Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Albany International Fourth Quarter and Full Year 2022 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, your conference is being recorded.

to Director conference Albany of like host, to International. now Hobbs, John Investor would turn over the your I Relations of Please go ahead.

John Hobbs

International’s and Welcome year Lois, morning, conference fourth Albany XXXX you, full quarter Thank call. and good to everyone.

certain regarding the the text for press financial to to is of non-GAAP yesterday detailing the on issued use results. financial notice please our refer release As a quarterly their listening our Contained and call, and associated reminder, afternoon, those GAAP. of forward-looking our statements release in measures a the reconciliation

those For our this the COVID-XX pandemic purposes potential financial same statements contain of and statements operations, we’ll uncertainties, our Today, on of to this that remarks the markets conference among verbal number of forward-looking we are serve, that call, results. a effects our the make the are apply morning. risks, which

GAAP in including both may For to XXXX, their a measures February filings, of as non-GAAP full as comparable we XX-K. please and XX, discussion, well a our call this earnings reconciliation release measures, SEC refer our use including most our to

Bill? turn to the call remarks. President Higgins, Chief Officer, I'll who provide opening Bill Executive will Now and over

Bill Higgins

joining Thank good strong Welcome Thank you, our report in everyone. John. to call. XXXX. quarter, you Good pleased year for We're a morning. another capping

of shareholders. pandemic, threats course solid results the markets, delivered lockdown, China the supply headwinds, COVID and multiple of tight we chain Despite continuing labor these Over the higher resilient, including year, navigated our geopolitical successively for challenges, were shortages, inflation, uncertainty. team recession

business track, global position composites strategy the solid from our sheet, performance. from machine year-over-year had balance record were year employees’ our rock our to operational and adjusted clothing, XXXX’s a higher, exceeded EBITDA We year XX% margins EBITDA leadership aerospace $X,XXX grew and good XX% growth and outstanding and continued past margins is adjusted Revenue trend Sales and approaching benefited organic to million. XX.X%. our our Gross on highs. long-term

service. new a quality, focus and balance won our And new growth We us in brought job We continue to invest strong and in doing market. on product and customers, our business strategies. execute our to allows sheet to great technical reliability, delivery, businesses products

level, Machine to financial the and results segment continued operational be Clothing's performance At impressive.

environment. year our sales up up XX%, adjusted gross a margins Russian and exceeding Clothing full net the loss were EBITDA making inflationary margins revenue X% profitability excellent constant from segment The on exit. For million XX% XXXX, nearly market basis, in $XX delivered currency Machine the exceeding despite with

basis sales a segment nearly full Boeing helicopter the net The commercial Sikorsky from and CH-XXK recovering by the in aircraft. on of Engineered Composites body ramp constant the XX% aircraft contributions driven XX%, both production year narrow the on MAX work Airbus LEAP and program, production grew currency AXXXneo with XXX new aviation significant on

was XXXX's EBITDA about million, Adjusted $XX results. up $XX million from

the we Clothing and expect XXXX, from Machine to our for quality benefit enter we be relatively delivery. As year We products healthy. reliability, reputation exceptional demand for

belts consumable end value replenishment our Our steady markets focus while helps profitability, nature in results higher the added drive of relatively on demand.

up to sensitive leadership be to economic where activity. markets markets grade better position, Albany has printing economic tend holds a and packaging more volatile Tissue times, and

the through strong in XXXX, and today. You our markets the when Americas fourth And we may healthy entered recall the Clothing quarter, remained was stayed fourth that quarter strong. Machine demand in in demand

programs AEC, concerns. remains European body for the outlook in be narrow that up in in the slowed Chinese production term somewhat European the Machine in easing market Clothing Overall in driven longer should to portfolio of XXXX. of now our QX energy reopening and by China defense. demand growth great encouraged we're on in healthy, hold appears demand and recovering In recovering

the in aerospace demand ability as commercial In supply. is heard, outstripping market to industry's the the near-term, you've

As a is top a anticipated of more production than muted line driven significant we commercial after had the result, year year-over-year by growth aircraft growth in XXXX.

would Once the passenger MAX, are expect AXXXneo see Boeing to we supply and improved aircraft. travel and XXX production chains airplane growth for demand, Airbus with Boeing growing XXX

For now, growth contemplate for XXXX these in however, programs. outlook not our does near-term

programs side, including production the have or and defense to On come. for JASSM we Lockheed Martin, the missile. growing helicopter, programs the Sikorsky profiles significant F-XX, the years CH-XXK stable These have

remain program set program in enter arrive CH-XXK full at and is the our program to to production, size. defense the rate With that expected LEAP largest

programs want customer defense we've base add Additionally, our term both aerospace to composite smaller our further and not commercial expertise. to customers These OEM markets, that in growth, our customers wins our longer disclose. leveraging portfolio and us materials won several diversifying do new for programs with new

Now about let our long-term me strategy. a comment make

growth differentiation strategy Our competitive for fundamentals. long-term based on two and is

These our excellence operational product for material two us expertise at The reliably consistency material job things value our advanced combined, do be that industrialize operational deliver highest the time to is developing first gives This or choice products our we customers and is and up set of and to to a advantage on really development, the solutions, partner our quality ability our a that process and customers. an great we're technical support good the customers. that for us second

product we for focus Effective advanced the because our capital value. employees, We priority growth process processes and top we with customers efficiently a with It competitive advancement. products to to driving capital organic material long-term sustain that allocation remains continue the differentiation our a produce invest need on and starts this in and growth. equipment both and development the research

You'll specifically and engineered in partnerships composites. goals. improvement per collaborations in past and an efforts X% nearly sales advancements net in our and research notice of product alignment year – technological $XX development invested three over pandemic, business, success with both in throughout million are machine and clothing These the customer are our are and target average about development we on essential development years. the that that that These specifically often material process investment future

Our and business our only capital regular not to maintaining base capabilities, growing December, by production but grows. on per In on are our as our our current capabilities dividend advancing focused we our $X.XX XX% increased efficiency and expenditures quarter. capacity

two of Board the $XXX executed just a of retiring our repurchase we've Directors our years, and over authorized about has million During repurchases, share program past of shares. X%

and us evaluate Finally, supplement we'll technological discipline with our global acquisitions continue have acquisitions growth build our to Historically, to positions role line targeted played with customers on by to priorities. important key leadership strategy. market an in strengthen long-term strategic our enabling

the shape great In in year a sheet. robust summary, ended with balance XXXX we

believe and relentless poised segments, both operational to organic position customers materials excellence for R&D we in in focus for to we're Our Albany on developing employees of solid year advanced doing a growth. a XXXX. great job and continue another long-term results in with for We invest

Stephen? with on So for details the our that, XXXX. provide hand more and I'll it to Stephen quarter outlook over to

Stephen Nolan

Thank you, outlook Bill. morning in talk our the I and coming year. first business for Good about results will our to about initial the quarter for everyone. then the

same For increase to net were year. quarter, company the the compared the total delivered an fourth in sales million $XXX.X last of $XXX.X quarter million, XX%

Clothing, growth adjusting by tissue in pulp by principally for grades, to sales grades. the U.S. in packaging Machine XX.X% sales currency also net the fabric and were and offset translation for effects, quarter. Adjusting In relative translation effects, declines currency year-over-year engineered the increased year-over-year euro with in net the in decline dollar, flat

sales, XXX and currency by grew after Engineered platforms. F-XX effects CH-XXK declines translation Composites’ net driven again by partially offset growth adjusting and by for XX.X%, on the LEAP on

LEAP million, compared over up of During about $XX CH-XXK last generated quarter program the year. same million, from the generated $XX the ASC revenues while to quarter, of million in million $XX last revenue $XX year,

on year We LEAP CH-XXK. and million the million the program $XXX on of over finished with ASC $XXX revenue

quarter variety had revenue we carrying chain other supply to risk seen in a QX, had across we programs. QX, portfolio downside entering the still risk for account for a our and of While on decline of some challenges reserve in been fourth

overall higher the risks the company comparable The for margin quarter those segment. from to an the Fourth declined last by period not basis margin gross XXX revenues. of XX.X% million, by caused increase $XX.X lower fully of resulting year. primarily quarter anticipated relatively AEC gross However, in revenues fourth net sales in XX.X% points than higher from X.X% profit did the was materialize,

the change net of startup established on caused improved less by from favorable from and Composites, the XX.X% program Clothing of declined XX.X% one-time to of absence in the sales we of absorption in partially XX.X% of costs, gross margin input lower previously profitability contracts. from higher of segment, $X.X Engineered higher XXXX to XX.X% the increased a losses long-term recognized Within a net absorption million offset recorded by margin reversal the primarily volumes. by by reserves, and due net Machine the gross Within lower sales, benefit caused and production to revenues

$XX.X essentially and sales. these million the a an year-over-year During current we prior million. for year XX% quarter, the in increased in expenses from in $XX.X prior quarter net million technical, Fourth were $X.X to difference net of contracts $X.X unfavorable compared change selling, million recognized to and quarter of general, favorable in the net year quarter about the of million a change $X.X of research flat quarter at

from the increase fell income investments $X.X million by million, income higher compensation expense, company our the $XX.X by $X.X AEC Total in prior rose by for STG&R driven Clothing million, quarter. gross and currency revaluation incentive operating caused and was gross in $XX.X by marketing. caused The expense million and sales by while higher profit income operating profit. year down Machine foreign increased operating lower expense, was higher

by was sale the expense currency this in expense period million, million income compared an of $X.X in netted and offset driven a quarter $X.X addresses. year. by gain income excess $X.X to effects foreign decline partially same primarily last The of Other million the of from of million, quarter $X.X revaluation to the IP unfavorable of

incremental compared up and related The rate this true prior the rate. quarters guilty quarter year primarily discrete higher for rate tax tax XX.X% tax was prior plus tax this a provisions the in XX.X%, was foreign adjustments to taxes of of code withholding The by caused to U.S. quarter quarter. the income

$XX.X expense year. Earnings higher For by $X.XX to unfavorable the the year, in XX.X%. in lower $XX.X effective operating to same caused and per company full year income, to last rate. was quarter $X.XX income was our compared the tax rate compared last this income quarter, million attributable Net the million, and period share other the was for tax

expenses for from last gains expenses, and year. acquisition this After currency the and this of gain exclusion $X.XX earnings adjusted CirComp was revaluation losses, impact sale addresses the the quarter, the adjusting of IP restructuring share $X.XX associated with quarter, of the per to foreign integration, compared and

million $XX.X was million fell most from XX.X% from sales recent XXXX EBITDA down million last sales Machine year the QX of adjusted $XX.X $XX.X $XX.X million of net of or net Adjusted of EBITDA up was or sales. the year in XX.X% in $XX.X in adjusted year’s million or million quarter. from net EBITDA this or $XX.X XX.X% sales prior quarter. Clothing net AEC XX.X% to

net the as ratio the of less activities finished operating quarter little used During with defined free generated X.XX. about million. a $XX cash flow company provided of the leverage We by investing quarter, cash in activities over cash net

like China’s I headwinds of COVID Clothing turn strong environment to delivered creating inflationary guidance challenging our and with a provide performance the in financial the year Russia’s another XXXX Russian subsequent environment, and would market, and towards business. exit and invasion year for profitability from the energy exceptional Europe’s challenges, the top for Machine our all line Ukraine coming now crisis, in XXXX. initial with

enter Americas. in the year, we start the are conditions to XXXX, As for another good particularly ripe

up one. again and year mid-single the digits XXXX, orders year over full sales For Americas XXXX, for XXXX orders greater than to were in full was the the

end for year. one, the Eurasia sales we orders tail see weakness While some was overall strong to with XXXX did in above

QX orders macroeconomic below Eurasia to one sales driven XXXX, Europe was conditions and in China. in both by In

current XXXX, this year. with we However, those XXXX few already average the stronger finished XXXX. of the rate see for is regions in to $X.XX be above a to Euro of exchange in seen exchange level. continuation exchange the foreign we first to and we We modestly full do rate do not in the Unlike of not a expect for activity headwinds expect fact, full weeks U.S. that have an dollar year orders long-term in And trend.

rate will in we year-over-year in year, half comparisons That of above said, current exchange as the the front projections of half first for some was year the see challenging the last in not From expect robust year. those expect mix this material grades. we do packaging product grades for the to a and any perspective, market shifts we see to and tissue remain

guidance for However, seen sustained million. in not million Overall, have be initial to revenue the the expect are $XXX we grades rebound segment, providing XXXX. we publication COVID we do $XXX in since to of

saw of on a From the more the Clothing we as QX, the inventory higher profitability sold. continuing of was of impact material inflationary cost sitting Machine raw into in current been incorporated perspective, cost the in environment gross that margin goods had

the on of are we front, bright see us. However, inflation spots to ahead beginning some

impact have compare results. in energy inflation and seen of three reversals EBITDA the ourselves through our XXXX, first we Logistics particularly of of adjusted year, recognition input increases the our periods Machine to higher, while full input may in In Clothing, we’ve year-over-year margin material that to prior offset and financial have prior some tough in been able customers. to prices we as comparisons labor both of and quarters the of to impact some prices raw higher pricing remain

to segment mid However, full long-term expect high-XXs with the margins our EBITDA of the for line for deliver we to in in adjusted margins year. expectations still the

As EBITDA a million of initial we $XXX providing result adjusted Clothing $XXX for guidance million. to for XXXX, Machine are

significantly the line on top overdelivered in Turning Composites. The Engineered to XXXX. segment

which intentional of in does it revenues in XXXX, pull none in we’re was the of the given upside this While the nature XXXX. performing an limit forward programs

the guidance XXXX. referenced, upside Boeing envisage material on our frames Bill in does program As any not XXX

MAX cases, ASC’s There of AXXXneo limited to on In of spacers program. was close the upside program fan LEAP million blades the through platforms. also XXX generated and the near-term supply on and XXXX, engine revenue $XXX LEAP

has been are ASC XXXX single-aisle and before that flat We compared are that well chain Boeing largely both revenue as be to facing limiting challenges again expect will aircraft. their Airbus in output However, XXXX publicized of supply now XXXX. growing in LEAP

an from to flat Transition in both Transition expect fully program recurring work related the to increase also tooling less including non-recurring package and non-recurring CH-XXK revenue with overall, Aft offset by the to more the We or revenue be in production engineering Aft XXXX, portion. decline

that Overall That growth as we in transitioned we some for other $XXX solid XXXX, said, programs, million as program, indicated, we Bill CH-XXK. to to $XXX expect recent we production also the guidance segment, providing the see are on expect of on wins. including longer-term rate several In initial revenue full growth million. AEC

primarily in we expect perspective see to inflation respect costs to profitability a labor AEC, some headwinds From in XXXX.

operation XXXX. absorption better in expect However, overall overhead we performance and better than

range between million depreciation and in EBITDA XX%, between per $XXX amortization are AEC a Revenue billion, EBITDA of follows. XX% income expenditures adjusted rate of $XX as we to initial million, guidance and and $XX result, the million XXXX GAAP total As $X.XX, million, $X.X and providing to million initial adjusted of of $XXX and tax share $XX million. of At to $XX $XX the $X.XX capital $XXX are between earnings million $X.XX billion million. providing company level, between of and adjusted guidance we effective and

present, the performed how are the very to company overall. XXXX in we Returning with pleased

another of long-term forward year look We’re both to and XXXX. about delivering in segments performance of strong also the excited positioning

With to like call for that, would questions. Lois? open the I

Operator

Peter [Operator line from Instructions] Our is Please the go Arment from ahead. first question Baird. of

Peter Arment

Bill of build you in morning, kind already are because kind rates good – provided had Wondering and some kind of just on lagging of you kind based clarity you Could on just with you’ve maybe additional of the sync it kind I sets? strong existing Stephen. low ship really touch could a the you are mentioned delivered currently or if XXXX. of that Stephen LEAP a Yes, – program,

Bill Higgins

this Peter, is Bill. Yes.

channel. a in with year, cooperation outlook. customer not their factory that our that for on we As the produced plan further load some we it’s based channel year and level imagined look Saffron of. There the I’m unusual level an the and the at full in the we material is set at we’ve inventory aware But down

looks So like. we’re the channel what your – if question, that’s

that. at setting year, the look as flat pick it’s plan, relatively part year, on things latter – the up could the the it if half improve of So we we and a of first we’re

Peter Arment

– outlooks. mentioned to I syncing step XXX you’re a kind just up? also what as of relatively up demand guess, And contributor, kind Boeing Okay. some But longer and Maybe your thoughts seeing That’s then not this you big term just of on looking year. helpful. has and for XXX

Bill Higgins

Yes, XXX is a great airplane.

we’re So this that to line. idle at point, the see hoping pick up. back we’ve But nearly production

at We’re to any don’t of keeping beginning part least it in year we this have process qualified any expectations there. production do but the

So we’re up, guidance. not our call it’s waiting for that to back in the but ramp

Peter Arment

kind AEC, just of impact on do of then Thanks. degree but the we an think And production down, you on with be offset margin follow-up Are the just up. kind on coming we’ll the mentioned expecting or on a one there about staying picking of non-recurring how mix any CH-XXK, to Okay. last kind we that?

Stephen Nolan

Yes.

in the the I’ve production And look, that Peter, floor comparable what’s part the that’s overhead. factory overhead on think The recurring referenced XXXX that. to is my profitability I where on talking better the non-recurring about recurring do guidance I absorbing expect the the driving out is improved was margin production. difference and gross both And AEC we is absorption plant of leading comments margins. to in

on the the higher while comparable, margin recurring revenue on is gross So non-recurring contribution than is margin revenue. CH-XXK

Peter Arment

all Appreciate guys. Thanks the details.

Bill Higgins

Peter. Thanks,

Operator

from And the from next go ahead. Cowen. is question Please Gautam Khanna

Gautam Khanna

guys. Hi, good morning

Bill Higgins

morning. Good

Gautam Khanna

they’re to of listen the to more curious, year. trying you what from just target units or was is has X,XXX square CFM a to going approximately this XXXX said, LEAP X,XXX X,XXX commentary I I’m because if in

not I’m following. explains X,XXX the level? actually closer ship you Did disconnect? much what Maybe So unit the to

Stephen Nolan

higher as plan together they on Airbus their entering XXXX, Gautam, for for think anticipated our and here part rate I had for aircraft. thier happened of XXXX demand Boeing at us production put is Saffron what

us actual so than up. And they produce they might that had have Boeing as Airbus and known profile what would had probably ramped done more like look they

think in situation so XXXX. a little more in therefore, through of product inventory our a may that some we’ll burn anticipated they’re I have and than And they’d where they of

into they engines may XXXX. additional public than end the – don’t deliver rates, so we we but components And produce and to I’ve full up may production I have more don’t seen insight XXXX statements, have you – in in Gautam, they insight produce certainly their

Gautam Khanna

point rate a anticipate et you’ve held you a Okay. QX, any that or the guidance in I mean, flat embedded are or in do you sequential dip getting at just at cetera? destocked QX,

Stephen Nolan

bounces and rises quarter-to-quarter, it the quarters. Look, a in for level year, around XXXX. depending possible we It’s given there’s always and many load as little quarter-to-quarters flat holidays roughly how to dip. great Bill any material look no to endeavor There’s extent Certainly, effectively It’s across all four dips. we on But other to rough. the as XXXX and flat. quarter, from things but noisy mentioned,

Bill Higgins

Yes.

As with the I for to a the working Saffron said, level year we plan plan year. try setting loaded

the So we’ve year now, come to per the it if adjust the to high might month is if and up. we’ll later pick low in we’re the things month, as year, But MAX XXs things right But planned it not do. goes expecting per it that XXs change. back from XXX the for and

Gautam Khanna

what to be or… by your unit were shipments XA/XB in XXXX, opine X,XXX on in you Would aggregate willing

Stephen Nolan

Yes.

want customer set production now calculate ship materiality going us to We charging disclose into given giving the get rates nor point. disclosing to it’s discuss, price We the obviously ship company. easy its being that reasons to because into right volumes. per don’t at we’re of exact has delivery the the the to in one to set? quantities revenue We we are for past asked not our program, do the what full pretty haven’t What or get

Bill Higgins

Yes.

in can Saffron engine when next about what think I few the listen you days, say to reports they production.

sync with them. closely We’re

Gautam Khanna

least up Yes. additional gaining could content. you aerospace Last give where in for programs color some new production some some at – us me, one in unnamed programs? or these If think you I to this Are existing opening your is programs you reference content these are picked remarks, on around… made

Bill Higgins

new with There actually customers. new programs

are So talk it We customers number Safran about, – few programs there’s hypersonics commercial [indiscernible] as the new we and of programs. the a hear think a you are with customers different that customers on speak and about both about anyway. working with and or was we new or we us in defense work – that

Stephen Nolan

in be production on some it certainly would program for Yes. Gautam, a And in is a new that’s might but platform us, an cases, that be platform.

new over to in are they cases, it’s existing… an some, on incumbent genuinely programs, some us So from switch a an new in

Bill Higgins

it to not way. that they’re put aircraft Yes, new

Gautam Khanna

Okay. it. you I appreciate Thank guys.

Operator

question from go Please The is Steve Tusa J.P. next from Morgan. ahead.

Sam Yellen

was just was hearing on follow-up Hi, last for through as I overproduction the loaded Yellen a don’t this Sam just wondering Steve QX. is what one. recall I to Tusa. the QX, into this

Stephen Nolan

to moment clarity sorry, in a I went it went fuzzy there. little So, the –

asking the You’re for overproduction…

Sam Yellen

overproduction all Yes, QX? the at in overproduction. there Was

Stephen Nolan

we mentioned, Look, overall, we level Bill Sorry. as the as mentioned we year on quarter-to-quarter. – as LEAP and – load we probably for effectively

So overproduction in QX. was it’s necessarily not there that

that future certainly if was we’ll rate was produced less by a might of more had Then collectively production the We if QX might program, quarter. consultation did I QX from overall, means think over might known us. than But LEAP, perfect they from otherwise year produce the have Airbus than periods. with at into insight production into we our big the customers our we Saffron in additional probably some and XXXX Boeing pull intentionally and not you than wouldn’t But profile chosen the just done. nature overproduction profile. the decided higher look future have XXXX they that For given have customer have we take chosen

This from of of because shift over materially you that. and it’s was some year. think But to in XXXX. full XXXX has I revenue ways, want a QX there look the don’t to So been higher

Sam Yellen

sit And the does that LEAP Got right. Safran? it. All inventory, CFM or the then at on at JV

Stephen Nolan

combination. It’s a

to us them Prior our we we shipping, producing sorry, in invoice assets after they as revenue parts, when we we them. recognize certainly us to in – prior book. contract ship produced we for them, produce sit So or and

they’re books We which an be have When in middle receivable recognized across of accounts to on factory contract revenue yellow the collect we the them assets. line them. a we the they them, flip and money shipping until our in entails sitting floor, them, for in over deliver

XXX is but now huge our right about amount of not as through. of in have books, that excess sort excess think I does couple we of having ship some I a of so, It’s factory we some talked Safran inventory, sets, inventory. hold in But the inventory. of burn in a we’re product ago think not But of well, years where our situation to

Bill Higgins

And just hold as with we always part of arrangement them, our will some.

have things it’s to, So pick business but if at unusual were that’s the arrangement part inventory we to not in – we ship the happen of that an up, that system, the level. if

Sam Yellen

should should seasonality And just we looks about right. up. then last it. think How than reason year? sequential a different normal? QX one step the for me. one It All for high-single-digit calls ASC this QX Got typically be like in seasonality Any

Stephen Nolan

because isn’t Yes. And in LEAP all we example, QX more sees it the year LEAP, It’s when that quarters. look, really we on fact of of up like a it’s businesses, that the the one ASC looks I of level lot seasonality. step it appears growing that and growth load, nature for The when our next seasonable. to understand

see in to current I expect and not like in it’s that. the year. big of effects wouldn’t QX And there’s up QX really year, year this in a some prior it’s to so from more big jump seasonality, QX jump the

look not close our quarters will in annual In identical, taking if QX the four. fact, this and but high. guidance by last – year at be what look, just we I’m get delivered year I of you’d revenue you dividing saying would by quite expect

Bill Higgins

the we add, even not the as of the we’ve app and work And for that. actual of like and all of then as was some production, done going over the there. tooling I over some from convert programs Yes, programs we establishment it – a lines production CH-XXK are are the the as all go to change transition, there’s seasonal, to

actually So it’s seasonal. not seasonal may It at counter all. be

Sam Yellen

Okay. Thank much. you very

Operator

question ahead. line Pete from go Thank the of next Skibitski you. Global. from And the Please is Alembic

Pete Skibitski

guys. it Steve, corporate above assuming missed And stays I are so guys and morning questions. good kind going was for there? elevated guide for just expenses Couple directionally in Hey, but XXXX? even for was on in this, XXXX, CapEx might one you wondering just then housekeeping I of Thanks. the what what have second XXXX on came

Stephen Nolan

in compensation is – XXXX. corporate. Yes. We capabilities in a We’ll increase add overall, higher additional somewhat in environment, some don’t explicitly certainly merit inflationary to just our normal the One of taking some you and given a a the of contributing factors guide a there corporate guidance, corporate, which current those guidance by and targeted that segment addition combination lacking we company can of plus at just overall get looking our were and couple raises but headcount expense XXXX where higher felt XXXX. is at we

U.S. secondly, to programs some area it the internally. cybersecurity GIS GIS we requirements call IT as where we’ll where area government area, – DoD with our continuing for add comply in we are a contractor. IT to And expenses sorry, the In

requires to which We’re within data Maturity the Cybersecurity required of some comply of degree with some our Model, AEC additional CMMC, separation and expenses.

that disproportionate next somewhat level and to you hit corporate that’s the expense of higher will year. XXXX, in see why Some XXXX

were transition perspective, XXK. things in be as a Also app a a we’ve of is, on. discussed which program on deferred in general new which we make, going around portion capital programs such flow the XXXX, that cash thought some One program the we in of approved would which or good spending future going expenditures make But certain program growth. there’s and was XXXX. Portion were sorry. pandemic and with there to significantly what look From CapEx because were XXXX, even that uncertainty number was growth back good in expenses XXXX on as investments to of will and were be

here investments those where lot catch were playing now as expenses those of expenses a in we’re So XXXX. up in make incurring those we

So it’s those as deferred up our driven a a I spending. of normal, by aberrantly some wouldn’t XXXX high, of view new I combination factors. those think of it’s catch both

Pete Skibitski

color. you. the Appreciate Okay. Thank

Operator

Michael Thank move to we’ll you. the Securities. [Operator And Truist Ciarmoli of go from ahead. line Instructions] Please

Michael Ciarmoli

Hey, good taking morning the guys. Thanks questions. for

Just the to production. back and to go LEAP

or clarity, time? is breaks the month, up we Just for ramping production? or ahead lead in If start rate do how year, seven Boeing you later getting the soon your five up high successful are how if expecting per that far to eight, guys what’s

Bill Higgins

an think business but as place, and don’t and we about few ability we’d and equipment months somebody to have recall, them. But may go. be a capacity, you training the to as the We train ready to Maybe ramp Yes. on have it’s bring about that the in particularly from lead new a processes, people. that’s we time, the

I too we us it – think think So don’t would I long. don’t take

Stephen Nolan

Yes.

on, of and as increases has on much Some they’re anticipation. rate that, that how when absorb to the – like, you Safran at of vary Safran of you if think do inventory time about goods in safety does that us it if to gets they kind switch as have much based finished stock, how willing

up, thing much it finished probably step think to up? do we So good. say, a be how willing I depending if its does But if six step like But when both you vary with reasonable would months it might as something is vary. existing on does Safran you

Bill Higgins

what the of we happened know last the And of It’s thing minute. time. well ahead kind not would

Michael Ciarmoli

Okay.

Okay. chain? you mean, choke just are or I are might here? staff you employees training And people, any is a there demand for need look out employees. staff current there points at new there mean, to I in and think you mentioned how your where about supply other new the additional mean, I you as thinking be then about Bill, significant be. to going

Bill Higgins

wide existing markets the training if get and last they’ve The a won’t back Yes. up really or general, speed the need and lot people folks labor been to in to say focus with on doing tight better. them bit but gotten new a bringing able little they’re of we open, over and look so, been we’ve I year employees. training and we

on the better bit as little logistics a gotten have well. side Things comfortable. more feeling we’re So

So this major I anything bottleneck see don’t at point. that’s that a

Michael Ciarmoli

Okay.

EBITDA those in the just due margins mix? Steve, to that CH-XXK year-over-year happened just for higher one that then push margins Was from that sequentially. the revenues quarter down? down the Was clarity, just And or that the down quarter anything in engineered the Okay. to

Stephen Nolan

It’s me Look, solid is not on, No. program. margin touch CH-XXK low program. a certainly let a good

think I it’s briefly my combination this a remarks. I and mentioned in

programs the startup the terms about or accounting this we programs some the had think challenges. of news we good we life newer either news program the rate. spread our the program challenges process of is booking go of the and or pain new of And where gain, bad one as through, over on adjust long-term One a

an order very period. just new we a On for typically the short have program,

So doing rather that kind period a gain expense than long-term all gets like recognized program almost accounting. of

hit significant in to that. there’s So the quarter related

Michael Ciarmoli

it. Got

Okay. Helpful. Perfect. Thanks guys.

Operator

And you. Thank queue. in further continue. no at Please time this questions there are

Bill Higgins

you interest and Albany All in everyone for appreciate International. you your good today. Thank continued day. right. Thank have a on us call We joining the

Operator

ladies conference And gentlemen, Thank AT&T for and conclude and that does today. TeleConference. for participation your using for you Thank our you.

now disconnect. You may

Albany International (AIN) 14 Feb 232022 Q4 Earnings call transcript