Albany International Reports Second-Quarter 2021 Results, Raises 2021 Guidance

Albany International Reports Second-Quarter 2021 Results, Raises 2021 Guidance

ROCHESTER, N.H.–(BUSINESS WIRE)–
Albany International Corp. (NYSE:AIN) today reported operating results for its second quarter of 2021, which ended June 30, 2021. Additionally, the company raised its financial guidance for 2021.

“We are pleased to report another quarter of solid performance,” said Bill Higgins, President and CEO. “We delivered revenues of $235 million as well as profitability and free cash flow near record levels. Both business segments contributed to the strong results. Our Machine Clothing segment continued to experience solid demand from customers across the globe. In our Engineered Composites segment, performance remains very good – particularly in light of the headwinds caused by the ongoing destocking in the commercial aerospace supply chain. We are executing well on our defense programs and preparing to meet planned increases on OEM production rates on our narrow body commercial programs.”

“We had a great first half of 2021,” added CFO, Stephen Nolan. “Our consistent operating performance, near record free cash flow, and strong balance sheet position us well as global markets recover. At this stage, we believe that we have sufficient insight into that recovery and our operational performance to be able to raise our full year revenue and profit guidance, including raising the guidance midpoint of GAAP EPS and Adjusted EPS, each by over $0.40.”

For the second quarter ended June 30, 2021:

Net sales were $234.5 million, up 4%, or 1% after adjusting for currency translation rates, when compared to the prior year.
Gross profit of $101.7 million was 1% lower than the $103.0 million reported for the same period of 2020.
Selling, Technical, General, and Research (STG&R) expenses were $51.8 million, compared to $47.4 million in the same period of 2020. The increase was driven by higher incentive compensation, travel, Research and Development costs, and revaluation of foreign currency balances, which increased STG&R by $1.9 million in 2021, compared to an increase of $1.1 million in the same period of 2020.
Operating income was $50.0 million, compared to $52.7 million in the prior year, a decrease of 5%, principally due to higher STG&R expenses, partially offset by lower restructuring expenses.
The effective tax rate was 30.0%, compared to 32.1% for the second quarter of 2020. A lower share of our global profits in jurisdictions with higher tax rates contributed to the lower tax rate this quarter compared to that for the second-quarter 2020.
Net income attributable to the Company was $31.4 million ($0.97 per share), compared to $32.4 million ($1.00 per share) in the second quarter of 2020. Adjusted earnings per share (or Adjusted EPS, a non-GAAP measure) was $1.01 per share, compared to $1.09 for the same period of last year.
Adjusted EBITDA (a non-GAAP measure) was $69.4 million, compared to $73.7 million in the second quarter of 2020, a decrease of 6%.

Please see the tables below for a reconciliation of non-GAAP measures to their comparable GAAP measures.

Outlook for Full-Year 2021

Albany International is updating financial guidance for the full-year 2021:

Total company revenue between $880 and $910 million;
Effective income tax rate, including tax adjustments, of 28% to 30%;
Total company depreciation and amortization of approximately $75 million;
Capital expenditures in the range of $40 to $50 million;
GAAP earnings per share between $2.84 and $3.14 and Adjusted earnings per share between $2.90 and $3.20;
Total company Adjusted EBITDA between $225 to $240 million;
Machine Clothing revenue between $585 to $600 million;
Machine Clothing Adjusted EBITDA between $210 and $220 million;
Albany Engineered Composites (AEC) revenue between $290 to $310 million; and
Albany Engineered Composites Adjusted EBITDA between $65 to $70 million.

ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2021			2020		2021		2020
Net sales	$	234,519		$	225,990	$	456,880	$	461,754
Cost of goods sold	132,791			123,010		266,606		269,302

Gross profit	101,728			102,980		190,274		192,452
Selling, general, and administrative expenses	42,009			38,543		79,203		78,649
Technical and research expenses	9,762			8,873		19,243		18,003
Restructuring expenses, net	(9		)	2,837		43		3,479

Operating income	49,966			52,727		91,785		92,321
Interest expense, net	4,218			3,823		7,787		7,800
Other expense/(income), net	862			1,091		1,462		16,660

Income before income taxes	44,886			47,813		82,536		67,861
Income tax expense	13,446			15,364		23,486		27,818

Net income	31,440			32,449		59,050		40,043
Net income/(loss) attributable to the noncontrolling interest	43			95		70		(1,420		)
Net income attributable to the Company	$	31,397		$	32,354	$	58,980	$	41,463

Earnings per share attributable to Company shareholders – Basic	$	0.97		$	1.00	$	1.82	$	1.28

Earnings per share attributable to Company shareholders – Diluted	$	0.97		$	1.00	$	1.82	$	1.28

Shares of the Company used in computing earnings per share:
Basic	32,375			32,328		32,363		32,320

Diluted	32,422			32,336		32,411		32,328

Dividends declared per share, Class A and Class B	$	0.20		$	0.19	$	0.40	$	0.38

ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)

	June 30, 2021			December 31, 2020
ASSETS
Cash and cash equivalents	$	253,330		$	241,316
Accounts receivable, net	190,937			188,423
Contract assets, net	113,225			139,289
Inventories	120,665			110,478
Income taxes prepaid and receivable	6,236			5,940
Prepaid expenses and other current assets	33,089			31,830
Total current assets	$	717,482		$	717,276

Property, plant and equipment, net	438,392			448,554
Intangibles, net	42,998			46,869
Goodwill	185,293			187,553
Deferred income taxes	33,102			38,757
Noncurrent receivables, net	34,466			36,265
Other assets	74,907			74,662
Total assets	$	1,526,640		$	1,549,936

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	55,348		$	49,173
Accrued liabilities	108,007			125,459
Current maturities of long-term debt	—			9
Income taxes payable	12,233			16,222
Total current liabilities	175,588			190,863

Long-term debt	350,000			398,000
Other noncurrent liabilities	121,333			130,424
Deferred taxes and other liabilities	11,660			10,784
Total liabilities	658,581			730,071

SHAREHOLDERS’ EQUITY
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; 39,142,483 issued in 2021 and 39,115,405 in 2020	39			39
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; issued and outstanding 1,617,998 in 2021 and 2020	2			2
Additional paid in capital	435,230			433,696
Retained earnings	816,778			770,746
Accumulated items of other comprehensive income:
Translation adjustments	(85,384		)	(83,203		)
Pension and postretirement liability adjustments	(39,282		)	(39,661		)
Derivative valuation adjustment	(7,398		)	(9,544		)
Treasury stock (Class A), at cost; 8,379,804 shares in 2021 and 8,391,011 in 2020	(255,768		)	(256,009		)
Total Company shareholders’ equity	864,217			816,066
Noncontrolling interest	3,842			3,799
Total equity	868,059			819,865
Total liabilities and shareholders’ equity	$	1,526,640		$	1,549,936

ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
OPERATING ACTIVITIES
Net income	$	31,440		$	32,449		$	59,050		$	40,043
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	15,971			15,498			32,560			31,004
Amortization	2,280			2,456			4,573			5,020
Change in deferred taxes and other liabilities	974			3,543			5,416			9,360
Impairment of property, plant and equipment	353			36			538			233
Non-cash interest expense	265			20			310			171
Compensation and benefits paid or payable in Class A Common Stock	1,639			1,198			1,626			516
Provision for credit losses from uncollected receivables and contract assets	27			114			(83		)	1,769
Foreign currency remeasurement (gain)/loss on intercompany loans	(723		)	194			(1,031		)	15,581
Fair value adjustment on foreign currency options	1			—			140			64

Changes in operating assets and liabilities that provided/(used) cash:
Accounts receivable	(129		)	11,511			(3,365		)	8,117
Contract assets	9,539			(11,169		)	25,643			(20,009		)
Inventories	(1,821		)	(4,878		)	(10,384		)	(24,628		)
Prepaid expenses and other current assets	(606		)	(301		)	(1,505		)	(2,457		)
Income taxes prepaid and receivable	1,156			29			(309		)	(208		)
Accounts payable	(4,580		)	(9,337		)	4,608			(10,383		)
Accrued liabilities	2,062			4,171			(17,423		)	(10,901		)
Income taxes payable	4,121			5,526			(3,956		)	1,955
Noncurrent receivables	1,099			628			1,587			397
Other noncurrent liabilities	(2,166		)	(464		)	(4,263		)	(524		)
Other, net	1,051			(552		)	1,908			(1,086		)
Net cash provided by operating activities	61,953			50,672			95,640			44,034

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(10,302		)	(9,212		)	(22,836		)	(21,971		)
Purchased software	(286		)	—			(288		)	(46		)
Net cash used in investing activities	(10,588		)	(9,212		)	(23,124		)	(22,017		)

FINANCING ACTIVITIES
Proceeds from borrowings	—			—			8,000			70,000
Principal payments on debt	(34,002		)	(56,005		)	(56,009		)	(59,011		)
Principal payments on finance lease liabilities	(355		)	(329		)	(704		)	(6,463		)
Taxes paid in lieu of share issuance	—			—			(998		)	(490		)
Proceeds from options exercised	21			20			149			20
Dividends paid	(6,474		)	(6,141		)	(12,942		)	(12,280		)
Net cash used in financing activities	(40,810		)	(62,455		)	(62,504		)	(8,224		)

Effect of exchange rate changes on cash and cash equivalents	4,904			2,352			2,002			(5,296		)

Increase/(decrease) in cash and cash equivalents	15,459			(18,643		)	12,014			8,497
Cash and cash equivalents at beginning of period	237,871			222,680			241,316			195,540
Cash and cash equivalents at end of period	$	253,330		$	204,037		$	253,330		$	204,037

Financial tables and reconciliation of non-GAAP measures to comparable GAAP measures

The following tables present Net sales and the effect of changes in currency translation rates:

(in thousands, except percentages)	Net sales as reported, Q2 2021		Increase due to changes in currency translation rates		Q2 2021 sales on same basis as Q2 2020 currency translation rates		Net sales as reported, Q2 2020		% Change compared to Q2 2020, excluding currency rate effects
Machine Clothing	$	159,921	$	5,281	$	154,640	$	153,433	0.8	%
Albany Engineered Composites	74,598		1,088		73,510		72,557		1.3	%
Consolidated total	$	234,519	$	6,369	$	228,150	$	225,990	1.0	%

(in thousands, except percentages)	Net sales as reported, YTD 2021		Increase due to changes in currency translation rates		YTD 2021 sales on same basis as 2020 currency translation rates		Net sales as reported, YTD 2020		% Change compared to 2020, excluding currency rate effects
Machine Clothing	$	308,127	$	10,142	$	297,985	$	290,035	2.7	%
Albany Engineered Composites	148,753		2,267		146,486		171,719		(14.7)	%
Consolidated total	$	456,880	$	12,409	$	444,471	$	461,754	(3.7)	%

The following tables present Gross profit and Gross profit margin:

(in thousands, except percentages)	Gross profit, Q2 2021		Gross profit margin, Q2 2021		Gross profit, Q2 2020		Gross profit margin, Q2 2020
Machine Clothing	$	84,597	52.9	%	$	83,612	54.5	%
Albany Engineered Composites	17,131		23.0	%	19,368		26.7	%
Consolidated total	$	101,728	43.4	%	$	102,980	45.6	%

(in thousands, except percentages)	Gross profit, YTD 2021		Gross profit margin, YTD 2021		Gross profit, YTD 2020		Gross profit margin, YTD 2020
Machine Clothing	$	160,990	52.2	%	$	156,264	53.9	%
Albany Engineered Composites	29,284		19.7	%	36,188		21.1	%
Consolidated total	$	190,274	41.6	%	$	192,452	41.7	%

A reconciliation from operating income/(loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the current-year and comparable prior-year periods has been calculated as follows:

Three months ended June 30, 2021
(in thousands)	Machine Clothing			Albany Engineered Composites			Corporate expenses and other			Total Company
Operating income/(loss) (GAAP)	$	55,902		$	7,164		$	(13,100	)	$	49,966
Interest, taxes, other income/(expense)	—			—			(18,526		)	(18,526		)
Net income/(loss) (GAAP)	55,902			7,164			(31,626		)	31,440
Interest expense, net	—			—			4,218			4,218
Income tax expense	—			—			13,446			13,446
Depreciation and amortization expense	5,138			12,194			919			18,251
EBITDA (non-GAAP)	61,040			19,358			(13,043		)	67,355
Restructuring expenses, net	10			(48		)	29			(9		)
Foreign currency revaluation (gains)/losses	1,908			(244		)	174			1,838
Acquisition/integration costs	—			300			—			300
Pre-tax (income) attributable to noncontrolling interest	—			(65		)	—			(65		)
Adjusted EBITDA (non-GAAP)	$	62,958		$	19,301		$	(12,840	)	$	69,419
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)	39.4		%	25.9		%	—			29.6		%


Three months ended June 30, 2020
(in thousands)	Machine Clothing			Albany Engineered Composites			Corporate expenses and other			Total Company
Operating income/(loss) (GAAP)	$	56,543		$	8,299		$	(12,115	)	$	52,727
Interest, taxes, other income/(expense)	—			—			(20,278		)	(20,278		)
Net income/(loss) (GAAP)	56,543			8,299			(32,393		)	32,449
Interest expense, net	—			—			3,823			3,823
Income tax expense	—			—			15,364			15,364
Depreciation and amortization expense	4,981			11,971			1,002			17,954
EBITDA (non-GAAP)	61,524			20,270			(12,204		)	69,590
Restructuring expenses, net	388			2,248			201			2,837
Foreign currency revaluation (gains)/losses	973			30			20			1,023
Acquisition/integration costs	—			278			—			278
Pre-tax (income) attributable to noncontrolling interest	—			(58		)	—			(58		)
Adjusted EBITDA (non-GAAP)	$	62,885		$	22,768		$	(11,983	)	$	73,670
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)	41.0		%	31.4		%	—			32.6		%

Six months ended June 30, 2021
(in thousands)	Machine Clothing			Albany Engineered Composites			Corporate expenses and other			Total Company
Operating income/(loss) (GAAP)	$	106,264		$	10,102		$	(24,581	)	$	91,785
Interest, taxes, other income/(expense)	—			—			(32,735		)	(32,735		)
Net income/(loss) (GAAP)	106,264			10,102			(57,316		)	59,050
Interest expense, net	—			—			7,787			7,787
Income tax expense	—			—			23,486			23,486
Depreciation and amortization expense	10,258			25,061			1,814			37,133
EBITDA (non-GAAP)	116,522			35,163			(24,229		)	127,456
Restructuring expenses, net	(58		)	41			60			43
Foreign currency revaluation (gains)/losses	1,415			332			341			2,088
Acquisition/integration costs	—			614			—			614
Pre-tax (income) attributable to noncontrolling interest	—			(111		)	—			(111		)
Adjusted EBITDA (non-GAAP)	$	117,879		$	36,039		$	(23,828	)	$	130,090
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)	38.3		%	24.2		%	—			28.5		%

Six months ended June 30, 2020
(in thousands)	Machine Clothing			Albany Engineered Composites			Corporate expenses and other			Total Company
Operating income/(loss) (GAAP)	$	103,718		$	15,922		$	(27,319	)	$	92,321
Interest, taxes, other income/(expense)	—			—			(52,278		)	(52,278		)
Net income/(loss) (GAAP)	103,718			15,922			(79,597		)	40,043
Interest expense, net	—			—			7,800			7,800
Income tax expense	—			—			27,818			27,818
Depreciation and amortization expense	10,068			23,956			2,000			36,024
EBITDA (non-GAAP)	113,786			39,878			(41,979		)	111,685
Restructuring expenses, net	1,030			2,248			201			3,479
Foreign currency revaluation (gains)/losses	(2,688		)	727			14,850			12,889
Former CEO termination costs	—			—			2,742			2,742
Acquisition/integration costs	—			576			—			576
Pre-tax loss attributable to noncontrolling interest	—			1,434			—			1,434
Adjusted EBITDA (non-GAAP)	$	112,128		$	44,863		$	(24,186	)	$	132,805
Adjusted EBITDA margin (Adjusted EBITDA divided by Net sales-non-GAAP)	38.7		%	26.1		%	—			28.8		%

Per share impact of the adjustments to earnings per share are as follows:

Three months ended June 30, 2021 (in thousands, except per share amounts)	Pre tax Amounts			Tax Effect			After tax Effect			Per share Effect
Restructuring expenses, net	$	(9	)	$	(3	)	$	(6	)	$	0.00
Foreign currency revaluation (gains)/losses	1,838			781			1,057			0.03
Acquisition/integration costs	300			90			210			0.01

Three months ended June 30, 2020 (in thousands, except per share amounts)	Pre tax Amounts			Tax Effect			After tax Effect			Per share Effect
Restructuring expenses, net	$	2,837		$	953		$	1,884		$	0.06
Foreign currency revaluation (gains)/losses	1,023			536			487			0.02
Acquisition/integration costs	278			83			195			0.01

Six months ended June 30, 2021 (in thousands, except per share amounts)	Pre tax Amounts			Tax Effect			After tax Effect			Per share Effect
Restructuring expenses, net	$	43		$	12		$	31		$	0.00
Foreign currency revaluation (gains)/losses	2,088			646			1,442			0.04
Acquisition/integration costs	614			184			430			0.02

Six months ended June 30, 2020 (in thousands, except per share amounts)	Pre tax Amounts			Tax Effect			After tax Effect			Per share Effect
Restructuring expenses, net	$	3,479		$	1,145		$	2,334		$	0.07
Foreign currency revaluation (gains)/losses (a)	12,889			(1,009		)	13,898			0.44
Former CEO termination costs	2,742			713			2,029			0.06
Acquisition/integration costs	576			172			404			0.02

(a) In Q1 2020, the company recorded losses of approximately $17 million in jurisdictions where it cannot record a tax benefit from the losses, which results in an unusual relationship between the pre-tax and after-tax amounts.

The following table provides a reconciliation of Earnings per share to Adjusted Earnings per share:

	Three months ended June 30,				Six months ended June 30,
Per share amounts (Basic)	2021		2020		2021		2020
Earnings per share (GAAP)	$	0.97	$	1.00	$	1.82	$	1.28
Adjustments, after tax:
Restructuring expenses, net	—		0.06		—		0.07
Foreign currency revaluation (gains)/losses	0.03		0.02		0.04		0.44
Former CEO termination costs	—		—		—		0.06
Acquisition/integration costs	0.01		0.01		0.02		0.02
Adjusted Earnings per share (non-GAAP)	$	1.01	$	1.09	$	1.88	$	1.87

The calculations of net debt are as follows:

(in thousands)	June 30, 2021		March 31, 2021		December 31, 2020
Current maturities of long-term debt	$	—	$	2	$	9
Long-term debt	350,000		384,000		398,000
Total debt	350,000		384,002		398,009
Cash and cash equivalents	253,330		237,871		241,316
Net debt (non-GAAP)	$	96,670	$	146,131	$	156,693

The tables below provide a reconciliation of forecasted full-year 2021 Adjusted EBITDA and Adjusted EPS (non-GAAP measures) to the comparable GAAP measures:

Forecast of Full Year 2021 Adjusted EBITDA	Machine Clothing						AEC
(in millions)	Low			High			Low			High
Net income attributable to the Company (GAAP) (b)	$	189		$	198		$	15		$	19
Income attributable to the noncontrolling interest	—			—			(1		)	(1		)
Interest expense, net	—			—			—			—
Income tax expense	—			—			—			—
Depreciation and amortization	20			21			49			50
EBITDA (non-GAAP)	209			219			63			68
Restructuring expenses, net (c)	—			—			—			—
Foreign currency revaluation (gains)/losses (c)	1			1			—			—
Acquisition/integration costs (c)	—			—			1			1
Pre-tax (income)/loss attributable to non-controlling interest	—			—			1			1
Adjusted EBITDA (non-GAAP)	$	210		$	220		$	65		$	70
(b) Interest, Other income/expense and Income taxes are not allocated to the business segments

Forecast of Full Year 2021 Adjusted EBITDA	Total Company
(in millions)	Low			High
Net income attributable to the Company (GAAP)	$	92		$	102
Income attributable to the noncontrolling interest	(1		)	(1		)
Interest expense, net	16			16
Income tax expense	40			44
Depreciation and amortization	74			75
EBITDA (non-GAAP)	221			236
Restructuring expenses, net (c)	—			—
Foreign currency revaluation (gains)/losses (c)	2			2
Acquisition/integration costs (c)	1			1
Pre-tax (income)/loss attributable to non-controlling interest	1			1
Adjusted EBITDA (non-GAAP)	$	225		$	240

	Total Company
Forecast of Full Year 2021 Earnings per share (basic) (d)	Low			High
Net income attributable to the Company (GAAP)	$	2.84		$	3.14
Restructuring expenses, net (c)	—			—
Foreign currency revaluation (gains)/losses (c)	0.04			0.04
Acquisition/integration costs (c)	0.02			0.02
Adjusted Earnings per share (non-GAAP)	$	2.90		$	3.20

(c) Due to the uncertainty of these items, we are unable to forecast these items for 2021. The amount shown represents the value incurred through the second quarter.
(d) Calculations based on shares outstanding estimate of 32.4 million

About Albany International Corp.

Albany International is a leading developer and manufacturer of engineered components, using advanced materials processing and automation capabilities, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed, consumable fabrics and process belts essential for the manufacture of all grades of paper products. Albany Engineered Composites is a growing designer and manufacturer of advanced materials-based engineered components for demanding aerospace applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 23 facilities in 11 countries, employs approximately 4,000 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com.

Non-GAAP Measures

This release, including the conference call commentary associated with this release, contains certain non-GAAP measures, including: net sales, and percent change in net sales, excluding the impact of currency translation effects (for each segment and on a consolidated basis); EBITDA and Adjusted EBITDA (for each segment and on a consolidated basis, represented in dollars or as a percentage of net sales); Net debt; and Adjusted earnings per share (or Adjusted EPS). Such items are provided because management believes that they provide additional useful information to investors regarding the Company’s operational performance.

Presenting Net sales and increases or decreases in Net sales, after currency effects are excluded, can give 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, Adjusted EBITDA and Adjusted EPS are performance measures that relate to the Company’s continuing operations. EBITDA, or net income with interest, taxes, depreciation, and amortization added back, is a common indicator of financial performance used, among other things, to analyze and compare core profitability between companies and industries because it eliminates effects due to differences in financing, asset bases and taxes. The Company calculates EBITDA by removing the following from Net income: Interest expense, net, Income tax expense, Depreciation and amortization expense. Adjusted EBITDA is calculated by: adding to EBITDA costs associated with restructuring, former CEO termination costs, and inventory write-offs associated with discontinued businesses; adding charges and credits related to pension plan settlements and curtailments; adding (or subtracting) revaluation losses (or gains); subtracting (or adding) gains (or losses) from the sale of buildings or investments; subtracting insurance recovery gains in excess of previously recorded losses; adding acquisition/integration costs and subtracting (or adding) Income (or loss) attributable to the non-controlling interest in Albany Safran Composites (ASC). Adjusted EBITDA may also be presented as a percentage of net sales by dividing it by net sales. An understanding of the impact in a particular quarter of specific restructuring costs, former CEO termination costs, acquisition/integration costs, currency revaluation, inventory write-offs associated with discontinued businesses, or other gains and losses, on net income (absolute as well as on a per-share basis), operating income or EBITDA can give management and investors additional insight into core financial performance, especially when compared to quarters in which such items had a greater or lesser effect, or no effect. Restructuring expenses, while frequent in recent years, are reflective of significant reductions in manufacturing capacity and associated headcount in response to shifting markets, and not of the profitability of the business going forward as restructured. Adjusted earnings per share (Adjusted EPS) is calculated by adding to (or subtracting from) net income attributable to the Company per share, on an after-tax basis: restructuring charges; former CEO severance costs; charges and credits related to pension plan settlements and curtailments; inventory write-offs associated with discontinued businesses; foreign currency revaluation losses (or gains); acquisition-related expenses; and losses (or gains) from the sale of investments.

EBITDA, Adjusted EBITDA, and Adjusted EPS, as defined by the Company, may not be similar to similarly named measures of other companies. Such measures are not considered measurements under GAAP, and should be considered in addition to, but not as substitutes for, the information contained in the Company’s statements of income.

The Company discloses certain income and expense items on a per-share basis. The Company believes that such disclosures provide important insight into 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 an income tax rate based on either the tax rates in specific countries or the estimated tax rate applied to total company results. The tax rate applied excludes income tax adjustments (discrete tax adjustments and the effect of changes in the estimated income tax rate). 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.

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.

Forward-Looking Statements

This press release may contain statements, estimates, guidance or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “look for,” “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 Quarterly Report on Form 10-Q), actual results may differ materially from those expressed or implied by such forward-looking statements.

Forward-looking statements in this release or in the webcast include, without limitation, statements about macroeconomic and paper-industry trends and conditions during 2021 and in future years; expectations in 2021 and in future periods of sales, EBITDA, Adjusted EBITDA (both in dollars and as a percentage of net sales), Adjusted EPS, income, gross profit, gross margin, cash flows and other financial items in each of the Company’s businesses, and for the Company as a whole; the timing and impact of production and development programs in the Company’s AEC business segment and the sales growth potential of key AEC programs, as well as AEC as a whole; the amount and timing of capital expenditures, future tax rates and cash paid for taxes, depreciation and amortization; future debt and net debt levels and debt covenant ratios; and changes in currency rates and their impact on future revaluation gains and losses. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period. Such statements are based on current expectations, and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Statements expressing management’s assessments of the growth potential of its businesses, or referring to earlier assessments of such potential, are not intended as forecasts of actual future growth, and should not be relied on as such. While management believes such assessments to have a reasonable basis, such assessments are, by their nature, inherently uncertain. This release and earlier releases set forth a number of assumptions regarding these assessments, including historical results, independent forecasts regarding the markets in which these businesses operate, and the timing and magnitude of orders for our customers’ products. Historical growth rates are no guarantee of future growth, and such independent forecasts and assumptions could prove materially incorrect in some cases.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210726005685/en/

John Hobbs

603-330-5897

[email protected]

KEYWORDS: United States North America New Hampshire

INDUSTRY KEYWORDS: Aerospace Manufacturing Other Manufacturing Textiles Engineering

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