Albany International posts marginal dip in Q4 sales
February 07, 2013 - United States Of America
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.
“In MC, the market trends of the past several quarters persisted. Sales remained stable in the Americas and China, weakened in Asia outside of China, and was well below 2011 levels in Europe. Pricing was stable around the world except for Europe, where it was under considerable pressure. On a positive note, we did see the first indications during Q4 that the sales decline in Europe might be moderating, as for the first time in over a year, quarterly sales increased on a sequential basis.
“Our competitive performance continues to be strong, as our market share with the leading papermakers in every region of the world is either holding firm or growing. Gross margins were once again strong and for the third consecutive quarter, exceeded 44 percent.
“Meanwhile, we decided in Q4 to make a major investment aimed at further enhancing our strength in R&D. For the last few years, at the same time that we have been introducing a steady stream of new products that helps to account for our strong competitive performance, we have been developing an entirely new, proprietary technology platform that offers the potential for an array of new products across all of our product segments.
In 2013, we will begin construction of a $15 million facility capable of producing full-scale prototypes of new products based on this new technology platform at our plant in Kaukauna, Wisconsin. Our objective is to accelerate the cycle of exploration, development, scale-up, testing, and market introduction of this new generation of products”.
“Our outlook for MC remains unchanged. For both the near and long term, we continue to view this as a business with the potential for flat, year-over-year Adjusted EBITDA. We still expect Adjusted EBITDA in 2013 to be roughly comparable to Adjusted EBITDA in 2012. Because of seasonal effects, we expect a weak Q1, although it is unlikely to be as weak as Q1 2012.
About Albany International Corp.
Albany International is a global advanced textiles and materials processing company, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed fabrics and belts essential to production in the paper, nonwovens, and other process industries.
Albany Engineered Composites is a rapidly growing supplier of highly engineered composite parts for the aerospace industry. Albany International is headquartered in Rochester, New Hampshire, operates 18 plants in 11 countries, employs 4,000 people worldwide.
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.
“In MC, the market trends of the past several quarters persisted. Sales remained stable in the Americas and China, weakened in Asia outside of China, and was well below 2011 levels in Europe. Pricing was stable around the world except for Europe, where it was under considerable pressure. On a positive note, we did see the first indications during Q4 that the sales decline in Europe might be moderating, as for the first time in over a year, quarterly sales increased on a sequential basis.
“Our competitive performance continues to be strong, as our market share with the leading papermakers in every region of the world is either holding firm or growing. Gross margins were once again strong and for the third consecutive quarter, exceeded 44 percent.
“Meanwhile, we decided in Q4 to make a major investment aimed at further enhancing our strength in R&D. For the last few years, at the same time that we have been introducing a steady stream of new products that helps to account for our strong competitive performance, we have been developing an entirely new, proprietary technology platform that offers the potential for an array of new products across all of our product segments.
In 2013, we will begin construction of a $15 million facility capable of producing full-scale prototypes of new products based on this new technology platform at our plant in Kaukauna, Wisconsin. Our objective is to accelerate the cycle of exploration, development, scale-up, testing, and market introduction of this new generation of products”.
“Our outlook for MC remains unchanged. For both the near and long term, we continue to view this as a business with the potential for flat, year-over-year Adjusted EBITDA. We still expect Adjusted EBITDA in 2013 to be roughly comparable to Adjusted EBITDA in 2012. Because of seasonal effects, we expect a weak Q1, although it is unlikely to be as weak as Q1 2012.
About Albany International Corp.
Albany International is a global advanced textiles and materials processing company, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed fabrics and belts essential to production in the paper, nonwovens, and other process industries.
Albany Engineered Composites is a rapidly growing supplier of highly engineered composite parts for the aerospace industry. Albany International is headquartered in Rochester, New Hampshire, operates 18 plants in 11 countries, employs 4,000 people worldwide.