UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended:	~~September 30, 2022~~March 31, 2023


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

Commission file number: 1-10026


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

Delaware


(State or other jurisdiction of incorporation or organization)

216 Airport Drive, Rochester, New Hampshire


(Address of principal executive offices)

14-0462060


(IRS Employer Identification No.)

03867


(Zip Code)

603-330-5850


(Registrant’s telephone number, including area code)

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


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

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

The registrant had ~~31.1~~31.2 million shares of Class A Common Stock and no shares of Class B Common Stock outstanding as of ~~October~~April 15, ~~2022.~~2023.

ALBANY INTERNATIONAL CORP.

TABLE OF CONTENTS


		Page No.
Part I Financial information
Item 1.	Financial Statements
	Consolidated statements of income – three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022	1
	Consolidated statements of comprehensive income/(loss) – three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022	2
	Consolidated balance sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022	3
	Consolidated statements of cash flows – three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022	4
	Notes to consolidated financial statements	65
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2318
	Forward-looking statements	2318
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3829
Item 4.	Controls and Procedures	3829
Part II Other Information
Item 1.	Legal Proceedings	3930
Item 1A.	Risk Factors	3930
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4030
Item 3.	Defaults upon Senior Securities	4030
Item 4.	Mine Safety Disclosures	4030
Item 5.	Other Information	4030
Item 6.	Exhibits	4131

Index

ITEM 1. FINANCIAL STATEMENTS

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net sales	Net sales	$	260,563	$	232,442	$	766,101	$	689,322	Net sales	$	269,096	$	244,169
Cost of goods sold	Cost of goods sold	160,070		140,400		473,411		407,006		Cost of goods sold	169,778		152,565

Gross profit	Gross profit	100,493		92,042		292,690		282,316		Gross profit	99,318		91,604
Selling, general, and administrative expenses	Selling, general, and administrative expenses	36,873		37,696		119,325		116,899		Selling, general, and administrative expenses	48,479		42,707
Technical and research expenses	Technical and research expenses	9,934		9,673		29,984		28,916		Technical and research expenses	10,277		9,889
Restructuring expenses, net	Restructuring expenses, net	42		187		268		230		Restructuring expenses, net	20		254

Operating income	Operating income	53,644		44,486		143,113		136,271		Operating income	40,542		38,754
Interest expense, net	Interest expense, net	3,794		3,734		11,336		11,521		Interest expense, net	3,290		3,609
Pension settlement expense		49,128		—		49,128		—
Aviation Manufacturing Jobs Protection (AMJP) grant		—		(5,832)		—		(5,832)

Other (income)/expense, net	Other (income)/expense, net	(6,918)		2,753		(17,891)		4,215		Other (income)/expense, net	(455)		(3,928)

Income before income taxes	Income before income taxes	7,640		43,831		100,540		126,367		Income before income taxes	37,707		39,073
Income tax expense/(benefit)		(3,183)		12,889		22,273		36,375
Income tax expense										Income tax expense	10,621		10,998

Net income	Net income	10,823		30,942		78,267		89,992		Net income	27,086		28,075
Net income attributable to the noncontrolling interest	Net income attributable to the noncontrolling interest	129		80		635		150		Net income attributable to the noncontrolling interest	197		338
Net income attributable to the Company	Net income attributable to the Company	$	10,694	$	30,862	$	77,632	$	89,842	Net income attributable to the Company	$	26,889	$	27,737

Earnings per share attributable to Company shareholders - Basic	Earnings per share attributable to Company shareholders - Basic	$	0.34	$	0.95	$	2.47	$	2.78	Earnings per share attributable to Company shareholders - Basic	$	0.86	$	0.87

Earnings per share attributable to Company shareholders - Diluted	Earnings per share attributable to Company shareholders - Diluted	$	0.34	$	0.95	$	2.46	$	2.77	Earnings per share attributable to Company shareholders - Diluted	$	0.86	$	0.87

Shares of the Company used in computing earnings per share:	Shares of the Company used in computing earnings per share:									Shares of the Company used in computing earnings per share:
Basic	Basic	31,111		32,381		31,416		32,369		Basic	31,131		31,877

Diluted	Diluted	31,223		32,434		31,518		32,424		Diluted	31,217		31,961

Dividends declared per share, Class A and Class B	Dividends declared per share, Class A and Class B	$	0.21	$	0.20	$	0.63	$	0.60	Dividends declared per share, Class A and Class B	$	0.25	$	0.21

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

Index

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in thousands)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net income	Net income	$	10,823	$	30,942	$	78,267	$	89,992	Net income	$	27,086	$	28,075

Other comprehensive income/(loss), before tax:	Other comprehensive income/(loss), before tax:									Other comprehensive income/(loss), before tax:
Foreign currency translation and other adjustments	Foreign currency translation and other adjustments	(38,971)		(14,709)		(79,841)		(16,497)		Foreign currency translation and other adjustments	13,440		(1,551)
Reclassification of loss on pension settlement		42,657		—		42,657		—

Amortization of pension liability adjustments:	Amortization of pension liability adjustments:									Amortization of pension liability adjustments:
Prior service credit	Prior service credit	(1,123)		(1,119)		(3,368)		(3,356)		Prior service credit	(1,031)		(1,123)
Net actuarial loss	Net actuarial loss	967		1,103		2,905		3,320		Net actuarial loss	346		971
Payments and amortization related to interest rate swaps included in earnings	Payments and amortization related to interest rate swaps included in earnings	(106)		1,803		2,758		5,049		Payments and amortization related to interest rate swaps included in earnings	(3,223)		1,696
Derivative valuation adjustment	Derivative valuation adjustment	8,492		722		23,529		369		Derivative valuation adjustment	(662)		11,721

Income taxes related to items of other comprehensive income/(loss):	Income taxes related to items of other comprehensive income/(loss):									Income taxes related to items of other comprehensive income/(loss):
Reclassification of loss on pension settlement		(16,459)		—		(16,459)		—

Amortization of prior service credit	Amortization of prior service credit	344		336		1,031		1,007		Amortization of prior service credit	315		344
Amortization of net actuarial loss	Amortization of net actuarial loss	(296)		(331)		(889)		(996)		Amortization of net actuarial loss	(105)		(297)
Payments and amortization related to interest rate swaps included in earnings	Payments and amortization related to interest rate swaps included in earnings	(27)		(466)		(752)		(1,304)		Payments and amortization related to interest rate swaps included in earnings	815		(430)
Derivative valuation adjustment	Derivative valuation adjustment	(2,151)		(186)		(5,960)		(95)		Derivative valuation adjustment	168		(2,969)
Comprehensive income	Comprehensive income	4,150		18,095		43,878		77,489		Comprehensive income	37,149		36,437
Comprehensive income attributable to the noncontrolling interest	Comprehensive income attributable to the noncontrolling interest	73		(112)		544		(69)		Comprehensive income attributable to the noncontrolling interest	435		394
Comprehensive income attributable to the Company	Comprehensive income attributable to the Company	$	4,077	$	18,207	$	43,334	$	77,558	Comprehensive income attributable to the Company	$	36,714	$	36,043

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

Index

ALBANY INTERNATIONAL CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	276,482	$	302,036	Cash and cash equivalents	$	304,258	$	291,776
Accounts receivable, net	Accounts receivable, net	198,847		191,985		Accounts receivable, net	216,035		200,018
Contract assets, net	Contract assets, net	148,729		112,546		Contract assets, net	153,817		148,695
Inventories	Inventories	133,840		117,882		Inventories	153,777		139,050
Income taxes prepaid and receivable	Income taxes prepaid and receivable	4,055		1,958		Income taxes prepaid and receivable	8,711		7,938
Prepaid expenses and other current assets	Prepaid expenses and other current assets	46,761		32,394		Prepaid expenses and other current assets	52,857		50,962
Total current assets	Total current assets	$	808,714	$	758,801	Total current assets	$	889,455	$	838,439

Property, plant and equipment, net	Property, plant and equipment, net	411,139		436,417		Property, plant and equipment, net	450,254		445,658
Intangibles, net	Intangibles, net	34,306		39,081		Intangibles, net	32,874		33,811
Goodwill	Goodwill	172,820		182,124		Goodwill	179,255		178,217
Deferred income taxes	Deferred income taxes	17,954		26,376		Deferred income taxes	15,843		15,196
Noncurrent receivables, net	Noncurrent receivables, net	28,770		31,849		Noncurrent receivables, net	27,322		27,913
Other assets	Other assets	98,146		81,416		Other assets	100,755		103,021
Total assets	Total assets	$	1,571,849	$	1,556,064	Total assets	$	1,695,758	$	1,642,255

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	Accounts payable	$	65,378	$	68,954	Accounts payable	$	76,241	$	69,707
Accrued liabilities	Accrued liabilities	106,831		124,325		Accrued liabilities	103,986		126,385
Current maturities of long-term debt	Current maturities of long-term debt	—		—		Current maturities of long-term debt	—		—
Income taxes payable	Income taxes payable	17,328		14,887		Income taxes payable	4,464		15,224
Total current liabilities	Total current liabilities	189,537		208,166		Total current liabilities	184,691		211,316

Long-term debt	Long-term debt	447,000		350,000		Long-term debt	491,000		439,000
Other noncurrent liabilities	Other noncurrent liabilities	103,843		107,794		Other noncurrent liabilities	108,371		108,758
Deferred taxes and other liabilities	Deferred taxes and other liabilities	11,281		12,499		Deferred taxes and other liabilities	14,181		15,638
Total liabilities	Total liabilities	751,661		678,459		Total liabilities	798,243		774,712

SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY					SHAREHOLDERS' EQUITY
Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued	Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued	—		—		Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued	—		—
Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,785,434 issued in 2022 and 40,760,577 in 2021		41		41
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; none issued and outstanding in 2022 and 104 in 2021		—		—
Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,842,023 issued in 2023 and 40,785,434 in 2022						Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; 40,842,023 issued in 2023 and 40,785,434 in 2022	41		41
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; none issued and outstanding in 2023 and 2022						Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; none issued and outstanding in 2023 and 2022	—		—
Additional paid in capital	Additional paid in capital	440,295		436,996		Additional paid in capital	441,917		441,540
Retained earnings	Retained earnings	920,966		863,057		Retained earnings	950,415		931,318
Accumulated items of other comprehensive income:	Accumulated items of other comprehensive income:					Accumulated items of other comprehensive income:
Translation adjustments	Translation adjustments	(185,721)		(105,880)		Translation adjustments	(132,970)		(146,851)
Pension and postretirement liability adjustments	Pension and postretirement liability adjustments	(12,613)		(38,490)		Pension and postretirement liability adjustments	(16,699)		(15,783)
Derivative valuation adjustment	Derivative valuation adjustment	17,961		(1,614)		Derivative valuation adjustment	14,805		17,707
Treasury stock (Class A), at cost; 9,674,542 shares in 2022 and 8,665,090 in 2021		(364,923)		(280,143)
Treasury stock (Class A), at cost; 9,674,542 shares in 2023 and 9,674,542 in 2022						Treasury stock (Class A), at cost; 9,674,542 shares in 2023 and 9,674,542 in 2022	(364,923)		(364,923)
Total Company shareholders' equity	Total Company shareholders' equity	816,006		873,967		Total Company shareholders' equity	892,586		863,049
Noncontrolling interest	Noncontrolling interest	4,182		3,638		Noncontrolling interest	4,929		4,494
Total equity	Total equity	820,188		877,605		Total equity	897,515		867,543
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	1,571,849	$	1,556,064	Total liabilities and shareholders' equity	$	1,695,758	$	1,642,255

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

Index

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
OPERATING ACTIVITIES
Net income $ 10,823 $ 30,942 $ 78,267 $ 89,992
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 15,588 15,925 46,864 48,485
Amortization 1,446 2,289 5,044 6,862
Change in deferred taxes and other liabilities (18,178) 1,606 (15,582) 7,022
Impairment of property, plant, equipment, and inventory (52) 25 2,610 563
Non-cash interest expense 279 283 840 593
Non-cash portion of pension settlement expense 42,657 — 42,657 —
Compensation and benefits paid or payable in Class A Common Stock 835 606 3,282 2,232
Provision/(recovery) for credit losses from uncollected receivables and contract assets (441) (1,075) 885 (1,158)
Foreign currency remeasurement (gain)/loss on intercompany loans (5,369) 480 (6,629) (551)
Fair value adjustment on foreign currency options (28) 29 (409) 169
Changes in operating assets and liabilities that provided/(used) cash:
Accounts receivable (5,853) (10,927) (20,260) (14,292)
Contract assets (13,333) (3,473) (37,201) 22,170
Inventories (3,760) 546 (24,895) (9,838)
Prepaid expenses and other current assets 1,741 3,949 (2,733) 2,444
Income taxes prepaid and receivable (2,119) 2,717 (2,179) 2,408
Accounts payable (2,395) (296) 5,081 4,312
Accrued liabilities (879) 5,112 (12,624) (12,311)
Income taxes payable 10,378 2,871 2,639 (1,085)
Noncurrent receivables 1,112 1,245 2,976 2,832
Other noncurrent liabilities (2,708) (1,319) (5,960) (5,582)
Other, net (150) 1,324 4,634 3,232
Net cash provided by operating activities 29,594 52,859 67,307 148,499
INVESTING ACTIVITIES
Purchases of property, plant and equipment (15,289) (8,918) (50,948) (31,754)
Purchased software (1,518) (106) (1,884) (394)
Net cash used in investing activities (16,807) (9,024) (52,832) (32,148)
FINANCING ACTIVITIES
Proceeds from borrowings 10,000 — 145,000 8,000
Principal payments on debt (48,000) — (48,000) (56,009)
Principal payments on finance lease liabilities — (363) (654) (1,067)
Purchase of Treasury shares — — (84,780) —
Taxes paid in lieu of share issuance — — (770) (998)
Proceeds from options exercised 10 4 17 153
Dividends paid (6,533) (6,476) (19,932) (19,418)
Net cash used in financing activities (44,523) (6,835) (9,119) (69,339)
Effect of exchange rate changes on cash and cash equivalents (12,652) (4,113) (30,910) (2,111)
(Decrease)/increase in cash and cash equivalents (44,388) 32,887 (25,554) 44,901
Cash and cash equivalents at beginning of period 320,870 253,330 302,036 241,316
Cash and cash equivalents at end of period $ 276,482 $ 286,217 $ 276,482 $ 286,217

~~Index~~


	Three Months Ended March 31,
	2023		2022
OPERATING ACTIVITIES
Net income	$	27,086	$	28,075
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	15,864		15,597
Amortization	1,503		2,165
Change in deferred taxes and other liabilities	(887)		1,792
Impairment of property, plant, equipment, and inventory	100		2,868
Non-cash interest expense	280		282

Compensation and benefits paid or payable in Class A Common Stock	378		745
Provision/(recovery) for credit losses from uncollected receivables and contract assets	309		1,858
Foreign currency remeasurement (gain)/loss on intercompany loans	(1,732)		(2,385)
Fair value adjustment on foreign currency options	58		(977)

Changes in operating assets and liabilities that provided/(used) cash:
Accounts receivable	(13,702)		(15,674)
Contract assets	(4,403)		272
Inventories	(12,360)		(7,549)
Prepaid expenses and other current assets	(2,191)		(1,976)
Income taxes prepaid and receivable	(693)		1,829
Accounts payable	5,214		(375)
Accrued liabilities	(23,137)		(19,350)
Income taxes payable	(10,996)		(10,890)
Noncurrent receivables	867		614
Other noncurrent liabilities	7		(1,914)
Other, net	2,042		(398)
Net cash used in operating activities	(16,393)		(5,391)

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(16,275)		(15,719)
Purchased software	—		(35)
Net cash used in investing activities	(16,275)		(15,754)

FINANCING ACTIVITIES
Proceeds from borrowings	58,000		77,000
Principal payments on debt	(6,000)		—
Principal payments on finance lease liabilities	—		(390)
Purchase of Treasury shares	—		(42,230)
Taxes paid in lieu of share issuance	(3,136)		(770)
Proceeds from options exercised	—		7
Dividends paid	(7,778)		(6,742)
Net cash provided by financing activities	41,086		26,875

Effect of exchange rate changes on cash and cash equivalents	4,064		(351)

Increase in cash and cash equivalents	12,482		5,379
Cash and cash equivalents at beginning of period	291,776		302,036
Cash and cash equivalents at end of period	$	304,258	$	307,415

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

Index

ALBANY INTERNATIONAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Significant Accounting Policies

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of results for such periods. Albany International Corp. ~~(Albany,~~("Albany", the ~~Registrant,~~"Registrant", the ~~Company, we, us,~~"Company", "we", "us", or ~~our)~~"our") consolidates the financial results of its subsidiaries for all periods presented. The results for any interim period are not necessarily indicative of results for the full year.

The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in ~~Albany International Corp.’s~~the Company's Consolidated Financial Statements and accompanying Notes. Actual results could differ materially from those estimates.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Albany International Corp.’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

2. Reportable Segments and Revenue Recognition

In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments.

Machine Clothing:

The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate.

We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.

Albany Engineered Composites:

The Albany Engineered Composites (“AEC”) segment provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, the SAFRAN Group (“~~Safran”~~SAFRAN”) owns a 10 percent noncontrolling interest. AEC, through ASC, is the exclusive supplier of the LEAP program of advanced composite fan blades and fan cases under a long-term supply ~~contract.~~contract, where revenue is determined by a cost-plus-fee agreement. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft . AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM's LEAP engine) accounted for approximately 1216 percent of the Company's consolidated Net sales in ~~2021.~~2022. AEC net sales to ~~Safran~~SAFRAN were ~~$125.4~~$45.3 million and ~~$81.6~~$40.4 million in the first ~~nine~~three months of ~~2022~~2023 and ~~2021,~~2022, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from ~~Safran~~SAFRAN amounted to ~~$76.4~~$80.2 million and ~~$79.6~~$80.8 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Other significant programs by AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing 7-Series programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine. In ~~2021,~~2022, approximately 4746 percent of AEC sales were related to U.S. government contracts or programs.

Index

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Net sales	Net sales									Net sales
Machine Clothing	Machine Clothing	$	153,389	$	154,171	$	459,121	$	462,298	Machine Clothing	$	153,222	$	154,062
Albany Engineered Composites	Albany Engineered Composites	107,174		78,271		306,980		227,024		Albany Engineered Composites	115,874		90,107
Consolidated total	Consolidated total	$	260,563	$	232,442	$	766,101	$	689,322	Consolidated total	$	269,096	$	244,169
Operating income/(loss)	Operating income/(loss)									Operating income/(loss)
Machine Clothing	Machine Clothing	$	57,247	$	55,467	$	161,752	$	161,731	Machine Clothing	$	48,964	$	49,644
Albany Engineered Composites	Albany Engineered Composites	9,958		2,917		20,688		13,019		Albany Engineered Composites	9,418		1,195
Corporate expenses	Corporate expenses	(13,561)		(13,898)		(39,327)		(38,479)		Corporate expenses	(17,840)		(12,085)
Operating income	Operating income	$	53,644	$	44,486	$	143,113	$	136,271	Operating income	$	40,542	$	38,754
Reconciling items:	Reconciling items:									Reconciling items:
Interest income	Interest income	(965)		(654)		(2,463)		(1,584)		Interest income	(1,102)		(652)
Interest expense	Interest expense	4,759		4,388		13,799		13,105		Interest expense	4,392		4,261
Pension settlement expense		49,128		—		49,128		—
AMJP grant		—		(5,832)		—		(5,832)

Other (income)/expense, net	Other (income)/expense, net	(6,918)		2,753		(17,891)		4,215		Other (income)/expense, net	(455)		(3,928)
Income before income taxes	Income before income taxes	$	7,640	$	43,831	$	100,540	$	126,367	Income before income taxes	$	37,707	$	39,073

A subsidiary within our Machine Clothing segment has been a partner in a joint venture (“JV”) that supplies paper machine clothing products to local papermakers in Russia. In March 2022, we made the decision to cease doing business in Russia, including giving notice to our JV partner of our intent to exit the venture. As a result, we recognized $1.6 million expense in the consolidated statement of operations, representing reserves against the risk of uncollectible customer receivables and obsolescence of certain inventory destined for Russian customers. We also wrote down the net book value of our investment in the aforementioned JV to reflect our intent to exit such venture, resulting in $0.8 million impairment loss during the first quarter of 2022.

In the third quarter, we took actions to settle certain pension plan liabilities in the U.S., leading to charges totaling $49.1 million, which were included as Corporate expenses and other. This led to a reduction of unfunded pension liabilities of $6.2 million.

Revenue Recognition:

Products and services provided under long-term contracts represent a significant portion of sales in the Albany Engineered Composites segment and we account for these contracts over time, primarily using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other ~~factors.~~factors. Changes in the estimated profitability of long-term contracts ~~increased~~decreased operating income by ~~$2.6~~$0.7 million ~~for the third quarter of 2022 and $2.0 million for~~during the first ~~nine~~three months of ~~2022. Adjustments~~2023, compared to a decrease of $0.7 million in the ~~estimated profitability of long-term contracts increased operating income by $2.1 million and $2.4 million for the three and nine month periods ended September 30, 2021, respectively.~~same period last year.

Index

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

The following table disaggregates revenue for each product group by timing of revenue recognition:


		Three months ended September 30, 2022							Three months ended March 31, 2023
(in thousands)	(in thousands)	Point in Time Revenue Recognition		Over Time Revenue Recognition		Total		(in thousands)	Point in Time Revenue Recognition		Over Time Revenue Recognition		Total
Machine Clothing	Machine Clothing	$	152,490	$	899	$	153,389	Machine Clothing	$	152,278	$	944	$	153,222

Albany Engineered Composites	Albany Engineered Composites							Albany Engineered Composites
ASC	ASC	—		41,463		41,463		ASC	—		44,532		44,532
Other AEC	Other AEC	5,819		59,892		65,711		Other AEC	5,793		65,549		71,342
Total Albany Engineered Composites	Total Albany Engineered Composites	5,819		101,355		107,174		Total Albany Engineered Composites	5,793		110,081		115,874

Total revenue	Total revenue	$	158,309	$	102,254	$	260,563	Total revenue	$	158,071	$	111,025	$	269,096


		Three months ended September 30, 2021							Three months ended March 31, 2022
(in thousands)	(in thousands)	Point in Time Revenue Recognition		Over Time Revenue Recognition		Total		(in thousands)	Point in Time Revenue Recognition		Over Time Revenue Recognition		Total
Machine Clothing	Machine Clothing	$	153,306	$	865	$	154,171	Machine Clothing	$	153,163	$	899	$	154,062

Albany Engineered Composites	Albany Engineered Composites							Albany Engineered Composites
ASC	ASC	—		26,904		26,904		ASC	—		39,712		39,712
Other AEC	Other AEC	3,589		47,778		51,367		Other AEC	3,913		46,482		50,395
Total Albany Engineered Composites	Total Albany Engineered Composites	3,589		74,682		78,271		Total Albany Engineered Composites	3,913		86,194		90,107

Total revenue	Total revenue	$	156,895	$	75,547	$	232,442	Total revenue	$	157,076	$	87,093	$	244,169

Nine months ended September 30, 2022
(in thousands) Point in Time Revenue
Recognition Over Time Revenue
Recognition Total
Machine Clothing $ 456,423 $ 2,698 $ 459,121
Albany Engineered Composites
ASC — 122,836 122,836
Other AEC 14,750 169,394 184,144
Total Albany Engineered Composites 14,750 292,230 306,980
Total revenue $ 471,173 $ 294,928 $ 766,101

~~Index~~

Nine months ended September 30, 2021
(in thousands) Point in Time Revenue
Recognition Over Time Revenue
Recognition Total
Machine Clothing $ 459,703 $ 2,595 $ 462,298
Albany Engineered Composites
ASC — 80,158 80,158
Other AEC 11,901 134,965 146,866
Total Albany Engineered Composites 11,901 215,123 227,024
Total revenue $ 471,604 $ 217,718 $ 689,322

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Americas PMC	Americas PMC	$	83,124	$	81,780	$	240,173	$	237,425	Americas PMC	$	83,378	$	76,616
Eurasia PMC	Eurasia PMC	49,828		53,277		157,751		164,320		Eurasia PMC	51,737		55,486
Engineered Fabrics	Engineered Fabrics	20,437		19,114		61,197		60,553		Engineered Fabrics	18,107		21,960
Total Machine Clothing Net sales	Total Machine Clothing Net sales	$	153,389	$	154,171	$	459,121	$	462,298	Total Machine Clothing Net sales	$	153,222	$	154,062

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year. Most contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled ~~$600~~$821 million and ~~$155~~$263 million as of ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of ~~September 30, 2022,~~March 31, 2023, we expect to recognize as revenue approximately ~~$46 million during 2022, $124~~$126 million during 2023, ~~$107~~$135 million during 2024, $129 million during 2025, and the remainder thereafter.

Index

3. Pensions and Other Postretirement Benefit Plans

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

The composition of the net periodic benefit cost for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ was as follows:


		Pension plans				Other postretirement benefits					Pension plans				Other postretirement benefits
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022		2023		2022
Components of net periodic benefit cost:	Components of net periodic benefit cost:									Components of net periodic benefit cost:
Service cost	Service cost	$	1,061	$	1,630	$	86	$	99	Service cost	$	281	$	355	$	15	$	29
Interest cost	Interest cost	4,235		3,999		916		827		Interest cost	1,063		1,417		468		305
Expected return on assets	Expected return on assets	(5,099)		(4,802)		—		—		Expected return on assets	(971)		(1,706)		—		—
Amortization of prior service cost/(credit)	Amortization of prior service cost/(credit)	(2)		10		(3,366)		(3,366)		Amortization of prior service cost/(credit)	(8)		(1)		(1,023)		(1,122)
Amortization of net actuarial loss	Amortization of net actuarial loss	1,493		1,625		1,412		1,695		Amortization of net actuarial loss	139		500		207		471
Net periodic benefit cost/(credit)	Net periodic benefit cost/(credit)	$	1,688	$	2,462	$	(952)	$	(745)	Net periodic benefit cost/(credit)	$	504	$	565	$	(333)	$	(317)
Settlement charge		49,128		—		—		—
Net benefit cost/(credit)		$	50,816	$	2,462	$	(952)	$	(745)

The amount of net benefit cost/(credit) is determined at the beginning of each year and generally only varies from quarter to quarter when a significant event occurs, such as a curtailment or a settlement. ~~In the third quarter, we took actions to settle certain pension plan liabilities for a plan~~There were no such events in the ~~U.S., leading to charges totaling $49.1 million. No similar charges were incurred in the prior year.~~first three months of 2023 or 2022.

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

4. Other (Income)/Expense, net

The components of Other (Income)/Expense, net are:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Currency transaction (gains)/losses	Currency transaction (gains)/losses	$	(6,636)	$	472	$	(17,660)	$	813	Currency transaction (gains)/losses	$	60	$	(3,741)
Bank fees and amortization of debt issuance costs	Bank fees and amortization of debt issuance costs	76		74		252		284		Bank fees and amortization of debt issuance costs	59		96
Components of net periodic pension and postretirement cost other than service cost	Components of net periodic pension and postretirement cost other than service cost	(138)		(6)		(411)		(12)		Components of net periodic pension and postretirement cost other than service cost	(125)		(136)
Other	Other	(220)		2,213		(72)		3,130		Other	(449)		(147)
Total	Total	$	(6,918)	$	2,753	$	(17,891)	$	4,215	Total	$	(455)	$	(3,928)

Other (income)/expense, net, included foreign currency ~~gains~~losses of ~~$6.6 million and $17.7~~$0.1 million in the first three ~~and nine month periods ended September 30, 2022, respectively,~~months of 2023, as compared to ~~losses~~gains of ~~$0.5 million and $0.8~~$3.7 million in the ~~three and nine month periods ended September 30, 2021, respectively.~~same period last year. The weaker Euro and Renminbi during the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2022~~March 31, 2023 led to ~~the gains~~a net loss on foreign currency related transactions, ~~during such periods.~~compared to a stronger Euro and Renminbi in the same period last year.

108

Index

5. Income Taxes

The following table presents components of income tax expense for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands, except percentages)	(in thousands, except percentages)	2022		2021		2022		2021		(in thousands, except percentages)	2023		2022
Income tax based on income from continuing operations (1)	Income tax based on income from continuing operations (1)	$	2,208	$	13,150	$	28,315	$	37,733	Income tax based on income from continuing operations (1)	$	11,058	$	10,942
Provision for change in estimated tax rate	Provision for change in estimated tax rate	674		397		740		179		Provision for change in estimated tax rate	—		—
Income tax before discrete items	Income tax before discrete items	2,882		13,547		29,055		37,912		Income tax before discrete items	11,058		10,942
Discrete tax expense:	Discrete tax expense:									Discrete tax expense:
Exercise of U.S. stock options	Exercise of U.S. stock options	(9)		(4)		(17)		(160)		Exercise of U.S. stock options	—		(9)
Impact of amended tax returns	Impact of amended tax returns	—		—		(98)		—		Impact of amended tax returns	—		(81)
True-up of prior year estimated taxes	True-up of prior year estimated taxes	(1,185)		(674)		(1,693)		(2,095)		True-up of prior year estimated taxes	(545)		104
Enacted tax legislation and rate change	Enacted tax legislation and rate change	—		—		—		352		Enacted tax legislation and rate change	313		—
Provision for/resolution of tax audits and contingencies, net	Provision for/resolution of tax audits and contingencies, net	24		—		(116)		278		Provision for/resolution of tax audits and contingencies, net	28		6
US Pension Settlement - Release of Residual Tax Effect		(5,217)		—		(5,217)		—
Impact of long range tax planning										Impact of long range tax planning	(443)		—
Other	Other	322		20		359		88		Other	210		36
Total income tax expense/(benefit)	Total income tax expense/(benefit)	$	(3,183)	$	12,889	$	22,273	$	36,375	Total income tax expense/(benefit)	$	10,621	$	10,998
(1) Calculated at estimated annual tax rates of 28.9% and 30.0% for the three and nine months ended September 30, 2022 and 2021.
(1) Calculated at estimated annual tax rates of 29.3% and 28.0%, respectively.										(1) Calculated at estimated annual tax rates of 29.3% and 28.0%, respectively.

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

The Company's policy for releasing income tax effects from accumulated other comprehensive income is the specific identification approach, whereas these items are released to income tax expense when the individual items are disposed of, terminated or extinguished.

The Tax Cuts and Jobs Act lowered the U.S. corporate tax rate from 35% to 21% as of December 31, 2017, creating residual tax effects as a result of the remeasurement of deferred tax assets and liabilities originally established in other comprehensive income. As a result of the U.S. pension liability settlement (see Note 3), and consistent with the Company's policy, in the third quarter of 2022, the Company recorded a net tax benefit of $5.2 million for the release of the residual tax effects within other comprehensive income related to the U.S. pension settlement.

~~Index~~

6. Earnings Per Share

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands, except market price and earnings per share)	(in thousands, except market price and earnings per share)	2022		2021		2022		2021		(in thousands, except market price and earnings per share)	2023		2022
Net income attributable to the Company	Net income attributable to the Company	$	10,694	$	30,862	$	77,632	$	89,842	Net income attributable to the Company	$	26,889	$	27,737

Weighted average number of shares:	Weighted average number of shares:									Weighted average number of shares:
Weighted average number of shares used in calculating basic net income per share	Weighted average number of shares used in calculating basic net income per share	31,111		32,381		31,416		32,369		Weighted average number of shares used in calculating basic net income per share	31,131		31,877
Effect of dilutive stock-based compensation plans:	Effect of dilutive stock-based compensation plans:									Effect of dilutive stock-based compensation plans:
Stock options	Stock options	—		1		—		2		Stock options	—		—
RSU and MPP shares	RSU and MPP shares	112		52		102		53		RSU and MPP shares	86		84

Weighted average number of shares used in calculating diluted net income per share	Weighted average number of shares used in calculating diluted net income per share	31,223		32,434		31,518		32,424		Weighted average number of shares used in calculating diluted net income per share	31,217		31,961

Average market price of common stock used for calculation of dilutive shares		$	86.00	$	80.33	$	84.53	$	82.41

Net income attributable to the Company per share:	Net income attributable to the Company per share:									Net income attributable to the Company per share:
Basic	Basic	$	0.34	$	0.95	$	2.47	$	2.78	Basic	$	0.86	$	0.87
Diluted	Diluted	$	0.34	$	0.95	$	2.46	$	2.77	Diluted	$	0.86	$	0.87

Index

7. Accumulated Other Comprehensive Income ~~(AOCI)~~("AOCI")

The table below presents changes in the components of AOCI for the period December 31, ~~2021~~2022 to ~~September 30, 2022:~~March 31, 2023:

(in thousands)
Translation
adjustments
Pension and
postretirement
liability
adjustments
Derivative
valuation
adjustment
Total Other
Comprehensive
Income
December 31, 2021 $ (105,880) $ (38,490) $ (1,614) $ (145,984)
Other comprehensive income/(loss) before reclassifications, net of tax (79,841) — 17,569 (62,272)
Pension settlement expense, net of tax — 26,198 — 26,198
Interest expense related to swaps reclassified to the Consolidated Statements of Income, net of tax — — 2,006 2,006
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax — (321) — (321)
Net current period other comprehensive income (79,841) 25,877 19,575 (34,389)
September 30, 2022 $ (185,721) $ (12,613) $ 17,961 $ (180,373)

~~Index~~


(in thousands)	Translation adjustments		Pension and postretirement liability adjustments		Derivative valuation adjustment		Total Other Comprehensive Income
December 31, 2022	$	(146,851)	$	(15,783)	$	17,707	$	(144,927)
Other comprehensive income/(loss) before reclassifications, net of tax	13,881		(441)		(494)		12,946

Interest expense related to swaps reclassified to the Consolidated Statements of Income, net of tax	—		—		(2,408)		(2,408)
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax	—		(475)		—		(475)
Net current period other comprehensive income	13,881		(916)		(2,902)		10,063
March 31, 2023	$	(132,970)	$	(16,699)	$	14,805	$	(134,864)

The table below presents changes in the components of AOCI for the period December 31, ~~2020~~2021 to ~~September 30, 2021:~~March 31, 2022:


(in thousands)	(in thousands)	Translation adjustments		Pension and postretirement liability adjustments		Derivative valuation adjustment		Total Other Comprehensive Income		(in thousands)	Translation adjustments		Pension and postretirement liability adjustments		Derivative valuation adjustment		Total Other Comprehensive Income
December 31, 2020		$	(83,203)	$	(39,661)	$	(9,544)	$	(132,408)
December 31, 2021										December 31, 2021	$	(105,880)	$	(38,490)	$	(1,614)	$	(145,984)
Other comprehensive income/(loss) before reclassifications, net of tax	Other comprehensive income/(loss) before reclassifications, net of tax	(17,124)		627		274		(16,223)		Other comprehensive income/(loss) before reclassifications, net of tax	(1,730)		179		8,752		7,201
Interest expense related to swaps reclassified to the Consolidated Statements of Income, net of tax	Interest expense related to swaps reclassified to the Consolidated Statements of Income, net of tax	—		—		3,745		3,745		Interest expense related to swaps reclassified to the Consolidated Statements of Income, net of tax	—		—		1,266		1,266
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax	Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax	—		(25)		—		(25)		Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax	—		(105)		—		(105)
Net current period other comprehensive income	Net current period other comprehensive income	(17,124)		602		4,019		(12,503)		Net current period other comprehensive income	(1,730)		74		10,018		8,362
September 30, 2021		$	(100,327)	$	(39,059)	$	(5,525)	$	(144,911)
March 31, 2022										March 31, 2022	$	(107,610)	$	(38,416)	$	8,404	$	(137,622)

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

Index

The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the ~~Statement~~Consolidated Statements of Income that were affected for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:	Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:									Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:
Expense/(income) related to interest rate swaps included in Income before taxes ~~(a)~~	Expense/(income) related to interest rate swaps included in Income before taxes ~~(a)~~	$	(106)	$	1,803	$	2,758	$	5,049	Expense/(income) related to interest rate swaps included in Income before taxes ~~(a)~~	$	(3,223)	$	1,696
Income tax effect	Income tax effect	(27)		(466)		(752)		(1,304)		Income tax effect	815		(430)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$	(133)	$	1,337	$	2,006	$	3,745	Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$	(2,408)	$	1,266

Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:	Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:									Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:
Pension settlement expense		42,657		—		42,657		—

Amortization of prior service credit	Amortization of prior service credit	(1,123)		(1,119)		(3,368)		(3,356)		Amortization of prior service credit	(1,031)		(1,123)
Amortization of net actuarial loss	Amortization of net actuarial loss	967		1,103		2,905		3,320		Amortization of net actuarial loss	346		971
Total pretax amount reclassified ~~(b)~~(a)	Total pretax amount reclassified ~~(b)~~(a)	42,501		(16)		42,194		(36)		Total pretax amount reclassified ~~(b)~~(a)	(685)		(152)
Income tax effect	Income tax effect	(16,411)		5		(16,317)		11		Income tax effect	210		47
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$	26,090	$	(11)	$	25,877	$	(25)	Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$	(475)	$	(105)

(a)~~Included in Interest expense, net are payments related to the interest rate swap agreements and amortization of swap buyouts (see Notes 13 and 14).~~

~~(b)~~These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 3).

8. Noncontrolling Interest

Effective October 31, 2013, Safran S.A. (Safran) acquired a 10 percent equity interest in a new Albany subsidiary, Albany Safran Composites, LLC ~~(ASC)~~("ASC"). The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiary, Albany Safran Composites, LLC:

~~Index~~


		Nine months ended September 30,							Three months ended March 31,
(in thousands, except percentages)	(in thousands, except percentages)	2022			2021			(in thousands, except percentages)	2023			2022
Net income of Albany Safran Composites (ASC)	Net income of Albany Safran Composites (ASC)	$	7,320		$	2,495		Net income of Albany Safran Composites (ASC)	$	2,282		$	3,702
Less: Return attributable to the Company's preferred holding	Less: Return attributable to the Company's preferred holding	974			991			Less: Return attributable to the Company's preferred holding	308			319
Net income of ASC available for common ownership	Net income of ASC available for common ownership	$	6,346		$	1,504		Net income of ASC available for common ownership	$	1,974		$	3,383
Ownership percentage of noncontrolling shareholder	Ownership percentage of noncontrolling shareholder	10		%	10		%	Ownership percentage of noncontrolling shareholder	10		%	10		%
Net income attributable to the noncontrolling interest	Net income attributable to the noncontrolling interest	$	635		$	150		Net income attributable to the noncontrolling interest	$	197		$	338

Noncontrolling interest, beginning of year	Noncontrolling interest, beginning of year	$	3,638		$	3,799		Noncontrolling interest, beginning of year	$	4,494		$	3,638
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	635			150			Net income attributable to noncontrolling interest	197			338
Changes in other comprehensive income attributable to the noncontrolling interest	Changes in other comprehensive income attributable to the noncontrolling interest	(91)			(219)			Changes in other comprehensive income attributable to the noncontrolling interest	238			56
Noncontrolling interest, end of interim period	Noncontrolling interest, end of interim period	$	4,182		$	3,730		Noncontrolling interest, end of interim period	$	4,929		$	4,032

Index

9. Accounts Receivable

Accounts receivable includes trade receivables. In connection with certain sales in Asia, the Company accepts a bank promissory note as customer payment. The notes may be presented for payment at maturity, which is less than one year. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, Accounts receivable consisted of the following:


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
Trade and other accounts receivable	Trade and other accounts receivable	$	179,734	$	168,046	Trade and other accounts receivable	$	199,290	$	179,676
Bank promissory notes	Bank promissory notes	21,654		26,284		Bank promissory notes	20,196		23,439
Allowance for expected credit losses	Allowance for expected credit losses	(2,541)		(2,345)		Allowance for expected credit losses	(3,451)		(3,097)
Accounts receivable, net	Accounts receivable, net	$	198,847	$	191,985	Accounts receivable, net	$	216,035	$	200,018

The Company has Noncurrent receivables in the AEC segment that represent revenue earned, which has extended payment terms. The Noncurrent receivables will be invoiced to the customer over a 10-year period, which began in 2020. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, Noncurrent receivables consisted of the following:


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
Noncurrent receivables	Noncurrent receivables	$	28,914	$	32,049	Noncurrent receivables	$	27,459	$	28,053
Allowance for expected credit losses	Allowance for expected credit losses	(144)		(200)		Allowance for expected credit losses	(137)		(140)
Noncurrent receivables, net	Noncurrent receivables, net	$	28,770	$	31,849	Noncurrent receivables, net	$	27,322	$	27,913

10. Contract Assets and Liabilities

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

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

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, Contract assets and Contract liabilities consisted of the following:

~~Index~~


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
Contract assets	Contract assets	$	149,477	$	113,249	Contract assets	$	154,589	$	149,443
Allowance for expected credit losses	Allowance for expected credit losses	(748)		(703)		Allowance for expected credit losses	(772)		(748)
Contract assets, net	Contract assets, net	$	148,729	$	112,546	Contract assets, net	$	153,817	$	148,695

Contract liabilities	Contract liabilities	$	5,672	$	6,959	Contract liabilities	$	12,310	$	15,176

Contract assets increased ~~$36.2~~$5.1 million during the ~~nine-month~~three-month period ended ~~September 30, 2022.~~March 31, 2023. The increase was primarily due to an increase in unbilled revenue related to the satisfaction of performance obligations, in excess of the amounts billed to customers for contracts that were in a contract asset position. There were no impairment losses related to our Contract assets during the ~~nine~~three month periods ended ~~September 30, 2022~~March 31, 2023 and ~~September 30, 2021.~~March 31, 2022.

Contract liabilities decreased ~~$1.3~~$2.9 million during the ~~nine-month~~three-month period ended ~~September 30, 2022,~~March 31, 2023, primarily due to revenue recognized from satisfied performance obligations exceeding amounts invoiced to customers that were in a contract liability position. Revenue recognized for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ that was included in the Contract liability balance at the beginning of the year was ~~$5.0~~$6.7 million and ~~$5.3~~$4.8 million, respectively.

Index

11. Inventories

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

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, Inventories consisted of the following:


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
Raw materials	Raw materials	$	66,911	$	58,689	Raw materials	$	81,611	$	74,631
Work in process	Work in process	51,756		44,839		Work in process	56,537		50,516
Finished goods	Finished goods	15,173		14,354		Finished goods	15,629		13,903
Total inventories	Total inventories	$	133,840	$	117,882	Total inventories	$	153,777	$	139,050

12. Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually. Our reportable segments are consistent with our operating segments.

In the second quarter of 2022, management applied the qualitative assessment approach in performing its annual evaluation of goodwill for the Company's Machine Clothing reporting unit and two AEC reporting units and concluded that each reporting unit’s fair value continued to exceed its carrying value. In addition, there were no amounts at risk due to the estimated excess between the fair and carrying values. Accordingly, no impairment charges were recorded.

When a quantitative assessment is performed, determining the fair value of a reporting unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates, and future market conditions, among others. Goodwill and other long-lived assets are reviewed for impairment whenever events, such as significant changes in the business climate, plant closures, changes in product offerings, or other circumstances indicate that the carrying amount may not be recoverable.

~~Index~~

To determine fair value, we utilize two market-based approaches and an income approach. Under the market-based approaches, we utilize information regarding the Company, as well as publicly available industry information, to determine earnings multiples and sales multiples. Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.

13. Financial Instruments

Long-term debt, principally to banks and noteholders, consists of:


(in thousands, except interest rates)	(in thousands, except interest rates)	September 30, 2022		December 31, 2021		(in thousands, except interest rates)	March 31, 2023		December 31, 2022
Revolving credit agreement with borrowings outstanding at an end of period interest rate of 3.87% in 2022 and 3.74% in 2021 (including the effect of interest rate hedging transactions, as described below), due in 2024		$	447,000	$	350,000
Revolving credit agreement with borrowings outstanding at an end of period interest rate of 3.58% in 2023 and 3.16% in 2022 (including the effect of interest rate hedging transactions, as described below), due in 2024						Revolving credit agreement with borrowings outstanding at an end of period interest rate of 3.58% in 2023 and 3.16% in 2022 (including the effect of interest rate hedging transactions, as described below), due in 2024	$	491,000	$	439,000

We had no current maturities of Long-term debt as of ~~September 30, 2022~~March 31, 2023 or December 31, ~~2021.~~2022.

Index

On October 27, 2020, we entered into a $700 million unsecured Four-Year Revolving Credit Facility Agreement (the “Credit Agreement”) which amended and restated the prior amended and restated $685 million Five-Year Revolving Credit Facility Agreement, ~~which we had~~ entered into on November 7, 2017 (the “Prior Agreement”). Under the Credit Agreement, ~~$447~~$491 million of borrowings were outstanding as of ~~September 30, 2022.~~March 31, 2023. The applicable interest rate for borrowings was LIBOR plus a spread, based on our leverage ratio (as defined in the Credit Agreement) at the time of borrowing. At the time of the last borrowing on ~~September 26,~~March 30, 2022, the spread was 1.625%. The spread was based on a pricing grid, which ranged from 1.500% to 2.000%, based on our leverage ratio. Based on our maximum leverage ratio and our Consolidated EBITDA (as defined in the Credit Agreement), and without modification to any other credit agreements, as of ~~September 30, 2022,~~March 31, 2023, we would have been able to borrow an additional ~~$253~~$209 million under the Agreement.

The Credit Agreement contains customary terms, as well as affirmative covenants, negative covenants and events of default that are comparable to those in the Prior Agreement. The Borrowings are guaranteed by certain of the Company’s subsidiaries.

Our ability to borrow additional amounts under the Credit Agreement is conditional upon the absence of any defaults, as well as the absence of any material adverse change (as defined in the Credit Agreement).

On June 14, 2021, we entered into interest rate swap agreements for the period October 17, 2022 through October 27, 2024. These transactions have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $350 million of indebtedness, drawn under the Credit Agreement at the rate of 0.838% during the period. Under the terms of these transactions, we pay the fixed rate of 0.838% and the counterparties pay a floating rate based on the one-month LIBOR rate at each monthly calculation date. The monthly calculation date is the 16th ~~day~~ of each month, and on ~~September~~March 16, ~~2022,~~2023, one-month LIBOR was ~~2.94%~~4.73%. On March 16, 2023, the all-in-rate on the $350 million of debt was 2.463%.

On ~~November 28, 2017, we entered into~~October 17, 2022, our interest rate swap agreements ~~for the period~~that were in effect from December 18, 2017 ~~through October 17, 2022.~~terminated. These transactions ~~have~~had the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $350 million of indebtedness drawn under the Credit Agreement at the rate of 2.11% during the period. Under the terms of ~~these~~those transactions, we ~~pay~~paid the fixed rate of 2.11% and the counterparties ~~pay~~paid a floating rate based on the one-month LIBOR rate at each monthly calculation date. The ~~monthly calculation date is the 16th day of each month, and on September 16, 2022, one-month LIBOR was 2.94%. On September 16, 2022, the~~ all-in-rate on the $350 million of debt was 3.735%.

These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14. No cash collateral was received or pledged in relation to the swap agreements.

Under the Credit Agreement, we are ~~currently~~ required to maintain a leverage ~~ratio~~and minimum interest coverage ratios (as defined in the ~~agreement)~~Credit Agreement) of not greater than 3.50 to 1.00 and ~~minimum interest coverage (as defined) of~~greater than 3.00 to ~~1.00.~~1.00, respectively.

As of ~~September 30, 2022,~~March 31, 2023, our leverage ratio was ~~1.22~~1.47 to 1.00 and our interest coverage ratio was ~~15.79~~14.76 to 1.00. We may purchase our Common Stock or pay dividends to the extent our leverage ratio remains at or below 3.50 to 1.00, and may make acquisitions with cash, provided our leverage ratio does not exceed the limits noted above.

~~Index~~

Indebtedness under the Credit Agreement is ranked equally in right of payment to all unsecured senior debt. We were in compliance with all debt covenants as of ~~September 30, 2022.~~March 31, 2023.

Currently, our Credit Agreement and certain of our derivative instruments reference one-month USD LIBOR-based rates, which are set to discontinue after June 30, 2023. Regulators in the U.S. and other jurisdictions have been working to replace these rates with alternative reference interest rates that are supported by transactions in liquid and observable markets, such as the Secured Overnight Financing Rate ~~(SOFR) for USD LIBOR.~~("SOFR"). Our Credit Agreement contains provisions specifying alternative interest rate calculations to be employed when LIBOR ceases to be available as a benchmark and we have adhered to the ISDA IBOR Fallbacks Protocol, which will govern our derivatives upon the final cessation of USD LIBOR. ~~ASU 2020-04,~~Amendments to the Reference Rate Reform ~~helps~~standard have helped limit the accounting impact from contract modifications, including hedging relationships, due to the transition from LIBOR to alternative reference rates that are completed by December 31, ~~2022.~~2024. We adopted certain provisions of ~~ASU 2020-04~~this standard during 2021. While we currently do not expect a significant impact to our operating results, financial position or cash flows from the transition from LIBOR to alternative reference interest rates, we will continue to monitor the impact of this transition until it is completed.

Index

14. Fair-Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting principles establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Level 3 inputs are unobservable data points for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability. We had no Level 3 financial assets or liabilities at ~~September 30, 2022,~~March 31, 2023, or at December 31, ~~2021.~~2022.

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


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		Quoted prices in active markets		Significant other observable inputs		Quoted prices in active markets		Significant other observable inputs			Quoted prices in active markets		Significant other observable inputs		Quoted prices in active markets		Significant other observable inputs
(in thousands)	(in thousands)	(Level 1)		(Level 2)		(Level 1)		(Level 2)		(in thousands)	(Level 1)		(Level 2)		(Level 1)		(Level 2)
Fair Value	Fair Value									Fair Value
Assets:	Assets:									Assets:
Cash equivalents	Cash equivalents	$	28,819	$	—	$	20,665	$	—	Cash equivalents	$	4,317	$	—	$	6,533	$	—
Other Assets:	Other Assets:									Other Assets:
Common stock of unaffiliated foreign public company (a)	Common stock of unaffiliated foreign public company (a)	558		—		702		—		Common stock of unaffiliated foreign public company (a)	601		—		602		—
Interest rate swaps	Interest rate swaps			23,987		—		3,328		Interest rate swaps			19,784		—		23,605
Liabilities:
Interest rate swaps		—		—		—		(5,176)

(a)Original cost basis $0.5 million.

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

The interest rate swaps are accounted for as hedges of future cash flows. The fair value of our interest rate swaps are derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve, and is included in Other assets and/or Other noncurrent liabilities in the Consolidated Balance Sheets. Amounts determined to be due within one year are reclassified to Other current assets and/or Accrued liabilities in the Consolidated Balance Sheets. Unrealized gains and losses on the interest rate swaps flow through the caption Derivative valuation adjustment in the Shareholders’ equity section of the Consolidated Balance Sheets. As of ~~September 30, 2022,~~March 31, 2023, these interest rate swaps were determined to be highly effective hedges of interest rate cash flow risk. Amounts accumulated in Other comprehensive income are reclassified as Interest expense, net when the related interest payments (that is, the hedged forecasted transactions), ~~and amortization related to the swap buyouts,~~ affect earnings. Interest (income)/expense related to payments under the active swap agreements totaled ~~$2.8~~$(3.2) million for the ~~nine~~three month period ended

~~Index~~

~~September 30, 2022,~~ March 31, 2023, and ~~$5.3~~$1.7 million for the ~~nine~~three month period ended September 30, 2021. Additionally, non-cash interest income related to the amortization of swap buyouts totaled $0.0 million for the nine month period ended September 30, 2022 and $0.3 million for the nine month period ended September 30, 2021.March 31, 2022.

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

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

Index

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments									Derivatives not designated as hedging instruments
Foreign currency options (gains)/losses	Foreign currency options (gains)/losses	$	(28)	$	30	$	(409)	$	169	Foreign currency options (gains)/losses	$	16	$	(977)

15. Contingencies

Asbestos Litigation

Albany International Corp. is a defendant in suits brought in various courts in the United States by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills.

We were defending ~~3,603~~3,597 claims as of ~~September 30, 2022.~~March 31, 2023.

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

Year ended December 31,
Opening
Number of
Claims
Claims
Dismissed,
Settled, or
Resolved
New Claims
Closing
Number of
Claims
Amounts Paid
(thousands) to
Settle or
Resolve
2021 3,615 32 26 3,609 93
2022 (As of September 30) 3,609 27 21 3,603 $ 5


Year ended December 31,	Opening Number of Claims	Claims Dismissed, Settled, or Resolved	New Claims	Closing Number of Claims	Amounts Paid (thousands) to Settle or Resolve
2022	3,609	43	32	3,598	125
2023 (As of March 31)	3,598	4	3	3,597	$	—

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

While we believe we have meritorious defenses to these claims, we have settled certain claims for amounts we consider reasonable given the facts and circumstances of each case. Our insurance carrier has defended each case and funded settlements under a standard reservation of rights. As of ~~September 30, 2022,~~March 31, 2023, we had resolved, by means of settlement or dismissal, ~~38,007~~38,028 claims. The total cost of resolving all claims was ~~$10.5~~$10.6 million. Of this amount,

~~Index~~

almost 100% was paid by our insurance carrier, who has confirmed that we have approximately $140 million of remaining coverage under primary and excess policies that should be available with respect to current and future asbestos claims.

The Company’s subsidiary, Brandon Drying Fabrics, Inc. (“Brandon”), is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant, despite never having manufactured any fabrics containing asbestos. While Brandon was defending against 7,709 claims as of ~~September 30, 2022,~~March 31, 2023, only twelve claims have been filed against Brandon since January 1, 2012, and only $15,000 in settlement costs have been incurred since 2001. Brandon was acquired by the Company in 1999 and has its own insurance policies covering periods prior to 1999. Since 2004, Brandon’s insurance carriers have covered 100% of indemnification and defense costs, subject to policy limits and a standard reservation of rights.

In some of these asbestos cases, the Company is named both as a direct defendant and as the “successor in interest” to Mount Vernon Mills (“Mount Vernon”). We acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability

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

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

16. Changes in Shareholders’ Equity

The following table summarizes changes in Shareholders’ Equity for the period December 31, ~~2021~~2022 to ~~September 30, 2022:~~March 31, 2023:


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



Dividends declared
Class A Common Stock, $0.25 per share	—	—		—	—		—		(7,792)		—		—	—		—		(7,792)
Class B Common Stock, $0.25 per share	—	—		—	—		—		—		—		—	—		—		—
Cumulative translation adjustments	—	—		—	—		—		—		13,881		—	—		238		14,119
Pension and postretirement liability adjustments	—	—		—	—		—		—		(916)		—	—		—		(916)
Derivative valuation adjustment	—	—		—	—		—		—		(2,902)		—	—		—		(2,902)
March 31, 2023	40,842	$	41	—	$	—	$	441,917	$	950,415	$	(134,864)	9,675	$	(364,923)	$	4,929	$	897,515

~~Index~~

Class A
Common Stock
Class B
Common Stock
Additional paid-in capital Retained earnings Accumulated items of other comprehensive income
Class A
Treasury Stock
Noncontrolling Interest Total Equity
(in thousands) Shares Amount Shares Amount Shares Amount
December 31, 2021 40,760 $ 41 — $ — $ 436,996 $ 863,057 $ (145,984) 8,665 $ (280,143) $ 3,638 $ 877,605
Net income — — — — — 27,737 — — — 338 28,075
Compensation and benefits paid or payable in shares 21 — — — 745 — — — — — 745
Options exercised — — — — 7 — — — — — 7
Shares issued to Directors' — — — — — — — — — — —
Purchase of Treasury shares (a) — — — — — — — 515 (43,937) — (43,937)
Dividends declared
Class A Common Stock, $0.21 per share — — — — — (6,661) — — — — (6,661)
Class B Common Stock, $0.21 per share — — — — — — — — — — —
Cumulative translation adjustments — — — — — — (1,730) — — 56 (1,674)
Pension and postretirement liability adjustments — — — — — — 74 — — — 74
Derivative valuation adjustment — — — — — — 10,018 — — — 10,018
March 31, 2022 40,781 $ 41 — $ — $ 437,748 $ 884,133 $ (137,622) 9,180 $ (324,080) $ 4,032 $ 864,252
Net income — — — — — 39,201 — — — 168 39,369
Compensation and benefits paid or payable in shares 4 — — — 902 — — — — — 902
Options exercised — — — — — — — — — — —
Shares issued to Directors' — — — — 800 — — (13) 285 — 1,085
Purchase of Treasury shares (a) — — — — — — — 508 (41,128) — (41,128)
Dividends declared
Class A Common Stock, $0.21 per share — — — — — (6,529) — — — — (6,529)
Class B Common Stock, $0.21 per share — — — — — — — — — — —
Cumulative translation adjustments — — — — — — (39,661) — — (91) (39,752)
Pension and postretirement liability adjustments — — — — — — 234 — — — 234
Derivative valuation adjustment — — — — — — 3,349 — — — 3,349
June 30, 2022 40,785 $ 41 — $ — $ 439,450 $ 916,805 $ (173,700) 9,675 $ (364,923) $ 4,109 $ 821,782
Net income — — — — — 10,694 — — — 129 10,823
Compensation and benefits paid or payable in shares — — — — 835 — — — — — 835
Options exercised — — — — 10 — — — — — 10
Shares issued to Directors' — — — — — — — — — — —
Purchase of Treasury shares (a) — — — — — — — — — — —
Dividends declared
Class A Common Stock, $0.21 per share — — — — — (6,533) — — — — (6,533)
Class B Common Stock, $0.21 per share — — — — — — — — — — —
Cumulative translation adjustments — — — — — — (38,450) — — (56) (38,506)
Pension and postretirement liability adjustments — — — — — — (629) — — — (629)
Settlement of certain pension liabilities — — — — — — 26,198 — — — 26,198
Derivative valuation adjustment — — — — — — 6,208 — — — 6,208
September 30, 2022 40,785 $ 41 — $ — $ 440,295 $ 920,966 $ (180,373) 9,675 $ (364,923) $ 4,182 $ 820,188

~~Index~~

The following table summarizes changes in Shareholders’ Equity for the period December 31, ~~2020~~2021 to ~~September 30, 2021:~~March 31, 2022:


		Class A Common Stock			Class B Common Stock			Additional paid-in capital		Retained earnings		Accumulated items of other comprehensive income		Class A Treasury Stock			Noncontrolling Interest		Total Equity			Class A Common Stock			Class B Common Stock			Additional paid-in capital		Retained earnings		Accumulated items of other comprehensive income		Class A Treasury Stock			Noncontrolling Interest		Total Equity
(in thousands)	(in thousands)	Shares	Amount		Shares	Amount								Shares	Amount						(in thousands)	Shares	Amount		Shares	Amount								Shares	Amount
December 31, 2020		39,115	$	39	1,618	$	2	$	433,696	$	770,746	$	(132,408)	8,391	$	(256,009)	$	3,799	$	819,865
December 31, 2021																					December 31, 2021	40,760	$	41	—	$	—	$	436,996	$	863,057	$	(145,984)	8,665	$	(280,143)	$	3,638	$	877,605
Net income	Net income	—	—		—	—		—		27,582		—		—	—		27		27,609		Net income	—	—		—	—		—		27,737		—		—	—		338		28,075
Compensation and benefits paid or payable in shares	Compensation and benefits paid or payable in shares	20	—		—	—		(13)		—		—		—	—		—		(13)		Compensation and benefits paid or payable in shares	21	—		—	—		745		—		—		—	—		—		745
Options exercised	Options exercised	6	—		—	—		128		—		—		—	—		—		128		Options exercised	—	—		—	—		7		—		—		—	—		—		7

Purchase of Treasury shares (a)																					Purchase of Treasury shares (a)	—	—		—	—		—		—		—		515	(43,937)		—		(43,937)
Dividends declared	Dividends declared																				Dividends declared
Class A Common Stock, $0.20 per share		—	—		—	—		—		(6,150)		—		—	—		—		(6,150)
Class B Common Stock, $0.20 per share		—	—		—	—		—		(324)		—		—	—		—		(324)
Class A Common Stock, $0.21 per share																					Class A Common Stock, $0.21 per share	—	—		—	—		—		(6,661)		—		—	—		—		(6,661)
Class B Common Stock, $0.21 per share																					Class B Common Stock, $0.21 per share	—	—		—	—		—		—		—		—	—		—		—
Cumulative translation adjustments	Cumulative translation adjustments	—	—		—	—		—		—		(15,955)		—	—		(210)		(16,165)		Cumulative translation adjustments	—	—		—	—		—		—		(1,730)		—	—		56		(1,674)
Pension and postretirement liability adjustments	Pension and postretirement liability adjustments	—	—		—	—		—		—		509		—	—		—		509		Pension and postretirement liability adjustments	—	—		—	—		—		—		74		—	—		—		74
Derivative valuation adjustment	Derivative valuation adjustment	—	—		—	—		—		—		752		—	—		—		752		Derivative valuation adjustment	—	—		—	—		—		—		10,018		—	—		—		10,018
March 31, 2021		39,141	39		1,618	2		433,811		791,854		(147,102)		8,391	(256,009)		3,616		826,211
Net income		—	—		—	—		—		31,397		—		—	—		43		31,440
Compensation and benefits paid or payable in shares		—	—		—	—		692		—		—		—	—		—		692
Options exercised		1	—		—	—		21		—		—		—	—		—		21
Shares issued to Directors'		—	—		—	—		706		—		—		(11)	241		—		947
Dividends declared
Class A Common Stock, $0.20 per share		—	—		—	—		—		(6,150)		—		—	—		—		(6,150)
Class B Common Stock, $0.20 per share		—	—		—	—		—		(323)		—		—	—		—		(323)
Cumulative translation adjustments		—	—		—	—		—		—		13,774		—	—		183		13,957
Pension and postretirement liability adjustments		—	—		—	—		—		—		(130)		—	—		—		(130)
Derivative valuation adjustment		—	—		—	—		—		—		1,394		—	—		—		1,394
June 30, 2021		39,142	$	39	1,618	$	2	$	435,230	$	816,778	$	(132,064)	8,380	$	(255,768)	$	3,842	$	868,059
Net income		—	—		—	—		—		30,862		—		—	—		80		30,942
Compensation and benefits paid or payable in shares		—	—		—	—		845		—		—		—	—		—		845
Options exercised		1	—		—	—		4		—		—		—	—		—		4
Shares issued to Directors'		—	—		—	—		—		—		—		—	—		—		—
Dividends declared
Class A Common Stock, $0.20 per share		—	—		—	—		—		(6,478)		—		—	—		—		(6,478)
Class B Common Stock, $0.20 per share		—	—		—	—		—		—		—		—	—		—		—
Conversion of Class B shares to Class A shares (b)		1,617	2		(1,617)	(2)		—		—		—		—	—		—		—
Cumulative translation adjustments		—	—		—	—		—		—		(14,943)		—	—		(192)		(15,135)
Pension and postretirement liability adjustments		—	—		—	—		—		—		223		—	—		—		223
Derivative valuation adjustment		—	—		—	—		—		—		1,873		—	—		—		1,873
September 30, 2021		40,760	$	41	1	$	0	$	436,079	$	841,162	$	(144,911)	8,380	$	(255,768)	$	3,730	$	880,333
March 31, 2022																					March 31, 2022	40,781	41		—	—		437,748		884,133		(137,622)		9,180	(324,080)		4,032		864,252

(a)In October 2021, the Company's Board of Directors authorized the Company to repurchase shares of up to $200 million through open market purchases, privately negotiated transactions or otherwise, and to determine the prices, times and amounts. ~~In 2021, the Company repurchased 285,286 shares totaling $24.4 million.~~ During the ~~nine month period ending September 30,~~three months ended March 31, 2022, the Company repurchased ~~1,022,717~~514,686 shares totaling ~~$85.1~~$43.9 million.

~~(b)~~In The Company did not repurchase shares during the third quarter of 2021, Standish Family Holdings, LLC and J.S. Standish Company (the "Selling Stockholders") agreed to sell to J.P. Morgan Securities LLC 1,566,644 shares of the Company’s Class A Common Stock, par value $0.001 per share, to be issued upon conversion of an equal number of shares of the Company’s Class B common stock, par value $0.001 per share, at a price per share of $75.9656 (the "Transaction"). Immediately following the Transaction, the Selling Stockholders and related persons (including Christine L. Standish and John C. Standish) hold in the aggregate shares of the Company’s common stock

~~Index~~

entitling them to cast less than one percent of the combined votes entitled to be cast by all stockholders of the Company. Costs associated with the Transaction were borne directly by the Selling Stockholders.

three months ended March 31, 2023.

2217

~~Index~~

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

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

Forward-looking statements

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

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

•Conditions in the industries in which our Machine Clothing and Albany Engineered Composites segments compete, along with the general risks associated with macroeconomic conditions, including continuation of COVID-19 pandemic effects for an extended period of time;

•Across the entire Company, increasing labor, raw material, energy, and logistic costs due to supply chain constraints and inflationary ~~pressures~~pressures; challenges that have only increased as a result of the ongoing Russia-Ukraine war;

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

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

•Failure to achieve or maintain anticipated profitable growth in our Albany Engineered Composites segment; and

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

General risks associated with macroeconomic conditions, as noted above, have changed during the first nine months of 2022. The Russia-Ukraine war has had and may continue to have profound effects on macroeconomic business conditions around the world, including in our Machine Clothing and Albany Engineered Composites segments. Certain COVID-19 related disruptions and risks have persisted during the current year, causing inflationary pressure connected to global supply chain bottlenecks and elevated energy price pressures. These challenges have only increased as a result of the Russia-Ukraine war, which also has quickly prompted a global imposition of stringent sanctions that have resulted in a sharp decline in trade with Russia. Correspondingly, and in union with the global community, we voluntarily decided to dissolve business relationships in Russia during the first quarter of 2022, despite the associated cost to our investment and the loss of future revenue in the region. While our Albany Engineered Composites segment does not have significant direct exposure in this region of the world, and our Machine Clothing segment has now significantly reduced its exposure, the broader economic ramifications of this war will indirectly affect all sectors of the economy. This conflict, including imposed sanctions, has amplified inflationary pressures, driving higher prices for global oil, natural gas, agricultural and metal prices, as well as causing additional supply-chain disruptions.

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

~~Index~~

perception of historical conditions, expected future developments, and other factors believed to be appropriate under the circumstances.

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

Business Environment Overview and Trends

Our reportable segments, Machine Clothing (“MC”) and Albany Engineered Composites (“AEC”), draw on the same advanced textiles and materials processing capabilities, and compete on the basis of product-based advantage that is grounded in those core capabilities.

The MC segment is the Company’s long-established core business and primary generator of cash. While it has been negatively impacted by well-documented declines in publication grades in the Company’s traditional markets, there has been some offsetting effect due to growth in demand for packaging and tissue grades, as well as the expansion of paper consumption and production in Asia and South America. We feel we are well-positioned in key markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, technical product support, and manufacturing technology. Some of the markets in which our products are sold are expected to have low levels of growth and we face pricing pressures in all markets. Despite these market pressures on revenue, the MC business retains the potential for maintaining stable earnings in the future. MC has been a significant generator of cash, and we seek to maintain the cash-generating potential of this business by maintaining the low costs that we have achieved through continuous focus on cost-reduction initiatives, and competing vigorously by using our differentiated and technically superior products to reduce our customers’ total cost of operation and improve their paper quality.

The AEC segment provides significant longer term growth potential for ~~our~~the Company. Our strategy is to grow by focusing our proprietary 3D-woven technology, as well as our non-3D technology capabilities, on high-value aerospace (both commercial and defense) applications, while at the same time performing successfully on our portfolio of growth programs. AEC (including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group owns a 10 percent noncontrolling interest) supplies a number of customers in the aerospace industry. AEC’s largest aerospace customer is the SAFRAN Group ("SAFRAN") and sales to SAFRAN, through ASC, (consisting primarily of fan blades and cases for CFM’s LEAP engine) accounted for approximately 1216 percent of the Company’s consolidated Net sales in ~~2021.~~2022. AEC, through ASC, also supplies 3D-woven composite fan cases for the GE9X engine. AEC’s current portfolio of non-3D programs includes components for the CH-53K helicopter, components for the F-35, missile bodies for Lockheed Martin’s JASSM air-to-surface missiles, fuselage components for the Boeing 787, and vacuum waste tanks for Boeing 7-Series aircraft. AEC is actively engaged in research to develop new applications in both commercial and defense aircraft engine and airframe markets. In ~~2021,~~2022, approximately 4746 percent of AEC sales were related to U.S. government contracts or programs.

~~Effect of Russia-Military Conflict~~

The war between Russia and Ukraine is affecting the economic and global financial markets and exacerbating ongoing economic challenges caused by impacts of the ongoing COVID-19 pandemic, including rising inflation and global supply chain disruptions.

Our MC segment generates approximately 2% of its annual net sales from customers in Russia and Ukraine. In addition, a subsidiary within our Machine Clothing segment has been a partner in a joint venture (“JV”) that supplies paper machine clothing products to local papermakers in Russia. In March 2022, we made the decision to cease doing business in Russia, including giving notice to our JV partner of our intent to exit the venture. As a result, we recognized $1.6 million expense in cost of goods sold and in Selling, Administrative, and General expense, representing reserves against the risk of obsolescence of certain inventory destined for Russian customers and uncollectible receivables from Russian customers, respectively. We also wrote down the net book value of our investment in the aforementioned JV to reflect our intent to exit such venture, resulting in $0.8 million impairment loss included in Other (income)/expense, net during the first quarter of 2022.

~~We anticipate approximately $10.0 million reduction in future annual net sales in the MC segment, due to our cessation of doing business in Russia.~~

~~For the year-to-date ended September 30, 2022, our segments saw higher input costs due to increased energy costs, tight supply market, and global logistics challenges.~~

~~Index~~

During the quarter ended September 30, 2022, our MC segment experienced higher energy prices, driven by energy surcharges supporting increased raw material prices. Such was due to capacity constraints, due to limited opportunity to move supply globally from Europe. We continued to identify alternatives to secure materials in the face of intense supply constraints. Logistics costs have begun to stabilize compared to the same period last year, though they remained higher than those pre-pandemic.

~~We anticipate inflationary pressure to remain for the balance of this fiscal year and energy cost escalation to be a primary input cost pressure in the near term.~~

The ultimate financial impact due to the war between Russia and Ukraine, the ongoing COVID-19 pandemic, and inflationary environment is difficult to predict. After consideration of possible offsets through corresponding price increases to our customers and productivity improvements, we estimate a net increase to the MC segment input costs of between $8.0 million and $10.0 million for the year ending December 31, 2022, or an unfavorable impact to the segment gross margin of up to 140 basis points for the year ending December 31, 2022.

Our Albany Engineered Composites segment does not have significant direct exposure in Russia. However, it has not been immune from supply chain disruptions. Increasing fuel prices coupled with higher demand has resulted in increased freight costs during the quarter, along with ongoing logistic constraints. Due to the nature of AEC’s contracts with its customers, we currently anticipate passing through a majority of such cost increases to the customers.

Until the effects of the war between Russia and Ukraine, as well as the COVID-19 pandemic, on the economic and global financial markets subside, there can be no assurance that our input costs will not continue to rise beyond our current estimate, thus unfavorably impacting our future results of operations, financial position and liquidity.

2519

~~Index~~

Consolidated Results of Operations

Net sales

The following table summarizes our Net sales by business segment:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands, except percentages)	(in thousands, except percentages)	2022	2021	% Change		2022	2021	% Change		(in thousands, except percentages)	2023	2022	% Change
Machine Clothing	Machine Clothing	$153,389	$154,171	-0.5	%	$459,121	$462,298	-0.7	%	Machine Clothing	$153,222	$154,062	-0.5	%
Albany Engineered Composites	Albany Engineered Composites	107,174	78,271	36.9	%	306,980	227,024	35.2	%	Albany Engineered Composites	115,874	90,107	28.6	%
Total	Total	$260,563	$232,442	12.1	%	$766,101	$689,322	11.1	%	Total	$269,096	$244,169	10.2	%

The following tables provide a comparison of ~~2022~~2023 Net sales, excluding ~~the impact of~~ currency translation effects, to ~~2021~~2022 Net sales:


(in thousands, except percentages)	(in thousands, except percentages)	Net sales as reported, Q3 2022		Decrease due to changes in currency translation rates		Q3 2022 sales on same basis as Q3 2021 currency translation rates		Net sales as reported, Q3 2021		% Change compared to Q3 2021, excluding currency rate effects		(in thousands, except percentages)	Net sales as reported, Q1 2023		Decrease due to changes in currency translation rates		Q1 2023 sales on same basis as Q1 2022 currency translation rates		Net sales as reported, Q1 2022		% Change compared to Q1 2022, excluding currency rate effects
Machine Clothing	Machine Clothing	$	153,389	$	(6,570)	$	159,959	$	154,171	3.8	%	Machine Clothing	$	153,222	$	(3,468)	$	156,690	$	154,062	1.7	%
Albany Engineered Composites	Albany Engineered Composites	107,174		(3,637)		110,811		78,271		41.6	%	Albany Engineered Composites	115,874		(1,496)		117,370		90,107		30.3	%
Total	Total	$	260,563	$	(10,207)	$	270,770	$	232,442	16.5	%	Total	$	269,096	$	(4,964)	$	274,060	$	244,169	12.2	%

(in thousands, except percentages) Net sales as reported, YTD 2022 Decrease due to changes in currency translation rates YTD 2022 sales on same basis as 2021 currency translation rates Net sales as reported, YTD 2021 % Change compared to 2021, excluding currency rate effects
Machine Clothing $ 459,121 $ (14,545) $ 473,666 $ 462,298 2.5 %
Albany Engineered Composites 306,980 (5,631) 312,611 227,024 37.7 %
Total $ 766,101 $ (20,176) $ 786,277 $ 689,322 14.1 %

~~Three month comparison~~

•Changes in currency translation rates had the effect of decreasing Net sales by ~~$10.2~~$5.0 million, ~~during~~driven by the ~~third quarter of 2022,~~weaker Euro and Renminbi, as compared to ~~2021, principally due to a weaker Euro in~~ 2022.

•Excluding the effect of changes in currency translation ~~rates:~~

•rates, consolidated Net sales increased ~~16.5% compared to the same period in 2021.~~

•12.2%. Net sales inat MC increased ~~3.8% compared to the third quarter of 2021,~~1.7%, driven by ~~increased~~higher net sales ofin packaging ~~pulp~~ and ~~engineered fabrics.~~

•publication grades, and AEC Net sales ~~in AEC~~ increased ~~41.6%~~30.3%, ~~mainly due to~~primarily driven by growth onin CH-53K and LEAP programs.

~~Nine month comparison~~

•~~Changes in currency translation rates had the effect of decreasing Net sales by $20.2 million during the first nine months of 2022, as compared to 2021, principally due to a weaker Euro in 2022.~~

•~~Excluding the effect of changes in currency translation rates:~~

•~~Net sales increased 14.1% compared to the same period in 2021.~~

•~~Net sales in MC increased 2.5% compared to the first nine months of 2021, driven by increased sales of packaging, pulp and engineered fabrics.~~

•~~Net sales in AEC increased 37.7%, primarily due to growth on CH-53K and LEAP programs.~~

Gross Profit

The following table summarizes Gross profit by business segment:

~~Index~~

Three months ended September 30, Nine months ended September 30,
(in thousands, except percentages) 2022 2021 2022 2021
Machine Clothing $ 79,232 $ 79,437 $ 237,434 $ 240,427
Albany Engineered Composites 21,261 12,605 55,256 41,889
Total $ 100,493 $ 92,042 $ 292,690 $ 282,316
% of Net sales 38.6 % 39.6 % 38.2 % 41.0 %

~~Three month comparison~~


	Three months ended March 31,
(in thousands, except percentages)	2023			2022
Machine Clothing	$	77,855		$	79,345
Albany Engineered Composites	21,463			12,259
Total	$	99,318		$	91,604
% of Net sales	36.9		%	37.5		%

The increase in ~~third quarter 2022~~2023 Gross profit, as compared to the same period ~~in 2021,~~last year, was due to increased Net sales at AEC. Gross profit as a percentage of sales:

•~~Remained consistent year over year in~~At MC, ~~increasing~~decreased from 51.5% in ~~2021~~2022 to ~~51.7%~~50.8% in ~~2022.~~

•Increased from 16.1% in 2021 to 19.8% in 2022 in AEC, principally due to a favorable mix of program revenue and improved productivity, driven by CH-53K and LEAP programs. Changes in the estimated profitability of long-term contracts increased Gross profit by $2.6 million for the third quarter of 2022, compared to an increase of $2.1 million for the third quarter of 2021.

~~Nine month comparison~~

~~The increase in Gross profit during the first nine months of 2022, as compared to the same period in 2021, was due to increased Net sales at AEC. Gross profit as a percentage of sales:~~

•~~Remained consistent year over year in MC, decreasing from 52.0% in 2021 to 51.7% in 2022 in MC,~~2023, due to an increase in input ~~costs.~~costs, mainly due to the inflationary environment.

•~~Decreased~~At AEC, increased from 13.6% in 2022 to 18.5% in ~~2021 to 18.0% in 2022 in AEC, primarily~~2023, driven by ~~reserves~~improved absorption and the absence of a raw material reserve recorded ~~on inventory that was damaged at an off-site storage facility~~ in the ~~first quarter, reducing gross profit as~~prior year, offset by losses on a percent of sales. Changes in the estimated profitability of long-term contracts were also less favorable, increasing Gross profit by $2.0 million in the first nine months of 2022, as compared to an increase of $2.4 million for the same period last year.new program.

Selling, Technical, General, and Research ("STG&R")

The following table summarizes STG&R expenses by business segment:


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
(in thousands, except percentages)	(in thousands, except percentages)	2022			2021			2022			2021			(in thousands, except percentages)	2023			2022
Machine Clothing	Machine Clothing	$	21,941		$	23,717		$	75,427		$	78,501		Machine Clothing	$	28,871		$	29,477
Albany Engineered Composites	Albany Engineered Composites	11,302			9,769			34,568			28,909			Albany Engineered Composites	12,045			11,064
Corporate expenses	Corporate expenses	13,564			13,883			39,314			38,405			Corporate expenses	17,840			12,055
Total	Total	$	46,807		$	47,369		$	149,309		$	145,815		Total	$	58,756		$	52,596
% of Net sales	% of Net sales	18.0		%	20.4		%	19.5		%	21.2		%	% of Net sales	21.8		%	21.5		%

~~Three month comparison~~

~~The overall decrease in~~Consolidated STG&R expenses ~~in the third quarter of 2022,~~increased 11.7% as compared to ~~the same period in 2021, was due to the net effect~~2022, but represented a fairly consistent percentage of ~~the following:~~Net Sales.

•In MC STG&R expenses remained largely in line with the prior year and improved $0.7 million as a result of changes in currency translation rates, ~~had the effect of decreasing STG&R by $1.5 million during 2022, driven by~~notably the weaker ~~Euro.~~Euro and Renminbi

•In AEC ~~selling and general expenses increased $0.7 million due to investment in business development activities, and research~~Research expense increased ~~$0.8 million over the prior year.~~

~~Nine month comparison~~

~~Index~~

~~The overall increase~~related to investments in new technologies and enhanced capabilities, driving higher STG&R ~~expenses in the first nine months of 2022,~~as compared to the ~~same period in 2021, was due to the net effect of the following:~~

•In MC, changes in currency translation rates had the effect of decreasing STG&R by $3.1 million during 2022, driven by the weaker Euro. This favorability was partially offset by customer credit loss reserve increases related to our dissolution of business relationships in Russia.prior year

•~~In AEC, selling and general~~Corporate STG&R expenses increased ~~$3.0 million,~~principally due to higher personnel-related costs and ~~research expense increased $2.7 million over the prior year.~~professional fees

Restructuring Expense, net

In addition to the items discussed above affecting Gross profit and STG&R expenses, ~~operating~~Operating income was affected by restructuring ~~expenses, as summarized in the following table:~~

Three months ended September 30, Nine months ended September 30,
(in thousands) 2022 2021 2022 2021
Machine Clothing $ 42 $ 251 $ 255 $ 193
Albany Engineered Composites — (81) — (40)
Corporate expenses — 17 13 77
Total $ 42 $ 187 $ 268 $ 230

~~Restructuring~~ expense, net, which was insignificant in both the current and prior year, and was related primarily to the winding down of restructuring actions taken in prior periods.

Operating Income

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

Three months ended September 30, Nine months ended September 30,
(in thousands) 2022 2021 2022 2021
Machine Clothing $ 57,247 $ 55,467 $ 161,752 $ 161,731
Albany Engineered Composites 9,958 2,917 20,688 13,019
Corporate expenses (13,561) (13,898) (39,327) (38,479)
Total $ 53,644 $ 44,486 $ 143,113 $ 136,271


	Three months ended March 31,
(in thousands)	2023		2022
Machine Clothing	$	48,964	$	49,644
Albany Engineered Composites	9,418		1,195
Corporate expenses	(17,840)		(12,085)
Total	$	40,542	$	38,754

Other Earnings Items

Three months ended September 30, Nine months ended September 30,
(in thousands) 2022 2021 2022 2021
Interest expense, net $ 3,794 $ 3,734 $ 11,336 $ 11,521
Pension settlement expense 49,128 — 49,128 —
AMJP grant — (5,832) — (5,832)
Other (income)/expense, net (6,918) 2,753 (17,891) 4,215
Income tax expense/(benefit) (3,183) 12,889 22,273 36,375
Net income/(loss) attributable to the noncontrolling interest 129 80 635 150


	Three months ended March 31,
(in thousands)	2023		2022
Interest expense, net	$	3,290	$	3,609
Other (income)/expense, net	(455)		(3,928)
Income tax expense	10,621		10,998
Net income attributable to the noncontrolling interest	197		338

Interest Expense, net

Interest expense, net, ~~was largely in line with~~decreased over the prior ~~year.~~year as a result of higher interest earned on Cash and cash equivalents, in addition to decreased interest expense on Finance leases. See the Working Capital, Liquidity and Capital Structure section for further discussion of borrowings and interest rates.

2821

~~Index~~

~~Pension settlement expense~~

~~In the third quarter, the Company took actions to settle certain pension plan liabilities in the U.S., leading to charges totaling $49.1 million. No similar charges were incurred in the prior year.~~

~~AMJP grant~~

During the third quarter of 2021, the Company was awarded an Aviation Manufacturing Jobs Protection Program ("AMJP") grant of $5.8 million, under the American Rescue Plan of the U.S. Department of Transportation. No such award was granted during 2022.

Other (income)/expense, net

Other (income)/expense, net ~~was primarily driven by foreign currency gains~~includes losses related to the revaluation of ~~$6.6~~nonfunctional-currency balances of $0.1 million, ~~and $17.7 million in the three and nine month periods ended September 30, 2022, respectively,~~ as compared to ~~losses~~gains of ~~$0.5~~$3.7 million ~~and $0.8 million~~during 2022, driven by changes in the three and nine month periods ended September 30, 2021, respectively. The weaker Euro during the three and nine month periods ended September 30, 2022 led to the gains on foreign currency during such periods.exchange rates.

Income Tax expense/(benefit)

The Company has operations which constitute a taxable presence in 18 countries outside of the United States. The majority of these countries had income tax rates that are above the United States federal tax rate of 21 percent during the periods reported. The jurisdictional location of earnings is a significant component of our effective tax rate each year. The rate impact of this component is influenced by the specific location of non-U.S. earnings and the level of our total earnings. From period to period, the jurisdictional mix of earnings can vary as a result of operating fluctuations in the normal course of business, as well as the extent and location of other income and expense items, such as pension settlement and restructuring charges.

The tax rate is affected by recurring items, such as the income tax rate in the U.S. and non-U.S. jurisdictions and the mix of income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign earnings, and by discrete items that may occur in any given year but are not consistent from year to year. The Company’s effective tax ~~rates~~rate for the ~~third~~first quarter of ~~2022~~2023 was ~~(41.6%)~~28.2%, ~~lower~~ compared to ~~29.4%~~28.1% for the same period in ~~2021, mainly due to favorable discrete tax adjustments in the current period. For the first nine months of 2022, the Company’s~~2022. The effective tax rate ~~was 22.2%, lower compared to 28.8%~~ for the ~~same period in 2021, mainly due~~first quarter of 2023 includes the impact of certain tax planning initiatives related to ~~favorable discrete~~future repatriation of additional earnings to the U.S. and managing overall cash tax ~~adjustments in the current year.~~exposure.

For more information on income tax, see Note 5 to the Consolidated Financial Statements.

2922

~~Index~~

Segment Results of Operations

Machine Clothing Segment

Machine Clothing is our primary business segment and accounted for ~~60%~~57% of our consolidated revenues during the first ~~nine~~three months of ~~2022.~~2023. MC products are purchased primarily by manufacturers of paper and paperboard. We feel we are well-positioned in these markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, technical product support, and manufacturing technology. ~~Recent technological~~Technological advances in paper machine clothing, while contributing to the papermaking efficiency of customers, have lengthened the useful life of many of our products and had an adverse impact on overall paper machine clothing demand. Additionally, we face pricing pressures in all of our markets.

The Company’s manufacturing and product platforms position us well to meet these shifting demands across product grades and geographic regions. Our strategy for meeting these challenges continues to be to grow share in all markets, with new products and technology, and to maintain our manufacturing footprint to align with global demand, while we offset the effects of inflation through continuous productivity improvement.

Review of Operations


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
(in thousands, except percentages)	(in thousands, except percentages)	2022			2021			2022			2021			(in thousands, except percentages)	2023			2022
Net sales	Net sales	$	153,389		$	154,171		$	459,121		$	462,298		Net sales	$	153,222		$	154,062
Gross profit	Gross profit	79,232			79,437			237,434			240,427			Gross profit	77,855			79,345
% of Net sales	% of Net sales	51.7		%	51.5		%	51.7		%	52.0		%	% of Net sales	50.8		%	51.5		%
STG&R expenses	STG&R expenses	21,941			23,717			75,427			78,501			STG&R expenses	28,871			29,477
Operating income	Operating income	57,247			55,467			161,752			161,731			Operating income	48,964			49,644

Net Sales

~~Three month comparison~~

•~~Net sales decreased by 0.5%.~~

•Changes in currency translation rates, driven by a weaker Euro ~~had the effect of decreasing third-quarter 2022~~and Renminbi, decreased 2023 net sales by ~~$6.6 million.~~

•$3.5 million compared to 2022. Excluding the effect of changes in currency translation rates, Net sales in MC increased ~~3.8%~~1.7% compared to ~~the third quarter of 2021,~~2022, driven by ~~increased sales of packaging, pulp and engineered fabrics.~~

~~Nine month comparison~~

•~~Net sales decreased by 0.7%.~~

•~~Changes in currency translation rates, driven by a weaker Euro, had the effect of decreasing 2022 sales by $14.5 million compared to the same period in 2021.~~

•~~Excluding the effect of changes in currency translation rates, Net~~higher net sales in ~~MC increased 2.5% compared to 2021, driven by growth in sales of~~ packaging ~~pulp~~ and ~~engineered fabrics.~~publication grades.

Gross Profit

~~For the three and nine month periods ended September 30, 2022, the~~

The decrease in MC Gross profit was ~~primarily~~ driven by ~~changes~~higher input costs. This had the effect of decreasing Gross margin from 51.5% in ~~currency translation rates, principally the weaker Euro, as well as increases~~2022 to 50.8% in ~~input costs.~~2023.

Operating Income

The ~~increase~~decrease in Operating income was ~~driven~~principally due to the decrease in Gross profit noted above, offset partially by lower STG&R expenses, ~~over~~reflecting the ~~prior year.~~benefit from changes in currency translation rates.

~~Index~~

Albany Engineered Composites ("AEC") Segment

The ~~Albany Engineered Composites~~AEC segment ~~including~~provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, SAFRAN Group, owns a 10 percent noncontrolling interest, provides highly engineered advanced composite structures to customers primarily in the aerospace (both commercial and defense) industry. AEC’s largest program relates to CFM International’s LEAP engine. interest.AEC, through ASC, is the exclusive supplier to the LEAP program of advanced composite fan blades and fan cases ~~for this program~~ under a long-term supply contract. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft. Other significant programs by AEC ~~programs~~ include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing 7-Series programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine.

Review of Operations


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
(in thousands, except percentages)	(in thousands, except percentages)	2022			2021			2022			2021			(in thousands, except percentages)	2023			2022
Net sales	Net sales	$	107,174		$	78,271		$	306,980		$	227,024		Net sales	$	115,874		$	90,107
Gross profit	Gross profit	21,261			12,605			55,256			41,889			Gross profit	21,463			12,259
% of Net sales	% of Net sales	19.8		%	16.1		%	18.0		%	18.5		%	% of Net sales	18.5		%	13.6		%
STG&R expenses	STG&R expenses	11,302			9,769			34,568			28,909			STG&R expenses	12,045			11,064
Operating income	Operating income	9,958			2,917			20,688			13,019			Operating income	9,418			1,195

Net Sales

~~For~~

Net sales increased 28.6% compared to prior year, driven by growth in CH-53K and LEAP programs. Excluding the ~~three and nine month periods ended September 30, 2022,~~effect of changes in currency translation rates, the increase in Net sales was ~~mainly due to growth on CH-53K and LEAP programs.~~30.3%.

AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 40 percent of segment revenue for ~~each of~~ the first ~~nine~~three months of ~~2022~~2023 and ~~2021. LEAP engines are currently used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft.~~2022.

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

Gross Profit

~~For the three and nine month periods ended September 30, 2022, the~~The increase in Gross profit was primarily due to ~~a favorable mix of program revenue and improved productivity,~~increased Net Sales, driven by growth on CH-53K and LEAP programs. Gross profit ~~during~~as a percentage of sales increased from 13.6% in 2022 to 18.5% in 2023, driven by improved absorption and the ~~nine month period ended September 30, 2022, was reduced by~~absence of a ~~$2 million~~raw material reserve recorded ~~on inventory that was damaged at an off-site storage facility. Changes~~ in the ~~estimated profitability of long-term contract had an insignificant effect~~prior year, offset by losses on ~~Gross profit year over year.~~a new program.

Operating Income

~~The increase in~~ Operating income ~~was driven by~~increased year over year, principally due to higher ~~gross~~Net sales and Gross profit, as described above, partially offset by ~~higher research~~an increase in Research expenses related to investments in new technologies and ~~selling expense.~~enhanced capabilities.

3124

~~Index~~

Working Capital, Liquidity and Capital Structure

Cash Flow Summary


		Nine months ended September 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Net income	Net income	$	78,267	$	89,992	Net income	$	27,086	$	28,075
Depreciation and amortization	Depreciation and amortization	51,908		55,347		Depreciation and amortization	17,367		17,762
Changes in working capital (a)	Changes in working capital (a)	(89,899)		(9,959)		Changes in working capital (a)	(48,388)		(42,676)
Changes in other noncurrent liabilities and deferred taxes	Changes in other noncurrent liabilities and deferred taxes	(21,542)		1,440		Changes in other noncurrent liabilities and deferred taxes	(880)		(122)
Other operating items	Other operating items	48,573		11,679		Other operating items	(11,578)		(8,430)
Net cash provided by operating activities		67,307		148,499
Net cash used in operating activities						Net cash used in operating activities	(16,393)		(5,391)
Net cash used in investing activities	Net cash used in investing activities	(52,832)		(32,148)		Net cash used in investing activities	(16,275)		(15,754)
Net cash used in financing activities		(9,119)		(69,339)
Net cash provided by financing activities						Net cash provided by financing activities	41,086		26,875
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(30,910)		(2,111)		Effect of exchange rate changes on cash and cash equivalents	4,064		(351)
(Decrease)/increase in cash and cash equivalents		(25,554)		44,901
Increase in cash and cash equivalents						Increase in cash and cash equivalents	12,482		5,379
Cash and cash equivalents at beginning of year	Cash and cash equivalents at beginning of year	302,036		241,316		Cash and cash equivalents at beginning of year	291,776		302,036
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	276,482	$	286,217	Cash and cash equivalents at end of period	$	304,258	$	307,415

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

~~Cash provided~~Net cash used in operating activities was ~~$67.3~~$16.4 million in ~~the first nine months of 2022,~~2023, compared to ~~$148.5~~$5.4 million in the same period last year. AEC experienced particularly strong working capital cash flows in Accounts receivable and Contract assets during 2021, driven by significant deliveries of LEAP components throughout the year. In addition, during 2022, the Company made necessary investmentsSuch increase was primarily due to AEC's investment in working capital, as ~~it prepared~~we continue to execute on ~~its recently~~the expanded CH-53K scope of ~~work. Customer payment is expected~~work and build-up inventory to ~~be collected in a later period. In~~position ourselves for ongoing demand on the ~~third quarter of 2022,~~ LEAP program.

~~we made contributions of approximately $12.6 million to the U.S. pension plan, in~~ line with the Company's plan to reduce pension obligations over time. In addition, the timing of customer and vendor invoice payments, as well as higher incentive compensation payouts during the first nine months in 2022 compared to the same period in 2021, contributed to reduced net cash provided by operating activities.

We ~~strategically~~ deploy our cash with a focus on investing in our business and new technologies to provide our customers with enhanced capabilities, to increase shareholder value, and to position ourselves to take advantage of new business opportunities as they arise.Based on such strategy, we have continued to invest in our business and technologies through capital expenditures, research and development, and when appropriate, selective business acquisitions. Our capital expenditures totaled ~~$52.8~~$16.3 million and ~~$32.1~~$15.8 million for the first ~~nine~~three months ~~ended September 30,~~of 2023 and 2022, ~~and 2021,~~ respectively, comprised of both sustaining and return seeking projects.In the recent past, a portion of our capital expenditures ~~consist~~consisted of investments ~~which~~to improve operational productivity, in addition to producing a meaningful impact on energy and resource efficiency.

Net cash ~~used in~~provided by financing activities during ~~2022~~2023 was ~~$9.1~~$41.1 million compared to ~~net cash used in financing activities of $69.3~~$26.9 million in ~~2021,~~2022, driven by ~~increased borrowings during~~the absence of Treasury share purchases in the current year, ~~that were partially used~~which resulted in lower borrowings from the revolving credit facility, as compared to ~~fund repurchases of shares.~~the prior year.

Liquidity and Capital Structure

We finance our business activities ~~primarily~~principally with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below. Our subsidiaries outside of the United States may also maintain working capital lines with local banks, but borrowings under such local facilities tend ~~not~~ to be ~~significant.~~insignificant.

~~On October 27, 2020, we entered into a~~

Under our $700 million unsecured Four-Year Revolving Credit Facility Agreement (the “Credit Agreement”) which amended and restated the prior amended and restated $685 million Five-Year Revolving Credit Facility Agreement, which we had entered into on November 7, 2017 (the “Prior Agreement”). Under the Credit Agreement, ~~$447~~$491.0 million of borrowings were outstanding as of ~~September 30, 2022. The applicable interest rate~~March 31, 2023. As of March 31, 2023, we had cash and cash equivalents of $304 million and availability under our Credit Agreement of $209 million, for ~~borrowings was LIBOR plus~~ a ~~spread, based on our leverage ratio at the time~~total liquidity of borrowing. At the time of the last borrowing on September 26, 2022, the spread was 1.625%. The spread was based on a pricing grid, which ranged from 1.500% to 2.000%, based on our leverage ratio. Based on our maximum leverage ratio and our Consolidated Adjusted EBITDA (as defined in the Credit Agreement), and without modification to any other credit agreements, as of September 30, 2022, we would have been able to borrow an additional $253 million under the Agreement. We were in compliance with all debt covenants as of September 30, 2022.

~~For more information, see Note 13 to the Consolidated Financial Statements.~~

~~Index~~

approximately $513 million. We believe cash flows from operations and the availability of funds under our Credit Agreement will be adequate to cover our operations and business needs over the next twelve months. As of September 30, 2022, we had cash and cash equivalents of approximately $276 million and availability under our Credit Agreement of $253 million, for a total liquidity of approximately $529 million.For more information on the revolving credit agreement, see Note 13 to the Consolidated Financial Statements.

As of ~~September 30, 2022, $245.6~~March 31, 2023, $273 million of our total cash and cash equivalents was held by non-U.S. subsidiaries. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were ~~approximately~~in excess of $201 ~~$190.2~~ million at ~~September 30, 2022,~~March 31, 2023, and are intended to remain indefinitely invested in foreign operations. Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there

can be no assurance that we will be able to cost effectively repatriate funds in the future. Repatriating such cash from certain jurisdictions may also result in additional withholding taxes.

We have also returned cash to shareholders through dividends and share repurchases. During the first ~~nine~~three months of ~~2022,~~2023, we paid ~~$20~~$7.8 million in ~~dividends and repurchased 1 million shares of our Class A Common shares at a cost of $85 million under the $200 million share repurchase program that our Board approved in October 2021.~~

dividends.

Off-Balance Sheet Arrangements

As of ~~September 30, 2022,~~March 31, 2023, we have no off-balance sheet arrangements required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K.

~~Recent Pronouncements~~

On March 9, 2022, the SEC issued a proposed rule to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies. The proposed rules are intended to provide more consistent, comparable and decision-useful information so that investors can better evaluate the Company’s exposure to cybersecurity risks, incidents, and strategies to mitigate risks and incidents. We will continue to monitor developments around this proposed rule.

On March 21, 2022, the SEC issued a proposed rule that would enhance and standardize the climate-related disclosures provided by public companies. Under the proposed rule, we would be required to provide quantitative and qualitative disclosures in registration statements and annual reports that include climate-related financial impact and expenditure metrics as well as a discussion of climate-related impacts on financial estimates and assumptions, all of which would be presented in a footnote to the financial statements. Such disclosures would also be subject to management's internal control over financial reporting ("ICFR") and external audit.

As a Company, we have long been committed to sustainable practices and corporate social responsibility and have more recently taken steps to articulate our values and goals, some of which are summarized in our published sustainability report that is included at our website www.albint.com. In 2020, we began establishing more formalized and scalable approaches to our sustainability practices, reporting and systems, in order to ensure we prioritize efforts that are impactful to our business and stakeholders. We have begun to incorporate certain climate-related disclosures and risk factors in our existing disclosures to this point. We will continue to monitor developments around this proposed rule, which once finalized, is expected to allow for a multi-year phased transition to achieving compliance.

Non-GAAP Measures

This Form 10-Q contains certain non-GAAP measures that should not be considered in isolation or as a substitute for the related GAAP measures. Such non-GAAP measures include net sales and percent change in net sales, excluding the impact of currency translation ~~effects ;~~effects; EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin; Net debt; Net leverage ratio; and Adjusted earnings per share (or Adjusted EPS). Management believes that these non-GAAP measures provide additional useful information to investors regarding the Company’s operational performance.

Presenting Net sales and change in Net sales, after currency effects are excluded, provides management and investors insight into underlying sales trends. Net sales, or 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. These amounts are then compared to the U.S. dollar amount as reported in the current period.

EBITDA (calculated as net income excluding interest, income taxes, depreciation and amortization), Adjusted EBITDA, and Adjusted EPS are performance measures that relate to the Company’s continuing operations. The

~~Index~~

Company defines Adjusted EBITDA as EBITDA excluding costs or benefits that are not reflective of the Company’s ongoing or expected future operational performance. Such excluded costs or benefits do not consist of normal, recurring cash items necessary to generate revenues or operate our business. Adjusted EBITDA margin represents Adjusted EBITDA expressed as a percentage of net sales.

The Company defines Adjusted EPS as basic earnings per share (GAAP), adjusted by the after tax per share amount of costs or benefits not reflective of the Company’s ongoing or expected future operational performance. The income tax effects are calculated using the applicable statutory income tax rate of the jurisdictions where such costs or benefits were incurred or the effective tax rate applicable to total company results.

The Company’s Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS may not be comparable to similarly titled measures of other companies.

Net debt aids investors in understanding the Company’s debt position if all available cash were applied to pay down indebtedness.

Net leverage ratio informs the investors of the Company's financial leverage at the end of the reporting period, providing an indicator of the Company's ability to repay its debt.

We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The following tables show the calculation of EBITDA and Adjusted EBITDA:


Three months ended September 30, 2022
Three months ended March 31, 2023										Three months ended March 31, 2023
(in thousands)	(in thousands)	Machine Clothing		Albany Engineered Composites		Corporate expenses and other		Total Company		(in thousands)	Machine Clothing		Albany Engineered Composites		Corporate expenses and other		Total Company

Net income/(loss) (GAAP)	Net income/(loss) (GAAP)	$	57,247	$	9,958	$	(56,382)	$	10,823	Net income/(loss) (GAAP)	$	48,964	$	9,418	$	(31,296)	$	27,086
Interest expense, net	Interest expense, net	—		—		3,794		3,794		Interest expense, net	—		—		3,290		3,290
Income tax expense/(benefit)		—		—		(3,183)		(3,183)
Income tax expense										Income tax expense	—		—		10,621		10,621
Depreciation and amortization expense	Depreciation and amortization expense	4,913		11,303		818		17,034		Depreciation and amortization expense	4,775		11,664		928		17,367
EBITDA (non-GAAP)	EBITDA (non-GAAP)	62,160		21,261		(54,953)		28,468		EBITDA (non-GAAP)	53,739		21,082		(16,457)		58,364
Restructuring expenses, net	Restructuring expenses, net	42		—		—		42		Restructuring expenses, net	20		—		—		20
Foreign currency revaluation (gains)/losses (a)	Foreign currency revaluation (gains)/losses (a)	(2,931)		122		(6,633)		(9,442)		Foreign currency revaluation (gains)/losses (a)	1,960		(133)		60		1,887
Dissolution of business relationships in Russia		(214)		—		—		(214)
Pension settlement expense		—		—		49,128		49,128

Acquisition/integration costs	Acquisition/integration costs	—		255		—		255		Acquisition/integration costs	—		269		—		269
Pre-tax (income) attributable to noncontrolling interest	Pre-tax (income) attributable to noncontrolling interest	—		(176)		—		(176)		Pre-tax (income) attributable to noncontrolling interest	—		(189)		—		(189)
Adjusted EBITDA (non-GAAP)	Adjusted EBITDA (non-GAAP)	$	59,057	$	21,462	$	(12,458)	$	68,061	Adjusted EBITDA (non-GAAP)	$	55,719	$	21,029	$	(16,397)	$	60,351

~~Index~~


Three months ended March 31, 2022
(in thousands)	Machine Clothing		Albany Engineered Composites		Corporate expenses and other		Total Company


Net income/(loss) (GAAP)	$	49,644	$	1,195	$	(22,764)	$	28,075
Interest expense, net	—		—		3,609		3,609
Income tax expense	—		—		10,998		10,998
Depreciation and amortization expense	4,923		12,039		800		17,762
EBITDA (non-GAAP)	54,567		13,234		(7,357)		60,444
Restructuring expenses, net	243		—		11		254
Foreign currency revaluation (gains)/losses (a)	1,057		423		(3,740)		(2,260)
Dissolution of business relationships in Russia	1,787		—		781		2,568
Acquisition/integration costs	—		282		—		282
Pre-tax (income) attributable to noncontrolling interest	—		(252)		—		(252)
Adjusted EBITDA (non-GAAP)	$	57,654	$	13,687	$	(10,305)	$	61,036

Three months ended September 30, 2021
(in thousands) Machine Clothing Albany Engineered
Composites Corporate expenses
and other Total Company
Net income/(loss) (GAAP) $ 55,467 $ 2,917 $ (27,442) $ 30,942
Interest expense, net — — 3,734 3,734
Income tax expense — — 12,889 12,889
Depreciation and amortization expense 5,014 12,265 935 18,214
EBITDA (non-GAAP) 60,481 15,182 (9,884) 65,779
Restructuring expenses, net 251 (81) 17 187
Foreign currency revaluation (gains)/losses (a) (1,571) 31 472 (1,068)
AMJP grant — 963 (5,832) (4,869)
Acquisition/integration costs — 297 — 297
Pre-tax (income) attributable to noncontrolling interest — (95) — (95)
Adjusted EBITDA (non-GAAP) $ 59,161 $ 16,297 $ (15,227) $ 60,231

Nine months ended September 30, 2022
(in thousands) Machine Clothing Albany Engineered
Composites Corporate expenses
and other Total Company
Net income/(loss) (GAAP) $ 161,752 $ 20,688 $ (104,173) $ 78,267
Interest expense, net — — 11,336 11,336
Income tax expense — — 22,273 22,273
Depreciation and amortization expense 14,716 34,792 2,400 51,908
EBITDA (non-GAAP) 176,468 55,480 (68,164) 163,784
Restructuring expenses, net 255 — 13 268
Foreign currency revaluation (gains)/losses (a) (3,690) 755 (17,644) (20,579)
Dissolution of business relationships in Russia 1,573 — 781 2,354
Pension settlement expense — — 49,128 49,128
Acquisition/integration costs — 806 — 806
Pre-tax (income) attributable to noncontrolling interest — (633) — (633)
Adjusted EBITDA (non-GAAP) $ 174,606 $ 56,408 $ (35,886) $ 195,128

Nine months ended September 30, 2021
(in thousands) Machine Clothing Albany Engineered
Composites Corporate expenses
and other Total Company
Net income/(loss) (GAAP) $ 161,731 $ 13,019 $ (84,758) $ 89,992
Interest expense, net — — 11,521 11,521
Income tax expense — — 36,375 36,375
Depreciation and amortization expense 15,272 37,326 2,749 55,347
EBITDA (non-GAAP) 177,003 50,345 (34,113) 193,235
Restructuring expenses, net 193 (40) 77 230
Foreign currency revaluation (gains)/losses (a) (156) 363 813 1,020
AMJP grant — 963 (5,832) (4,869)
Acquisition/integration costs — 911 — 911
Pre-tax (income) attributable to noncontrolling interest — (206) — (206)
Adjusted EBITDA (non-GAAP) $ 177,040 $ 52,336 $ (39,055) $ 190,321

~~Index~~

The Company discloses certain income and expense items on a per-share basis. The Company believes that such disclosures provide important ~~insight~~insights into the 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 either the tax rates in specific countries or the estimated tax rate applied to total company results. The after-tax amount is then divided by 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.

The following tables show the earnings per share effect of certain income and expense items:

Three months ended September 30, 2022
(in thousands, except per share amounts) Pre tax
Amounts Tax
Effect After tax
Effect Per share
Effect
Restructuring expenses, net $ 42 $ 6 $ 36 $ 0.00
Foreign currency revaluation (gains)/losses (a) (9,442) (2,694) (6,748) (0.22)
Dissolution of business relationships in Russia (214) (18) (196) (0.01)
Pension settlement expense 49,128 11,947 37,181 1.20
Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b) — 5,217 (5,217) (0.17)
Acquisition/integration costs 255 77 178 0.01

Three months ended September 30, 2021
(in thousands, except per share amounts) Pre tax
Amounts Tax
Effect After tax
Effect Per share
Effect
Restructuring expenses, net $ 187 $ 55 $ 132 $ 0.00
Foreign currency revaluation (gains)/losses (a) (1,068) (314) (754) (0.02)
AMJP grant (4,869) (1,446) (3,423) (0.11)
Acquisition/integration costs 297 89 208 0.01

Nine months ended September 30, 2022
(in thousands, except per share amounts) Pre tax
Amounts Tax
Effect After tax
Effect Per share
Effect
Restructuring expenses, net $ 268 $ 75 $ 193 $ 0.01
Foreign currency revaluation (gains)/losses (a) (20,579) (5,829) (14,750) (0.47)
Dissolution of business relationships in Russia 2,354 314 2,040 0.06
Pension settlement expense 49,128 11,947 37,181 1.20
Tax impact of stranded OCI benefit from TCJA for pension liability (b) — 5,217 (5,217) (0.17)
Acquisition/integration costs 806 241 565 0.03

Nine months ended September 30, 2021
(in thousands, except per share amounts) Pre tax
Amounts Tax
Effect After tax
Effect Per share
Effect
Restructuring expenses, net $ 230 $ 67 $ 163 $ 0.00
Foreign currency revaluation (gains)/losses (a) 1,020 332 688 0.02
AMJP grant (4,869) (1,446) (3,423) (0.11)
Acquisition/integration costs 911 273 638 0.03


Three months ended March 31, 2023 (in thousands, except per share amounts)	Pre tax Amounts		Tax Effect		After tax Effect		Per share Effect
Restructuring expenses, net	$	20	$	4	$	16	$	0.00
Foreign currency revaluation (gains)/losses (a)	1,887		553		1,334		0.04

Acquisition/integration costs	269		77		192		0.01

3627

~~Index~~


Three months ended March 31, 2022 (in thousands, except per share amounts)	Pre tax Amounts		Tax Effect		After tax Effect		Per share Effect
Restructuring expenses, net	$	254	$	73	$	181	$	0.01
Foreign currency revaluation (gains)/losses (a)	(2,260)		(653)		(1,607)		(0.05)
Dissolution of business relationships in Russia	2,568		332		2,236		0.07
Acquisition/integration costs	282		84		198		0.01

The following table contains the calculation of Adjusted EPS:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
Per share amounts (Basic)	Per share amounts (Basic)	2022		2021		2022		2021		Per share amounts (Basic)	2023		2022
Earnings per share (GAAP)	Earnings per share (GAAP)	$	0.34	$	0.95	$	2.47	$	2.78	Earnings per share (GAAP)	$	0.86	$	0.87
Adjustments, after tax:	Adjustments, after tax:									Adjustments, after tax:
Restructuring expenses, net	Restructuring expenses, net	—		—		0.01		—		Restructuring expenses, net	—		0.01
Foreign currency revaluation (gains)/losses (a)	Foreign currency revaluation (gains)/losses (a)	(0.22)		(0.02)		(0.47)		0.02		Foreign currency revaluation (gains)/losses (a)	0.04		(0.05)
Dissolution of business relationships in Russia	Dissolution of business relationships in Russia	(0.01)		—		0.06		—		Dissolution of business relationships in Russia	—		0.07
Pension settlement charge		1.20		—		1.20		—
Tax impact of stranded OCI benefit from Tax Cuts and Job Act (TCJA) for pension liability (b)		(0.17)		—		(0.17)		—
AMJP grant		—		(0.11)		—		(0.11)
Acquisition/ integration costs	Acquisition/ integration costs	0.01		0.01		0.03		0.03		Acquisition/ integration costs	0.01		0.01
Adjusted Earnings per share (non-GAAP)	Adjusted Earnings per share (non-GAAP)	$	1.15	$	0.83	$	3.13	$	2.72	Adjusted Earnings per share (non-GAAP)	$	0.91	$	0.91

(a) Foreign currency revaluation (gains)/losses represent unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies on the balance sheet date.

(b) Our Adjusted EPS excluded the benefit from the reclassification of stranded income tax effects caused by the TCJA associated with the US pension plan liability that was eliminated in September 2022, a one-time event that would not recur in the future. Such stranded income tax effect represented a one-time benefit that distorted the effective tax rate for the quarter and year-to-date ended September 30, 2022 , and would not be indicative of ongoing or expected future income tax rate at the Company. Management believes excluding pension settlement expense and its income tax impact, including the stranded income tax effects, from its Adjusted EBITDA and Adjusted EPS for the quarter and year-to-date ended September 30, 2022 would provide investors a transparent view and enhanced ability to better assess the Company’s ongoing operational and financial performance.

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. The Company calculates Net debt by subtracting Cash and cash equivalents from Total debt. Total debt is calculated by adding Long-term debt, Current maturities of long-term debt, and Notes and loans payable, if any.

The following table contains the calculation of net debt:


(in thousands)	(in thousands)	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022		March 31, 2022
Current maturities of long-term debt	Current maturities of long-term debt	$	—	$	—	$	—	$	—	Current maturities of long-term debt	$	—	$	—	$	—
Long-term debt	Long-term debt	447,000		485,000		427,000		350,000		Long-term debt	491,000		439,000		427,000
Total debt	Total debt	447,000		485,000		427,000		350,000		Total debt	491,000		439,000		427,000
Cash and cash equivalents	Cash and cash equivalents	276,482		320,870		307,415		302,036		Cash and cash equivalents	304,258		291,776		307,415
Net debt (non GAAP)	Net debt (non GAAP)	$	170,518	$	164,130	$	119,585	$	47,964	Net debt (non GAAP)	$	186,742	$	147,224	$	119,585

Net leverage ratio informs the investors of the Company's financial leverage at the end of the reporting period, providing an indicator of the Company's ability to repay its debt. The Company calculates net leverage ratio by subtracting cash and cash equivalents from total debt, and then dividing by trailing twelve months Adjusted EBITDA.

~~Index~~

The calculation of net leverage ratio as of ~~September 30, 2022~~March 31, 2023 is as follows:


Total Company	Total Company									Total Company
		Twelve months ended		Nine months ended				Trailing twelve months ended			Twelve months ended		Three months ended				Trailing twelve months ended
(in thousands)	(in thousands)	December 31, 2021		September 30, 2021		September 30, 2022		September 30, 2022 (non-GAAP) (c)		(in thousands)	December 31, 2022		March 31, 2022		March 31, 2023		March 31, 2023 (non-GAAP) (b)

Net income/(loss) (GAAP)	Net income/(loss) (GAAP)	$	118,768	$	89,992	$	78,267	$	107,043	Net income/(loss) (GAAP)	$	96,508	$	28,075	$	27,086	$	95,519
Interest expense, net	Interest expense, net	14,891		11,521		11,336		14,706		Interest expense, net	14,000		3,609		3,290		13,681
Income tax expense	Income tax expense	47,163		36,375		22,273		33,061		Income tax expense	35,472		10,998		10,621		35,095
Depreciation and amortization expense	Depreciation and amortization expense	74,255		55,347		51,908		70,816		Depreciation and amortization expense	69,049		17,762		17,367		68,654
EBITDA (non-GAAP)	EBITDA (non-GAAP)	255,077		193,235		163,784		225,626		EBITDA (non-GAAP)	215,029		60,444		58,364		212,949
Restructuring expenses, net	Restructuring expenses, net	1,331		230		268		1,369		Restructuring expenses, net	106		254		20		(128)
Foreign currency revaluation (gains)/losses (a)	Foreign currency revaluation (gains)/losses (a)	(1,442)		1,020		(20,579)		(23,041)		Foreign currency revaluation (gains)/losses (a)	(9,829)		(2,260)		1,887		(5,682)
Aviation Manufacturing Job Protection (AMJP) grant		(4,731)		(4,869)		—		138
Dissolution of business relationships in Russia	Dissolution of business relationships in Russia	—		—		2,354		2,354		Dissolution of business relationships in Russia	2,275		2,568		—		(293)
Pension settlement expense	Pension settlement expense	—		—		49,128		49,128		Pension settlement expense	49,128		—		—		49,128
IP address sales										IP address sales	(3,420)		—		—		(3,420)
Acquisition/integration costs	Acquisition/integration costs	1,166		911		806		1,061		Acquisition/integration costs	1,057		282		269		1,044
Pre-tax (income) attributable to noncontrolling interest	Pre-tax (income) attributable to noncontrolling interest	(510)		(206)		(633)		(937)		Pre-tax (income) attributable to noncontrolling interest	(817)		(252)		(189)		(754)
Adjusted EBITDA (non-GAAP)	Adjusted EBITDA (non-GAAP)	$	250,891	$	190,321	$	195,128	$	255,698	Adjusted EBITDA (non-GAAP)	$	253,529	$	61,036	$	60,351	$	252,844


(in thousands, except for net leverage ratio)			~~September 30, 2022~~March 31, 2023
Net debt (non-GAAP)			~~170,518~~186,742
Trailing twelve months Adjusted EBITDA (non-GAAP)			~~255,698~~252,844
Net leverage ratio (non-GAAP)			~~0.67~~0.74

~~(c)~~(b) Calculated as amounts incurred during the twelve months ended December 31, ~~2021,~~2022, less those incurred during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, plus those incurred during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For discussion of our exposure to market risk, refer to “Quantitative and Qualitative Disclosures about Market Risk”, which is included as an exhibit to this Form 10-Q.

Item 4. Controls and Procedures

a) Disclosure controls and procedures.

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

~~Index~~

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

(b) Changes in internal control over financial reporting.

There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information set forth above under Note 15 in Item 1, “Notes to Consolidated Financial Statements” is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes in risks since December 31, ~~2021, except as discussed below.~~

The military invasion of Ukraine by Russia, and the ensuing sanctions are likely to continue to have an impact on our business. We have already stopped shipping our products to Russia and are in the process of winding down a small joint venture in that country which supplied dryer fabrics to local papermakers, resulting in lost sales and possible future write-offs. However, we also expect that there could be further indirect impacts. For instance, the conflict has already caused disruption in the availability of shipping options between Asia and Europe. Supply chain disruptions could make it more difficult to find favorable pricing and reliable sources for the raw materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials or services we need to continue to make and deliver certain products. Moreover, these same pressures could hinder our customers’ ability to source materials needed for their own manufacturing efforts, thereby reducing or slowing their demand for our products. There can be no assurance that we will be able to pass through these cost increases to our customers or to fully offset them via operational efficiencies. If we are unsuccessful in managing such cost increases, they could have a material adverse effect on our business, financial position, results of operations, and liquidity.

2022. For discussion of risk factors, refer to Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

~~Index~~

2022.

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

~~Issuer Purchases of Equity Securities~~We made no share purchases during the ~~nine months ended September 30, 2022~~first quarter of 2023.

Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approx. dollar value of shares that may yet be purchased under the program (thousands)
January 1 to January 31, 2022 140,879 $ 85.24 140,879 $ 163,722
February 1 to February 28, 2022 145,164 86.29 145,164 151,244
March 1 to March 31, 2022 228,643 85.51 228,643 131,688
April 1 to April 30, 2022 236,091 82.21 236,091 112,418
May 1 to May 31, 2022 271,940 80.98 271,940 90,561
June 1 to September 30, 2022 — — — —
Total 1,022,717 1,022,717 $ 90,587

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

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

4030

~~Index~~

Item 6. Exhibits


Exhibit No.			Description
31.1			Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
31.2			Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
32.1			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
99.1			Quantitative and qualitative disclosures about market risks as reported at ~~September 30, 2022.~~March 31, 2023.
101.INS			XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover page formatted as Inline XBRL and contained in Exhibit 101

~~Index~~

SIGNATURES

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


		ALBANY INTERNATIONAL CORP.
		(Registrant)

Date: ~~October 25, 2022~~April 26, 2023	By	/s/ ~~Stephen M. Nolan~~Robert D. Starr
		~~Stephen M. Nolan~~Robert D. Starr Chief Financial Officer and Treasurer (Principal Financial Officer)


	Nine months ended September 30, 2022
(in thousands)	Point in Time Revenue Recognition		Over Time Revenue Recognition		Total
Machine Clothing	$	456,423	$	2,698	$	459,121

Albany Engineered Composites
ASC	—		122,836		122,836
Other AEC	14,750		169,394		184,144
Total Albany Engineered Composites	14,750		292,230		306,980

Total revenue	$	471,173	$	294,928	$	766,101


	Nine months ended September 30, 2021
(in thousands)	Point in Time Revenue Recognition		Over Time Revenue Recognition		Total
Machine Clothing	$	459,703	$	2,595	$	462,298

Albany Engineered Composites
ASC	—		80,158		80,158
Other AEC	11,901		134,965		146,866
Total Albany Engineered Composites	11,901		215,123		227,024

Total revenue	$	471,604	$	217,718	$	689,322


(in thousands, except percentages)	Net sales as reported, YTD 2022		Decrease due to changes in currency translation rates		YTD 2022 sales on same basis as 2021 currency translation rates		Net sales as reported, YTD 2021		% Change compared to 2021, excluding currency rate effects
Machine Clothing	$	459,121	$	(14,545)	$	473,666	$	462,298	2.5	%
Albany Engineered Composites	306,980		(5,631)		312,611		227,024		37.7	%
Total	$	766,101	$	(20,176)	$	786,277	$	689,322	14.1	%


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced program	Approx. dollar value of shares that may yet be purchased under the program (thousands)


January 1 to January 31, 2022	140,879	$	85.24	140,879	$	163,722
February 1 to February 28, 2022	145,164	86.29		145,164	151,244
March 1 to March 31, 2022	228,643	85.51		228,643	131,688
April 1 to April 30, 2022	236,091	82.21		236,091	112,418
May 1 to May 31, 2022	271,940	80.98		271,940	90,561
June 1 to September 30, 2022	—	—		—	—



Total	1,022,717			1,022,717	$	90,587