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ALBANY INTERNATIONAL CORP /DE/ (AIN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $288.8M, down 7.8% YoY as Machine Clothing (-5.7%) and AEC (-11.0%) softened; adjusted diluted EPS was $0.73, and adjusted EBITDA was $55.7M with a 19.3% margin .
  • Versus Wall Street, Albany delivered an EPS beat and revenue miss: adjusted EPS $0.73 vs $0.622* consensus; revenue $288.8M vs $294.9M* consensus (3 estimates) — driven by lower LEAP volumes and $7M EAC adjustments partly offset by CH-53K strength .
  • Guidance reaffirmed across the board: FY25 revenue $1.165–$1.265B, adjusted EBITDA $240–$260M, adjusted EPS $3.00–$3.40, tax rate ~31%, capex $85–$95M; segment targets maintained (MC revenue $705–$755M; AEC $460–$510M) .
  • Capital returns remained active: $69.2M in Q1 share repurchases and a $0.27 quarterly dividend (payable July 8, 2025), with $193M remaining under the $250M authorization .

What Went Well and What Went Wrong

  • What Went Well

    • “Machine Clothing continues to deliver consistent strong results,” with MC adjusted EBITDA margin up slightly YoY (28.4%) and gross margin steady at 45.7% .
    • AEC operational progress: “lower EAC adjustments in the quarter” and process improvements on CH-53K and Gulfstream; total EAC adjustments were $7M (vs $15M in Q4) .
    • New business momentum: seven-year Bell 525 composite components contract; AEC backlog stood at ~$1.3B excluding LEAP beyond the calendar year-end .

  • What Went Wrong

    • Revenue contraction and margin pressure: consolidated gross margin fell 130 bps YoY to 33.4% due to changes in estimated profitability of long-term AEC contracts .
    • AEC profitability was constrained by program-level EAC charges (CH-53K $2M; Gulfstream $1.7M) and lower LEAP sell-in amid destocking, compressing AEC gross margin YoY .
    • Net leverage rose to 1.34x with net debt at $297.1M due to increased borrowing for buybacks and working capital, up from 0.88x and $203.2M in Q4 .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$298.386 $286.905 $288.774
Diluted EPS (GAAP, $)$0.57 $0.56 $0.56
Adjusted Diluted EPS ($)$0.80 $0.58 $0.73
Gross Margin %30.3% 31.5% 33.4%
Adjusted EBITDA ($USD Millions)$53.549 $49.962 $55.718
Adjusted EBITDA Margin %17.9% 17.4% 19.3%

Segment breakdown

Segment MetricQ3 2024Q4 2024Q1 2025
MC Net Revenues ($USD Millions)$183.033 $188.079 $174.697
MC Gross Profit ($USD Millions)$88.921 $83.595 $79.902
MC Gross Margin %48.6% 44.4% 45.7%
AEC Net Revenues ($USD Millions)$115.353 $98.826 $114.077
AEC Gross Profit ($USD Millions)$1.463 $6.728 $16.584
AEC Gross Margin %1.3% 6.8% 14.5%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Net Debt ($USD Millions)$234.972 $203.248 $297.075
Net Leverage (x)0.91 0.88 1.34

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Company Revenue ($B)FY 2025$1.165–$1.265 $1.165–$1.265 Maintained
Adjusted EBITDA ($M)FY 2025$240–$260 $240–$260 Maintained
Adjusted Diluted EPS ($)FY 2025$3.00–$3.40 $3.00–$3.40 Maintained
Effective Tax Rate (%)FY 2025~31% ~31% Maintained
Capital Expenditures ($M)FY 2025$85–$95 $85–$95 Maintained
Machine Clothing Revenue ($M)FY 2025$705–$755 $705–$755 Maintained
Machine Clothing Adjusted EBITDA ($M)FY 2025$220–$240 $220–$240 Maintained
AEC Revenue ($M)FY 2025$460–$510 $460–$510 Maintained
AEC Adjusted EBITDA ($M)FY 2025$60–$70 $60–$70 Maintained
Quarterly Dividend ($/share)Q2 2025$0.27 (Q4 2024 declared) $0.27 (declared; payable 7/8/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroLower tax rate due to discrete items; EAC issues acknowledged “Uncertainty is high” re China, impacts de minimis; baked into guide “Not affected by tariffs” in Q1; regionalized supply chains mitigate Manageable/flat
LEAP programRevenues flat YoY; backlog >$1B; later update shows LEAP softness Projected ~$150M LEAP in 2025; conservative stance due to destocking Q1 likely low point; upside in H2 as Airbus/Boeing recover; ready to ramp Improving H2
CH-53K & GulfstreamAEC impacted by EAC (CH-53K, defense programs) $9M CH-53K, $3M Gulfstream EAC in Q4; operational reset $7M total EAC; $2M CH-53K, $1.7M Gulfstream; progress in training & planning EAC trending down
AAM & SpaceGrowth in space and commercial programs LTAs signed; medium-term space growth AAM ramp through 2025; new Bell 525 contract Building
MC Integration (Heimbach)Integration underway; strong MC results Footprint consolidation, divestitures, margin headwinds at Heimbach Synergies to accelerate into H2’25; confident trajectory Improving H2
Tech/ERP—GIS allocation change (segment reporting) SAP S/4HANA go-live next week to enhance analytics/efficiency Digital upgrade

Management Commentary

  • CEO on execution: “Machine Clothing continues to deliver consistent strong results, and the integration of Heimbach is proceeding to plan… AEC… had lower EAC adjustments in the quarter” .
  • CEO on tariffs: “We were not affected by tariffs or other disruptions in the first quarter… not expected to materially impact our financial or operational performance” .
  • CFO on EAC impacts and margin cadence: $7M EAC in Q1 ($2M CH-53K; $1.7M Gulfstream), with second-half stronger due to AEC ramp and Heimbach synergies .
  • CEO on backlog and growth: AEC backlog ~$1.3B (ex-LEAP beyond calendar year); opportunities in space and missile programs; Bell 525 new 7-year agreement .

Q&A Highlights

  • LEAP destocking and cadence: Management maintained conservative plan but sees H2 upside as Boeing/Airbus recover; AIN has capacity to ramp quickly .
  • CH-53K/Gulfstream EACs: Q1 EAC down to $7M; improving onboarding, training, frontline leadership and supply chain planning are reducing EAC volatility .
  • Bell 525 contract details: Taking over complex tail boom composites after a supplier exit; targeting high-teens returns at AEC .
  • MC organic trajectory and Heimbach: Near-term organic softness tied to divestitures/line exits; order backlog strong with acceleration expected through 2025 .
  • 787/777X and certification: 787 to grow slowly through 2025 then accelerate in 2026; 777X focused on certification builds .

Estimates Context

  • Q1 2025 EPS: Adjusted diluted EPS $0.73 vs Primary EPS consensus mean $0.622* (beat; 3 estimates*) .
  • Q1 2025 Revenue: $288.8M vs Revenue consensus mean $294.9M* (miss; 3 estimates*) .
  • Drivers: Lower LEAP volumes and $7M EAC adjustments pressured revenue/margins; CH-53K and AAM provided partial offsets .

Values retrieved from S&P Global.*

MetricQ1 2025 ConsensusQ1 2025 Actual
Primary EPS Consensus Mean ($)0.62173*0.73
Revenue Consensus Mean ($USD Millions)294.901*288.774
Primary EPS – # of Estimates3*—
Revenue – # of Estimates3*—

Key Takeaways for Investors

  • H1 softness appears transitory: EAC EAC-charges fell to $7M from $15M in Q4; AEC gross margin improved to 14.5%, supporting a stronger H2 cadence .
  • MC remains the profit anchor: Gross margin 45.7%, adjusted EBITDA margin 28.4%; integration synergies expected to accelerate into H2’25 .
  • Near-term narrative: Expect destocking to fade and LEAP demand to recover in H2; watch Airbus/Boeing rate ramps and Safran pull patterns .
  • Capital allocation supportive: $69.2M buybacks in Q1 and $0.27 dividend; monitor rising net leverage (1.34x) as buybacks continue .
  • Guidance intact: Full-year ranges reaffirmed; any upside likely tied to AEC ramp and European MC recovery .
  • Program execution risk moderating: CH-53K/Gulfstream process improvements plus leadership changes reduce EAC volatility risk; still a key watch item .
  • Operational digitization: S/4HANA go-live should enhance analytics/efficiency — potential medium-term margin lever .