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Albany International posts marginal dip in Q4 sales

07 Feb '13

6 min read

Albany International Corp., a global advanced textiles and materials processing company with core businesses in machine clothing and engineered composites, reported Q4 2012 income from continuing operations of $8.0 million ($0.25 per share).

These results include restructuring charges of $0.9 million ($0.02 per share), foreign currency revaluation losses of $4.0 million ($0.08 per share), and net unfavorable income tax adjustments of $0.1 million ($0.01 per share).

“Our income tax rate for 2012, exclusive of discrete tax adjustments, was 38.5 percent. Including the utilization of net operating loss carry-forwards and other deferred tax assets, cash paid for income taxes in 2012 was $15.1 million.”

Q4 2011 income from continuing operations was a loss of $10.0 million ($0.32 per share). These results included restructuring charges of $4.9 million ($0.10 per share), foreign currency revaluation gains of $3.5 million ($0.08 per share), and net unfavorable income tax adjustments of $15.6 million ($0.50 per share)

Net sales from continuing operations were $194.3 million, a decrease of 1.6 percent compared to Q4 2011.

Gross profit was $79.0 million (40.6 percent of net sales) in the fourth quarter of 2012, compared to $77.0 million (39.0 percent of net sales) in the same period of 2011. The increase in gross profit percentage was primarily due to results at Machine Clothing, where gross profit margins increased from 42.1 percent in 2011 to 45.0 percent in 2012, reflecting high plant utilization in the Americas, favorable geographic sales mix, and the cumulative effect of restructuring actions taken over the last year.

Selling, technical, general, and research (STG&R) expenses were $58.4 million, or 30.0 percent of net sales, in the fourth quarter of 2012. STG&R expenses included losses of $1.2 million related to the revaluation of non-functional-currency assets and liabilities. In the fourth quarter of 2011, STG&R expenses were $61.8 million, or 31.3 percent of net sales, including gains of $0.9 million related to the revaluation of non-functional-currency assets and liabilities. The decrease in STG&R expense reflects lower bad debt charges and lower pension expense resulting from the settlement of certain pension liabilities in Q2 2012.

Q4 2012 Machine Clothing operating income included restructuring charges of $1.1 million and foreign currency revaluation losses of $1.2 million. Q4 2011 Machine Clothing operating income included restructuring charges of $2.5 million and foreign currency revaluation gains of $0.9 million. Unallocated expenses included restructuring charges of $2.4 million in Q4 2011.

Q4 2012 Other income/expense, net, was expense of $2.6 million, including losses of $2.8 million related to the revaluation of non-functional-currency intercompany balances. Other income/expense, net, in Q4 2011 was income of $2.2 million, including income of $2.7 million related to the revaluation of non-functional-currency intercompany balances.

The Company's effective income tax rate, exclusive of discrete tax items, was 38.5 percent for the fourth quarter of 2012, compared to 33.1 percent for the fourth quarter of 2011. Q4 2012 income tax expense included an unfavorable adjustment of $1.2 million related to a change in the tax rate, and net favorable discrete income tax adjustments of $1.1 million.

Q4 2011 income tax expense included net discrete income tax charges of $16.2 million, and a favorable adjustment of $0.7 million related to a change in tax rate. The discrete tax charge in Q4 2011 was principally due to recording a valuation allowance in Germany resulting from the sale of the Company's Doors business.

Capital spending for equipment and software was $11.8 million for the fourth quarter of 2012, bringing the full-year total to $37.2 million. Depreciation and amortization related to continuing operations was $15.7 million for Q4 2012 and $63.1 million for the full year.

CEO Comments
President and CEO Joseph Morone said, “Q4 2012 was another good quarter for Albany International. Both businesses continued to perform well, Adjusted EBITDA was 27 percent higher than in the comparable period in 2011, and cash generation was once again strong and resulted in an additional $20 million reduction in net debt.