~326)		(1,~~640~~606)		(24,~~513~~750)		7(10,~~160~~682)
June 30, 2023	$	(135,538)	$	(17,423)	$	15,194	$	(137,767)
September 30, 2023	$	(151,177)	$	(17,389)	$	12,957	$	(155,609)

1213

Index

The components of AOCI that are reclassified to the Consolidated Statements of Income relate to our pension and postretirement plans and interest rate swaps.

The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the Consolidated Statements of Income that were affected for the three and ~~six~~nine ended ~~June~~September 30, 2024 and 2023:

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Pre-tax Derivative valuation reclassified from Accumulated Other Comprehensive Income:
Interest expense/(income), net related to interest rate swaps included in Income before taxes	$	(42,~~180~~675)	$	(3,~~678~~990)	$	(810,~~218~~893)	$	(610,~~901~~891)
Income tax effect	~~1,001~~658		~~931~~1,009		2,~~023~~681		12,~~746~~755
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$	(32,~~179~~017)	$	(2,~~747~~981)	$	(68,~~195~~212)	$	(58,~~155~~136)
Pre-tax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:
Amortization of prior service credit	$	(3837)	$	(1,~~030~~031)	$	(76113)	$	(23,~~061~~092)
Amortization of net actuarial loss	176		~~347~~349		~~354~~530		~~693~~1,042
Total pre-tax amount reclassified (a)	~~138~~139		(~~683~~682)		~~278~~417		(12,~~368~~050)
Income tax effect	(42)		~~209~~208		(85127)		~~419~~627
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$	9697	$	(474)	$	~~193~~290	$	(~~949~~1,423)

(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 3. Pensions and Other Postretirement Benefit Plans).

9. Noncontrolling Interests

Effective October 31, 2013, Safran S.A. (Safran) acquired a 10 percent equity interest in Albany Safran Composites, LLC ("ASC").

On August 31, 2023, the Company acquired all the outstanding shares of Heimbach, a privately held manufacturer of paper machine clothing with headquarters in Düren, Germany. In July 2021, Heimbach acquired 85% of Arcari, SRL (“Arcari”). Arcari is a manufacturer of textile and plastic industrial technical products and conveyor belts. ~~On the date of the acquisition, the fair value of the noncontrolling interest in Arcari was $0.5 million.~~ For the ~~six~~nine months ended ~~June~~September 30, 2024, the net income/(loss) attributable to Arcari’s noncontrolling interest was less than $0.1 million and the noncontrolling interest balance at ~~June~~September 30, 2024 was $0.64 million.

1314

Index

The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiaries:

ASC Noncontrolling Interest	~~Six~~Nine months ended ~~June~~September 30,
(in thousands, except percentages)	2024			2023
Net income of Albany Safran Composites (ASC)	$	13,~~841~~754		$	4,~~146~~929
Less: Return attributable to the Company's preferred holding	~~589~~850			~~637~~974
Net income of ASC available for common ownership	$	12,~~252~~904		$	3,~~509~~955
Ownership percentage of noncontrolling shareholder	10		%	10		%
Net income attributable to the noncontrolling interest	$	~~125~~290		$	~~351~~396
Noncontrolling interest, beginning of year	$	5,423		$	4,494
Net income attributable to noncontrolling interest	~~125~~290			~~351~~396
Changes in other comprehensive income attributable to the noncontrolling interest	(~~304~~481)			~~417~~317
ASC Noncontrolling interest, end of interim period	$	5,~~244~~232		$	5,~~262~~207
Arcari Noncontrolling interest, end of interim period	$	~~562~~447		$	—1,587
Total Noncontrolling interest, end of interim period	$	5,~~806~~679		$	56,~~262~~794

10. Accounts Receivable

Accounts receivable, net includes Trade and other accounts receivable and Bank promissory notes, net of Allowance for expected credit losses. In connection with certain revenues in Asia, the Company accepts a bank promissory note as customer payment. The notes may be presented for payment at maturity, which is less than one year. As of ~~June~~September 30, 2024 and December 31, 2023, Accounts receivable consisted of the following:

(in thousands)	~~June~~September 30, 2024		December 31, 2023
Trade and other accounts receivable	$	~~263~~254,~~781~~194	$	272,351
Bank promissory notes	2021,~~991~~535		20,690
Allowance for expected credit losses	(43,~~764~~754)		(5,260)
Accounts receivable, net	$	~~280~~271,~~008~~975	$	287,781

The Company had Noncurrent receivables in the AEC segment that represent revenue earned, which had extended payment terms. In 2023, the payment terms were amended and the Noncurrent receivables are now included in Trade and other accounts receivable. As of ~~June~~September 30, 2024 and December 31, 2023, Noncurrent receivables consisted of the following:

(in thousands)	~~June~~September 30, 2024		December 31, 2023
Noncurrent receivables	$	—	$	4,414
Allowance for expected credit losses	—		(22)
Noncurrent receivables, net	$	—	$	4,392

1415

Index

11. Contract Assets and Liabilities

Contract assets include unbilled amounts typically resulting from revenues under contracts when the over time method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to Accounts receivable, net when the entitlement to pay becomes unconditional and the customer is invoiced. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract liabilities are included in Accrued liabilities in the Consolidated Balance Sheets.

Contract assets and Contract liabilities are reported on the Consolidated Balance Sheets in a net position on a contract-by-contract basis at the end of each reporting period.

As of ~~June~~September 30, 2024 and December 31, 2023, Contract assets and Contract liabilities consisted of the following:

(in thousands)	~~June~~September 30, 2024		December 31, 2023
Contract assets	$	~~190~~196,~~193~~765	$	183,189
Allowance for expected credit losses	(~~951~~983)		(908)
Contract assets, net	$	~~189~~195,~~242~~782	$	182,281
Contract liabilities	$	7,~~657~~122	$	7,127

Contract assets, net increased $713.05 million during the ~~six~~nine months ended ~~June~~September 30, 2024. The ~~modest~~ increase was primarily due to an increase in unbilled revenue, primarily related to commercial and space programs. There were no impairment losses related to our Contract assets during the ~~six~~nine months ended ~~June~~September 30, 2024 and ~~June~~September 30, 2023.

Contract liabilities ~~decreased~~are ~~$0.5~~essentially ~~million~~flat ~~during~~for the ~~six~~period ~~months~~ ended ~~June~~September 30, 2024 compared to December 31, 2023, primarily due to revenue recognized from satisfied performance obligations ~~exceeding~~were essentially offset by customer advance payments for commercial and defense programs. Revenue recognized for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 that was included in the Contract liability balance at the beginning of the year was $3.87 million and $1114.74 million, respectively.

12. Inventories

Costs included in inventories are raw materials, labor, supplies and allocable depreciation and overhead. Raw material inventories are valued on an average cost basis. Other inventory cost elements are valued at cost, using the first-in, first-out method. The Company writes down the inventories for estimated obsolescence and to lower of cost or net realizable value based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related write-down represents the new cost basis of such inventories.

As of ~~June~~September 30, 2024 and December 31, 2023, Inventories consisted of the following:

(in thousands)	~~June~~September 30, 2024		December 31, 2023
Raw materials	$	8284,~~412~~257	$	79,611
Work in process	5754,~~027~~772		67,743
Finished goods	2221,~~187~~588		22,213
Total inventories	$	~~161~~160,~~626~~617	$	169,567

1516

Index

13. Goodwill and Other Intangible Assets

The following table sets forth the gross carrying value, accumulated amortization and net values of intangible assets and goodwill as of ~~June~~September 30, 2024 and December 31, 2023:

June 30, 2024

September 30, 2024

(in thousands)

Amortization life in years

Gross carrying amount

Accumulated amortization

Net carrying amount

Finite-lived assets:

AEC Trademarks and trade names

6-15

208

(~~192~~194)

1614

AEC Technology

10-15

56,~~993~~226

(23,~~947~~201)

3,~~046~~025

AEC Intellectual property

1,250

(~~381~~402)

~~869~~848

AEC Customer relationships

8-15

69,~~268~~395

(4546,~~583~~500)

2322,~~685~~895

Heimbach Developed technology

89,~~798~~166

(~~802~~1,090)

78,~~996~~076

Total Finite-lived intangible assets

8586,~~517~~245

(4951,~~905~~387)

3534,~~612~~858

Indefinite-lived intangible assets:

Heimbach Trade name

56,~~893~~138

—

56,~~893~~138

MC Goodwill

6567,~~440~~407

—

6567,~~440~~407

AEC Goodwill

~~112~~113,~~796~~505

—

~~112~~113,~~796~~505

Total Indefinite-lived intangible assets:

~~184~~187,~~129~~050

—

~~184~~187,~~129~~050


	December 31, 2023
(in thousands)	Amortization life in years	Gross carrying amount		Accumulated amortization		Net carrying amount

Finite-lived assets:
AEC Trademarks and trade names	6-15	$	208	$	(186)	$	22
AEC Technology	10-15	6,161		(2,735)		3,426
AEC Intellectual property	15	1,250		(339)		911
AEC Customer relationships	8-15	69,360		(43,875)		25,485
Heimbach Developed technology	9	9,042		(310)		8,732
Total Finite-lived assets		$	86,021	$	(47,445)	$	38,576

Indefinite-lived intangible assets:
Heimbach Trade name		$	6,070	$	—	$	6,070
MC Goodwill		66,873		—		66,873
AEC Goodwill		113,308		—		113,308
Total Indefinite-lived intangible assets:		$	186,251	$	—	$	186,251

1617

Index

The changes in intangible assets, net and goodwill from December 31, 2023 to ~~June~~September 30, 2024, were as follows:

(in thousands)	December 31, 2023		OtherChanges		Amortization		CurrencyTranslation		~~June~~September 30, 2024
Finite-lived intangible assets:
AEC Trademarks and trade names	$	22	$	—	$	(68)	$	—	$	1614
AEC Technology	3,426		—		(~~283~~428)		~~(97)~~27		3,~~046~~025
AEC Intellectual property	911		—		(4263)		—		~~869~~848
AEC Customer relationships	25,485		—		(12,~~740~~611)		~~(60)~~21		2322,~~685~~895
Heimbach Developed technology	8,732		—		(~~492~~767)		~~(244)~~111		78,~~996~~076
Total Finite-lived intangible assets	$	38,576	$	—	$	(23,~~563~~877)	$	~~(401)~~159	$	3534,~~612~~858
Indefinite-lived intangible assets:
Heimbach Trade name	$	6,070	$	—	$	—	$	~~(177)~~68	$	56,~~893~~138
MC Goodwill	66,873		—		—		~~(1,433)~~534		6567,~~440~~407
AEC Goodwill	113,308		—		—		~~(512)~~197		~~112~~113,~~796~~505
Total Indefinite-lived assets:	$	186,251	$	—	$	—	$	~~(2,122)~~799	$	~~184~~187,~~129~~050

In the second quarter of 2024, management performed the quantitative assessment approach in conducting its annual evaluation of goodwill and indefinite-lived trademark intangibles and concluded that no impairment provision was required. Our goodwill has been allocated to and is tested for impairment at a level referred to as the reporting unit, which management determined to be the business segment level. As part of the quantitative assessment, management used the income and market approach to determine fair value by considering projected cash flows and market multiples for the Machine Clothing reporting unit and the AEC reporting unit. Management performed the quantitative assessments and concluded that each reporting unit’s fair value continued to significantly exceed its carrying value. In addition, there were no amounts at risk due to the estimated spread between the fair and carrying values. Accordingly, no impairment charges were recorded.

In the third quarter, the Company revised its estimates and assumptions used in certain program estimates at completion of its AEC reporting unit. As a result, on October 3, 2024, the Company reported a preliminary update to its full year outlook to reflect revised revenue and profitability expectations for the AEC segment. As a result of the change in estimates of certain program revenues and profits, we performed a qualitative assessment of the AEC reporting unit’s goodwill for impairment and concluded that goodwill was not impaired. The excess of the fair value of the AEC reporting unit over its carrying value reduced approximately 26% from previous quarters; and fair value continues to exceed the carrying value by more than 20%.

14. Financial Instruments

Debt principally consists of a revolving credit agreement and foreign bank debt assumed in the 2023 acquisition of Heimbach. The following table represents the Company's outstanding debt:

The following table represents the Company's outstanding debt:


(in thousands, except interest rates)	September 30, 2024		December 31, 2023
Borrowings under the Amended Credit Agreement (1)	$	360,000	$	446,000
Foreign bank debt	2,194		10,885
Total bank debt	362,194		456,885
Less: Current maturities of long-term debt	555		4,218
Long-term debt	$	361,639	$	452,667
(1) the credit facility matures in August 2028. At the end of September 30, 2024 and December 31, 2023, the interest rate in effect was 2.50% and 3.49%, respectively, including the effect of interest rate hedging transactions, as described below.

(in thousands, except interest rates)	June 30, 2024		December 31, 2023
Borrowings under the Amended Credit Agreement(1)	$	370,000	$	446,000
Foreign bank debt	7,057		10,885
Total bank debt	377,057		456,885
Less: Current maturities of long-term debt	2,732		4,218
Long-term debt	$	374,325	$	452,667
(1) the credit facility matures in August 2028. At the end of June 30, 2024 and December 31, 2023, the interest rate in effect was 2.75% and 3.49%, respectively, including the effect of interest rate hedging transactions, as described below.

Amended Credit Agreement

On August 16, 2023, we entered into a $800 million unsecured committed Five-Year Revolving Credit Facility Agreement (the “Amended Credit Agreement”). The applicable interest rate for borrowings under the Amended Credit Agreement is based on Term SOFR plus a spread, which is based on our leverage ratio (as defined in the Amended Credit Agreement) at the time of a borrowing as follows:

Index

Amended Credit Agreement

On August 16, 2023, we entered into a $800 million unsecured committed Five-Year Revolving Credit Facility Agreement (the “Amended Credit Agreement”), which matures in August of 2028. The applicable interest rate for borrowings under the Amended Credit Agreement is based on Term SOFR plus a spread, which is based on our leverage ratio (as defined in the Amended Credit Agreement) at the time of a borrowing as follows:


Leverage Ratio	Commitment Fee	ABR Spread	Term Benchmark/ Daily Simple SOFR Spread
<1.00:1.00	0.275%	0.500%	1.500%
≥ 1.00:1.00 and < 2.00:1.00	0.300%	0.625%	1.625%
≥ 2.00:1.00 and < 3.00:1.00	0.325%	0.750%	1.750%
≥ 3.00:1.00	0.350%	1.000%	2.000%

As of ~~June~~September 30, 2024, the applicable interest rate for borrowings under the Amended Credit Agreement was based on one-month term SOFR plus the spread, which was 1.~~625~~50%.

As of ~~June~~September 30, 2024, there was $~~370~~360 million of borrowings outstanding under the Amended Credit Agreement and we had borrowings available of $~~430~~440 million, based on our maximum leverage ratio and our Consolidated EBITDA (as defined in the Amended Credit Agreement).

~~The Amended Credit Agreement contains customary terms including affirmative covenants, negative covenants and events of default.~~ Under the Amended Credit Agreement, we are required to maintain a leverage ratio (as defined in the Credit Agreement) of not greater than 3.75 to 1.00, or 4.25 to 1.00 after a significant acquisition. We are also required to maintain a minimum interest coverage ratio (as defined in the Credit Agreement) of greater than 3.00 to 1.00. If our leverage ratio exceeds 3.50 to 1.00, we will be restricted in paying dividends to a maximum amount of $40 million in a calendar year.

As of ~~June~~September 30, 2024, our leverage ratio was 0.9899 to 1.00 ~~(as defined in the Amended Credit Agreement)~~ and our interest coverage ratio was 1415.7039 to 1.00. ~~If our leverage ratio exceeds 3.50 to 1.00, then we are restricted in paying dividends to a maximum amount of $40 million in a calendar year.~~ As of ~~June~~September 30, 2024, we were in compliance with all applicable covenants. We anticipate continued compliance in each of the next four quarters while continuing to monitor future compliance based on current and future economic conditions.

The borrowings are guaranteed by certain of the Company’s subsidiaries, including all significant U.S. subsidiaries (subject to certain exceptions), as defined in the Amended Credit Agreement. Our ability to borrow additional amounts under the Amended Credit Agreement is conditional upon the absence of any defaults, as well as the absence of any material adverse change (as defined in the Amended Credit Agreement).

Interest Rate Swaps

InFrom ~~2021~~time to time, wethe ~~entered~~Company enters into interest rate swap ~~agreements~~contracts ~~for~~to manage the ~~period~~interest ofrate ~~October~~risk ~~17,~~associated ~~2022~~with ~~through~~its ~~October~~outstanding ~~27,~~variable-interest ~~2024~~rate borrowings. ~~These~~Such ~~transactions~~contracts ~~had~~are ~~the~~intended ~~effect~~to ofeconomically ~~fixing~~hedge the ~~LIBOR~~reference ~~portion~~rate component of future interest payments associated with outstanding borrowings under the ~~effective~~Company’s Amended Credit Agreement. In 2021, we entered into interest rate ~~(before~~swap ~~addition~~agreements offor the ~~spread)~~period onof October 17, 2022 through October 27, 2024, to hedge $350 million of variable-interest rate indebtedness. WeThe ~~amended~~interest ~~the~~rate ~~swap~~swaps ~~agreements~~are onaccounted ~~June~~for ~~29,~~as ~~2023~~a ~~replacing~~hedge ~~the~~of ~~LIBOR~~future (cash flows, as further described in ~~preparation~~Note ~~for~~15, ~~the~~Fair-Value ~~cessation~~Measurements. ofNo ~~LIBOR)~~cash ~~with~~collateral ~~SOFR~~was ~~and~~received ~~adjusting~~or pledged in relation to the ~~spread~~swap agreements.

We pay a fixed blended rate of 0.88% through October 27, 2024 on $350 million and the counterparties pay a floating rate based on the one-month term SOFR at each monthly calculation date, which on June 17, 2024 was 5.33%. As of ~~June~~September 30, 2024, the all-in rate on the $~~350M~~350 million of debt was 2.5138%. Upon the expiration of the interest rate swap on October 2728, 2024, our interest cost will increase significantly. Beginning in October 2024, our interest cost will be calculated using a floating rate based on the one-month term SOFR.

The interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 15, Fair-Value Measurements. No cash collateral was received or pledged in relation to the swap agreements.

Foreign Bank Debt

On August 31, 2023, the Company acquired Heimbach. The Company assumed Heimbach’s bank debt in the amount of $32.7 million. The bank debt is held by several European financial institutions, with maturity dates ranging from February 1, 2025 to June 30, 2031. At June 30, 2024 and December 31, 2023, the foreign debt was $7.1 million and $10.9 million, respectively, of which $2.7 million and $4.2 million, respectively, was classified as Current maturities on long-term debt.

Index

15. Fair-Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

Index

•Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

We had no Level 3 financial assets or liabilities at ~~June~~September 30, 2024 or at December 31, 2023, other than certain pension assets as indicated in our December 31, 2023 Annual Report on Form 10-K.

The following table presents the fair-value hierarchy for our Level 1 and Level 2 financial and non-financial assets and liabilities, which are measured at fair value on a recurring basis:

	June 30, 2024				December 31, 2023
	September 30, 2024				December 31, 2023
	Quotedprices inactivemarkets		Significantotherobservableinputs		Quotedprices inactivemarkets		Significantotherobservableinputs
(in thousands)	(Level 1)		(Level 2)		(Level 1)		(Level 2)
Fair Value
Assets:
Cash equivalents	$	1213,~~184~~401	$	—	$	27,157	$	—
Foreign currency option contracts	—		~~1,048~~—		—		1,725
Foreign currency forward contracts	—		—		—		199
Other Assets:
Common stock of unaffiliated foreign public company (a)	~~759~~693		—		682		—
Interest rate swaps	—		51,~~635~~722		—		12,214
Liabilities
Foreign currency forward contracts	—		(21,~~790~~105)		—		—

(a)Original cost basis $0.5 million.

Cash equivalents include short-term securities that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities.

The interest rate swaps are accounted for as hedges of future cash flows. The fair value of our interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve, and is included in Other assets and/or Other noncurrent liabilities in the Consolidated Balance Sheets. Amounts determined to be due within one year are reclassified to Other current assets and/or Accrued liabilities in the Consolidated Balance Sheets. Unrealized gains and losses on the interest rate swaps flow through the caption Derivative valuation adjustment in the Shareholders’ equity section of the Consolidated Balance Sheets. Amounts accumulated in Other comprehensive income are reclassified as interest expense/(income), net when the related interest payments (that is, the hedged forecasted transactions), affect earnings. Interest expense/(income) related to payments under the active swap agreements totaled $(810.29) million for the ~~six~~nine months ended ~~June~~September 30, 2024, and $(610.9) million for the ~~six~~nine months ended ~~June~~September 30, 2023.

We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results. Foreign currency instruments are entered into periodically and consist of foreign currency option contracts and forward contracts that are valued using quoted prices in active markets obtained from independent pricing sources. These instruments are measured using market foreign exchange prices and are recorded in the Consolidated Balance Sheets as Other current assets and Accrued liabilities, as applicable. Changes in fair value of these instruments are recorded as gains or losses within Other (income)/expense, net.

Index

When exercised, the foreign currency instruments are net-settled with the same financial institution that bought or sold them. For all positions, whether options or forward contracts, there is a risk from the possible inability of the financial institution to meet the terms of the contracts and the risk of unfavorable changes in interest and currency rates, which may reduce the value of the instruments. We seek to mitigate risk by evaluating the creditworthiness of counterparties and by monitoring the currency exchange and interest rate markets while reviewing the hedging risks and contracts to ensure compliance with our internal guidelines and policies.

Index

(Gains)/losses related to changes in fair value of derivative instruments that were recognized in Other (income)/expense, net in the Consolidated Statements of Income were as follows:

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Derivatives not designated as hedging instruments:
Foreign currency options (gains)/losses	$	~~4,391~~(485)	$	~~(138)~~704	$	43,~~273~~788	$	~~(123)~~581

16. Commitments and Contingencies

Asbestos Litigation

Albany International Corp. is a defendant in suits brought in various courts in the United States by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. We were defending 3,~~623~~642 claims as of ~~June~~September 30, 2024.

The following table sets forth the number of claims filed, the number of claims settled, dismissed or otherwise resolved, and the aggregate settlement amount during the periods presented:

(in thousands, except number of claims)	OpeningNumber ofClaims	ClaimsDismissed,Settled, orResolved	New Claims	ClosingNumber ofClaims	Amounts Paid toSettle orResolve
For the period ended December 31, 2023	3,598	19	27	3,606	$	74
For the period ended June 30, 2024	3,606	5	22	3,623	$	10
For the period ended September 30, 2024	3,606	9	45	3,642	$	13

We anticipate that additional claims will be filed against the Company and related companies in the future but are unable to predict the number and timing of such future claims. Due to the fact that information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to pending or future claims and therefore are unable to estimate a range of reasonably possible loss in excess of amounts already accrued for pending or future claims.

While we believe we have meritorious defenses to these claims, we have settled certain claims for amounts we consider reasonable given the facts and circumstances of each case. Our insurance carrier has defended each case and funded settlements under a standard reservation of rights. As of ~~June~~September 30, 2024, we had resolved, by means of settlement or dismissal, 38,~~046~~050 claims at a total cost of $10.7 million. Of this amount, almost 100% was paid by our insurance carrier, who has confirmed that we have approximately $140 million of remaining coverage under primary and excess policies that should be available with respect to current and future asbestos claims.

The Company’s subsidiary, Brandon Drying Fabrics, Inc. (“Brandon”), is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant, despite never having manufactured any fabrics containing asbestos. While Brandon was defending against 7,676 claims as of ~~June~~September 30, 2024, only twelve claims have been filed against Brandon since January 1, 2012, and only $15,000 in settlement costs have been incurred since 2001. Brandon was acquired by the Company in 1999 and has its own insurance policies covering periods prior to 1999. Since 2004, Brandon’s insurance carriers have covered 100% of indemnification and defense costs, subject to policy limits and a standard reservation of rights.

In some of these asbestos cases, the Company is named both as a direct defendant and as the “successor in interest” to Mount Vernon Mills (“Mount Vernon”). We acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products. We deny any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, we have successfully moved for dismissal in a number of actions.

20We currently do not anticipate, based on currently available information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results of operations, or cash

years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products. We deny any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, we have successfully moved for dismissal in a number of actions.

We currently do not anticipate, based on currently available information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results of operations, or cash flows of the Company. Although we cannot predict the number and timing of future claims, based on the foregoing factors, the trends in claims filed against us, and available insurance, we also do not currently anticipate that potential future claims will have a material adverse effect on our financial position, results of operations, or cash flows.

17. Changes in Shareholders’ Equity

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2023 to June 30, 2024:

	Class ACommon Stock			Additional paid-in capital	Retained earnings		Accumulated items of other comprehensive income		Class ATreasury Stock			Noncontrolling Interest		Total Shareholders' Equity
(in thousands)	Shares	Amount									Shares					Amount
December 31, 2023	40,856	$	41		$	448,218	$	1,010,942	$	(133,168)	9,662	$	(364,665)	$	5,952	$	967,320
Net income	—	—			—		27,291		—		—	—		78		27,369
Compensation and benefits paid or payable in shares	42	—			810		—		—		—	—		—		810
Dividends declared on Class A Common Stock, $0.26 per share	—	—			—		(8,122)		—		—	—		—		(8,122)
Cumulative translation adjustments	—	—			—		—		(12,116)		—	—		46		(12,070)
Pension and postretirement liability adjustments	—	—			—		—		382		—	—		—		382
Derivative valuation adjustment	—	—			—		—		(2,124)		—	—		—		(2,124)
March 31, 2024	40,898	$	41		$	449,028	$	1,030,111	$	(147,026)	9,662	$	(364,665)	$	6,076	$	973,565
Net income	—	—			—		24,624		—		—	—		96		24,720
Compensation and benefits paid or payable in shares	—	—			2,530		—		—		—	—		—		2,530
Shares issued to Directors'	10	—			903		—		—		—	—		—		903
Dividends declared on Class A Common Stock, $0.26 per share	—	—			—		(8,123)		—		—	—		—		(8,123)
Cumulative translation adjustments	—	—			—		—		(17,287)		—	—		(366)		(17,653)
Pension and postretirement liability adjustments	—	—			—		—		246		—	—		—		246
Derivative valuation adjustment	—	—			—		—		(2,840)		—	—		—		(2,840)
June 30, 2024	40,908	$	41		$	452,461	$	1,046,612	$	(166,907)	9,662	$	(364,665)	$	5,806	$	973,348

~~The~~flows ~~following~~of ~~table~~the ~~summarizes~~Company. ~~changes~~Although inwe ~~Shareholders’~~cannot ~~Equity~~predict ~~for~~the number and timing of future claims, based on the ~~period~~foregoing ~~December 31~~factors, ~~2022~~the totrends ~~June 30~~in claims filed against us, ~~2023:~~and available insurance, we also do not currently anticipate that potential future claims will have a material adverse effect on our financial position, results of operations, or cash flows.

	Class ACommon Stock			Additional paid-in capital	Retained earnings		Accumulated items of other comprehensive income		Class ATreasury Stock			Noncontrolling Interest		Total Shareholders' Equity
(in thousands)	Shares	Amount									Shares					Amount
December 31, 2022	40,785	$	41		$	441,540	$	931,318	$	(144,927)	9,675	$	(364,923)	$	4,494	$	867,543
Net income	—	—			—		26,889		—		—	—		197		27,086
Compensation and benefits paid or payable in shares	58	—			378		—		—		—	—		—		378
Dividends declared on Class A Common Stock, $0.25 per share	—	—			—		(7,792)		—		—	—		—		(7,792)
Cumulative translation adjustments	—	—			—		—		13,881		—	—		238		14,119
Pension and postretirement liability adjustments	—	—			—		—		(916)		—	—		—		(916)
Derivative valuation adjustment	—	—			—		—		(2,902)		—	—		—		(2,902)
March 31, 2023	40,842	$	41		$	441,917	$	950,415	$	(134,864)	9,675	$	(364,923)	$	4,929	$	897,515
Net income	—	—			—		26,672		—		—	—		154		26,826
Compensation and benefits paid or payable in shares	—	—			811		—		—		—	—		—		811
Shares issued to Directors'	—	—			828		—		—		(12)	258		—		1,086
Dividends declared on Class A Common Stock, $0.25 per share	—	—			—		(7,795)		—		—	—		—		(7,795)
Cumulative translation adjustments	—	—			—		—		(2,568)		—	—		179		(2,389)
Pension and postretirement liability adjustments	—	—			—		—		(724)		—	—		—		(724)
Derivative valuation adjustment	—	—			—		—		389		—	—		—		389
June 30, 2023	40,842	$	41		$	443,556	$	969,292	$	(137,767)	9,663	$	(364,665)	$	5,262	$	915,719

17. Changes in Shareholders’ Equity

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2023 to September 30, 2024:


	Class A Common Stock			Additional paid-in capital	Retained earnings		Accumulated items of other comprehensive income		Class A Treasury Stock			Noncontrolling Interest		Total Shareholders' Equity
	Shares	Amount									Shares					Amount
December 31, 2023	40,856	$	41		$	448,218	$	1,010,942	$	(133,168)	9,662	$	(364,665)	$	5,952	$	967,320
Net income	—	—			—		27,291		—		—	—		78		27,369
Compensation and benefits paid or payable in shares	42	—			810		—		—		—	—		—		810




Dividends declared on Class A Common Stock, $0.26 per share	—	—			—		(8,122)		—		—	—		—		(8,122)

Cumulative translation adjustments	—	—			—		—		(12,116)		—	—		46		(12,070)
Pension and postretirement liability adjustments	—	—			—		—		382		—	—		—		382
Derivative valuation adjustment	—	—			—		—		(2,124)		—	—		—		(2,124)
March 31, 2024	40,898	$	41		$	449,028	$	1,030,111	$	(147,026)	9,662	$	(364,665)	$	6,076	$	973,565
Net income	—	—			—		24,624		—		—	—		96		24,720
Compensation and benefits paid or payable in shares	—	—			2,530		—		—		—	—		—		2,530

Shares issued to Directors'	10	—			903		—		—		—	—		—		903


Dividends declared on Class A Common Stock, $0.26 per share	—	—			—		(8,123)		—		—	—		—		(8,123)

Cumulative translation adjustments	—	—			—		—		(17,287)		—	—		(366)		(17,653)
Pension and postretirement liability adjustments	—	—			—		—		246		—	—		—		246
Derivative valuation adjustment	—	—			—		—		(2,840)		—	—		—		(2,840)
June 30, 2024	40,908	$	41		$	452,461	$	1,046,612	$	(166,907)	9,662	$	(364,665)	$	5,806	$	973,348
Net income	—	—			—		18,029		—		—	—		192		18,221
Compensation and benefits paid or payable in shares	9	—			195		—		—		—	—		—		195




Dividends declared on Class A Common Stock, $0.26 per share	—	—			—		(8,127)		—		—	—		—		(8,127)

Dividends paid to noncontrolling interests	—	—			—		—		—		—	—		(166)		(166)

Cumulative translation adjustments	—	—			—		—		16,931		—	—		(153)		16,778
Pension and postretirement liability adjustments	—	—			—		—		(623)		—	—		—		(623)

Derivative valuation adjustment	—	—			—		—		(2,950)		—	—		—		(2,950)
September 30, 2024	40,917	$	41		$	452,656	$	1,056,514	$	(153,549)	9,662	$	(364,665)	$	5,679	$	996,676

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2022 to September 30, 2023:


	Class A Common Stock			Additional paid-in capital	Retained earnings		Accumulated items of other comprehensive income		Class A Treasury Stock			Noncontrolling Interest		Total Shareholders' Equity
(in thousands)	Shares	Amount									Shares					Amount
December 31, 2022	40,785	$	41		$	441,540	$	931,318	$	(144,927)	9,675	$	(364,923)	$	4,494	$	867,543
Net income	—	—			—		26,889		—		—	—		197		27,086
Compensation and benefits paid or payable in shares	58	—			378		—		—		—	—		—		378




Dividends declared on Class A Common Stock, $0.25 per share	—	—			—		(7,792)		—		—	—		—		(7,792)

Cumulative translation adjustments	—	—			—		—		13,881		—	—		238		14,119
Pension and postretirement liability adjustments	—	—			—		—		(916)		—	—		—		(916)
Derivative valuation adjustment	—	—			—		—		(2,902)		—	—		—		(2,902)
March 31, 2023	40,842	$	41		$	441,917	$	950,415	$	(134,864)	9,675	$	(364,923)	$	4,929	$	897,515
Net income	—	—			—		26,672		—		—	—		154		26,826
Compensation and benefits paid or payable in shares	—	—			811		—		—		—	—		—		811

Shares issued to Directors'	—	—			828		—		—		(12)	258		—		1,086


Dividends declared on Class A Common Stock, $0.25 per share	—	—			—		(7,795)		—		—	—		—		(7,795)

Cumulative translation adjustments	—	—			—		—		(2,568)		—	—		179		(2,389)
Pension and postretirement liability adjustments	—	—			—		—		(724)		—	—		—		(724)
Derivative valuation adjustment	—	—			—		—		389		—	—		—		389
June 30, 2023	40,842	$	41		$	443,556	$	969,292	$	(137,767)	9,663	$	(364,665)	$	5,262	$	915,719
Net income	—	—			—		27,109		—		—	—		45		27,154
Compensation and benefits paid or payable in shares	15	—			2,914		—		—		(1)	—		—		2,914



Dividends declared on Class A Common Stock, $0.25 per share	—	—			—		(7,799)		—		—	—		—		(7,799)

Initial equity related to Noncontrolling interest in Arcari	—	—			—		—		—		—	—		1,632		1,632
Cumulative translation adjustments	—	—			—		—		(15,639)		—	—		(145)		(15,784)
Pension and postretirement liability adjustments	—	—			—		—		34		—	—		—		34

Derivative valuation adjustment	—	—			—		—		(2,237)		—	—		—		(2,237)
September 30, 2023	40,857	$	41		$	446,470	$	988,602	$	(155,609)	9,662	$	(364,665)	$	6,794	$	921,633

18. Business Combination

On August 31, 2023, the Company acquired all the outstanding shares of Heimbach, a privately-held manufacturer of paper machine clothing with headquarters in Düren, Germany. For the three and ~~six~~nine months ended ~~June~~September 30, 2024, there were no material adjustments to the assets acquired and liabilities assumed. As of September 30, 2024, management’s review of the purchase price allocation has been completed.

19. Subsequent Events

We evaluated subsequent events through the issuance date of these financial statements in Form 10-Q. No material subsequent events were identified that require disclosure.

2223

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of the Company. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes.

Forward-looking Statements

This quarterly report and the documents incorporated or deemed to be incorporated by reference in this quarterly report contain statements concerning our future results and performance and other matters that are “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” "forecast," ”look for,” “will,” “should,” “guidance,” “guide” and similar expressions identify forward-looking statements, which generally are not historical in nature. Because forward-looking statements are subject to certain risks and uncertainties, (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or prior Quarterly Reports on Form 10-Q) actual results may differ materially from those expressed or implied by such forward-looking statements.

There are a number of risks, uncertainties, and other important factors that could cause actual results to differ materially from the forward-looking statements, including, but not limited to:

•Conditions in the industries in which our Machine Clothing and Albany Engineered Composites segments compete, along with the general risks associated with macroeconomic conditions, including higher interest rates, inflationary pressures, or the effects of another pandemic, for an extended period of time;

•Across the entire Company, increasing labor, raw material, energy, ~~and~~or logistics costs due to supply chain constraints and inflationary pressures. These challenges have only increased as a result of the ongoing Russia-Ukraine war and the conflict in the Middle East;

•Across both segments, potential ports strikes could cause additional disruptions to our supply chain;

•Harm caused by changes in our relationships or contracts with suppliers and customers;

•In the Machine Clothing segment, greater than anticipated declines in the demand for publication grades of paper, or lower than anticipated growth in other paper grades;

•In the Albany Engineered Composites segment, longer-than-expected timeframe for the aerospace industry to utilize existing inventories, unanticipated reductions in demand, delays, technical difficulties, and cancellations in aerospace programs that are expected to generate revenue and drive long-term growth;

•Inability of our Machine Clothing or Albany Engineered Composite segments to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as a result of geopolitical crises, natural disaster, public health crises and epidemics/pandemics, regulatory or otherwise);

•Changes in geopolitical conditions impacting countries where the Company does or intends to do business;

•Failure to achieve or maintain anticipated profitable growth;

•Failure to achieve our strategic initiatives and other goals, including, but not limited to, our sustainability goals;

•In the Albany Engineered Composites segment, the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others;

•In the Albany Engineered Composites segment, risks and uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to manufacture the products to the detailed specifications required and recover start-up costs and other investments in the programs;

•In the Albany Engineered Composites segment, risks associated with changes in estimates and assumptions that could result in a decline in program gross margins or turn a profitable program into a loss program;

•Adverse impacts from inflation, an economic slowdown or recession and by disruption in capital and credit markets that might impede our access to credit, increase our borrowing costs and impair the financial soundness of our customers and suppliers;

23•Expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy and other goals;

~~•Risks and uncertainties associated with the successful integration of our Heimbach Group acquisition;~~24

•Expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy;

•Adverse impacts from fluctuations in foreign currency exchange rates;

•Harm caused by large customer purchase reductions, payment defaults or contract non-renewal;

•In the Albany Engineered Composites segment, future funding and compliance risks associated with our contracts with government entities, ~~involve~~OEM ~~future~~customers ~~funding~~or ~~and~~prime ~~compliance~~contractors ~~risks~~on contracts with government entities;

•Costly and disruptive legal disputes and settlements;

•Future levels of indebtedness and capital expenditures;

•Adverse impacts from changes in tax legislation or challenges to our tax positions;

•Cybersecurity incidents or significant computer system compromises or data breaches;

•Significant problems with information systems or networks;

•Failure to adequately integrate the Heimbach Group companies into our business systems and processes within the expected timeframe or, failure to or delayed realization of anticipated benefits of the acquisition could adversely impact the Company’s business, financial condition and results of operations; and

•Other risks and uncertainties detailed in this report and other periodic reports.

Further information concerning important factors that could cause actual events or results to be materially different from the forward-looking statements can be found in the “Business Environment Overview and Trends” sections of this quarterly report, as well as in the Item 1A-“Risk Factors” section of our most recent Annual Report on Form 10-K. Although we believe the expectations reflected in our other forward-looking statements are based on reasonable assumptions, it is not possible to foresee or identify all factors that could have a material and negative impact on our future performance. The forward-looking statements included or incorporated by reference in this report are made on the basis of our assumptions and analyses, as of the time the statements are made, in light of our experience and perception of historical conditions, expected future developments, and other factors believed to be appropriate under the circumstances.

Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained or incorporated by reference in this report to reflect any change in our expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.

Business Environment Overview and Trends

~~During~~Machine ~~the~~Clothing second quarter of 2024, the MC segment continued to see challenges in Europe, and, to a lesser degree, softness in North America and China. However, our global backlog remains stable. The integration of Heimbach continues to be on track with our internal plans. We transitioned Heimbach’s PMC businesses onto our SAP platform in July, an integral step to integrate Heimbach into the MC business. Segment

~~The~~During ~~AEC segment continues to increase production levels on commercial, defense, and space programs. For~~ the ~~first~~third ~~half~~quarter of 2024, the ~~AEC~~Company ~~segment~~announced ~~has~~that ~~been~~Merle ~~awarded~~Stein ~~over~~was ~~$900~~appointed ~~million~~President inof ~~awards~~the ~~mostly~~Machine onClothing ~~defense~~(“MC”) ~~programs~~segment, ~~and~~after ~~modest~~serving ~~awards~~as onthe ~~commercial~~Segment’s ~~and~~Chief ~~space~~Operating ~~programs~~Officer. ~~While~~Mr. ~~both~~Stein ~~major~~has ~~large~~considerable ~~aircraft~~experience ~~manufacturers, Boeing and Airbus SE, had earlier announced increases~~ in ~~build~~the ~~rates~~paper inand ~~2024~~pulp ~~compared to 2023~~industries, ~~due~~significant toknowledge ~~continued~~of ~~quality~~the ~~issues~~MC ~~at Boeing~~business, ~~Boeing~~and ~~has~~a ~~slowed~~strategic ~~their~~understanding ~~production~~of ~~rate~~the onmarkets ~~737~~it ~~MAX~~serves. ~~Additionally,~~ ~~Airbus SE has given indications that their expected ramp on the A320 will be pushed out beyond previous expectations~~Mr. WeStein ~~have~~joined ~~decreased our LEAP production forecast for~~ the ~~remainder~~Company ofin ~~2024 and we are working with our customer, Safran, to determine the appropriate production volumes for our LEAP production into 2025~~2011.

24The MC segment global backlog is stable and profitability continues to improve despite challenges in Europe, and, to a lesser degree, softness in China. North America is stable. The integration of Heimbach is on track with our internal plans. We transitioned Heimbach’s Paper Machine Clothing (“PMC”) businesses onto our SAP platform in July, an integral step to integrate Heimbach into the MC business.

~~Also,~~Albany ~~please~~Engineered ~~refer~~Composites to the Business Environment Overview and Trends in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023. The Annual Report on Form 10-K, along with the Company's other filings, can be found on the Securities and Exchange Commission's website, www.sec.gov, as well as on the Company's website: www.albint.com.Segment

In the third quarter, the Company announced the appointment of Christopher Stone as President of the Albany Engineered Composites segment. Mr. Stone brings a deep knowledge of the Aerospace and Defense industry, and considerable operational experiences to his new role. He has held a wide range of leadership positions at public companies, with a focus in manufacturing and supply chain management, business operations, production control, logistics and organizational transformation.

The AEC segment continues to ramp-up production levels on commercial, defense, and space programs. In the third quarter of 2024, the Company updated its labor, material input and scrap assumptions and estimates of certain long-term programs that resulted in a negative cumulative change in estimated profitability in the amount of $22.4

million. The negative cumulative change in profitability was primarily driven by a few large complex programs, including $13.3 million for various CH-53K programs, $6.5 million on our Gulfstream program, $2.2 million on our F-35 program, and $0.4 million, net on all other programs.

Boeing and Airbus SE had earlier announced increases in build rates in 2024 compared to 2023. During the year, both OEMs announced slower production rates than initially projected. We are seeing lower production rates on our Boeing 787 program causing AEC to slow its production on its content for this program for the remainder of 2024. Furthermore, although we have not yet experienced an adverse impact as a result of the Boeing Machinist strike, we are monitoring the strike and its potential impact on our future production rates.

Airbus SE has indicated that their expected ramp on the A320 will be pushed out beyond previous expectations. We have decreased our LEAP production forecast for the remainder of 2024; and we are working with our customer, Safran, to determine the appropriate production volumes for our LEAP production into 2025.

Also, please refer to the Business Environment Overview and Trends in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 and in our Forms 10-Q previously filed with the SEC in 2024. The Annual Report on Form 10-K, along with the Company's other filings, can be found on the Securities and Exchange Commission's website, www.sec.gov, as well as on the Company's website: www.albint.com.

Consolidated Results of Operations

Net ~~revenues~~Revenues

The following table summarizes our Net revenues by business segment:

	Three months ended June 30,						Six months ended June 30,
	Three months ended September 30,						Nine months ended September 30,
(in thousands, except percentages)	2024		2023		% Change		2024		2023		% Change
Machine Clothing	$	~~193~~183,~~578~~033	$	~~159~~166,~~217~~588	219.69	%	$	~~378~~561,~~795~~828	$	~~312~~479,~~439~~027	2117.23	%
Albany Engineered Composites	~~138~~115,~~416~~353		114,~~906~~518		200.57	%	~~266~~381,~~529~~882		~~230~~345,~~780~~298		1510.56	%
Total	$	~~331~~298,~~994~~386	$	~~274~~281,~~123~~106	216.1	%	$	~~645~~943,~~324~~710	$	~~543~~824,~~219~~325	1814.85	%

The following tables provide a comparison of 2024 Net revenues, excluding currency translation effects, to 2023 Net revenues:

(in thousands, except percentages)	Net revenues as reported, Q2Q3 2024		(Decrease)/ increase due to changes in currency translation rates		Q2Q3 2024 revenues on same basis as Q2Q3 2023 currency translation rates		Net revenues as reported, Q2Q3 2023		% Change compared to Q2Q3 2023, excluding currency rate effects
Machine Clothing	$	~~193~~183,~~578~~033	$	~~(1,128)~~727	$	~~194~~182,~~706~~306	$	~~159~~166,~~217~~588	229.34	%
Albany Engineered Composites	~~138~~115,~~416~~353		~~(219)~~159		~~138~~115,~~635~~194		114,~~906~~518		200.76	%
Total	$	~~331~~298,~~994~~386	$	~~(1,347)~~886	$	~~333~~297,~~341~~500	$	~~274~~281,~~123~~106	215.68	%

(in thousands, except percentages)	Net revenues as reported, YTD 2024		(Decrease)/ increase due to changes in currency translation rates		YTD 2024 revenues on same basis as 2023 currency translation rates		Net revenues as reported, YTD 2023		% Change compared to 2023, excluding currency rate effects
Machine Clothing	$	~~378~~561,~~795~~828	$	(~~1,726~~999)	$	~~380~~562,~~521~~827	$	~~312~~479,~~439~~027	2117.85	%
Albany Engineered Composites	~~266~~381,~~529~~882		2161		~~266~~381,~~527~~721		~~230~~345,~~780~~298		1510.5	%
Total	$	~~645~~943,~~324~~710	$	(~~1,724~~838)	$	~~647~~944,~~048~~548	$	~~543~~824,~~219~~325	1914.16	%

Three month comparison

Net revenues increased 216.1% compared to the same period in 2023, driven by ~~$39.8~~an ~~million~~increase ofin Net revenues from the Heimbach acquisition and ~~higher~~stable Net revenues in AEC in line with the prior year, partially offset by lower organic Net revenues at MC.

MC's Net revenues increased 219.69% compared to the ~~second~~third quarter of 2023, driven by an increase in Heimbach Net revenues of $3917.84 million. This was partially offset by $41.37 million of lower Net ~~revenues~~Revenues in the rest of the segment, due to ~~decreased~~lower ~~sales~~revenues in ~~pulp,~~ packaging and publication grades,. ~~net~~In ofaddition, ~~increased~~changes ~~sales~~ in ~~tissue grades and engineered fabrics. Changes in~~ currency translation rates had the effect of ~~decreasing~~increasing Net revenues $10.17 million.

AEC's Net revenues ~~increased~~were 20largely in line with the prior year, increasing $0.58 million or 0.7%, primarily driven by growth on ~~CH-53K,~~certain ~~Boeing~~commercial ~~787~~and ~~Frames~~space programs, ~~and~~which ~~other~~was ~~commercial~~partially offset by lower revenues on CH-53K and ~~space~~other defense programs. Changes in currency translation rates had ~~had~~ an insignificant effect on Net revenues.

~~Six~~Nine month comparison

Net revenues increased 1814.85% compared to the same period in 2023, driven by ~~$77.7~~an ~~million~~increase of Net revenues from the Heimbach acquisition and higher Net revenues in AEC, partially offset by lower organic Net revenues at MC.

MC's Net revenues increased 2117.23% compared to the same period in 2023, driven by an increase in Heimbach Net revenues of $7795.70 million. This was partially offset by $911.62 million of lower Net revenues in the rest of the segment, driven primarily by weakness in publication globally, and in most grades in Europe, as well as decreased sales in packaging grades. Changes in currency translation rates had the effect of decreasing Net revenues $1.70 million.

25 AEC's Net revenues increased 10.6%, primarily driven by growth on certain commercial and space programs, which was partially offset by lower revenues on the F-35 program. Changes in currency translation rates had an insignificant effect on Net revenues.

AEC's Net revenues increased 15.5%, primarily driven by growth on commercial and space programs, including Boeing 787 Frames, as well as growth on certain defense programs, including CH-53K. Changes in currency translation rates had an insignificant effect on Net revenues.

Gross Profit

The following table summarizes Gross profit by business segment:

	Three months ended June 30,						Six months ended June 30,
	Three months ended September 30,						Nine months ended September 30,
(in thousands, except percentages)	2024			2023			2024			2023
Machine Clothing	$	88,~~873~~921		$	8079,~~919~~257		$	~~173~~262,~~528~~449		$	~~158~~238,~~774~~031
Albany Engineered Composites	231,~~510~~463			2122,~~785~~578			4749,~~541~~004			4365,~~248~~826
Total	$	~~112~~90,~~383~~384		$	~~102~~101,~~704~~835		$	~~221~~311,~~069~~453		$	~~202~~303,~~022~~857
% of Net revenues	3330.93		%	3736.52		%	3433.30		%	3736.29		%

Three month comparison

The ~~increase~~decrease in 2024 Gross profit, as compared to the same period last year, was driven by ~~higher~~increased ~~sales~~cost assumptions that adjusted the expected profitability of certain long-term contracts in ~~both~~the ~~segments~~AEC segment. Gross profit as a percentage of revenues was as follows:

•MC's gross profit margin ~~decreased~~increased from 5047.86% in 2023 to 4548.96% in 2024., ~~This margin decrease was~~ primarily attributable to ~~lower~~reduced ~~gross~~input ~~margin at Heimbach~~costs. ~~Excluding Heimbach, MC's gross profit margin increased to 51.7% in 2024.~~

•AEC's gross profit margin decreased from 19.07% in 2023 to 171.03% in 2024, driven primarily by cumulative changes in the estimated profitability of long-term contracts, which decreased gross profit by $522.04 million in 2024, as compared to a ~~decrease~~increase of $10.9 million during the same period last year.

~~Six~~Nine month comparison

The ~~increase~~decrease in Gross profit during the first ~~half~~nine months of 2024, as compared to the same period in 2023, was driven by ~~higher~~increased ~~sales~~cost assumptions that adjusted the expected profitability of certain long-term contracts in ~~both~~the ~~segments~~AEC segment. Gross profit as a percentage of revenues was as follows:

•MC's gross profit margin decreased from 5049.87% in 2023 to 4546.87% in 2024. This margin decrease was primarily attributable to lower gross margin at Heimbach. ~~Excluding Heimbach, MC's gross profit margin increased to 51.9% in 2024.~~

•AEC's gross profit margin decreased from 1819.71% in 2023 to 1712.8% in 2024, driven primarily by cumulative changes in the estimated profitability of long-term contracts, which decreased gross profit by $728.63 million in ~~2024, as compared to a decrease of $4.0 million during the same period last year, partially offset by a favorable shift in revenue mix.~~

2024, as compared to a decrease of $4.1 million during the same period last year, partially offset by a favorable shift in revenue mix to commercial and space programs.

Selling, General, and Administrative ("SG&A")

The following table summarizes SG&A expenses by business segment:

	Three months ended June 30,						Six months ended June 30,
	Three months ended September 30,						Nine months ended September 30,
(in thousands, except percentages)	2024			2023			2024			2023
Machine Clothing	$	2628,~~618~~191		$	2022,~~682~~442		$	5583,~~622~~813		$	4366,~~755~~197
Albany Engineered Composites	87,~~798~~920			9,~~185~~519			1624,~~308~~228			1626,~~751~~270
Corporate expenses	2015,~~099~~986			1620,~~893~~014			3854,~~420~~406			3454,~~733~~747
Total	$	5552,~~515~~097		$	4651,~~760~~975		$	~~110~~162,~~350~~447		$	95147,~~239~~214
% of Net revenues	1617.75		%	1718.05		%	17.12		%	17.59		%

Three month comparison

Consolidated SG&A expenses increased 180.72% as compared to 2023, however, as a percentage of Net revenues, SG&A expenses decreased from 1718.05% in 2023 to 1617.75% in 2024.

•MC SG&A expenses increased $5.97 million as compared to 2023, with a $73.49 million increase related to Heimbach, ~~offset by~~ a $1.52 million ~~decrease~~increase due to changes in currency translation rates, and a $0.6 million increase in professional, consulting, and personnel-related costs.

•In AEC, SG&A expenses ~~remained~~decreased ~~largely~~$1.6 inmillion, ~~line~~primarily ~~with~~driven ~~the~~by ~~prior~~lower ~~year,~~incentive ~~decreasing~~compensation ~~$0.4~~and ~~million~~personnel-related costs.

•Corporate SG&A expenses ~~increased~~decreased $34.20 million, principally due to ~~Heimbach~~lower ~~IT-related~~incentive ~~costs~~compensation and ~~acquisition and integration~~ personnel-related ~~expenses~~costs.

26Nine month comparison

~~Six~~Consolidated ~~month~~SG&A ~~comparison~~expenses increased 10.3% as compared to 2023, however, as a percentage of Net revenues, SG&A expenses decreased from 17.9% in 2023 to 17.2% in 2024.

~~Consolidated~~The overall increase in SG&A expenses ~~increased~~in ~~15.9%~~the asfirst ~~compared~~nine tomonths ~~2023,~~of ~~however~~2024, ascompared ato ~~percentage~~the ofsame ~~Net~~period ~~revenues~~in 2023, ~~SG&A~~was ~~expenses~~due ~~decreased~~to ~~from~~the ~~17.5%~~net ineffect ~~2023~~of tothe ~~17.1% in 2024.~~following:

~~The~~•MC ~~overall increase in~~ SG&A expenses inincreased ~~the~~$17.6 ~~first~~million ~~six~~as ~~months~~compared ofto ~~2024~~2023, ~~compared~~with a $20.4 million increase related to ~~the~~Heimbach ~~same~~and ~~period~~a in$0.9 ~~2023~~million increase related to personnel-related and travel costs, ~~was~~partially offset by a $3.7 million decrease due to ~~the~~changes ~~net~~in ~~effect~~currency oftranslation ~~the~~rates. ~~following:~~

•MCIn AEC, SG&A expenses ~~increased~~decreased $112.90 million ~~as compared to 2023~~, ofdriven ~~which~~by a $160.58 million ofdecrease ~~the~~in ~~increase~~ personnel-related ~~to Heimbach. Excluding Heimbach~~costs, ~~MC's~~a ~~SG&A decreased~~ $40.68 million, ~~driven~~decrease ~~primarily by changes~~ in ~~currency~~marketing ~~translation rates~~costs, ~~which~~and ~~reduced~~a ~~expense by~~ $40.94 million, ~~partially~~decrease ~~offset~~in byprofessional ~~higher~~and ~~employee-related~~consulting ~~compensation~~fees.

•InCorporate ~~AEC,~~ SG&A expenses remained largely in line with the prior year, decreasing $0.43 million.

•Corporate SG&A expenses increased $3.7 million, principally due to Heimbach IT-related costs and acquisition and integration related expenses.

Technical and Research

The following table summarizes technical and research expenses by business segment:

	Three months ended June 30,						Six months ended June 30,
	Three months ended September 30,						Nine months ended September 30,
(in thousands, except percentages)	2024			2023			2024			2023
Machine Clothing	$	7,~~504~~042		$	6,~~386~~023		$	1522,~~024~~066		$	1218,~~184~~207
Albany Engineered Composites	43,~~356~~802			3,~~932~~685			913,~~501~~303			812,~~411~~096
Total	$	1110,~~860~~844		$	109,~~318~~708		$	2435,~~525~~369		$	2030,~~595~~303
% of Net revenues	3.6		%	3.85		%	3.87		%	3.87		%

Three month comparison

Consolidated Technical and research expenses increased 1411.97% as compared to 2023, and as a percentage of Net revenues ~~decreased~~increased from 3.85% in 2023 to 3.6% in 2024.

•MC Technical and research expenses increased $1.10 million as compared to 2023, ~~of which $1.6 million was~~ due to the addition of Heimbach. ~~Excluding Heimbach, material and labor costs were lower as compared to the prior year, driving the decrease in expenses.~~

•AEC Technical and research expenses increased $0.41 million as compared to 2023, due to increases in research material and labor costs.

~~Six~~Nine month comparison

Consolidated Technical and research expenses increased 1916.17% as compared to 2023, but as a percentage of Net revenues remained unchanged at 3.87% in both 2023 and 2024.

•MC Technical and research expenses increased $23.89 million as compared to 2023, ofwith ~~which~~a $34.13 million ~~was~~increase ~~due~~related to ~~the addition of~~ Heimbach~~. Excluding Heimbach~~, ~~labor~~which ~~costs~~was ~~were~~partially ~~lower~~offset asby ~~compared~~a to$0.4 ~~the~~million ~~prior~~decrease ~~year, driving decreases~~ in ~~expenses.~~personnel-related costs.

•AEC Technical and research expenses increased $1.12 million as compared to 2023, due to increases in research material and labor costs.

Restructuring Expense, net

In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, Operating income was affected by ~~restructuring~~Restructuring expense, net, of $2.13 million in the three months ended ~~June~~September 30, 2024, compared to $0.1 million in in the same period of 2023; and $46.36 million in the ~~six~~nine months ended ~~June~~September 30, 2024, compared to $0.12 million in the same period in ~~2024~~2023.

The following table summarizes Restructuring expenses, net by business segment:

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
(in thousands, except percentages)	2024		2023		2024		2023
Machine Clothing	$	12,~~066~~207	$	~~125~~82	$	13,~~087~~294	$	~~145~~227
Albany Engineered Composites	~~922~~34		—		3,~~110~~144		—
Corporate expenses	~~115~~31		—		~~115~~146		—
Consolidated total	$	2,~~103~~272	$	~~125~~82	$	46,~~312~~584	$	~~145~~227

~~Restructuring~~At ~~expenses~~MC, ~~net~~restructuring actions were taken in the second ~~quarter~~and third quarters of 2024 to cease operations at the Company's MC ~~were~~forming ~~primarily~~fabric ~~related~~manufacturing tofacility ~~actions~~in ~~taken~~Chungju, toSouth ~~cease operations~~Korea, and at the Company's MCHeimbach ~~forming~~engineered fabric manufacturing facility in ~~Chungju~~Rochdale, ~~South Korea~~UK. This ~~led~~was tothe aprincipal driver of $13.03 million ~~charge~~in to Restructuring expenses, net for the first nine months of 2024 related to workforce reductions, fixed asset impairments and related costs, as well as acharges of $01.53 million ~~charge~~in toCosts ~~Cost~~ of goods sold for the write-off of inventory. We expect to incur additional restructuring expenses related to ~~this~~these ~~action~~actions throughout the remainder of the year.

At AEC, restructuring activities were related to reductions in the workforce at various AEC locations, which resulted in restructuring expenses of $~~0.9 million during the second quarter and $~~3.1 million ~~during~~for the first ~~half~~nine months of 2024.

Restructuring expenses incurred at MC and AEC during 2023 were not significant.

Operating Income

The following table summarizes operating income/(loss) by business segment:

	Three months ended June 30,						Six months ended June 30,
	Three months ended September 30,						Nine months ended September 30,
(in thousands, except percentages)	2024			2023			2024			2023
Machine Clothing	$	5351,~~685~~481		$	5350,~~726~~710		$	~~101~~153,~~795~~276		$	~~102~~153,~~690~~400
Albany Engineered Composites	9(10,~~434~~293)			89,~~668~~374			188,~~622~~329			1827,~~086~~460
Corporate expenses	(2016,~~214~~017)			(1620,~~893~~014)			(3854,~~535~~552)			(3454,~~733~~747)
Total	$	4225,~~905~~171		$	4540,~~501~~070		$	81107,~~882~~053		$	86126,~~043~~113
% of Net revenues	128.94		%	1614.63		%	1211.73		%	15.83		%

Changes in operating income were primarily attributable to the drivers noted above.

Other Earnings Items

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

2024

2023

2024

2023

Interest expense, net

2,~~950~~411

3,~~106~~653

68,~~269~~680

610,~~396~~049

Other (income)/expense, net

53,~~657~~257

~~(4,511)~~56

25,~~675~~932

(4,~~966~~910)

Income tax expense

91,~~578~~282

209,~~080~~207

2022,~~849~~131

3039,~~701~~908

Net income attributable to the noncontrolling interest

96192

~~154~~45

~~174~~366

~~351~~396

Interest Expense/(Income), net

Interest expense/(income), net, ~~was~~decreased ~~largely~~over the prior year primarily due to lower average debt balances, in ~~line~~part ~~with~~offset by less interest income earned on cash equivalents during the ~~prior~~current year. See Note 14. Financial Instruments in the Notes to Consolidated Financial Statements for further discussion of borrowings and interest rates.

Other (Income)/Expense, net

Other (income)/expense, net, included foreign currency related transactions, which resulted in losses of $01.28 million and ~~gains of~~ $10.17 million in the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively, as compared to ~~gains~~losses of $40.25 million and gains of $43.16 million in the same ~~period~~periods last year. In addition, changes in the fair value of derivative instruments included ~~losses~~gains of $40.45 million and losses of $4.3.8 million in the three and ~~six~~nine months ended ~~June~~September 30, 2024, as compared to ~~gains~~losses of $0.17 million and $0.16 million in the same period last year, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. Net periodic pension and postretirement costs, other than service costs, were $0.7 million and $12.30 million in the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively, as compared to benefits of $0.1 million and $0.23 million in the same period last year. Other (income)/expense, net, also included net losses of $0.7 million from the divestiture of assets related to Heimbach during the nine months ended September 30, 2024, as well as bank fees, amortization of debt issuance costs, and rental income.

proceeds of $0.5 million from the divestiture of assets related to Heimbach during the three and six months ended June 30, 2024, as well as bank fees, amortization of debt issuance costs, and rental income.

Effective Income Tax Rate

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Effective income tax rate	276.96	%	4225.83	%	2823.69	%	3633.30	%

The Company has operations that constitute a taxable presence in 22 countries outside of the United States. The majority of these countries had income tax rates that were above the United States federal tax rate of 21 percent during the periods reported. The jurisdictional location of earnings is a significant component of our effective tax rate each year. The rate impact of this component is influenced by the specific location of non-U.S. earnings and the level of our total earnings. From period to period, the jurisdictional mix of earnings can vary as a result of operating fluctuations in the normal course of business, as well as the extent and location of other income and expense items, such as pension settlement and restructuring charges.

The tax rate is affected by recurring items, such as the income tax rate in the U.S. and non-U.S. jurisdictions and the mix of pre-tax income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign pre-tax earnings, and by discrete items that may occur in any given year but are not consistent from year to year. The Company’s effective tax rate for the ~~second~~third quarter of 2024 was 276.96%, lower compared to 4225.83% for the same period in 2023, mainly due to favorable discrete tax adjustments in the current period ~~compared~~exceeding tofavorable ~~unfavorable~~ discrete tax adjustments in the prior period. ~~For~~The favorable discrete benefits in the ~~first~~third ~~half~~quarter of 2024 were partially offset by an unfavorable change in the jurisdictional mix of earnings compared to the prior period. For the nine months ended September 30, 2024, the Company's effective tax rate was 2823.69%, lower compared to 3633.30% for the same period in 2023, mainly due to favorable discrete tax adjustments in the current period compared to unfavorable discrete tax adjustments in the prior period, partially offset by an unfavorable change in the jurisdictional mix of earnings compared to the prior period. For more information, see Note 6, Income Taxes, in the Notes to the Consolidated Financial Statements.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15 percent intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. Although we do not expect these rules to materially increase our global tax costs in 2024, there remains uncertainty as to the final Pillar Two model rules. We will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.

Segment Results of Operations

Machine Clothing Segment

The MC segment accounted for 5861% and 5960% of our consolidated revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively. A summary of selected financial results for MC is as follows:

Review of Operations

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands, except percentages)

2024

2023

2024

2023

Net revenues

~~193~~183,~~578~~033

~~159~~166,~~217~~588

~~378~~561,~~795~~828

~~312~~479,~~439~~027

Gross profit

88,~~873~~921

8079,~~919~~257

~~173~~262,~~528~~449

~~158~~238,~~774~~031

% of Net revenues

4548.96

5047.86

4546.87

5049.87

SG&A expenses

2628,~~618~~191

2022,~~682~~442

5583,~~622~~813

4366,~~755~~197

Technical and research expenses

7,~~504~~042

6,~~386~~023

1522,~~024~~066

1218,~~184~~207

Operating income

5351,~~685~~481

5350,~~726~~710

~~101~~153,~~795~~276

~~102~~153,~~690~~400

Net Revenues

For the three months ended ~~June~~September 30, 2024, Net revenues increased by 219.69% as compared to the prior year, driven by an increase in Heimbach Net revenues of $3917.84 million. This was partially offset by $41.37 million of lower organic Net ~~revenues~~Revenues in the rest of the segment, ~~driven~~due ~~primarily~~to by decreased sales in ~~pulp,~~ packaging and publication grades,. ~~net~~In ofaddition, ~~increased~~changes ~~sales~~ in ~~tissue grades and engineered fabrics. Changes in~~ currency translation rates had the effect of ~~decreasing~~increasing Net revenues $10.17 million.

29For the nine months ended September 30, 2024, Net revenues increased by 17.3% as compared to the prior year, driven by an increase in Heimbach Net revenues of $95.0 million. This was partially offset by $11.2 million of lower organic Net revenues in the rest of the segment, driven primarily by weakness in publication globally, and in most grades in Europe, as well as decreased sales in packaging grades. Changes in currency translation rates had the effect of decreasing Net revenues $1.0 million.

For the six months ended June 30, 2024, Net revenues increased by 21.2% as compared to the prior year, driven by Heimbach Net revenues of $77.7 million. This was partially offset by $9.6 million of lower Net revenues in the rest of the segment, driven primarily by weakness in publication globally, and in most grades in Europe, as well as decreased sales in packaging grades. Changes in currency translation rates had the effect of decreasing Net revenues $1.7 million.

Gross Profit

For the three months ended ~~June~~September 30, 2024, Gross profit increased by $89.07 million asand ~~compared to~~ the ~~same period in the prior year, driven by the higher sales noted above; however,~~ gross profit margin ~~decreased~~increased from 5047.86% in 2023 to 4548.96% in 2024. This margin ~~decrease~~increase was primarily ~~driven~~attributable ~~by lower gross margins at Heimbach. Excluding Heimbach, MC's gross profit margins increased~~ to ~~51.7%~~reduced ininput ~~2024~~costs.

For the ~~six~~nine months ended ~~June~~September 30, 2024, Gross profit increased by $1424.84 million as compared to the same period in the prior year, driven by the higher sales noted above; however, gross profit margin decreased from 5049.87% in 2023 to 4546.87% in 2024. This margin decrease was primarily driven by lower gross margins at Heimbach. ~~Excluding Heimbach, MC's gross profit margins increased to 51.9% in 2024.~~

Operating Income

For the three months ended ~~June~~September 30, 2024, Operating income was largely in line with the prior year, increasing $0.8 million or 1.5%. The ~~addition~~strong ofGross ~~Heimbach~~profit performance was largely offset by increased SG&A and Technical and Research expenses, byprimarily at Heimbach locations. SG&A expenses increased $75.47 million ~~and~~as ~~increased~~compared ~~Technical~~to ~~and~~2023, ~~research~~with ~~expenses~~a by$3.9 million increase related to Heimbach, a $1.62 million. ~~Excluding~~increase ~~Heimbach~~due to changes in currency translation rates, ~~SG&A~~and ~~decreased~~a $10.56 million increase in professional, consulting, and personnel-related costs. Technical and research expenses ~~decreased~~increased $01.50 million as compared to 2023 due to the addition of Heimbach. In addition, ~~driven~~Restructuring ~~primarily~~expenses byincreased ~~changes~~$2.2 inmillion ~~currency~~related ~~translation~~to ~~rates~~recent ~~and~~announcements ~~reduced~~to ~~material~~cease ~~and~~operations ~~labor~~at ~~costs~~multiple manufacturing facilities, further reducing Operating income.

For the six months ended June 30, 2024, Operating income decreased $0.9 million, principally due to lower gross profit margins and higher SG&A and Technical and research expenses from the Heimbach acquisition. The addition of Heimbach increased SG&A expenses by $16.3 million and increased Technical and research expenses by $3.1 million. Excluding Heimbach, SG&A decreased $4.9 million due to changes in currency translation rates, partially offset by higher employee-related compensation, and Technical and research expenses decreased $0.3 million, driven by reduced labor costs.31

For the nine months ended September 30, 2024, Operating income was also largely in line with the prior year, decreasing $0.1 million or 0.1%.The strong Gross profit performance was largely offset by increased SG&A and Technical and Research expenses, primarily at Heimbach locations. SG&A expenses increased $17.6 million as compared to 2023, with a $20.4 million increase related to Heimbach and a $0.9 million increase related to personnel-related and travel costs, partially offset by a $3.7 million decrease due to changes in currency translation rates. Technical and research expenses increased $3.9 million as compared to 2023, with a $4.3 million increase related to Heimbach, which was offset by a $0.4 million decrease in personnel-related costs. In addition, Restructuring expenses increased $3.3 million related to recent announcements to cease operations at multiple manufacturing facilities, further reducing Operating income.

Albany Engineered Composites ("AEC") Segment

The AEC segment accounted for 4239% and 4140% of our consolidated revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively. A summary of selected financial results for AEC is as follows:

Review of Operations

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands, except percentages)

2024

2023

2024

2023

Net revenues

~~138~~115,~~416~~353

114,~~906~~518

~~266~~381,~~529~~882

~~230~~345,~~780~~298

Gross profit

231,~~510~~463

2122,~~785~~578

4749,~~541~~004

4365,~~248~~826

% of Net revenues

171.03

19.07

1712.8

1819.71

SG&A expenses

87,~~798~~920

9,~~185~~519

1624,~~308~~228

1626,~~751~~270

Technical and research expenses

43,~~356~~802

3,~~932~~685

913,~~501~~303

812,~~411~~096

Operating income

9(10,~~434~~293)

89,~~668~~374

188,~~622~~329

1827,~~086~~460

Net Revenues

For the three months ended ~~June~~September 30, 2024, Net revenues increased 200.57% as compared to the prior year, primarily driven by growth on ~~CH-53K,~~certain ~~Boeing~~commercial ~~787~~and ~~Frames~~space programs, ~~and~~which ~~other~~was ~~commercial~~partially offset by lower revenues on CH-53K and ~~space~~other defense programs. Changes in currency translation rates had an insignificant effect on Net revenues.

For the ~~six~~nine months ended ~~June~~September 30, 2024, Net revenues increased 1510.56%, primarily driven by growth on certain commercial and space programs, ~~including~~which ~~Boeing~~was ~~787~~partially ~~Frames,~~offset asby ~~well~~lower asrevenues ~~growth~~ on ~~certain~~the ~~defense programs, including CH~~F-~~53K~~35 program. Changes in currency translation rates had an insignificant effect on Net revenues.

AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 40 percent of segment revenue for the first ~~six~~nine months of 2024 and 2023.

In addition, AEC has long-term contracts in which the selling price is fixed. In accounting for those contracts, we estimate the profit margin expected at the completion of the contract and recognize a pro-rata share of that profit during the course of the contract using a cost-to-cost approach. Changes in estimated contract profitability will affect revenue and gross profit when the change occurs, which could have a significant favorable or unfavorable effect on revenue and gross profit in any reporting period. For contracts with anticipated losses, a provision for the entire amount of the estimated remaining loss is charged against income in the period in which the loss becomes known. Contract losses are determined considering all direct and indirect contract costs, exclusive of any selling, general or administrative cost allocations, which are treated as period expenses. Expected losses on projects include losses on contract options that are probable of exercise, excluding profitable options that often follow.

Gross Profit

For the three months ended ~~June~~September 30, 2024, Gross profit ~~increased~~decreased $121.71 million as compared to the same period last year, and as a percentage of revenues decreased from 19.07% in 2023 to 171.03% in 2024. ~~The~~ This decrease in Gross profit ~~margin~~ was driven primarily by ~~unfavorable~~ changes in the estimated profitability of long-term contracts, which decreased gross profit by $22.4 million in 2024 due to increased cost assumptions as ~~noted~~well ~~below~~as the impact of suspended production at a key customer. For the 2023 year, adjustments in the estimated profitability of long-term contracts increased Gross profit $0.9 million.

For the six months ended June 30, 2024, Gross profit increased $4.3 million as compared to the same period last year, and gross profit margin decreased from 18.7% in 2023 to 17.8% in 2024. The decrease in profit margin was driven primarily by unfavorable changes in the estimated profitability of long-term contracts as noted below, partially offset by a favorable shift in revenue mix.32

For the nine months ended September 30, 2024, Gross profit decreased $16.8 million as compared to the same period last year, and gross profit margin decreased from 19.1% in 2023 to 12.8% in 2024. This decrease in Gross profit was driven primarily by changes in the estimated profitability of long-term contracts, which decreased gross profit by $28.3 million in 2024 due to increased cost assumptions as well as the impact of suspended production at a key customer, partially offset by a favorable shift in revenue mix to commercial and space programs. For the 2023 year, adjustments in the estimated profitability of long-term contracts decreased Gross profit $4.1 million.

Operating Income

For the three months ended ~~June~~September 30, 2024, Operating income ~~increased~~decreased $019.87 million, principally due to reduced anGross ~~increase~~profit ofas ~~$23~~noted above.5 ~~million~~This inwas ~~Net~~partially ~~revenues~~offset ~~and~~by ana ~~increase~~decrease in SG&A expenses of $1.76 million, inprimarily ~~Gross~~driven ~~profit,~~by ~~offset~~decreased byincentive ~~restructuring~~compensation ~~expenses~~and ofpersonnel-related $0costs.9 ~~million,~~Technical asand ~~described~~research ~~above~~expenses and Restructuring expenses remained largely in line with the prior year.

For the ~~six~~nine months ended ~~June~~September 30, 2024, Operating income ~~increased~~decreased $019.51 million, principally due to anreduced ~~increase~~Gross profit as noted above. This was partially offset by a decrease in SG&A expenses of $352.70 million, indriven ~~Net~~by ~~revenues,~~a an$0.8 ~~increase~~million ofdecrease in personnel-related costs, a $40.38 million decrease in ~~Gross~~marketing ~~profit~~costs, and a ~~reduction of~~ $0.4 million decrease in ~~SG&A,~~professional ~~offset~~and byconsulting anfees. ~~increase~~Technical ofand research expenses increased $1.12 million inas ~~Technical~~compared ~~and~~to 2023 due to increases in research ~~expenses~~material and labor costs. Restructuring activities related to reductions in the workforce at various AEC locations resulted in restructuring expenses of $3.1 million, asfurther ~~described~~reducing ~~above~~Operating income.

Changes in the estimated profitability of long-term contracts decreased operating income by $5.0 million for the second quarter of 2024 and decreased operating income $7.6 million for the first half of 2024. For the 2023 year, adjustments in the estimated profitability of long-term contracts decreased operating income by $1.9 million in the second quarter and decreased operating income by $4.0 million for the first half of the year.

Working Capital, Liquidity and Capital Structure

Cash Flow Summary

	Six months ended June 30,
	Nine months ended September 30,
(in thousands)	2024		2023
Net income	$	5270,~~089~~310	$	5381,~~912~~066
Depreciation and amortization	4467,~~693~~003		3554,~~317~~778
Changes in working capital (a)	17,~~868~~700		(7158,~~524~~130)
Changes in other noncurrent liabilities and deferred taxes	(37,~~315~~569)		(~~135~~4,866)
Other operating items	(2,~~346)~~541		~~(2,895)~~964
Net cash provided by operating activities	92139,~~989~~985		1473,~~675~~812
Net cash used in investing activities	(4561,~~627~~053)		(34182,~~971~~596)
Net cash used in financing activities	(98121,~~225~~773)		29(10,~~294~~839)
Effect of exchange rate changes on cash and cash equivalents	(63,~~118~~357)		~~142~~(647)
Decrease in cash and cash equivalents	(5646,~~981~~198)		9(120,~~140~~270)
Cash and cash equivalents at beginning of year	173,420		291,776
Cash and cash equivalents at end of period	$	~~116~~127,~~439~~222	$	~~300~~171,~~916~~506

(a)Includes Accounts receivable, Contract assets, Inventories, Accounts payable, and Accrued liabilities.

Net cash provided by operating activities during the first ~~six~~nine months of 2024 was $93140.0 million, compared to $1473.78 million in the same period last year. The increase was primarily driven by improved levels of working capital at both segments, but was most pronounced at AEC, which invested a much more significant amount in working capital during 2023 related to the expanded CH-53K scope of work and the build-up of inventory in the LEAP program as compared to 2024.

31Net cash used in investing activities included capital expenditures totaling $62.1 million and $49.1 million for the first nine months of 2024 and 2023, respectively, including investments in new aerospace programs and to improve productivity in our MC segment. In addition, investing activities during the prior year included the acquisition of Heimbach, headquartered in Düren, Germany, for net cash of $133.5 million, funded using cash on hand.

~~segments,~~Net ~~but~~cash ~~was~~used ~~most~~in ~~pronounced~~financing atactivities ~~AEC,~~was ~~which~~$121.8 ~~invested~~million afor ~~much~~the ~~more~~first ~~significant~~nine ~~amount~~months inof ~~working~~2024 ~~capital~~as ~~during~~compared ~~2023~~to ~~related~~$10.8 tomillion for the ~~expanded~~first ~~CH-53K~~nine ~~scope~~months of ~~work~~2023. The ~~and~~significant ~~the~~increase ~~build-up~~in ofnet ~~inventory~~cash inused ~~the~~during ~~LEAP~~2024 ~~program~~was asdue ~~compared~~to increased principal payments on debt and increased dividends paid to ~~2024~~shareholders.

Net cash used in investing activities primarily included capital expenditures totaling $45.6 million and $35.0 million for the first six months of 2024 and 2023, respectively, including investments in new aerospace programs and to improve productivity in our MC segment.33

Net cash used in financing activities during 2024 was $98.2 million as compared to net cash provided by financing activities of $29.3 million in 2023. The change was primarily due to lower borrowings and a significant increase in principal payments on debt during 2024.

Liquidity and Capital Structure

We finance our business activities principally with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below. Our subsidiaries outside of the United States may also maintain working capital lines with local banks.

Under our $800 million unsecured committed Amended Credit Agreement, $~~370~~360.0 million of borrowings were outstanding as of ~~June~~September 30, 2024. In addition, we have borrowings outstanding at our ~~newly acquired~~ Heimbach subsidiary of $72.12 million, of which $20.76 million was considered current.

As of ~~June~~September 30, 2024, we had cash and cash equivalents of $~~116~~127.42 million and available borrowings under our Amended Credit Agreement of $~~430~~440.0 million, for a total liquidity of approximately $~~546~~567.42 million. We believe cash flows from operations and the availability of funds under our Amended Credit Agreement will be adequate to fund our operations and business needs over the next twelve months. For more information on credit agreements, see Note 14. Financial Instruments in the Notes to Consolidated Financial Statements.

As of ~~June~~September 30, 2024, $~~100~~106.25 million of our total cash and cash equivalents were held by non-U.S. subsidiaries. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were in excess of $120.0 million, as of ~~June~~September 30, 2024 and are intended to remain indefinitely invested in foreign operations. Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there can be no assurance that we will be able to cost effectively repatriate funds in the future. Repatriating such cash from certain jurisdictions, which is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes.

We have also returned cash to shareholders through dividends and share repurchases. During the first ~~six~~nine months of 2024, we paid $1624.24 million in dividends and had no share repurchases.

Off-Balance Sheet Arrangements

The Company is party to certain off-balance sheet arrangements, including certain guarantees. The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $12 million. There were no material changes in the Company’s off-balance sheet arrangements during 2024.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have market risk with respect to foreign currency exchange rates and interest rates. The market risk is the potential loss arising from adverse changes in these rates as discussed below.

Foreign Currency Exchange Rate Risk

We have manufacturing plants and sales transactions worldwide and, therefore, are subject to foreign currency risk. This risk is composed of both potential losses from the translation of foreign currency financial statements and the remeasurement of foreign currency transactions. To manage this risk, we periodically enter into forward exchange contracts either to hedge the net assets of a foreign investment or to provide an economic hedge against future cash flows. The total net assets of non-U.S. operations and long-term intercompany loans denominated in nonfunctional currencies subject to potential loss amount to approximately $~~663~~693.23 million. The potential loss in fair value resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to $6669.3 million. Furthermore, related to foreign currency transactions, we have exposure to various nonfunctional currency balances totaling $~~128~~146.84 million. This amount includes, on an absolute basis, exposures to assets and liabilities held in currencies other than our local entities’ functional currencies. On a net basis, we had $2752.84 million of foreign currency assets as of ~~June~~September 30, 2024. As currency rates change, these nonfunctional currency balances are revalued, and the corresponding adjustment is recorded in the income statement. A hypothetical change of 10% in currency rates could result in an adjustment to the income statement of approximately $25.82 million. Actual results may differ from these estimates.

Interest Rate Risk

We are exposed to interest rate fluctuations with respect to our variable rate debt, depending on general economic conditions.

On ~~June~~September 30, 2024, we had ~~the~~$10.1 ~~following~~million in variable rate debt:

(in thousands, except interest rates)
Current Maturities of Long-Term Debt
Foreign Bank Debt	$	477
Long-term debt
Credit agreement with borrowings outstanding, net of fixed rate portion, at an end of period interest rate of 7.06% in 2024, due in 2028	$	20,000
Foreign Bank Debt	33
Total	$	20,510

Assuming borrowings were outstanding for an entire year, an increase of one percentage point in weighted average interest rates would increase interest expense by $0.1 million. To manage interest rate risk, we may periodically enter into interest rate swap agreements to effectively fix the interest rates on variable debt to a specific rate for a period of time. Our current interest rate swap agreements expire in October 2024, which will result in a significant increase in our interest cost, which will be calculated using a floating rate based on the one-month term SOFR at that time, which was 5.06% at the time of our last borrowing, which was September 19, 2024. See Note 14. Financial Instruments in the Notes to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

Assuming borrowings were outstanding for an entire year, an increase of one percentage point in weighted average interest rates would increase interest expense by $0.2 million. To manage interest rate risk, we may periodically enter into interest rate swap agreements to effectively fix the interest rates on variable debt to a specific rate for a period of time. Our current interest rate swap agreements expire in October 2024, which will result in a significant increase in our interest cost, which will be calculated using a floating rate based on the one-month term SOFR at that time, which was 5.33% as of June 30, 2024. (See Note 14. Financial Instruments in the Notes to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference).

Item 4. Controls and Procedures

a) Disclosure controls and procedures.

The principal executive officer and principal financial officer, based on their evaluation of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that the Company’s disclosure controls and procedures are effective for ensuring that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in filed or submitted reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

and communicated to the Company’s management, including its principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

~~There~~In ~~was~~July noof ~~change~~2024, inwe implemented the Company’s ~~internal~~version ~~control~~of ~~over~~SAP ~~financial~~at ~~reporting~~certain ~~(as~~Heimbach ~~defined~~facilities, which in ~~Rule~~turn, ~~13a-15(f)~~resulted ~~and~~in ~~15d-15(f)~~changes ~~under~~to ~~the~~our ~~Securities~~internal ~~Exchange~~controls ~~Act~~over offinancial ~~1934,~~reporting. asWhile ~~amended)~~we ~~during~~expect ~~the~~SAP ~~last~~to ~~fiscal~~strengthen ~~quarter~~our ~~that~~internal ~~has~~controls ~~materially~~at ~~affected,~~Heimbach orby isautomating ~~reasonably~~certain ~~likely~~manual toprocess ~~materially~~and ~~affect~~standardizing business processes and reporting, ~~the~~we ~~Company’s~~will continue to monitor our internal ~~control~~controls ~~over~~in ~~financial~~each ~~reporting~~of the affected facilities.

Other than discussed above, there were no other changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during

the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information set forth above under Note 16. Commitments and Contingencies in Item 1, Notes to Consolidated Financial Statements is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We made no share purchases during the ~~second~~third quarter of 2024.

On October 25, 2021, the Company's Board of Directors authorized the Company to repurchase shares of up to $200 million through open market purchases, privately negotiated transactions or otherwise, and to determine the prices, times and amounts. The program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company's discretion. The share repurchase program does not have an expiration date. The timing and amount of any share repurchases will be based on the Company’s liquidity, general business and market conditions, debt covenant restrictions and other factors, including alternative investment opportunities and capital structure. In total, the Company has repurchased 1,308,003 shares for a total cost of $109.4M, of which 1,022,717 shares were repurchased in 2022 for $85.1 million and 285,286 shares were repurchased in 2021 for $24.3 million. We currently remain authorized to repurchase shares of up to $90.6 million.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Securities Trading Plans of Directors and Executive Officers

During the three months ended ~~June~~September 30, 2024, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Albany International Corp. securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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Item 6. Exhibits

Exhibit No.			Description
10.1			First Amendment to Amended and Restated Credit Agreement, dated as of June 28, 2024, between Albany International Corp. and JPMorgan Chase Bank, N.A., as Administrative Agent.
3.1			Albany International Corp. By Laws, effective as of September 20, 2024.
10(n)(viii)			Form of 2024 Annual Performance Bonus Award Agreement
10(u)(ix)			Mutual Separation Agreement, dated August 7, 2024, between the Company and Gregory Harwell
10(m)(xxi)			Form of 2024 Multi-Year Performance Bonus Agreement
10(l)(xvi)			Form of 2024 Restricted Stock Unit Award Agreement
10(l)(xvii)			Form of 2024 Non-Employee Director Restricted Stock Unit Award Agreement
31.1			Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
31.2			Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
32.1			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
101.INS			XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover page formatted as Inline XBRL and contained in Exhibit 101

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ALBANY INTERNATIONAL CORP.
		(Registrant)
Date: August 6, 2024	By	/s/ Robert D. Starr
Date: October 30, 2024	By	/s/ Robert D. Starr
		Robert D. StarrExecutive Vice President and Chief Financial Officer(Principal Financial Officer)

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