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Albany International Corp.$82.59$.77.94%

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 Albany International Reports Fourth-Quarter Results
   Monday, February 05, 2018 5:00:00 PM ET

--Net sales were $226.7 million, an increase of 6.4% compared to 2016 (see Table 1).

--Net income attributable to the Company was $3.7 million ($0.12 per share), including a net charge of $6.8 million ($0.21 per share) for income tax adjustments resulting primarily from changes in U.S. tax laws. Q4 2016 Net income attributable to the Company was $15.8 million ($0.49 per share), including a net benefit of $2.5 million ($0.08 per share) from income tax adjustments.

--Net income attributable to the Company, excluding adjustments (a non-GAAP measure), was $0.43 per share, compared to $0.36 per share in Q4 2016 (see Table 18).

--Adjusted EBITDA (a non-GAAP measure) was $43.4 million, compared to $38.3 million in Q4 2016 (see Tables 8 and 9). Q4 2016 Adjusted EBITDA included a charge of $2.5 million related to the theft of cash in Japan.



--On February 5, the Company issued a press release announcing that Olivier Jarrault has been named President and Chief Executive Officer to succeed Joseph G. Morone, effective March 2.

Albany International Corp. (AIN ) reported that Q4 2017 Net income attributable to the Company was $3.7 million, including a net charge of $6.8 million for income tax adjustments, principally due to the U.S. tax reform enacted in December 2017. Q4 2016 Net income attributable to the Company was $15.8 million, including a net benefit of $2.5 million from income tax adjustments.

This press release features multimedia. View the full release here: http://www.businesswire.com/news/home/20180205005932/en/

Q4 2017 Income before income taxes was $15.1 million, including $3.3 million of restructuring charges and $1.8 million of losses from foreign currency revaluation. Q4 2016 Income before income taxes was $20.8 million, including restructuring charges of $0.7 million and gains of $3.2 million from foreign currency revaluation. Q4 2016 Income before income taxes also included a charge of $2.5 million related to a theft of cash in Japan.

Table 1 summarizes net sales and the effect of changes in currency translation rates:

Table 1                                                                           
------------------------------------- -------------------- ------------------------------------   -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
                                    Net Sales                              Percent                    Impact of                     Percent
                                                                     Three Months ended                                                                                            Changes                                         Change
                                                                        December 31,                                                                                             in Currency                                      excluding
                                                                                                                                                                                                                                  Currency
(in thousands, excluding percentages)     2017       2016                  Change                 Translation Rates               Rate Effect
------------------------------------- -------------------- -------- -------------------- -------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
Machine Clothing (MC)                   $150,263   $144,744          3.8 %                                    $4,382          0.8 %
------------------------------------- -------------------- -------- -------------------- -------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Albany Engineered Composites (AEC)        76,465     68,302         12.0                      937         10.6  
------------------------------------- -------------------- -------- -------------------- -------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total                                   $226,728   $213,046          6.4 %                                    $5,319          3.9 %
------------------------------------- -------------------- -------- -------------------- -------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                     

In Machine Clothing, continuing declines in the publication grades were more than offset by growth in other grades. The increase in AEC Net sales was primarily due to growth in the 787 fuselage frames, F-35 airframe and CH-53K programs.

Table 2 summarizes Gross profit by segment:

Table 2                                                                               
------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
                                                      Three Months ended                                                                     Three Months ended
                                                                                             December 31, 2017                                                                                         December 31, 2016
(in thousands, excluding percentages)             Gross profit                    Percent of sales                    Gross profit                    Percent of sales
------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Machine Clothing                           $67,602           45.0 %                         $67,775           46.8 %
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Albany Engineered Composites                10,003           13.1          9,792           14.3  
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Corporate Expenses                            (219 )                               -           (235 )                               -  
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Total                                      $77,386           34.1 %                         $77,332           36.3 %
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                   

Fourth-quarter MC gross profit as a percentage of sales decreased due to stronger than normal year-end negative effects on capacity utilization. For the full year, MC gross profit as a percentage of sales remained steady at 47.5% in both 2016 and 2017. The decrease in AEC gross profit as a percentage of sales reflects ramp-up inefficiencies which were partially offset by a favorable net adjustment to the estimated profitability of long-term contracts.

Table 3 summarizes selling, technical, general and research (STG&R) expenses by segment:

Table 3                                                         
------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
                                                 Three Months ended                                                          Three Months ended
                                                                                        December 31, 2017                                                                              December 31, 2016
(in thousands, excluding percentages)       STG&R Expense              Percent of sales              STG&R Expense              Percent of sales
------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
Machine Clothing                                     $30,601         20.4 %                                   $27,679         19.1 %
------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Albany Engineered Composites                           8,564         11.2                   10,546         15.4  
------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Corporate Expenses                                    12,386            -                   11,554            -  
------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total                                                $51,551         22.7 %                                   $49,779         23.4 %
------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                             

Gains from the revaluation of nonfunctional-currency assets and liabilities decreased total fourth-quarter STG&R expenses by $0.5 million in 2017 and $2.0 million in 2016. The increase in MC STG&R expenses was primarily due to lower revaluation gains and higher research and development expenses. The decrease in AEC STG&R expenses was due primarily to lower-than-average spending in research and development activities during Q4 2017, and acquisition accounting adjustments that increased STG&R expenses by $0.7 million in Q4 2016.

Table 4 summarizes fourth-quarter expenses associated with internally funded research and development by segment:

Table 4                             
---------------------------- -------------------- -------------------- -------------------- --------------------
                               Research and development
                                                                        expenses by segment
                                                                               Three
                                                                           Months ended
                                                                           December 31,
(in thousands)                         2017                   2016
---------------------------- -------------------- -------------------- -------------------- --------------------
Machine Clothing                             $5,210                 $4,188
---------------------------- -------------------- -------------------- -------------------- --------------------
Albany Engineered Composites                  2,506                  3,672
---------------------------- -------------------- -------------------- -------------------- --------------------
Total                                        $7,716                 $7,860
---------------------------- -------------------- -------------------- -------------------- --------------------
                                                                        

Table 5 summarizes fourth-quarter operating income by segment:

Table 5                                        
---------------------------- -------------------- ------------------------------  -------------------- ------------------------------
                                           Operating Income/(loss)
                                                                                   Three Months ended
                                                                                      December 31,
(in thousands)                    2017           2016     
---------------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Machine Clothing                  $34,584        $39,946  
---------------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Albany Engineered Composites          585         (1,280 )
---------------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Corporate expenses                (12,605 )                         (11,836 )
---------------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Total                             $22,564        $26,830  
---------------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
                                                                                   

Table 6 presents the effect on operating income from restructuring and currency revaluation:

Table 6                                                
---------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
                                    Expenses/(gain) in Q4 2017                                                  Expenses/(gain) in Q4 2016
                                                                                resulting from                                                                                 resulting from
(in thousands)                     Restructuring                 Revaluation                Restructuring                 Revaluation
---------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
Machine Clothing                             $2,417        $(524 )                                      $150      $(2,050 )
---------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Albany Engineered Composites                    854           44                      526           11  
---------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Corporate expenses                                -            2                       47            -  
---------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total                                        $3,271        $(478 )                                      $723      $(2,039 )
---------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                    

Restructuring charges in Q4 2017 were principally related to previously-announced restructuring actions in Europe. Due to the ongoing nature of discussions with the local works council associated with the announced proposal for the restructuring of Machine Clothing operations in France, the Company has not recorded a provision for potential severance and other costs that could be incurred if the restructuring proposal is approved.

Q4 2017 Other income/expense, net, was expense of $3.4 million, including losses related to the revaluation of nonfunctional-currency balances of $2.3 million. Q4 2016 Other income/expense, net, was expense of $2.1 million, including income related to the revaluation of nonfunctional-currency balances of $1.2 million and a charge of $2.5 million related to the theft of cash from the Company’s subsidiary in Japan.

Table 7 summarizes currency revaluation effects on certain financial metrics:

Table 7                                       
--------------------------- -------------------- ------------------------------  -------------------- --------------------
                                   Income/(loss) attributable
                                                                           to currency revaluation
                                                                                    Three
                                                                          Months ended December 31,
(in thousands)                   2017                2016
--------------------------- -------------------- ---------- -------------------- -------------------- --------------------
Operating income                    $478                   $2,039
--------------------------- -------------------- ---------- -------------------- -------------------- --------------------
Other income/(expense), net       (2,323 )                                     1,170
--------------------------- -------------------- ---------- -------------------- -------------------- --------------------
Total                            $(1,845 )                                    $3,209
--------------------------- -------------------- ---------- -------------------- -------------------- --------------------
                                                                                  

The Company’s income tax rate based on income from continuing operations was 35.4% for Q4 2017, compared to 35.3% for Q4 2016. Discrete tax items and the effect of a change in the estimated income tax rate increased income tax expense by $6.8 million in Q4 2017, principally due to a charge to reflect the Company’s estimate of the impact of U.S. tax law changes. Discrete tax items and the effect of a change in the estimated income tax rate decreased income tax expense by $2.5 million in Q4 2016.

Tables 8 and 9 provide a reconciliation of operating income and net income to EBITDA and Adjusted EBITDA:

Table 8                                                                                                             
------------------------------------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Three Months ended December 31, 2017                                               Machine                           Albany                           Corporate                           Total
(in thousands)                                                                                       Clothing                                            Engineered                                            expenses                                              Company
                                                                                                                                                         Composites                                            and other
------------------------------------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Operating income/(loss) (GAAP)                                           $34,584           $585       $(12,605 )                         $22,564  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest, taxes, other income/expense                                          -              -        (19,560 )                         (19,560 )
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net income (GAAP)                                                         34,584            585        (32,165 )                           3,004  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest expense, net                                                          -              -          4,049          4,049  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Income tax expense                                                             -              -         12,139         12,139  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Depreciation and amortization                                              8,429          8,920          1,351         18,700  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
EBITDA (non-GAAP)                                                         43,013          9,505        (14,626 )                          37,892  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Restructuring expenses, net                                                2,417            854              -          3,271  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Foreign currency revaluation (gains)/losses                                 (524 )                              44          2,325          1,845  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Adjustment to write-off of inventory in a discontinued product line            -           (355 )                               -           (355 )
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Pretax loss attributable to non-controlling interest in ASC                    -            746              -            746  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Adjusted EBITDA (non-GAAP)                                               $44,906        $10,794       $(12,301 )                         $43,399  
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                           
Table 9                                                                                                         
--------------------------------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Three Months ended December 31, 2016                                           Machine                           Albany                           Corporate                           Total
(in thousands)                                                                                   Clothing                                            Engineered                                            expenses                                              Company
                                                                                                                                                     Composites                                            and other
--------------------------------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Operating income/(loss) (GAAP)                                       $39,946        $(1,280 )                        $(11,836 )                         $26,830  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest, taxes, other income/expense                                      -              -        (10,844 )                         (10,844 )
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net income (GAAP)                                                     39,946         (1,280 )                         (22,680 )                          15,986  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest expense, net                                                      -              -          3,854          3,854  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Income tax expense                                                         -              -          4,841          4,841  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Depreciation and amortization                                          8,583          6,433          1,221         16,237  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
EBITDA (non-GAAP)                                                     48,529          5,153        (12,764 )                          40,918  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Restructuring expenses, net                                              150            526             47            723  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Foreign currency revaluation (gains)/losses                           (2,050 )                              11         (1,170 )                          (3,209 )
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Pretax (income) attributable to non-controlling interest in ASC            -           (160 )                               -           (160 )
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Adjusted EBITDA (non-GAAP)                                           $46,629         $5,530       $(13,887 )                         $38,272  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                       

Payments for capital expenditures were $22.9 million in Q4 2017, compared to $22.2 million in Q4 2016. Depreciation and amortization was $18.7 million in Q4 2017, compared to $16.2 million in Q4 2016.

CFO Comments

CFO and Treasurer John Cozzolino commented, "During the fourth quarter, the Company amended and extended its revolving credit facility with its existing group of banks. The facility was increased from $550 million to $685 million, the maturity date extended to November 2022, and the leverage ratio limit increased to 3.75 through June 2019 (after which the limit moves back to 3.50). The remaining terms of the new facility are essentially the same as the previous facility. Additionally, during the quarter the Company utilized its credit facility to pay down the remaining $50 million due on the 6.84% notes with Prudential. At the end of the year, borrowings under the new credit facility were $501 million.

"The Company replaced its existing interest rate swaps with new swap agreements during the quarter. The previous swaps, which fixed LIBOR on $300 million of debt at 1.245%, were terminated with the Company receiving about $6 million of proceeds. The new swaps fix LIBOR on $350 million of debt at 2.11% through October 2022. At year end, the effective interest rate for borrowings under the revolving credit facility was 3.40%.

"Cash flow in the fourth quarter was strong due to good operating performance and management of working capital. Cash balances increased about $30 million to a total of $184 million, while total debt increased about $11 million to $516 million as of the end of the year. The combined effect of those two changes resulted in a $20 million decrease in net debt (total debt less cash, see Table 20) to a balance of $332 million as of the end of the year. The Company’s leverage ratio, as defined in our revolving credit facility, was 2.62 at the end of the year, well below our limit of 3.75.

"Payments for capital expenditures in Q4 were about $23 million, bringing the total for the year to approximately $85 million. As several key AEC programs continue to ramp, we continue to expect total Company capital expenditures in 2018 to be in the range of $20 million to $25 million per quarter.

"New tax legislation in the U.S. had a significant mostly non-cash impact on discrete tax expense in Q4. Tax expense of $6 million was recorded to reflect the impact of the mandatory deemed repatriation of offshore earnings, while $1 million was recorded as the result of the revaluation of U.S. net deferred tax assets using the new lower rate of 21%. These charges are based on the Company’s current estimates. The final impact of the new tax legislation may differ materially due to factors such as further refinement of the Company’s calculations, changes in interpretations and assumptions that the Company has made, additional guidance that may be issued by the U.S. Government, and actions the Company may take, among other items. The Company plans to continue its repatriation program and expects that over the long run the new tax legislation will have a beneficial impact on the program.

"The Company’s income tax rate, based on income from continuing operations, was about 35% in both 2017 and 2016. Cash paid for income taxes was about $3 million in Q4, bringing the full-year total to $24 million. Based on the Company’s current estimate of the mix of earnings in the countries where we do business and including the impact of the lower tax rate in the U.S., we estimate the 2018 tax rate on income from continuing operations to be in the range of 27% to 31%. Cash taxes in 2018 are expected to be in the range of $22 million to $24 million.

"Effective January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, utilizing the cumulative effect method for transitioning to the new standard. As a result, in 2018 the Company will report results under the new standard, and will also provide disclosure of results calculated under the former standard. Although the Company is still finalizing the implementation of this new standard, it is clear that it will have an impact on both businesses.

"For MC, a large portion of revenue will continue to be recognized upon delivery to customers. Revenue associated with certain contracts, however, will be accelerated in situations where the Company satisfies its performance obligation in advance of delivery. Additionally, the Company expects to allocate a small portion of revenue to services to reflect certain situations in which support services are provided to customers. While these changes could increase volatility in quarterly sales, total 2018 MC net sales should not be significantly impacted by this new standard.

"In AEC, the impact of the new standard will vary based on the terms of each customer contract. For most long-term contracts, we expect to record revenue based on costs incurred as compared to units of delivery, which we have used for several of our programs. For contracts previously utilizing the units of delivery method, this change should result in the acceleration of revenue. Additionally, profitability of many long-term contracts will be estimated based on shorter time periods than those used under the former standard. We expect that this change will result in lower reported earnings during the early years of a program, with higher reported earnings once a program is ramped up. Overall for 2018, we do not expect this new standard to have a significant impact on AEC net sales, however due to the effects on the accounting for certain new or existing early-stage programs, 2018 reported earnings could be somewhat lower than they would have been under the former standard."

CEO Comments

CEO Joseph Morone said, "Q4 2017 was another good quarter for Albany International. Although charges associated with the new tax law contributed to a sharp drop in net income, both businesses performed well in Q4, resulting in solid growth in total Company sales and Adjusted EBITDA, and strong cash flow. MC and AEC both reached the high-end of their projected outlooks for full-year 2017, and expect continued strong performance in 2018.

"Q4 sales in MC were once again stable compared to Q4 2016, as market trends of the previous eight quarters persisted. A roughly 10% decline in publication grades sales was offset by stable or incrementally growing sales in other grades. Publication grade sales declined to approximately 23% of total sales compared to 25% in Q4 2016. Prices were stable, although pricing pressure remained intense, particularly in Asia. New product performance was once again strong across the board, and we are greatly encouraged by advances in the new technology platform across multiple segments and product lines. The only anomaly in the quarter was a drop in gross margin due to higher than normal end-of-year underutilization of capacity. We expect gross margin to bounce back in 2018 to the full-year average of the past two years.

"For the full-year 2017, sales excluding currency, gross margin, operating income and Adjusted EBITDA were virtually identical to 2016, with gross margin at 47.5% and Adjusted EBITDA again at the high end of our expected range of $180 million to $195 million.

"After a decade of steady year-over-year sales declines due to the collapse of the publication grades, we view the stability of MC sales over the past two years as an indicator of an important, structural change. Although publication grade sales are likely to continue to erode at a 5% to 10% annual rate and to cause periodic volatility when large numbers of publication machines are shut down in a short period of time, the publication grades have become a small enough part of MC’s sales mix that under normal economic conditions, incremental growth in the other grades should usually be sufficient to offset those declines. The last two years suggest it may now be appropriate to think of MC for the long-term as a stable business with some potential for small increases in sales volume during strong economic conditions, rather than as a gradually deteriorating business fighting a market in structural decline.

"We expect full-year 2018 to be comparable to full-year 2017, and thus for MC to again perform in the upper half of our expected range. While growing inflationary pressures and a weakening U.S. dollar could lead to some regression away from the very high end of our normal range for Adjusted EBITDA, a strong order backlog, healthy economic conditions around the world, and continued strong product performance should lead to another good year for MC in 2018.

"AEC also had a good quarter and full year. Sales grew by 12% compared to a strong Q4 2016, and 38% compared to full-year 2016. The year-over-year Q4 increase was driven primarily by growth in the 787 fuselage frames, F-35 airframe, and CH-53K programs in Salt Lake City along with the new program for engine parts in Boerne. LEAP, which accounted for 44% of sales, was flat compared to an especially strong Q4 2016. Compared to Q3 2017, LEAP grew by 30%, and compared to full-year 2016, LEAP grew by 40%.

"All of AEC’s ramping programs made progress on quality and deliveries, and the two new plants in Queretaro Mexico are on schedule. The first of these two plants produced and shipped its first LEAP fan blades late in Q4. We continue to see upward pressure on demand for the LEAP program, while demand on all of AEC’s other ramping programs is either stable or facing incremental upward pressure.

"AEC Q4 2017 operating income improved to slightly above break-even. As expected, Gross profit was hurt by ramp-up inefficiencies in Q4, but the negative impact was offset by a favorable net adjustment to estimated profitability of long-term contracts. As a result, Adjusted EBITDA as a percent of sales improved to 14% compared to 11% in Q3 2017, and 8% in Q4 2016. As discussed earlier in this release in the CFO commentary, future AEC profit margins will be affected by the change in revenue recognition standards that went into effect on January 1 of this year. But holding revenue recognition standards constant, the trend toward incrementally improving profit margins should continue through 2018 and 2019, as the rate of hiring, training and new equipment installation begins to slow and operating efficiencies advance.

"In new business development, we continue to make progress on three fronts: opportunities with our current customers on existing platforms, opportunities on new platforms, and longer-term opportunities still in development. We have made enough progress on each of these fronts to revise our estimate of revenue potential for 2020. In 2016, following the acquisition of our Salt Lake City operation, we stated that AEC had the potential to grow to $450 million in revenue by 2020. In mid-year 2017, we revised that potential upward to $450 million to $500 million. We now think $475 million to $550 million is a reasonable estimate. This assumes both existing contracts and contracts that we believe we are more likely than not to win. We continue to expect 18% to 20% EBITDA as a percent of sales by 2020 (again, holding revenue recognition standards constant).

"As for our outlook for 2018, we expect 20% to 30% growth in full-year sales, driven primarily by the ramp-ups in LEAP, 787 fuselage frames, and F-35 programs, and holding revenue recognition standards constant, continued steady, incremental improvement in Adjusted EBITDA as a percent of sales.

"In sum, this was another good quarter and year for Albany, with stable year-over-year performance on both top and bottom lines in MC, continued strong growth and incremental improvements in profitability in AEC, and an outlook for both businesses of continued strong performance in 2018."

About Albany International Corp.

Albany International is a global advanced textiles and materials processing company, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed fabrics and belts essential to production in the paper, nonwovens, and other process industries. Albany Engineered Composites is a rapidly growing supplier of highly engineered composite parts for the aerospace industry. Albany International is headquartered in Rochester, New Hampshire, operates 22 plants in 10 countries, employs 4,400 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com.

This release contains certain non-GAAP metrics, including: percent change in net sales excluding currency rate effects (for each segment and the Company as a whole); EBITDA and Adjusted EBITDA (for each segment and the Company as a whole, represented in dollars or as a percentage of net sales); net debt; and net income per share attributable to the Company, excluding adjustments. Such items are provided because management believes that, when reconciled from the GAAP items to which they relate, they provide additional useful information to investors regarding the Company’s operational performance.

Presenting increases or decreases in sales, after currency effects are excluded, can give management and investors insight into underlying sales trends. EBITDA, or net income with interest, taxes, depreciation, and amortization added back, is a common indicator of financial performance used, among other things, to analyze and compare core profitability between companies and industries because it eliminates effects due to differences in financing, asset bases and taxes. An understanding of the impact in a particular quarter of specific restructuring costs, acquisition expenses, currency revaluation, inventory write-offs associated with discontinued businesses, or other gains and losses, on net income (absolute as well as on a per-share basis), operating income or EBITDA can give management and investors additional insight into core financial performance, especially when compared to quarters in which such items had a greater or lesser effect, or no effect. Restructuring expenses in the MC segment, while frequent in recent years, are reflective of significant reductions in manufacturing capacity and associated headcount in response to shifting markets, and not of the profitability of the business going forward as restructured. Net debt is, in the opinion of the Company, helpful to investors wishing to understand what the Company’s debt position would be if all available cash were applied to pay down indebtedness. EBITDA, Adjusted EBITDA and net income per share attributable to the Company, excluding adjustments, are performance measures that relate to the Company’s continuing operations.

Percent changes in net sales, excluding currency rate effects, are calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. That amount is then compared to the U.S. dollar amount reported in the current period. The Company calculates EBITDA by removing the following from Net income: Interest expense net, Income tax expense, Depreciation and amortization. Adjusted EBITDA is calculated by: adding to EBITDA costs associated with restructuring, inventory write-offs associated with discontinued businesses and pension settlement charges; adding (or subtracting) revaluation losses (or gains); subtracting (or adding) gains (or losses) from the sale of buildings or investments; subtracting insurance recovery gains in excess of previously recorded losses; subtracting (or adding) Income (or loss) attributable to the non-controlling interest in Albany Safran Composites (ASC); and adding expenses related to the Company’s acquisition of Harris Corporation’s composite aerostructures division. Adjusted EBITDA may also be presented as a percentage of net sales by dividing it by net sales. Net income per share attributable to the Company, excluding adjustments, is calculated by adding to (or subtracting from) net income attributable to the Company per share, on an after-tax basis: restructuring charges; inventory write-offs associated with discontinued businesses; discrete tax charges (or gains) and the effect of changes in the income tax rate; foreign currency revaluation losses (or gains); acquisition expenses; and losses (or gains) from the sale of investments.

EBITDA, Adjusted EBITDA, and net income per share attributable to the Company, excluding adjustments, as defined by the Company, may not be similar to similarly named measures of other companies. Such measures are not considered measurements under GAAP, and should be considered in addition to, but not as substitutes for, the information contained in the Company’s statements of income.

The Company discloses certain income and expense items on a per-share basis. The Company believes that such disclosures provide important insight into underlying quarterly earnings and are financial performance metrics commonly used by investors. The Company calculates the quarterly per-share amount for items included in continuing operations by using the income tax rate based on income from continuing operations and the weighted-average number of shares outstanding for each period. Year-to-date earnings per-share effects are determined by adding the amounts calculated at each reporting period.

Tables 10 and 11 contain full-year Net sales and Gross profit by segment:

Table 10                                                            
------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
                                                Net Sales                                          Percent                    Impact of                     Percent
                                                                                     Years ended                                                                                                           Changes                                         Change
                                                                                    December 31,                                                                                                         in Currency                                      excluding
                                                                                                                                                                                                                                                          Currency
(in thousands, excluding percentages)           2017                   2016                        Change                 Translation Rates               Rate Effect
------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
Machine Clothing (MC)                               $590,357               $582,190          1.4 %                                    $3,071          0.9 %
------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Albany Engineered Composites (AEC)                   273,360                197,649         38.3                      674         38.0  
------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total                                               $863,717               $779,839         10.8 %                                    $3,745         10.3 %
------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                 
Table 11                                                                              
------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
                                                          Year ended                                                                             Year ended
                                                                          December 31, 2017                                                                                         December 31, 2016
(in thousands, excluding percentages)             Gross profit                    Percent of sales                    Gross profit                    Percent of sales
------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Machine Clothing                          $280,683           47.5 %                        $276,402           47.5 %
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Albany Engineered Composites                15,875            5.8         25,121           12.7  
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Corporate Expenses                            (778 )                               -           (955 )                               -  
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Total                                     $295,780           34.2 %                        $300,568           38.5 %
------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                   

Tables 12 and 13 contain full-year Adjusted EBITDA by segment:

Table 12                                                                                         
----------------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Year ended December 31, 2017                                         Machine                      Albany                           Corporate                           Total
(in thousands)                                                                         Clothing                                       Engineered                                            expenses                                              Company
                                                                                                                                      Composites*                                           and other
----------------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Operating income/(loss) (GAAP)                                            $153,936     $(31,657 )                        $(46,128 )                         $76,151  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest, taxes, other income/expense                                            -            -        (45,720 )                         (45,720 )
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net income (GAAP)                                                          153,936      (31,657 )                         (91,848 )                          30,431  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest expense, net                                                            -            -         17,091         17,091  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Income tax expense                                                               -            -         24,277         24,277  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Depreciation and amortization                                               33,527       33,533          4,896         71,956  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
EBITDA (non-GAAP)                                                          187,463        1,876        (45,584 )                         143,755  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Restructuring expenses, net                                                  3,429       10,062              -         13,491  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Foreign currency revaluation losses                                          3,903          214          4,644          8,761  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Write-off of inventory in a discontinued product line                            -        2,800              -          2,800  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Pretax loss attributable to non-controlling interest in ASC                      -          567              -            567  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Adjusted EBITDA (non-GAAP)                                                $194,795      $15,519       $(40,940 )                        $169,374  
----------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------

* Includes Q2 charge of $15.8 million related to revisions in the estimated profitability of two long-term contracts.

Table 13                                                                                                        
--------------------------------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Year ended December 31, 2016                                                   Machine                           Albany                           Corporate                           Total
(in thousands)                                                                                   Clothing                                            Engineered                                            expenses                                              Company
                                                                                                                                                     Composites                                            and other
--------------------------------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
Operating income/(loss) (GAAP)                                      $152,529       $(15,363 )                        $(45,390 )                         $91,776  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest, taxes, other income/expense                                      -              -        (38,964 )                         (38,964 )
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net income (GAAP)                                                    152,529        (15,363 )                         (84,354 )                          52,812  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Interest expense, net                                                      -              -         13,464         13,464  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Income tax expense                                                         -              -         25,454         25,454  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Depreciation and amortization                                         36,428         24,211          6,822         67,461  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
EBITDA (non-GAAP)                                                    188,957          8,848        (38,614 )                         159,191  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Restructuring expenses, net                                            6,069          2,314             (7 )                           8,376  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Foreign currency revaluation losses/(gains)                             (404 )                              16         (3,525 )                          (3,913 )
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Acquisition expenses                                                       -          5,367              -          5,367  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Pretax (income) attributable to non-controlling interest in ASC            -           (125 )                               -           (125 )
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Adjusted EBITDA (non-GAAP)                                          $194,622        $16,420       $(42,146 )                        $168,896  
--------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                       

Tables 14 through 17 contain Q4 and full-year calculations of per share effects of certain income and expense items:

Table 14                                                                          
------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Three Months ended December 31, 2017                                        Pretax               Tax Effect              After-tax              Per Share
(in thousands,                                                                                 amounts                                                                             Effect                                    Effect
except per share amounts)
------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring expenses, net                                                        $3,271                 $1,158                 $2,113                  $0.07
------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Foreign currency revaluation losses                                                 1,845                    653                  1,192                   0.04
------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Reduction in write-off of inventory in a discontinued product line                    355                    131                    224                   0.01
------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Favorable effect of change in income tax rate                                           -                    394                    394                   0.01
------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net discrete income tax charge                                                          -                  7,174                  7,174                   0.22
------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                         
Table 15                                                            
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Three Months ended December 31, 2016                          Pretax               Tax Effect              After-tax          Per Share Effect
(in thousands,                                                                   amounts                                                                             Effect
except per share amounts)
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring expenses, net                                            $723                   $255                   $468                  $0.01
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Foreign currency revaluation gains                                    3,209                  1,133                  2,076                   0.06
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Expenses related to integration of acquired business                    762                    290                    472                   0.01
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Loss due to theft                                                     2,506                    877                  1,629                   0.05
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Favorable effect of change in income tax rate                             -                  1,278                  1,278                   0.04
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net discrete income tax benefit                                           -                  1,243                  1,243                   0.04
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                           
Table 16                                                                       
--------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Year ended December 31, 2017                                             Pretax               Tax Effect              After-tax              Per Share
(in thousands, except per                                                                   amounts                                                                             Effect                                    Effect
share amounts)
--------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring expenses, net                                                    $13,491                 $4,879                 $8,612                  $0.27
--------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Foreign currency revaluation losses                                              8,761                  3,169                  5,592                   0.18
--------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Write-off of inventory in a discontinued product line                            2,800                  1,036                  1,764                   0.05
--------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net discrete income tax charge                                                       -                  4,893                  4,893                   0.15
--------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Charge for revision to estimated profitability of AEC contracts                 15,821                  5,854                  9,967                   0.31
--------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                      
Table 17                                          
---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Year ended December 31, 2016                Pretax               Tax Effect              After-tax          Per Share Effect
(in thousands, except per                                      amounts                                                                             Effect
share amounts)
---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring expenses, net                        $8,376                 $3,220                 $5,156                  $0.16
---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Foreign currency revaluation gains                  3,913                  1,389                  2,524                   0.07
---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Acquisition expenses                                5,367                  1,933                  3,434                   0.11
---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Loss due to theft                                   2,506                    877                  1,629                   0.05
---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net discrete income tax benefit                         -                  2,175                  2,175                   0.07
---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

Table 18 contains the calculation of net income per share attributable to the Company, excluding adjustments:

Table 18                                                                                              
---------------------------------------------------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- -------------------- -------------------- ------------------------------
                                                                                 Three Months ended                                                                    Years ended
                                                                                                                          December 31,                                                                                         December 31,
Per share amounts (Basic)                                             2017           2016                2017              2016     
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Net income/(loss) attributable to the Company, reported (GAAP)          $0.12          $0.49            $0.96*               $1.64  
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Adjustments:                                                                                          
---------------------------------------------------------------- -------------------- ---------------------------------------------------- ---------------------------------------------------- -------------------- -------------------- --------------------------------
Restructuring charges                                                    0.07           0.01                     0.27         0.16  
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Discrete tax adjustments and effect of change in income tax rate         0.21          (0.08 )                                      0.15        (0.07 )
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Foreign currency revaluation losses/(gains)                              0.04          (0.06 )                                      0.18        (0.07 )
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Write-off of inventory in a discontinued product line                   (0.01 )                               -                     0.05            -  
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Acquisition expenses                                                        -              -                        -         0.11  
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Net income attributable to the Company, excluding adjustments           $0.43          $0.36                    $1.61        $1.77  
(non-GAAP)
---------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------

* Includes Q2 charge of $0.31 per share for revisions in estimated profitability of two AEC contracts

Table 19 contains the calculation AEC Adjusted EBITDA as a percentage of sales:

Table 19                                                                                             
                                                                                                 Adjusted EBITDA as a percentage of net sales
                                                                                                                                 Three months ended
                                                                   
                                                                  December 31,                       September 30,                      June 30,                       March 31,                     December 31,
(in thousands, except percentages)                 2017            2017          2017        2017         2016
-------------------------------------------- -------------------- ------------ -------------------- ------------- -------------------- --------- -------------------- --------- -------------------- ------------
Adjusted EBITDA (non-GAAP)                        $10,794         $8,125       $(8,586)*    $5,188       $5,530
-------------------------------------------- -------------------- ------------ -------------------- ------------- -------------------- --------- -------------------- --------- -------------------- ------------
Net sales (GAAP)                                  $76,465         $71,447       $68,999     $56,450      $68,302
-------------------------------------------- -------------------- ------------ -------------------- ------------- -------------------- --------- -------------------- --------- -------------------- ------------
Adjusted EBITDA as a percentage of net sales       14.1%           11.4%        (12.4)%      9.2%         8.1%
-------------------------------------------- -------------------- ------------ -------------------- ------------- -------------------- --------- -------------------- --------- -------------------- ------------

* Includes charge of $15.8 million in Q2 2017 for revisions in estimated profitability of two AEC contracts.

Table 20 contains the calculation of net debt:

Table 20                                                
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
(in thousands)                             December 31,           September 30,            June 30,               March 31,            December 31,
                                                                  2017                                      2017                                      2017                                      2017                                      2016
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Notes and loans payable                                $262                   $186                   $249                   $274                   $312
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Current maturities of long-term debt                  1,799                 51,765                 51,732                 51,699                 51,666
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Long-term debt                                      514,120                453,578                444,030                428,477                432,918
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total debt                                          516,181                505,529                496,011                480,450                484,896
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Cash and cash equivalents                           183,727                153,465                138,792                143,333                181,742
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net debt                                           $332,454               $352,064               $357,219               $337,117               $303,154
------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                  

Table 21 contains the reconciliation of MC 2018 projected Adjusted EBITDA to MC 2018 projected net income:

Table 21                                   
--------------------------------------- -------------------- --------------------
Machine Clothing Full-Year 2018 Outlook          Normal
(in millions)                                                    target range
                                                                 for full-year
--------------------------------------- -------------------- --------------------
Net income (non-GAAP)                          $147 - $162
--------------------------------------- -------------------- --------------------
Depreciation and amortization                      33
--------------------------------------- -------------------- --------------------
EBITDA (non-GAAP)                              $180 - $195
--------------------------------------- -------------------- --------------------
Restructuring expenses                              *
--------------------------------------- -------------------- --------------------
Foreign currency revaluation losses                 *
--------------------------------------- -------------------- --------------------
Adjusted EBITDA (non-GAAP)                     $180 - $195
--------------------------------------- -------------------- --------------------

* Due to the uncertainty of these items, management is currently unable to project restructuring expenses and foreign currency revaluation gains/losses for 2018.

This press release may contain statements, estimates, or projections that constitute "forward-looking statements" as defined under U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will," "should," "look for," and similar expressions identify forward-looking statements, which generally are not historical in nature. 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 Quarterly Report on Form 10-Q) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections.

Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic, geopolitical and paper-industry trends and conditions during 2018 and in future years; expectations in 2018 and in future periods of sales, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net sales), income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, and for the Company as a whole; the timing and impact of production and development programs in the Company’s AEC business segment and the sales growth potential of key AEC programs, as well as AEC as a whole; the amount and timing of capital expenditures, future tax rates and cash paid for taxes, depreciation and amortization; future debt and net debt levels and debt covenant ratios; the impact of the new revenue recognition standard on financial results for each business segment and for the Company as a whole; the impact of the U.S. tax legislation passed in Q4 2017; the timing and impact of the proposed restructuring in France; and changes in currency rates and their impact on future revaluation gains and losses. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period. Such statements are based on current expectations, and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Statements expressing management’s assessments of the growth potential of its businesses, or referring to earlier assessments of such potential, are not intended as forecasts of actual future growth, and should not be relied on as such. While management believes such assessments to have a reasonable basis, such assessments are, by their nature, inherently uncertain. This release and earlier releases set forth a number of assumptions regarding these assessments, including historical results, independent forecasts regarding the markets in which these businesses operate, and the timing and magnitude of orders for our customers’ products.

Historical growth rates are no guarantee of future growth, and such independent forecasts and assumptions could prove materially incorrect in some cases.

 
                                                                                                           ALBANY INTERNATIONAL CORP.
                                                                                                        CONSOLIDATED STATEMENTS OF INCOME
                                                                                                    (in thousands, except per share amounts)
                                                                                                                   (unaudited)
                                                                                                                                              
                                                                                                                                                                                                                            
                     Three Months Ended                                                                                                                                                            Twelve Months Ended
                        December 31,                                                                                                                                                                  December 31,
                                                                                                                                                                                                                            
  2017                            2016                                                                                                                 2017                                  2016
-------- --------------------                      --------                                                                                                             -------- --------------------                      --------------------
                                                                                                                                                                                                                            
$226,728                                           $213,046                      Net sales                                                                              $863,717                                                       $779,839
 149,342                         135,714                      Cost of goods sold                                                                      567,937                                     479,271
-------- --------------------                      --------                                                                                                             -------- --------------------                      --------------------
                                                                                                                                                                                                                            
  77,386                                             77,332                      Gross profit                                                                            295,780                                                        300,568
  41,165                                             39,115                         Selling, general, and administrative expenses                                        164,964                                                        160,112
  10,386                                             10,664                         Technical and research expenses                                                       41,174                                                         40,304
   3,271                             723                         Restructuring expenses, net                                                           13,491                                       8,376
-------- --------------------                      --------                                                                                                             -------- --------------------                      --------------------
                                                                                                                                                                                                                            
  22,564                                             26,830                      Operating income                                                                         76,151                                                         91,776
   4,049                                              3,854                         Interest expense, net                                                                 17,091                                                         13,464
   3,372                           2,149                         Other expense, net                                                                     4,352                                          46
-------- --------------------                      --------                                                                                                             -------- --------------------                      --------------------
                                                                                                                                                                                                                            
  15,143                                             20,827                      Income before income taxes                                                               54,708                                                         78,266
  12,139                           4,841                         Income tax expense                                                                    24,277                                      25,454
-------- --------------------                      --------                                                                                                             -------- --------------------                      --------------------
                                                                                                                                                                                                                            
   3,004                                             15,986                       Net income                                                                              30,431                                                         52,812
    (728 )                                              190                      Net income/(loss) attributable to the noncontrolling interest                              (526 )                                                           79
-------- --------------------                      --------                                                                                                             -------- --------------------                      --------------------
  $3,732                         $15,796                       Net income attributable to the Company                                                 $30,957                                     $52,733
======== ====================                      ========                                                                                                             ======== ====================                      ====================
                                                                                                                                                                                                                            
   $0.12                                              $0.49                      Earnings per share attributable to Company shareholders - Basic                           $0.96                                                          $1.64
                                                                                                                                                                                                                            
   $0.12                                              $0.49                      Earnings per share attributable to Company shareholders - Diluted                         $0.96                                                          $1.64
                                                                                                                                                                                                                            
                                                                                 Shares of the Company used in computing earnings per share:
  32,196                                             32,107                        Basic                                                                                  32,169                                                         32,086
                                                                                                                                                                                                                            
  32,218                                             32,145                        Diluted                                                                                32,199                                                         32,125
                                                                                                                                                                                                                            
   $0.17                                              $0.17                      Dividends declared per share, Class A and Class B                                         $0.68                                                          $0.68
                                                                                                                                                                                                                            
 
                                                                         ALBANY INTERNATIONAL CORP.
                                                                         CONSOLIDATED BALANCE SHEETS
                                                                      (in thousands, except share data)
                                                                                 (unaudited)
                                                                                                      
                                                                                                                                              
                                                                                                  December 31,                                         December 31,
                                                                                                                                              
                                                                                           2017                              2016     
                                                                                        ---------- --------------------                      ---------- --------------------
ASSETS
  Cash and cash equivalents                                                               $183,727                                             $181,742
  Accounts receivable, net                                                                 202,675                                              171,193
  Inventories                                                                              136,519                                              133,906
  Income taxes prepaid and receivable                                                        5,358                                                5,213
  Prepaid expenses and other current assets                                                 17,020                             9,251  
                                                                                        ---------- --------------------                      ---------- --------------------
      Total current assets                                                                 545,299                                              501,305
                                                                                                                                              
  Property, plant and equipment, net                                                       451,802                                              422,564
  Intangibles, net                                                                          55,441                                               66,454
  Goodwill                                                                                 166,796                                              160,375
  Income taxes receivable and deferred                                                      68,017                                               68,865
  Contract receivables                                                                      32,811                                               14,045
  Other assets                                                                              39,493                            29,825  
                                                                                        ---------- --------------------                      ---------- --------------------
      Total assets                                                                      $1,359,659                        $1,263,433  
                                                                                        ========== ====================                      ========== ====================
                                                                                                                                              
LIABILITIES AND SHAREHOLDERS’ EQUITY
  Notes and loans payable                                                                     $262                                                 $312
  Accounts payable                                                                          44,899                                               43,305
  Accrued liabilities                                                                      105,914                                               95,195
  Current maturities of long-term debt                                                       1,799                                               51,666
  Income taxes payable                                                                       9,805                             9,531  
                                                                                        ---------- --------------------                      ---------- --------------------
      Total current liabilities                                                            162,679                                              200,009
                                                                                                                                              
  Long-term debt                                                                           514,120                                              432,918
  Other noncurrent liabilities                                                             101,555                                              106,827
  Deferred taxes and other liabilities                                                      10,444                            12,389  
                                                                                        ---------- --------------------                      ---------- --------------------
      Total liabilities                                                                    788,798                           752,143  
                                                                                        ---------- --------------------                      ---------- --------------------
                                                                                                                                              
SHAREHOLDERS’ EQUITY
                                                                                                 -                                                    -
  Preferred stock, par value $5.00 per share; authorized 2,000,000
  shares; none issued
                                                                                                37                                                   37
  Class A Common Stock, par value $.001 per share; authorized
  100,000,000 shares; issued 37,395,753 in 2017 and 37,319,266 in
  2016
                                                                                                 3                                                    3
  Class B Common Stock, par value $.001 per share; authorized
  25,000,000 shares; issued and outstanding 3,233,998 in 2017 and
  2016
  Additional paid in capital                                                               428,423                                              425,953
  Retained earnings                                                                        531,928                                              522,855
  Accumulated items of other comprehensive income:
    Translation adjustments                                                                (87,318 )                                           (133,298 )
    Pension and postretirement liability adjustments                                       (50,536 )                                            (51,719 )
    Derivative valuation adjustment                                                          1,953                                                  828
                                                                                          (256,876 )                                           (257,136 )
  Treasury stock (Class A), at cost 8,431,335 shares in 2017 and
  8,443,444 shares in 2016
                                                                                        ---------- --------------------                      ---------- --------------------
      Total Company shareholders’ equity                                                   567,614                                              507,523
  Noncontrolling interest                                                                    3,247                             3,767  
                                                                                        ---------- --------------------                      ---------- --------------------
 Total equity                                                                              570,861                           511,290  
                                                                                        ---------- --------------------                      ---------- --------------------
      Total liabilities and shareholders’ equity                                        $1,359,659                        $1,263,433  
                                                                                        ========== ====================                      ========== ====================
                                                                                                                                                         
 
                                                                                                                                           ALBANY INTERNATIONAL CORP.
                                                                                                                                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                                                                                                                                 (in thousands)
                                                                                                                                                   (unaudited)
                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                  
                               Three Months Ended                                                                                                                                                                                                             Twelve Months ended
                                  December 31,                                                                                                                                                                                                                   December 31,
                                                                                                                                                                                                                                                                                  
  2017                            2016                                                                                                                                                    2017                             2016     
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
                                                                                                      OPERATING ACTIVITIES
  $3,004                                            $15,986                                           Net income                                                                                                               $30,431                                              $52,812
                                                                                                      Adjustments to reconcile net income to net cash provided by
                                                                                                      operating activities:
  16,150                                             13,370                                                         Depreciation                                                                             61,517                                               58,106
   2,550                                              2,867                                                                            Amortization                                                                             10,439                                                9,355
  (7,623 )                                             (222 )                                                                          Change in other noncurrent liabilities                                                  (10,145 )                                             (5,232 )
   9,441                                              6,663                                                                            Change in deferred taxes and other liabilities                                           (1,179 )                                              5,889
     954                                              1,369                                                                            Provision for write-off of property, plant and equipment                                  2,870                                                2,778
      26                                                211                                                                            Non-cash interest expense                                                                   660                                                  564
     268                                                551                                                                            Compensation and benefits paid or payable in Class A Common Stock                         2,133                                                2,433
       -                                                  -                                                                            Write-off of intangible assets in a discontinued product line                             4,149                                                    -
       -                                                 51                                                                            Write-off of pension liability adjustment due to settlement                                   -                                                   51
                                                                                                                                                                                                                                                                                  
                                                                                                      Changes in operating assets and liabilities that (used)/provided
                                                                                                      cash, net of impact of business acquisition:
  (2,078 )                                           (6,205 )                                                                          Accounts receivable                                                                     (21,859 )                                            (12,697 )
  20,300                                                366                                                                            Inventories                                                                               3,090                                              (12,520 )
  (4,322 )                                              707                                                                            Prepaid expenses and other current assets                                                (7,489 )                                             (2,595 )
   2,783                                             (3,943 )                                                                          Income taxes prepaid and receivable                                                         (34 )                                             (2,206 )
   5,614                                              3,652                                                                            Accounts payable                                                                          2,910                                                2,108
     778                                              5,048                                                                            Accrued liabilities                                                                       5,303                                                1,312
  (2,600 )                                           (2,601 )                                                                          Income taxes payable                                                                        364                                                1,398
  (3,123 )                                          (14,045 )                                                                          Contract receivables                                                                    (18,766 )                                            (14,045 )
  (2,121 )                                            3,900                                                         Other, net                                                                               (2,678 )                                             (6,571 )
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
  40,001                          27,725                                                         Net cash provided by operating activities                                                61,716                            80,940  
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
                                                                                                                                                                                                                                                                                  
                                                                                                      INVESTING ACTIVITIES
       -                                                  -                                                                            Purchase of business, net of cash acquired                                                    -                                             (187,000 )
 (21,286 )                                          (21,215 )                                                                          Purchases of property, plant and equipment                                              (83,010 )                                            (71,244 )
  (1,589 )                                             (986 )                                                                          Purchased software                                                                       (2,127 )                                             (2,248 )
       -                             517                                                         Proceeds from sale or involuntary conversion of assets                                        -                             6,939  
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
 (22,875 )                                          (21,684 )                                                                          Net cash used in investing activities                                                   (85,137 )                                           (253,553 )
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
                                                                                                                                                                                                                                                                                  
                                                                                                      FINANCING ACTIVITIES
  69,999                                              3,112                                                                            Proceeds from borrowings                                                                115,334                                              235,907
 (59,336 )                                          (10,661 )                                                                          Principal payments on debt                                                              (84,047 )                                            (34,356 )
  (2,130 )                                                -                                                                            Debt acquisition costs                                                                   (2,130 )                                             (1,771 )
   6,346                                                  -                                                                            Cash received/(paid) to settle swap agreements                                            6,346                                               (5,175 )
       -                                                  -                                                                            Taxes paid in lieu of share issuance                                                     (1,364 )                                             (1,272 )
      66                                                 63                                                                            Proceeds from options exercised                                                             597                                                  517
  (5,473 )                                           (5,458 )                                                                          Dividends paid                                                                          (21,869 )                                            (21,812 )
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
   9,472                         (12,944 )                                                                          Net cash provided by/(used in) financing activities                                      12,867                           172,038  
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
                                                                                                                                                                                                                                                                                  
   3,664                          (7,525 )                                         Effect of exchange rate changes on cash and cash equivalents                                                              12,539                            (2,796 )
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
                                                                                                                                                                                                                                                                                  
  30,262                                            (14,428 )                                         Increase/(decrease) in cash and cash equivalents                                                                           1,985                            (3,371 )
 153,465                         196,170                        Cash and cash equivalents at beginning of period                                                                         181,742                           185,113  
-------- --------------------                      -------- --------------------                                                                                                                                              -------- --------------------                      ---------- --------------------
$183,727                        $181,742                        Cash and cash equivalents at end of period                                                                              $183,727                          $181,742  
======== ====================                      ======== ====================                                                                                                                                              ======== ====================                      ========== ====================

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180205005932r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180205005932/en/

SOURCE: Albany International Corp.

Albany International Corp. 
Investors 
John Cozzolino, 518-445-2281 
john.cozzolino@albint.com 
or 
Media 
Heather Kralik, 801-505-7001 
heather.kralik@albint.com


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