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Q4 Financial PerformanceFebruary 11, 2019 www.albint.com | AIN | #albint
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‘Non-GAAP’ Items and Forward-Looking Statements This presentation contains the following non-GAAP measures:Percentage changes in net sales, excluding currency rate effects (for each segment, and the Company as a whole);Adjusted EBITDA (for each segment, and the Company as a whole; absolute and as a percentage of sales);Net debt; andNet income per share attributable to the Company, excluding adjustments. We think such items provide useful information to investors regarding the Company’s core operational performance. See the Company’s earnings release (which accompanies this presentation) for additional information including reconciliations to GAAP measures. This presentation also may contain statements, estimates, or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. We disclaim any obligation to update any information in this presentation to reflect any changes or developments after the date on the cover page. Certain additional disclosures regarding our use of these ‘non-GAAP’ items and forward-looking statements are set forth in our fourth-quarter earnings press release dated February 11, 2019, and in our SEC filings, including our most recent quarterly reports and our annual reports for the years ended December 31, 2015, 2016, and 2017. Our use of such items in this presentation is subject to those additional disclosures, which we urge you to read. 2
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Net Sales by Segment 3 (in thousands, except percentages) Net SalesThree Months endedDecember 31, 2018 2017 PercentChange Impact of Changesin CurrencyTranslation Rates Increase /(decrease) due to ASC 606 Percent Changeexcluding Currency Rate and ASC 606 Effects Machine Clothing (MC) $150,693 $150,263 0.3% $(2,547) $(3,781) 4.5% Albany Engineered Composites (AEC) 100,920 76,465 32.0% (685) (1,088) 34.3% Total $251,613 $226,728 11.0% $(3,232) $(4,869) 14.5% (in thousands, except percentages) Net SalesYears endedDecember 31, 2018 2017 PercentChange Impact of Changesin CurrencyTranslation Rates Increase /(decrease) due to ASC 606 Percent Changeexcluding Currency Rate and ASC 606 Effects Machine Clothing (MC) $611,858 $590,357 3.6% $6,128 $(3,970) 3.3% Albany Engineered Composites (AEC) 370,621 273,360 35.6% 2,399 (3,150) 35.9% Total $982,479 $863,717 13.8% $8,527 $(7,120) 13.6%
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Gross Profit Margin by Quarter 4 Includes 7.3% impact from profitability revision in two AEC contracts * Reflects correction of immaterial errors related to the implementation of ASC 606 in the Company’s quarterly financial statements for the first three quarters of 2018.
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Net Income (GAAP) and Adjusted EBITDA (non-GAAP) by Segment 5 Three Months ended December 31, 2018 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Operating income/(loss) (GAAP) $42,884 $6,667 $(12,137) $37,414 Interest, taxes, other income/expense - - (20,142) (20,142) Net income (GAAP) 42,884 6,667 (32,279) 17,272 Interest expense, net - - 4,594 4,594 Income tax expense - - 10,538 10,538 Depreciation and amortization 6,542 10,909 1,162 18,613 EBITDA (non-GAAP) 49,426 17,576 (15,985) 51,017 Restructuring expenses, net 1,756 80 20 1,856 Foreign currency revaluation (gains)/losses 26 3 2,878 2,907 Write-off of inventory in a discontinued product line - - - - Pension settlement /curtailment charge - - 1,494 1,494 Pretax (income)/loss attributable to noncontrolling interest in ASC - 422 - 422 Adjusted EBITDA (non-GAAP) $51,208 $18,081 $(11,593) $57,696 Three Months ended December 31, 2017 Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company $34,614 $585 $(11,984) $23,215 - - (18,057) (18,057) 34,614 585 (30,041) 5,158 - - 4,049 4,049 - - 9,985 9,985 8,429 8,920 1,351 18,700 43,043 9,505 (14,656) 37,892 2,417 854 - 3,271 (524) 44 2,325 1,845 - (355) - (355) - - - - - 746 - 746 $44,936 $10,794 $(12,331) $43,399
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Net Income (GAAP) and Adjusted EBITDA (non-GAAP) by Segment 6 Year ended December 31, 2018 (in thousands) Machine Clothing Albany Engineered Composites Corporate expenses and other Total Company Operating income/(loss) (GAAP) $169,836 $16,647 $(49,075) $137,408 Interest, taxes, other income/expense - - (54,389) (54,389) Net income (GAAP) 169,836 16,647 (103,464) 83,019 Interest expense, net - - 18,124 18,124 Income tax expense - - 32,228 32,228 Depreciation and amortization 30,813 43,205 5,018 79,036 EBITDA (non-GAAP) 200,649 59,852 (48,094) 212,407 Restructuring expenses, net 12,278 3,048 244 15,570 Foreign currency revaluation (gains)/losses (826) 547 (62) (341) Write-off of inventory in a discontinued product line - - - - Pension settlement/curtailment charge - - 1,494 1,494 Pretax (income)/loss attributable to noncontrolling interest in ASC - (197) - (197) Adjusted EBITDA (non-GAAP) $212,101 $63,250 $(46,418) $228,933 Year ended December 31, 2017 Machine Clothing Albany Engineered Composites * Corporate expenses and other Total Company $153,980 $(31,657) $(43,647) $78,676 - - (46,091) (46,091) 153,980 (31,657) (89,738) 32,585 - - 17,091 17,091 - - 22,123 22,123 33,527 33,533 4,896 71,956 187,507 1,876 (45,628) 143,755 3,429 10,062 - 13,491 3,903 214 4,644 8,761 - 2,800 - 2,800 - - - - - 567 - 567 $194,839 $15,519 $(40,984) $169,374 * Includes $15.8 million charge for AEC contract revisions
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Earnings Per Share 7 *Includes $0.31 charge for AEC contract revisions Per share amounts (Basic) Three Months endedDecember 31, 2018 2017 YearsendedDecember 31, 2018 2017 * Net income attributable to the Company, as reported (GAAP) $0.55 $0.18 $2.57 $1.03 Adjustments: Restructuring expenses, net 0.04 0.07 0.34 0.27 Discrete tax adjustments and effect of change in income tax rate 0.05 0.16 (0.12) 0.14 Foreign currency revaluation losses/(gains) 0.06 0.04 (0.01) 0.18 Write-off of inventory in a discontinued product line - (0.01) - 0.05 Pension settlement/curtailment charge 0.04 - 0.04 - Net income attributable to the Company, excluding adjustments (non-GAAP) $0.74 $0.44 $2.82 $1.67
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Total Debt (GAAP) and Net Debt* (non-GAAP) $ thousands 8 * Total debt less cash see table 22 for reconciliation of total debt to net debt
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Summary Financial InformationQ1 through Q3 2018, as revised* 9 (dollars in thousands, except per share data) Machine Clothing segment (in thousands) Q1 Q2 Q3 Nine Months ended September 30, 2018 Net sales $141,773 $161,784 $157,608 $461,165 Gross profit $66,311 $79,072 $78,728 $224,111 Gross profit percentage 46.8% 48.9% 50.0% 48.6% Operating income $26,941 $50,314 $49,700 $126,955 Net income attributable to the Company - - - - Earnings per share - basic - - - - Adjusted EBITDA (non-GAAP) $45,169 $57,965 $57,759 $160,893 Total Company Q1 Q2 Q3 Nine Months ended September 30, 2018 $223,603 $255,374 $251,889 $730,866 $77,782 $91,643 $92,402 $261,827 34.8% 35.9% 36.7% 35.8% $17,004 $42,156 $40,834 $99,994 $7,662 $29,902 $27,736 $65,300 $0.24 $0.93 $0.86 $2.02 $47,118 $61,411 $62,708 $171,237 * Reflects correction of immaterial errors related to the implementation of ASC 606 in the Company’s quarterly financial statements for the first three quarters of 2018.