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What changed in ALBANY INTERNATIONAL CORP /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ALBANY INTERNATIONAL CORP /DE/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+378 added−351 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-26)

Top changes in ALBANY INTERNATIONAL CORP /DE/'s 2024 10-K

378 paragraphs added · 351 removed · 240 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

56 edited+40 added−33 removed26 unchanged
Biggest changeWe ensure that our global employees receive inclusive and competitive compensation, benefits, and total rewards for their critical contributions at Albany. For employees in the U.S. this includes 401(k) match and profit sharing contribution, paid time off, personal days off, health and dental insurance, pet insurance, reward and recognition programs, and strong commitment to employee well-being and work/life balance.
Biggest changeIn the U.S., this includes 401(k) matching, profit sharing, paid time off, health and dental insurance, and recognition programs, among others. We also emphasize work-life balance and well-being. We support global human rights, aligning our policies with the United Nations Global Compact and the Universal Declaration of Human Rights.
Our Data Security strategy is overseen by the Audit Committee of our Board of Directors, regularly reviewed at the executive level, directed by our Chief Information Officer, and managed by our Enterprise Cyber Security (ECS) team. For information on our approach, see Item 1C, Cybersecurity in this Part I and the Sustainability section of our website at www.albint.com.
Our Data Security strategy is overseen by the Audit Committee of our Board of Directors, regularly reviewed at the executive level, directed by our Chief Information Officer, and managed by our Enterprise Cyber Security (ECS) team. For information on our approach, see Item 1C, Cybersecurity in this Part I and the Sustainability section of our website at https://www.albint.com/sustainability/.
AEC, through ASC, is the exclusive supplier to the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircrafts.
AEC, through ASC, is the exclusive supplier to the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract. The LEAP engine is used on the Airbus A320neo and A321neo, Boeing 737 MAX, and COMAC 919 aircrafts.
Competition Price and technology are the primary means of competitive differentiation in the industry. Our MC product portfolio is broad and deep, with products for every part of the machine and a wide range of machine types and paper grades.
Competition Machine Clothing Price and technology are the primary means of competitive differentiation in the industry. Our MC product portfolio is broad and deep, with products for every part of the machine and a wide range of machine types and paper grades.
A forming fabric assists in paper sheet formation and conveys the very wet sheet through the forming section. Pressing fabrics are designed to carry the sheet through the press section, where water is pressed from the sheet as it passes through the press nip.
A forming fabric assists in paper sheet formation and conveys the very wet sheet through the forming section. Pressing fabrics are designed to carry the sheet through the press section, where water is mechanically pressed from the sheet as it passes through the press nip.
This experience and knowledge, combined with knowledge of and experience with the Company’s own extensive product portfolio, allows the sales and technical teams to ensure that the appropriate machine clothing products are being supplied for each part of the machine, to customize those products as needed for best performance, and to continuously propose new products that offer each customer the possibility of even better performance and increased savings.
This experience and knowledge, combined with knowledge of and experience with MC’s own extensive product portfolio, allows the sales and technical teams to ensure that the appropriate machine clothing products are being supplied for each part of the machine, to customize those products as needed for best performance, and to continuously propose new products that offer each customer the possibility of even better performance and increased savings.
In addition, copies of our Annual Report on Form 10-K will be made available, free of charge, upon written request. We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K. 12 Index
In addition, copies of our Annual Report on Form 10-K will be made available, free of charge, upon written request. We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K. 13 Index
He previously spent 16 years at Kaman Corporation where he served as the 11 Index Vice President, Finance and Chief Accounting Officer from 2007 to 2020. Earlier in his career he held finance and accounting roles of increasing responsibility at Diageo NA, United Technologies Corp., and KPMG.
He previously spent 16 years at Kaman Corporation where he served as the Vice President, Finance and Chief Accounting Officer from 2007 to 2020. Earlier in his career he held finance and accounting roles of increasing responsibility at Diageo NA, United Technologies Corp., and KPMG.
Some customer funded research and development may be on a cost sharing basis, in 6 Index which case, amounts charged to the collaborating entity are credited against research and development costs. For customer-funded research and development in which we anticipate funding to exceed expenses, we include amounts charged to the customer in Net revenues.
Some customer funded research and development may be on a cost sharing basis, in which case, amounts charged to the collaborating entity are credited against research and development costs. For customer-funded research and development in which we anticipate funding to exceed expenses, we include amounts charged to the customer in Net revenues.
Before 2000, he served the Company in a number of technical management and research and development positions in Europe and the U.S. John J. Tedone, 59, Vice President – Controller and Chief Accounting Officer , joined the Company in 2023. Prior to joining the Company, Mr.
Before 2000, he served the Company in a number of technical management and research and development positions in Europe and the U.S. John J. Tedone, 60, Vice President – Controller and Chief Accounting Officer , joined the Company in 2023. Prior to joining the Company, Mr.
In addition, we can be held liable for damages resulting from our default and may be responsible to provide transition services to another supplier or the customer. Available Information Our principal executive offices are located at 216 Airport Drive, Rochester, New Hampshire 03867. Our telephone number is 603-330-5800 and our website address www.albint.com.
In addition, we can be held liable for damages resulting from our default and may be responsible to provide transition services to another supplier or the customer. Available Information Our principal executive offices are located at 216 Airport Drive, Rochester, New Hampshire 03867. Our telephone number is 603-330-5850 and our website is www.albint.com.
Governance We are incorporated under the laws of the State of Delaware and are the successor to a New York corporation originally incorporated in 1895, which was merged into the Company in August 1987 solely for the purpose of changing the domicile of the corporation.
Governance We are incorporated under the laws of the State of Delaware and are the successor to a New York corporation originally incorporated in 1895, which was merged into the Company in August 1987 solely for the purpose of 12 Index changing the domicile of the corporation.
The Company’s research and development team works closely with the sales and technical organization to develop new products to meet changes in customer needs, and also pursues targeted joint development activities with customers and equipment manufacturers to create new products.
MC's research and development team works closely with the sales and technical organization to develop new products to meet changes in customer needs, and also pursues targeted joint development activities with customers and equipment manufacturers to create new products.
Our paper machine clothing solutions enable our customers to reduce energy consumption, improve resource efficiency, and help maintain and improve water quality. These efforts – which effectively integrate the Company’s experience and technological expertise into each product we sell – are reflected in the Company’s strong competitive position in the marketplace.
MC's machine clothing solutions enable our customers to reduce energy and water consumption, improve resource efficiency, and help maintain and improve water quality. These efforts – which effectively integrate MC’s experience and technological expertise into each product we sell – are reflected in MC’s strong competitive position in the marketplace.
In addition, we manufacture polymer monofilaments, a basic raw material for all types of machine clothing, at our facility in Homer, New York, which supplies approximately 25 percent of our worldwide monofilament requirements. In our AEC segment, the primary raw materials are carbon fiber and resin.
In addition, we manufacture polymer monofilaments, a basic raw material for all types of machine clothing, at our facility in Homer, New York, which supplies approximately 20% of our worldwide monofilament requirements. In our AEC segment, the primary raw materials are carbon fiber and resin.
International Operations Our MC business segment maintains manufacturing facilities in Belgium, Brazil, Canada, China, France, Germany, Italy, Mexico, South Korea, Spain, Sweden, Switzerland, the United Kingdom, and the United States. MC's global manufacturing footprint is designed to most efficiently meet regional customer requirements.
International Operations Our MC business segment maintains manufacturing facilities in Belgium, Brazil, Canada, China, France, Germany, Italy, Mexico, Spain, Sweden, the United Kingdom, and the United States. MC's global manufacturing footprint is designed to most efficiently meet regional customer requirements.
AEC designs, develops and manufactures advanced composite parts and sub-assemblies for complex aerospace applications, using a range of core technologies, including its proprietary 3D-woven reinforced composites technology, traditional 2D laminated composite structures, automated fiber placement for both thermoplastics and thermoset composites as well as rigid installation for through-thickness reinforcements, and braided structures.
AEC develops innovative solutions and manufactures advanced composite parts and assemblies for complex aerospace applications, using a range of core technologies, including its proprietary 3D-woven reinforced composites technology, traditional 2D laminated composite structures, automated fiber placement for both thermoplastics and thermoset composites as well as rigid installation for through-thickness reinforcements, and braided structures.
Following is a table of Net revenues by segment for years ended December 31, 2023, 2022, and 2021.
Following is a table of Net revenues by segment for years ended December 31, 2024, 2023, and 2022.
Some of the Company’s paper machine clothing competitors also supply paper machines, papermaking equipment, and aftermarket parts and services, and often bundle machine clothing products with original or rebuilt machines and/or aftermarket services. The primary competitive factors in the markets in which our AEC segment competes are product performance, delivery performance, quality, and price.
Some of the MC’s paper machine clothing competitors also supply paper machines, papermaking equipment, and aftermarket parts and services, and often bundle machine clothing products with original or rebuilt machines and/or aftermarket services. Albany Engineered Composites The primary competitive factors in the markets in which our AEC segment competes are product performance, delivery performance, quality, and price.
Our broad array of capabilities in composites enables us to offer customers the opportunity to displace metal components and, in some cases, conventional composites with lower-weight, high-strength, and potentially high-temperature resistant composites.
Our broad array of capabilities in composites enables us to offer customers the opportunity to displace metal components and, in some cases, conventional composites with lower-weight, higher-strength, and higher-temperature and corrosion resistant composites.
AEC’s largest aerospace customer is SAFRAN and sales to SAFRAN (consisting primarily of fan blades and cases for CFM’s LEAP engine) accounted for approximately 16 percent of the Company’s consolidated Net revenues in 2023.
AEC’s largest aerospace customer is SAFRAN and sales to SAFRAN (consisting primarily of fan blades and cases for CFM’s LEAP engine) accounted for approximately 14% of the Company’s consolidated Net revenues in 2024.
Our AEC business segment maintains manufacturing facilities in the United States, France, Mexico, and Germany to meet customer demand in those regions. Our global presence subjects us to certain risks, including tariffs and other restrictions on trade, and controls on foreign exchange and the repatriation of funds.
Our AEC business segment maintains manufacturing facilities in the United States, France, Mexico, and Germany to meet customer demand in those regions. Our global presence subjects us to certain risks, including tariffs and other restrictions on trade, foreign exchange exposure and our ability to repatriate funds from foreign jurisdictions.
On August 31, 2023, the Company completed the acquisition of Heimbach GmbH ("Heimbach"), a privately-held manufacturer of paper machine clothing and technical textiles, as further described in Note 24, Business Combination, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K .
In August 2023, the Company completed the acquisition of Heimbach GmbH ("Heimbach"), a privately-held manufacturer of paper machine clothing and technical textiles. For additional information, see Note 24, Business Combination, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of our 2023 Annual Report on Form 10-K .
Technical and research expenses totaled $40.6 million in 2023, $39.9 million in 2022, and $38.9 million in 2021. In 2023, these costs were 3.5 percent of total Company Net revenues, including $16.0 million, or 3.3 percent of Net revenues, in our AEC segment. Research and development in the AEC segment include both Company-sponsored and customer-funded activities.
Technical and research expenses totaled $46.1 million in 2024, $40.6 million in 2023, and $39.9 million in 2022. In 2024, these costs were 3.7% of total Company Net revenues, including $16.3 million, or 3.4% of Net revenues, in our AEC segment. Research and development in the AEC segment include both Company-sponsored and customer-funded activities.
We are committed to reducing waste, both from our own operations as well as our customers’, and we continue to look for opportunities to reduce waste generated across our operations and our products. As a first step we strive to separate our waste streams across our operations including general waste, hazardous waste, electronic waste, and carbon fiber/raw material waste.
We continue to look for opportunities to reduce waste generated across our operations and our products. As a first step we strive to separate our waste streams across our operations including general waste, hazardous waste, electronic waste, carbon fiber/raw material waste, and compostable material.
He previously served as Vice President – Corporate Research and Development from April 2006 to January 2010, and Director of Technical and Marketing – Europe Press Fabrics from 2004 to April 2006. From 2000 to 2004, he served as Technical Director – Göppingen, Germany.
Hansen has served the Company as Senior Vice President and Chief Technology Officer since January 2010. He previously served as Vice President – Corporate Research and Development from April 2006 to January 2010, and Director of Technical and Marketing – Europe Press Fabrics from 2004 to April 2006. From 2000 to 2004, he served as Technical Director – Göppingen, Germany.
(in thousands) 2023 2022 2021 Machine Clothing $ 670,768 $ 609,461 $ 619,015 Albany Engineered Composites 477,141 425,426 310,225 Total net revenues $ 1,147,909 $ 1,034,887 $ 929,240 The table that sets forth certain Net revenues, operating income, and balance sheet data appears in Note 3, Reportable Segments and Geographic Data, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
(in thousands) 2024 2023 2022 Machine Clothing $ 749,907 $ 670,768 $ 609,461 Albany Engineered Composites 480,708 477,141 425,426 Total net revenues $ 1,230,615 $ 1,147,909 $ 1,034,887 The table that sets forth certain segment financial performance metrics and selected balance sheet data appears in Note 3, Reportable Segments and Geographic Data, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Our machine clothing solutions use innovative technologies to reduce the amount of heat energy required for paper production. We continue to innovate and remain focused on developing and bringing to market proprietary products aimed at improving the energy and resource efficiency needed for our customers’ products and their production processes.
We continue to innovate and remain focused on developing and bringing to market proprietary products aimed at improving the energy and resource efficiency needed for our customers’ products and their production processes.
In the drying section, drying fabrics manage air movement and hold the sheet against heated cylinders to enhance drying to a final moisture content between 4 percent to 9 percent, depending on the grade.
In the drying section, drying fabrics manage air movement and hold the sheet against heated cylinders to enhance drying and help control tight tolerances of final moisture content depending on the grade.
Other significant AEC programs include the production of structures, parts and sub-assemblies for the Sikorsky CH-53K helicopter, F-35 fighter jet, Joint Air-to-Surface Standoff Missile ("JASSM"), and Boeing 787 aircraft. AEC also supplies vacuum waste tanks for most Boeing commercial aircraft, as well as the fan case for the GE9X engine.
Other significant AEC programs include the production of structures, parts and sub-assemblies for the Sikorsky CH-53K helicopter, F-35 fighter jet, Joint Air-to-Surface Standoff Missile ("JASSM"), Boeing 787 aircraft, and components and structures on other commercial, business jet, defense, space and AAM programs.
The MC segment sells its products directly to customer end-users in countries across the globe. MC products, manufacturing processes, and distribution channels are substantially the same in each region of the world in which we operate.
The MC segment sells its products directly to customer end-users in countries across the globe. MC products, manufacturing processes, and distribution channels are substantially similar in each region of the world in which we 5 Index operate. No individual customer accounted for as much as 10% of MC segment Net revenues in any of the periods presented.
He has served the Company as President and Chief Executive Officer since September 2023. Prior to joining the Company, Mr. Kleveland served as President and Chief Executive Officer of Textron Specialized Vehicles Inc. He also served as the President of TRU Simulation + Training Inc. and Executive Vice President of Integrated Operations for Bell Helicopter Textron Inc.
Kleveland served as President and Chief Executive Officer of Textron Specialized Vehicles Inc. He has also served as the President of TRU Simulation + Training Inc. and Executive Vice President of Integrated Operations for Bell Helicopter Textron Inc. Prior to joining Textron in 2004, Mr. Kleveland was a fighter pilot in the Royal Norwegian Air Force (RNoAF). Robert D.
As described above, we have a comprehensive sustainability program that seeks to manage the risks and opportunities associated with sustainability and climate change.
As described above, we have a comprehensive sustainability program that seeks to manage the risks and opportunities associated with sustainability and climate change. For more information on the risk of sustainability- and climate-related regulation, see Item 1A - Risk Factors.
We have applied learnings from our 128+ years of experience manufacturing machine clothing to pioneer 3D weaving technologies to manufacture our composite material. The process involves layering and interweaving fibers in a precise, computer-controlled process to create complex, high-strength parts that allows for the production of lightweight and strong composite parts with high-performance properties.
The process involves layering and interweaving fibers in a precise, computer-controlled process to create complex, high-strength parts that allows for the production of lightweight and strong composite parts with high-performance properties.
Waste streams are collected via appropriate third parties, with the objective of optimizing reuse and minimizing waste to landfill. For example, at one of our facilities we have achieved zero waste to landfill since 2022, primarily through recycling and converting waste to energy sources. Innovation and partnerships are key to our core business and our sustainability objectives.
Waste streams are collected via appropriate third parties, with the objective of optimizing reuse and minimizing waste to landfill. Innovation and partnerships are key to our core business and our sustainability objectives.
Prior to 2004 he was a principal at McNamee, Lochner, Titus & Williams, PC. Robert A. Hansen, 66, Senior Vice President and Chief Technology Officer, joined the Company in 1981. Mr. Hansen has served the Company as Senior Vice President and Chief Technology Officer since January 2010.
Prior to 2004 he was a principal at the law firm of McNamee, Lochner, Titus & Williams, PC, where, among other clients, he had represented the Company in various matters as outside counsel. Robert A. Hansen, 67, Senior Vice President and Chief Technology Officer, joined the Company in 1981. Mr.
The dominant competitive factor is the relative 7 Index importance the customer places on these performance benefits, which include fuel savings/emissions reductions due to lower weight, against the possible cost advantage of more traditional metal and composite components. Human Capital Resources The health and safety of our employees is our highest priority, and drives the successful execution of our business.
The dominant competitive factor is the relative importance the customer places on these performance benefits, which include fuel savings/emissions reductions due to lower weight, against the possible cost advantage of more traditional metal and composite components. Human Capital Resources At our company, we are proud to employ approximately 5,400 people across North America, South America, Europe, and Asia.
We continue to focus on the impact of our own operations by evaluating our risks and identifying actionable opportunities to drive meaningful improvement in our energy and GHG emissions intensity, as well as our products’ environmental impact.
We continue to focus on the impact of our own operations by evaluating our risks and identifying actionable opportunities to drive meaningful improvement in our energy and emissions intensity, as well as our products’ environmental impact. 10 Index Water and Waste We are also committed to reducing waste, both from our own operations as well as our customers’, and we have a goal of zero waste to landfill by 2030 for our operations in the Americas and Europe.
Technical expertise, judgment, and experience are critical in designing the appropriate clothing for each machine, position, and application. As a result, many employees in sales and technical functions have engineering degrees, paper mill experience, or other manufacturing experience in the markets in which we operate. Our market leadership position reflects our commitment to technology innovation.
As a result, many employees in sales and technical functions have engineering degrees, paper mill experience, or other manufacturing experience in the markets in which we operate. Our market leadership position reflects our 6 Index commitment to technology innovation. This innovation has resulted in new products and enhancements across all of our product lines.
While the direct impact of recent developments in global trade and tariff policy has not been significant, there is risk that the impact of such developments on companies in our supply chain will be reflected in higher costs from affected suppliers.
While global trade and tariff policies have not had a material impact to our past results of operations, there is risk that the impact of recent developments on companies in our supply chain could cause higher costs from affected suppliers.
Prior to joining the Company, he served for 18 months as Chief Financial Officer of Fairbanks Morse Defense, a privately-held supplier of naval power and propulsion systems. He previously spent 12 years at Kaman Corporation where he served as Chief Financial Officer for 8 years and VP, Treasurer for 4 years. Before joining Kaman, Mr.
Starr, 57, Executive Vice President and Chief Financial Officer, joined the Company in 2023. Prior to joining the Company, he served for 18 months as Chief Financial Officer of Fairbanks Morse Defense, a privately-held supplier of naval power and propulsion systems.
We manufacture and sell approximately twice as much paper machine clothing worldwide than any other company. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.
PMC Products: We design, manufacture, and market paper machine clothing for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.
Research and Development and Technology We invest in research, new product development, and technical analysis with the objective of maintaining our technological leadership in each business segment. While much of our research activity supports existing products, we also engage in significant research and development activities for new technology platforms, products and product enhancements.
While much of our research activity supports existing products, we also engage in significant research and development activities for new technology platforms, products and product enhancements. Our MC segment products are custom-designed for each user, depending on the type, size, and speed of the machine, and the products being produced.
For more information on the risk of sustainability- and climate-related regulation, see Item 1A - Risk Factors. 10 Index Executive Officers The following table sets forth certain information with respect to the executive officers of the Company as of February 26, 2024: Gunnar Kleveland, 54, President and Chief Executive Officer , joined the Company in 2023.
Executive Officers The following table sets forth certain information with respect to the executive officers of the Company as of February 26, 2025: Gunnar Kleveland, 55, President and Chief Executive Officer , joined the Company in 2023 and serves the Company as President and Chief Executive Officer. Prior to joining the Company, Mr.
Our MC segment products are custom-designed for each user, depending on the type, size, and speed of the machine, and the products being produced. Products are specifically designed for each section and position on a machine, the grade of product being produced, and the quality of the stock used.
Products are specifically designed for each section and position on a machine, the grade of product being produced, and the quality of the stock used. Technical expertise, judgment, and experience are critical in designing the appropriate clothing for each machine, position, and application.
And we are committed to going beyond regulatory requirements, implementing responsible and intentional strategies to continually minimize our environmental impact.
And we are committed to going beyond regulatory requirements, implementing responsible and intentional strategies to continually minimize our environmental impact. We are proud to partner with an independent third-party enterprise climate platform to enhance measurement, reporting, and reduction of our carbon emissions.
The financial results of the acquired company are included in the MC reportable segment. The Albany Engineered Composites (“AEC”) segment, provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, SAFRAN Group ("SAFRAN"), owns a 10 percent noncontrolling interest.
AEC provides highly engineered, advanced composite structures and assembly solutions to customers and platforms in the commercial and defense markets, as well as for space-launch vehicles and the emerging advanced air mobility market (“AAM”). The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, SAFRAN Group ("SAFRAN"), owns a 10% noncontrolling interest.
As described above, our paper machine clothing products enable our paper-making customers to reduce their own environmental footprint by reducing their energy consumption, improving resource efficiency, and helping maintain and improve water quality. Energy is one of the top three cost components in the paper making process.
Our products are designed for performance and consistency, while enabling our customers to improve their environmental footprint through more sustainable and efficient processes and end products. As described above, our paper machine clothing products enable our paper-making customers to reduce their own environmental footprint by reducing their energy consumption, and improving both resource and operating efficiency.
We have a cash repatriation strategy that targets a certain amount of foreign current year earnings that are not indefinitely reinvested. Changes in the trade or regulatory compliance in any country that we have significant cash balances could make it difficult to repatriate foreign earnings cost-effectively in the future.
Changes in the trade or regulatory compliance in any country that we have significant cash balances could make it more difficult to repatriate foreign earnings cost-effectively in the future. Research, Development and Technology We invest in research, new product development, and technical analysis with the objective of maintaining our technological leadership in each business segment.
Process belts are used in the press section to increase dryness and enhance sheet properties, as well as in other sections of the machine to improve runnability and enhance sheet qualities. The MC segment also supplies engineered processing belts used in the manufacturing process in the pulp, corrugator, nonwovens, fiber cement, building products, and textile industries.
Process belts are used in the press section to increase dryness and enhance sheet properties, as well as in other sections of the machine to improve runnability and enhance sheet qualities. PMC product revenues accounted for more than 80% of MC’s segment Net revenues. EF products: EF products are solution-focused, custom-designed fabrics and belts.
In aerospace, weight savings that drive fuel efficiency are essential for aircraft producers, if the industry is to achieve its goals for sustainable aviation. This fundamental design goal has driven the increased use of lightweight composite structures in an ever-broadening sphere of aerospace applications.
This includes further exploration into increasing both the use of recycled materials in our products, and improving the recyclability of our products at the end of their useful life. In aerospace, weight savings that drive fuel efficiency are essential for aircraft producers, if the industry is to achieve its goals for sustainable aviation.
In 2023, we partnered with an independent third-party enterprise climate platform to enhance measurement, reporting, and reduction of our carbon emissions. This work sets the foundation for calculating Scope 3 emissions and, importantly, developing a climate transition plan to address both our products and services as well as our company operations and manufacturing footprint.
This work has set the foundation for developing a climate transition plan to address both our products and services as well as our company operations and manufacturing footprint. In 2023, we signed a commitment letter with the Science Based Targets Initiative ("SBTi") that commits us to establishing near-term Science-Based Targets.
Cost of goods sold associated with customer-funded research was $6.4 million in 2023, $5.2 million in 2022, and $5.2 million in 2021. We have developed, and continue to develop, proprietary intellectual property germane to the industries we serve. Our intellectual property takes many forms, including patents, trademarks, trade names and domains, and trade secrets.
Cost of goods sold associated with customer-funded research was $5.6 million in 2024, $6.4 million in 2023, and $5.2 million in 2022.
Item 1. Business Albany International Corp. (the Registrant, the Company, Albany, we, us, or our) and its subsidiaries are engaged in two business segments. The Machine Clothing (“MC”) segment supplies consumable permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, pulp, nonwovens, fiber cement and several other industrial applications.
MC supplies highly engineered consumable permeable, and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, and pulp, referred to in the industry as “machine clothing” or “paper machine clothing.” The MC segment also supplies Engineered Fabric (“EF”) products that provide solutions for nonwovens, fiber cement and several other industrial applications.
Gaug, 60, Vice President – General Counsel and Secretary, joined the Company in 2004. Mr. Gaug has served the Company as Vice President – General Counsel and Secretary since May 2020. He previously served as Associate General Counsel from 2004 and as Associate General Counsel and Assistant Secretary from 2006 to May 2020.
Gaug is responsible for the Company's global legal, compliance, sustainability, risk management, and intellectual property functions, overseeing a team of lawyers, paralegals and other professionals. He has served as General Counsel and Secretary since 2020. He previously served as Associate General Counsel from 2004 and as Associate General Counsel and Assistant Secretary from 2006 to May 2020.
Starr held increasingly senior treasury roles at large publicly listed companies including Crane Co., Aetna and Fisher Scientific International. Early in his career he worked in investment banking both domestically and internationally across a broad range of industries. Daniel A. Halftermeyer, 62, President – Machine Clothing, joined the Company in 1987. Mr.
Early in his career he worked in investment banking both domestically and internationally across a broad range of industries. Merle Stein, 48, President – Machine Clothing , joined the company in 2011. He has considerable experience in the paper and pulp industries and significant knowledge of the Machine Clothing business and a strategic understanding of the markets it serves.
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Within the pulp and paper industry these belts are referred to as “machine clothing” or “paper machine clothing.” In other industries we serve the products we produce are generally referred to as “processing belts.” We design, manufacture, and market paper machine clothing for each section of the paper machine and for every grade of paper.
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Item 1. BUSINESS General Founded in 1895, Albany International Corp. is a global leader in advanced textiles and materials processing specializing in designing and manufacturing high-performance engineered fabrics and composite components and assemblies that serve industries such as paper, industrial manufacturing, and aerospace.
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The sales of paper machine clothing forming, pressing, and drying fabrics, individually and in the aggregate, accounted for more than 10 percent of our consolidated Net revenues during one or more of the last three years. No individual customer accounted for as much as 10 percent of MC segment Net revenues in any of the periods presented.
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The terms the Registrant, the Company, Albany, we, us, or our mean Albany International Corp. and its subsidiaries, unless the context indicates another meaning.
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A majority of MC segment Net revenues in the year ended December 31, 2023 were for use in the production of the growing grades of tissue, containerboard, other paper categories, and other engineered fabrics, while less than 20 percent of MC segment Net revenues were for the production of the declining newsprint and printing and writing papers categories.
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The following description of our business should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Item 7 of this Annual Report on Form 10-K, including the information contained therein under the heading “Business Environment Overview and Trends.” Business Segments The Company operates under two business segments: Machine Clothing and Albany Engineered Composites.
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In 2023, approximately 39 percent of the AEC segment’s revenues were related to U.S. government contracts or programs. 5 Index See “Business Environment Overview and Trends” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for a discussion of general segment developments in recent years.
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Machine Clothing The Machine Clothing (“MC”) segment is the world’s leading producer of custom-designed fabrics and high-speed process belts critical in the manufacture of all grades of paper products characterized primarily as Paper Machine Clothing (“PMC”).
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This innovation has resulted in new products and enhancements across all of our product lines.
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These products are also utilized in process industries outside of papermaking such as nonwovens, corrugators, building products, tannery and textile industries and designed to improve production rates and lower the overall cost of operation. EF product revenue accounted for less than 20% of the MC segment’s Net revenues.
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Our trade secrets include, among other things, manufacturing know-how and unique processes and equipment. Because intellectual property in the form of patents is published, we often forgo patent protection and preserve the intellectual property as trade secrets. We aggressively protect our proprietary intellectual property, pursuing patent protection when appropriate.
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The financial results of the acquired company are included in the MC reportable segment. Albany Engineered Composites The Albany Engineered Composites (“AEC”) segment is a leader in innovative composite technology solutions and manufacturer of engineered components, structures and assemblies for demanding aerospace and defense applications.
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Our active portfolio currently contains over 2,300 patents, and approximately 100 new patents are typically granted each year. While we consider our total portfolio of intellectual property, including our patents, to be an important competitive advantage, we do not believe that any single patent is critical to the continuation of our business.
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AEC also supplies vacuum waste tanks for most Boeing commercial aircraft, as well as the fan case for the GE9X engine used on the Boeing 777 aircraft. In 2024, approximately 36% of the AEC segment’s revenues were related to U.S. government contracts or programs.
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All brand names and product names are trade names of Albany International Corp. or its subsidiaries. Raw Materials Primary raw materials for our MC products are polymer monofilaments and fibers, which have generally been available from a number of suppliers.
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With the change in the United States Presidential Administration, proposed tariffs by the new Administration may significantly adversely impact our results of operations. We have a cash repatriation strategy that manages a certain amount of foreign current year earnings that are not indefinitely reinvested.
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Our objective is always zero injuries at work, and our entire workforce from the Board of Directors to our teams on the shop floor work together towards this goal. We track and review safety metrics throughout the year, including Total Recordable Incident Rate ("TRIR") and proactive safety actions taken.
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In addition, AEC continues to leverage its 3D woven technology to develop differentiated processing solutions for high-temperature applications, including hypersonic flight components. AEC is working closely with its customers to develop high performance alternatives to traditional thermal protection and energy absorption requirements.
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Our Board of Directors further reinforces our culture of safety by tying a portion of each Executive Officer's compensation to the achievement of TRIR goals across the entire company. Our talented and innovative people are truly our greatest advantage. We are unwavering in our commitment to nurture a thriving people-first and high-engagement workplace culture defined by mutual respect.
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These preforms serve as the building blocks for an array of critical applications, ranging from thermal protection to energy absorption.
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We strive to foster an inclusive and equitable culture where diversity of experiences, backgrounds, and skills are valued, respected, and celebrated. We believe that an inclusion-based culture has the power to enhance innovation, nurture an environment where our people can reach their highest potential, and deliver the best solutions to our customers.
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New Business Ventures In 2024, the Company launched a New Business Ventures team dedicated to developing innovative products and business opportunities that address high growth opportunities which are adjacent to our current business portfolio utilizing our existing developed technologies, materials science and extensive expertise across our MC and AEC segments.
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We believe in the power of open and transparent communication throughout the organization and endeavor to ensure our employees’ voices are heard. We currently employ approximately 5,600 people, with significant global operations in North America, South America, Europe and Asia. Our Employee Value Proposition enables us to provide an outstanding Albany employee experience and strengthen our high-performance organization.
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The strategy is to unlock further potential in focus areas, such as 3D weaving, resin transfer molding, large scale flat weaving, and the application of technically diverse composite materials and coatings, to create and certify groundbreaking products.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIssues may exist that could rise to the level of significant deficiencies or, in some cases, material weaknesses, particularly with respect to foreign companies or non-public U.S. companies. Customer dissatisfaction or performance problems with an acquired business, technology, service or product could also have a material adverse effect on our reputation and business.
Biggest changeWe may fail to achieve anticipated synergies and lose key employees of the acquired business. In addition, internal controls over financial reporting of acquired companies may not be compliant with required standards. Issues may exist that could rise to the level of significant deficiencies or, in some cases, material weaknesses, particularly with respect to foreign companies or non-public U.S. companies.
The Company is a significant user of raw materials that are based on petroleum or petroleum derivatives. Increases in the prices of petroleum or petroleum derivatives, particularly in regions that are experiencing higher levels of inflation, could increase our costs, and we may not be able to fully offset the effects through price increases, productivity improvements, and cost-reduction programs.
The Company is a significant user of raw materials that are based on petroleum or petroleum derivatives. Increases in the prices of petroleum or petroleum derivatives, particularly in regions that are experiencing higher levels of inflation, could increase our costs, and we may not be able to fully offset the effects through price increases, productivity improvements, or cost-reduction programs.
We believe our brand names and our reputation are important corporate assets that help distinguish our products and services from those of our competitors and also contribute to our efforts to recruit and retain talented employees.
We believe our brand names and reputation are important corporate assets that help distinguish our products and services from those of our competitors and also contribute to our efforts to recruit and retain talented employees.
We also may choose not to conduct business with potential customers or suppliers or discontinue or not expand business with existing customers due to these positions. There is a risk that negative or inaccurate information about the Company, even if based on rumor or misunderstanding, could adversely affect our business.
We also may choose not to conduct business with potential customers or suppliers or discontinue or not expand business with existing customers or suppliers due to these positions. There is a risk that negative or inaccurate information about the Company, even if based on rumor or misunderstanding, could adversely affect our business.
Changes in laws and regulations could also mandate significant and costly changes to the way we conduct our business, including increasing the cost of compliance, or could impose additional taxes. Such changes may result in contracts being terminated, greater costs to us, or could have a negative impact on our ability to obtain future work from government customers.
Changes in laws and regulations could also mandate significant and costly changes to the way we conduct our business, including increasing the cost of compliance, or could impose additional taxes. Such changes may result in contracts being terminated, greater costs to us, or could have a negative impact on our ability to obtain future work from government or other customers.
LEAP engines are currently used on the Boeing 737 MAX, Airbus A320neo and COMAC 919 aircraft. The LEAP long-term supply agreement contains certain events of default that, if triggered, could result in termination of the agreement by the customer, which would also have a material adverse impact on segment Net revenues and profitability.
LEAP engines are currently used on the Boeing 737 MAX, Airbus A320neo, Airbus A321neo and COMAC 919 aircraft. The LEAP long-term supply agreement contains certain events of default that, if triggered, could result in termination of the agreement by the customer, which would also have a material adverse impact on segment Net revenues and profitability.
Because of the significance of management’s judgments and estimation processes, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may adversely affect our future results of operations and financial condition.
Because of the significance of management’s judgments and estimation processes, it is likely that materially different estimates could be recorded in the future if we used different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may adversely affect our future results of operations and financial condition.
These provisions could delay or prevent a change in control and could limit the price that investors might be willing to pay in the future for shares of our Class A Common Stock. Our Certificate of Incorporation authorizes our Board of Directors to issue new series of preferred stock without stockholder approval.
These provisions could delay or prevent a change in control and could limit the price that investors might be willing to pay in the future for shares of our Common Stock. Our Certificate of Incorporation authorizes our Board of Directors to issue new series of preferred stock without stockholder approval.
In the event that AEC succeeds in developing products and securing contracts to manufacture and supply them, it will face the same industrialization and manufacturing ramp-up risks that it currently faces in its existing contracts, and AEC may or may not be successful in meeting its obligations under these contracts.
In the event that AEC succeeds in developing products and securing contracts to manufacture and supply them, it will face the same industrialization and manufacturing ramp-up risks that it currently faces on its existing contracts, and AEC may or may not be successful in meeting its obligations under these contracts.
Furthermore, both the MC and AEC business segments manufacture products that are custom-designed for a specific customer application. In the event of a customer liquidity issue, the Company could also be required to write off amounts that are included in Contract assets or Inventories.
Furthermore, both the MC and AEC business segments manufacture products that are custom-designed for a specific customer application. In the event of a customer liquidity issue, the Company could be required to write off amounts that are included in Contract assets or Inventories.
While the direct impact to date of recent developments in global trade and tariff policy has not been significant, there is a risk that the impact of such developments on companies in our supply chain will be reflected in higher costs from affected suppliers.
While the direct impact to date of recent developments in global trade and tariff policy has not been significant, there is a risk that the impact of such developments on our supply chain will be reflected in higher costs from affected suppliers.
Depending on the rights and terms of any new series created, and the reaction of the market to the series, the rights or value of our Class A Common Stock could be negatively affected. For example, subject to applicable law, our Board of Directors could create a series of preferred stock with superior voting rights to our existing common stock.
Depending on the rights and terms of any new series created, and the reaction of the market to the series, the rights or value of our Common Stock could be negatively affected. For example, subject to applicable law, our Board of Directors could create a series of preferred stock with superior voting rights to our existing common stock.
Risks related to our financial matters Fluctuations in currency exchange rates could adversely affect the Company’s business, financial condition, and results of operations. We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results.
Risks related to our liquidity and financial matters Fluctuations in currency exchange rates could adversely affect the Company’s business, financial condition, and results of operations. We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results.
Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investment in product designs, result in carbon offset investments or otherwise could negatively impact our business and/or competitive position.
Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investment in product and packaging designs, result in carbon offset investments or otherwise could negatively impact our business and/or competitive position.
The risks associated with limited suppliers increased as a result of the COVID-19 pandemic, which has put pressure on the supply chain in general, and on transportation companies that deliver raw materials to us and our products to customers, in particular.
The risks associated with limited suppliers increased as a result of the COVID-19 pandemic, which has put pressure on the supply chain in general, and on transportation companies that deliver raw materials to us and our products to customers.
Certain provisions of our Certificate of Incorporation, our Bylaws and Delaware law could hinder, delay or prevent a change in control of us that you might consider favorable, which could also adversely affect the price of our Class A Common Stock.
Certain provisions of our Certificate of Incorporation, our Bylaws and Delaware law could hinder, delay or prevent a change in control of us that you might consider favorable, which could also adversely affect the price of our Common Stock.
Additionally, many of AEC’s customers, as well as the companies supplied by our customers, are under pressure to improve returns on their substantial investments in recent years in new technologies, new programs and new product introductions.
Additionally, many of AEC’s customers, as well as the companies supplied by our customers, are under pressure to improve returns on their substantial investments made in recent years in new technologies, new programs and new product introductions.
Similarly, in the Company’s AEC segment, a decline in global or regional economic conditions could result in lower orders for aircraft or aircraft engines, or the cancellation of existing orders, which would in turn result in reduced demand for the AEC components utilized on such aircraft or engines.
Similarly, in the Company’s AEC segment, a decline in global or regional economic conditions could result in reduced orders for aircraft or aircraft engines, or the cancellation of existing orders, which would in turn result in reduced demand for the AEC components utilized on such aircraft or engines.
However, our reputation is susceptible to material damage by events such as disputes with customers or competitors, cybersecurity incidents or service outages, internal control deficiencies, delivery failures, regulatory compliance violations, government investigations or legal proceedings. We may also experience reputational damage from employees, advocacy groups, regulators, investors and other stakeholders that disagree with the way we conduct our business.
However, our reputation is susceptible to material damage by events such as disputes with customers, suppliers, or competitors, cybersecurity incidents or service outages, internal control deficiencies, delivery failures, regulatory compliance violations, government investigations or legal proceedings. We may also experience reputational damage from employees, advocacy groups, regulators, investors or other stakeholders that disagree with the way we conduct our business.
Any failure by AEC to maintain its current supplier status under these programs, or any material change in their commercial or other terms, could have a material adverse effect on AEC’s future Net revenues and operating income. Our top ten customers in the MC segment accounted for a significant portion of our Net revenues in 2023.
Any failure by AEC to maintain its current supplier status under these programs, or any material change in their commercial or other terms, could have a material adverse effect on AEC’s future Net revenues and operating income. Our top ten customers in the MC segment accounted for a significant portion of our Net revenues in 2024.
At the same time, the geographic sources of materials purchased (and the currencies in which these purchases are denominated) can vary depending on market forces, and the Company may also shift production of its products between manufacturing locations, which can result in a change in the currency in which certain costs to produce such products are incurred.
At the same time, the geographic sources of materials purchased (and the currencies in which these purchases are denominated) can vary depending on market 23 Index forces, and the Company may also shift production of its products between manufacturing locations, which can result in a change in the currency in which certain costs to produce such products are incurred.
Any material liability not covered by insurance could have a material adverse effect on our business, financial condition, and results of operations. Also see " The Company is subject to legal proceedings and legal compliance risks". 18 Index The Company has significant manufacturing operations outside of the U.S., which could involve many uncertainties.
Any material liability not covered by insurance could have a material adverse effect on our business, financial condition, and results of operations. Also see " The Company is subject to legal proceedings and legal compliance risks". The Company has significant manufacturing operations outside of the U.S., which could involve many uncertainties.
We are subject to U.S. federal procurement regulations such as the DFARS clause 252.204-7012, based on the NIST 800-171 framework whose goal is protecting controlled unclassified information in non-federal systems and organizations. In 2023, we continued efforts to comply with the forthcoming U.S.
We are subject to U.S. federal procurement regulations such as the DFARS clause 252.204-7012, based on the NIST 800-171 framework whose goal is protecting controlled unclassified information in non-federal systems and organizations. In 2024 , we continued efforts to comply with the forthcoming U.S.
Changes in sustainability reporting requirements may impact our global operations as we begin collecting information for reports to be published according to new standards. We will face significant challenges in being able to implement separate but overlapping standard-setting initiatives, which may contain inconsistencies.
Changes in sustainability reporting requirements may impact our global operations as we continue collecting information for reports to be published according to new standards. We will face significant challenges in being able to implement separate but overlapping standard-setting initiatives, which may contain inconsistencies.
For example, we have a substantial amount of indebtedness and while we feel that we generate sufficient cash from operations and have sufficient borrowing capacity to make required capital expenditures 26 Index to maintain and grow our business, any decrease in our cash generation could result in higher leverage.
For example, we have a substantial amount of indebtedness and while we feel that we generate sufficient cash from operations and have sufficient borrowing capacity to make required capital expenditures to maintain and grow our business, any decrease in our cash generation could result in higher leverage.
Government’s Department of Defense Cybersecurity Maturity Model Certification (“CMMC”) program introduces new and unique risks for DoD contractors.” The loss of one or more major customers could have a material adverse effect on Net revenues and profitability.
Government’s Department of Defense ("DoD") Cybersecurity Maturity Model Certification (“CMMC”) program introduces new and unique risks for DoD contractors.” 21 Index The loss of one or more major customers could have a material adverse effect on Net revenues and profitability.
As a result, while AEC reasonably expects to continue as a supplier on these programs as long as it meets its obligations, there can be no assurance that this will be the case, or that, in programs where it is currently a sole supplier, this sole supplier status will continue.
As a result, while AEC reasonably expects to continue as a supplier on these programs for so long as it meets its obligations, there can be no assurance that this will be the case, or that, in programs where it is currently a sole supplier, this sole supplier status will continue.
Increases in output in remaining manufacturing operations can likewise impose stress on these remaining facilities as they undertake the manufacture of greater volume and, in some cases, a greater variety of products. Competitors can be quick to attempt to exploit these situations.
Increases in output in remaining manufacturing operations can likewise impose stress on remaining facilities as they undertake the manufacture of greater volume and, in some cases, a greater variety of products. Competitors can attempt to exploit these situations.
This underscores the importance of our ability to maintain the 17 Index technological competitiveness and value of our products, and a failure to do so could have a material adverse effect on our business, financial condition, and results of operations.
This underscores the importance of our ability to maintain the technological competitiveness and value of our products, and a failure to do so could have a material adverse effect on our business, financial condition, and results of operations.
AEC could also be subject to product liability claims if such failures were to cause death, injury or losses to third parties, or damage claims resulting from the grounding of aircraft into which such defective or non-conforming products had been incorporated.
AEC could also be subject to product liability claims if such failures were to cause death, injury or losses to third parties, or damage claims resulting from the grounding of aircraft into which such defective or non-conforming products are incorporated.
In addition, existing and future supply agreements, especially for commercial and defense aerospace, are subject to the same curtailment or cancellation risks as the programs they support. AEC is currently working on a broad portfolio of potential new product applications in the aerospace industry. These development projects may or may not result in commercial supply opportunities.
In addition, existing and future supply agreements, especially for commercial and defense aerospace, are subject to the same curtailment or cancellation risks as the programs they support. AEC is currently working on potential new product applications in the aerospace industry. These development projects may or may not result in commercial supply opportunities.
Due to the size and long-term nature of many of AEC contracts, the estimation of total revenues and cost at completion is complicated and subject to many variables.
Due to the size and long-term nature of many of AEC contracts, the estimation of total revenues and cost at completion is complex and subject to many variables.
These factors have had, and in the future are likely to have, an adverse effect on paper machine clothing net revenues. The market for paper machine clothing in recent years has been characterized by continuous pressure to provide more favorable commercial terms, which has continued to place pressure on our operating results.
These factors have had, and in the future are likely to have, an adverse effect on paper machine clothing net revenues. The market for paper machine clothing in recent years has been characterized by continuous pressure to provide more favorable commercial terms, which has in turn placed pressure on our operating results.
Risks related to our legal and regulatory environment The Company may fail to adequately protect its proprietary technology, which would allow competitors or others to take advantage of its research and development efforts. 24 Index Proprietary trade secrets are a source of competitive advantage in each of our segments.
Risks related to our legal and regulatory environment The Company may fail to adequately protect its proprietary technology or intellectual property, which would allow competitors or others to take advantage of its research and development efforts. Proprietary trade secrets are a source of competitive advantage in each of our segments.
We are subject to tax audits by various tax authorities in many jurisdictions. Following the acquisition of Heimbach, the open tax years in these jurisdictions range from approximately 2009 to 2023. We regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes.
We are subject to tax audits by various tax authorities in many jurisdictions. Following the acquisition of Heimbach, the open tax years in these jurisdictions range from approximately 2013 to 2024. We regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes.
Changes in currency exchange rates could adversely affect the Company’s business, financial condition or results of operations. We have a substantial amount of indebtedness. At December 31, 2023, the Company had outstanding long-term debt of $453 million.
Changes in currency exchange rates could adversely affect the Company’s business, financial condition or results of operations. We have a substantial amount of indebtedness. At December 31, 2024, the Company had outstanding long-term debt of $319 million.
We are subject to numerous risks as a result of our acquisition strategy, including, but not limited to, the following: • We may invest time and capital pursuing acquisitions that do not materialize; • We may incur costs and expenses associated with any unidentified or potential liabilities of the acquired companies; • We may not achieve anticipated revenue and cost benefits from the acquisitions; 19 Index • We may encounter unforeseen difficulties in integrating the acquired operations into our existing operations; and • Our past or future acquisitions might not ultimately improve our competitive position and business.
We are subject to numerous risks as a result of our growth strategy, including, but not limited to, the following: • We may invest time and capital pursuing acquisitions, joint ventures, or new products that do not materialize; • We may incur costs and expenses associated with any unidentified or potential liabilities of the acquired companies; • We may not achieve anticipated revenue and cost benefits from the acquisitions, joint ventures, or new product development; • We may encounter unforeseen difficulties in integrating acquired operations, joint ventures, or new businesses into our existing operations; and 19 Index • Our past or future acquisitions, joint ventures, or new businesses might not ultimately improve our competitive position and business.
Government Department of Defense, which are subject to unique risks. The funding of DoD programs is subject to congressional appropriations. Many of the DoD programs in which we participate may last several years, but they are normally funded annually. Changes in military strategy and priorities may affect future opportunities and/or existing programs.
The funding of DoD programs is subject to congressional appropriations. Many of the DoD programs in which we participate may last several years, but they are normally funded annually. Changes in military strategy and priorities may affect future opportunities and/or existing programs.
As of December 31, 2023, we have approximately $130.7 million of net operating loss (“NOL”) carryforwards in various taxing jurisdictions. Our ability to utilize the NOL carryforward could be adversely impacted by several factors, including but not limited to significant changes to tax legislation and lower than expected future earnings of the Company.
As of December 31, 2024, we have approximately $140.3 million of net operating loss (“NOL”) carryforwards in various taxing jurisdictions. Our ability to utilize the NOL carryforward could be adversely impacted by several factors, including but not limited to significant changes to tax legislation and lower than expected future earnings.
MC has significant manufacturing operations in China and vendors that support AEC import significant materials from China, and any escalation in this region could also disrupt our business.
MC has significant manufacturing operations in China and vendors that support AEC import significant materials from China, and any escalation in this region could disrupt either segment of our business.
Failure to manage these development, commercialization and execution risks could have a material adverse impact on AEC’s prospects for revenue growth. In addition to dealing with these development and manufacturing execution risks, future AEC growth will likely require increasingly larger amounts of cash to fund the investments in equipment, capital, and development efforts needed to achieve this growth.
Failure to manage these development, commercialization and execution risks could have a material adverse impact on AEC’s prospects for revenue growth. In addition to these development and manufacturing execution risks, future AEC growth will likely require additional cash to fund the investments in equipment, capital, and development efforts needed to achieve this growth.
These disruptions could make it difficult to supply our customers with products on time, which could have a negative impact on our business, financial condition, and results of operations. The Company also relies on the labor market in many regions of the world to meet our operational requirements, advance our technology and differentiate our products.
These disruptions could make it difficult to supply our customers with products on time or at all, which could have a negative impact on our business, financial condition, and results of operations. The Company also relies on the labor market to meet our operational requirements, advance our technology and differentiate our products.
Our customer Safran accounted for approximately 39 percent of Net revenues in the AEC segment in 2023, substantially all of which was under an exclusive long-term supply agreement relating to parts for the LEAP engine.
In the AEC segment, our customer Safran accounted for approximately 37% of AEC's Net revenues in 2024, substantially all of which was under an exclusive long-term supply agreement relating to parts for the LEAP engine.
Operations outside of the U.S. are subject to a number of risks and uncertainties, including: governments may impose limitations on our ability to repatriate funds; governments may impose withholding or other taxes on remittances and other payments from our non-U.S. operations, or the amount of any such taxes may increase; an outbreak or escalation of any insurrection or armed conflict may occur; governments may seek to nationalize our assets; or governments may impose or increase investment barriers or other restrictions affecting our business.
We currently have manufacturing facilities outside the U.S. which are subject to a number of risks and uncertainties, including: governments may impose withholding or other taxes on remittances and other payments from our non-U.S. operations, or the amount of any such taxes may increase; an outbreak or escalation of any insurrection or armed conflict may occur; governments may seek to nationalize our assets; or governments may impose or increase investment barriers or other restrictions affecting our business.
Any failure 20 Index by AEC to maintain its current supplier status under these programs, or any material change in their commercial or other terms, could have a material adverse effect on AEC’s future revenues and segment operating income. AEC derives a significant portion of its revenue from contracts related to U.S.
Any failure by AEC to maintain its current supplier status under these programs, or any material change in their commercial or other terms, could have a material adverse effect on AEC’s future revenues and segment operating income. AEC derives a significant portion of its revenue from contracts related to U.S. Government Department of Defense, which are subject to unique risks.
Risks related to our business and operations We may fail to realize all of the anticipated benefits of the acquisition of Heimbach or those benefits may take longer to realize than expected. We are devoting significant management attention to integrating the business practices and operations of Heimbach.
We may fail to realize all of the anticipated benefits of the acquisition of Heimbach or those benefits may take longer to realize than expected. We continue to devote significant management attention to integrating the business practices and operations of Heimbach.
At December 31, 2023, our leverage ratio (as defined in our primary borrowing agreement) was 1.25 to 1.00, and we had borrowed $446 million under our $800 million revolving credit facility.
At December 31, 2024, our leverage ratio (as defined in our primary borrowing agreement) was 0.88 to 1.00, and we had borrowed $318 million under our $800 million revolving credit facility.
Increasing stakeholder environmental, social and governance expectations, physical and transition risks associated with climate change, emerging sustainability and social regulation, contractual requirements, and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global 25 Index supply chain and production continuity, which may impact our ability to achieve long-term business objectives.
Evolving sustainability and social regulation, contractual requirements, and policy requirements, including transition risks associated with climate change, may pose risk to our market outlook, brand and reputation, financial outlook, 26 Index cost of capital, global supply chain, and production continuity, which may impact our ability to achieve long-term business objectives.
As the breadth and complexity of this infrastructure continues to grow, including the increasing reliance on, and use of, mobile technologies and cloud-based services, and as many of our employees continue to work remotely following the coronavirus pandemic, the risk of security incidents and cyberattacks has increased.
As the breadth and complexity of this infrastructure continues to grow, including the increasing reliance on, and use of, mobile technologies and cloud-based services , and as some of our global employees work remotely, t he risk of security incidents and cyberattacks has increased.
We also rely on our supply chain to adequately detect and report cyber incidents, which could affect our ability to report or respond to cybersecurity incidents effectively or in a timely manner. Our information technology systems, processes, sites and cloud-based providers may suffer interruptions or failures which may affect our ability to conduct our business.
We also rely on our supply chain to adequately detect and report cyber incidents, which could affect our ability to report or respond to cybersecurity incidents effectively or in a timely manner. 22 Index Our information technology systems, processes, sites and cloud-based providers may suffer interruptions or failures, or we may experience disruptions or challenges arising from the implementation or upgrading of new information technology systems, which may affect our ability to conduct our business.
This has contributed to a relentless focus on capital investments to reduce costs, resulting in continuous pressure for cost reductions and customer pricing improvement throughout the supply chain. Future consolidation in the aerospace industry could intensify these pressures. The long-term organic growth prospects of AEC are subject to a number of risks.
This has contributed to a relentless focus on capital investments to reduce costs, resulting in continuous pressure for cost reductions and customer pricing improvement throughout the supply chain. Future consolidation in the aerospace industry could intensify these pressures.
While long-term contracts provide an opportunity to realize steady and reliable revenues for extended periods, they pose a number of risks, such as program cancellations, reductions or delays in orders by AEC’s customers under these contracts, the termination of such contracts or orders, changes in the customers’ requirements that may not entitle AEC to additional compensation or payment, or the occurrence of similar events over which AEC has no or limited control.
While long-term contracts provide an opportunity to realize steady and reliable revenues for extended periods, they pose a number of risks, such as program cancellations, reductions or delays in orders by customers, the termination of such contracts or orders, changes in the customers’ requirements that may not entitle AEC to additional compensation or payment, or the occurrence of similar events over which AEC has no or limited control. 20 Index Accounting for long-term contracts and related assets requires estimates and judgments related to our progress toward completion and the long-term performance on the contract.
In such an event, the Company would need to modify or restructure all or a portion of such indebtedness. Depending on prevailing economic conditions at the time, the Company might find it difficult to modify or restructure the debt on attractive terms, or at all. We use interest rate swaps to manage the interest cost associated with our borrowings.
In such an event, the Company would need to modify or restructure all or a portion of such indebtedness. Depending on prevailing economic conditions at the time, the Company might find it difficult to modify or restructure the debt on attractive terms, or at all.
Despite such measures, our employees, consultants, and third parties to whom such information may be disclosed in the ordinary course of our business may breach their obligations not to reveal such information, and any legal remedies available to us may be insufficient to compensate our damages. The Company is subject to legal proceedings and legal compliance risks.
Despite such measures, our employees, consultants, and third parties to whom such information may be disclosed in the ordinary course of our business may breach their obligations not to reveal such information, and any legal remedies available to us may be insufficient to compensate our damages. Our success depends on our ability to protect our intellectual property.
If our business continuity plans, incident response capabilities, and security controls do not function effectively, we may experience partial or complete interruptions in our operations, which may adversely impact our business, financial condition, results of operations and cash flows. We face legal, reputational and financial risks from any failure to protect customer and/or Company data from security incidents or cyberattacks.
If our business continuity plans, incident response capabilities, and security controls do not function effectively, we may experience partial or complete interruptions in our operations, which may adversely impact our business, financial condition, results of operations and cash flows.
These estimates and actuarial assumptions could change significantly as a result to changes in economic, legislative, and/or demographic profiles. Such changes could result in unfavorable changes to our pension and OPEB expense and funded status, and our cash contributions thereof, which could have a negative impact on our results of operations.
Such changes could result in unfavorable changes to our pension and OPEB expense and funded status, and our cash contributions thereof, which could have a negative impact on our results of operations.
We are subject to income taxes in both the U.S. and various non-U.S. jurisdictions. Unanticipated changes in foreign and domestic tax laws, regulations, or policies, or their interpretation and application by regulatory bodies, or exposure to additional tax liabilities could affect our future profitability and cash flows.
Unanticipated changes in foreign and domestic tax laws, regulations, or policies, or their interpretation and application by regulatory bodies, or exposure to additional tax liabilities could affect our future profitability and cash flows. Our domestic and international tax liabilities are dependent upon the distribution of income among these jurisdictions.
However, these liabilities are difficult to assess and estimate due to unknown factors, including the severity of an illness and the number of incidents not reported. The accruals are based upon known facts and historical trends, and management believes such accruals to be adequate. The Company also maintains stop-loss insurance policies to protect against catastrophic claims above certain limits.
However, these liabilities are difficult to assess and estimate due to unknown factors, including the severity of an illness and the number of incidents not reported. The accruals are based upon known facts and historical trends, and 24 Index management believes such accruals to be adequate.
Such programs include airframe components for the F-35, forward fuselage frames for the Boeing 787, and aft transition assembly including skins and longerons for the CH-53K helicopter.
Such programs include airframe components for the F-35; forward fuselage frames for the Boeing 787; AFT assembly including skins and longerons, sponson assemblies, tail rotor pylon and the horizontal stabilizer for the CH-53K helicopter, and other long-term programs.
Physical impacts of climate change, increasing global chemical restrictions and bans, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.
Increasing global chemical restrictions and bans, increasing regulation related to product end-of-life and packaging materials, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.
During 2019, Net revenues under the LEAP contract exceeded $210 million, only to significantly decline in the years that followed due to several factors outside of the Company's control, including the temporary Boeing 737 MAX groundings and the COVID-19 pandemic. Such events drove a reduction in demand for LEAP components and disrupted supply chains for an extended period of time.
During 2019, net revenues under the LEAP contract exceeded $210 million, only to significantly decline in the years that followed due to several factors outside of the Company's control, including the temporary Boeing 737 MAX groundings, other Boeing production issues, and the COVID-19 pandemic.
Moreover, we cannot predict how the nature of competition in this segment may continue to evolve as a result of future consolidation among our competitors, or consolidation involving our competitors and other suppliers to our customers.
Moreover, we cannot predict how the nature of competition in this segment may continue to evolve as a result of future consolidation among our competitors, or consolidation involving our competitors and other suppliers to our customers. 14 Index AEC is subject to significant risks related to the potential manufacture and sale of defective or non-conforming products.
We expect such pressure to remain intense in all paper machine clothing markets, especially during periods of customer consolidation, plant closures, or when major contracts are being renegotiated. The emergence of Asian competitors exacerbates this risk. Similar pressures in the markets in which AEC competes along with labor shortages could have an impact on AEC revenues.
We expect such pressure to remain intense in all paper machine clothing markets, especially during periods of customer consolidation, plant closures, or when major contracts are being renegotiated. The growing sophistication of Asian competitors exacerbates this risk. Similar pressures in the markets in which AEC serves are highly competitive and price sensitive.
For example, a recession could lead to lower consumption in all paper grades including tissue and packaging, which would not only reduce consumption of paper machine clothing but could also increase the risk of greater price competition in the machine clothing industry.
The Company identifies in this section a number of risks, the effects of which may be exacerbated by an unfavorable economic climate. For example, a recession could lead to lower consumption in all paper grades including tissue and packaging, which would not only reduce consumption of paper machine clothing, but could also increase price competition in the machine clothing industry.
Weak or unstable economic conditions also increase the risk that one or more of our customers might be unable to pay outstanding accounts receivable, whether as the result of bankruptcy or an inability to obtain working capital financing from banks or other lenders.
In addition, any economic conditions that led to sustained high interest rates could affect the airline’s ability to finance new aircraft and engine orders. 15 Index Weak or unstable economic conditions also increase the risk that one or more of our customers might be unable to pay outstanding accounts receivable, whether as the result of bankruptcy or an inability to obtain working capital financing from banks or other lenders.
Damage to our reputation could also reduce investor confidence in the Company, materially adversely affecting our share price. Some of the Company’s competitors in the MC segment have the capability to make and sell paper machines and papermaking equipment as well as other engineered fabrics.
Some of the Company’s competitors in the MC segment have the capability to make and sell paper machines and papermaking equipment as well as other engineered fabrics.
Changes in U.S. trade policy with foreign countries, or other changes in U.S. laws and policies governing foreign trade, as well as any responsive or retaliatory changes in regulations or policies by such countries, could have an adverse impact on our business, either directly or in the form of increased costs due to their impacts on our supply chain.
These ongoing conflicts, along with other geopolitical uncertainties such as the current conflict in the Middle East, could have broader adverse impacts on macroeconomic factors that impact our business, cash flows, financial condition and results of operations. 18 Index Changes in U.S. trade policy with foreign countries, or other changes in U.S. laws and policies governing foreign trade, as well as any responsive or retaliatory changes in regulations or policies by such countries, could have an adverse impact on our business, either directly or in the form of increased costs on our supply chain.
There can be no assurance, however, that we will pay dividends in the future in the amounts that we have in the past, or at all. Our Board of Directors may change the timing and amount of any future dividend payments or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders.
Our Board of Directors may change 27 Index the timing and amount of any future dividend payments or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders.
The failure to meet the challenges involved in the integration process and to realize the anticipated benefits of the acquisition of Heimbach could cause an interruption or loss of momentum in our operations and could adversely affect our business, financial condition and results of operations.
We may experience disruptions to our business and, if integrated ineffectively, it could restrict the realization of the full expected benefits of the acquisition. The failure to meet the challenges involved in the integration process and to realize the anticipated benefits of the acquisition of Heimbach could cause an interruption or loss of momentum in our operations.
Department of Defense Cybersecurity Maturity Model Certification ("CMMC") program, which will impact us in the coming years as it is formalized through the DFARS and those regulations are incorporated into our contracts for government programs. 22 Index These laws and regulations continue to evolve, are increasing in complexity and number and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us.
Department of Defense Cybersecurity Maturity Model Certification ("CMMC") program, which will impact us in the coming years as it is formalized through the DFARS and those regulations are incorporated into our contracts for government programs.
If actual results significantly differ from estimates, our financial condition, results of operations, and cash flows could be materially impacted by losses under these programs, as well as higher stop-loss premiums in future periods. Unanticipated changes in tax laws or exposure to additional tax liabilities could affect our future profitability.
The Company also maintains stop-loss insurance policies to protect against catastrophic claims above certain limits. If actual results significantly differ from estimates, our financial condition, results of operations, and cash flows could be materially impacted by losses under these programs, as well as higher stop-loss premiums in future periods.
Non-compliance could result in various penalties, including liability for significant monetary damages, fines, enforcement actions and/or criminal prosecution or sanctions. Given the reach of new and proposed regulations in the jurisdictions where we operate, there is the possibility that we may not be able to comply, or may not be able to comply in time.
Given the reach of new and proposed regulations in the jurisdictions where we operate, there is the possibility that we may not be able to comply, or may not be able to comply in time.
Restructuring involves risks such as employee work stoppages, slowdowns, or strikes, which can threaten uninterrupted production, maintenance of high product quality, meeting of customers’ delivery deadlines, and maintenance of administrative processes.
Future shifting of customer demand, the need to reduce costs, or other factors could cause us to determine in the future that additional restructuring steps are required. Restructuring involves risks such as employee work stoppages, slowdowns, or strikes, which can threaten uninterrupted production, maintenance of high product quality, meeting of customers’ delivery deadlines, and maintenance of administrative processes.
As of February 16, 2024, we had 31.2 million shares of Class A Common Stock outstanding. In addition, shares of Class A Common Stock are issuable upon the vesting of outstanding equity awards, and certain shares are reserved for future issuance under our equity compensation plans. Item 1B. UNRESOLVED STAFF COMMENTS None.
As of February 18, 2025, we had 30.9 million shares of Class A Common Stock outstanding. In addition, shares of Common Stock are issuable upon the vesting of outstanding equity awards, and certain shares are reserved for future issuance under our equity compensation plans. Shareholder activism can have a significant impact on our operations, strategy, and overall performance.
A number of industry factors have had, and in future periods could have, an adverse impact on net revenues, profitability and cash flow in the Company’s MC and AEC segments. Significant consolidation and rationalization in the paper industry in recent years have reduced global consumption of paper machine clothing in certain markets and for certain grades.
Risks related to our business and operations A number of industry factors have had, and in future periods could have, an adverse impact on net revenues, profitability and cash flow in the Company’s MC and AEC segments.
While we normally enter into long-term supply agreements with significant MC customers, the agreements generally do not obligate the customer to purchase any products from us, and may be terminated by the customer at any time with appropriate notice. 21 Index Risks related to information technology and cybersecurity We are dependent on information technology networks, systems and cloud-based services to securely process, transmit and store electronic information and to communicate among our locations around the world and with our employees, customers and suppliers.
While we normally enter into long-term supply agreements with significant MC customers, the agreements generally do not obligate the customer to purchase any products from us, and may be terminated by the customer at any time with appropriate notice.
The determination of our pension and other postretirement benefit plans’ expense or income involves significant judgments, specifically related to our discount rate, long-term return on assets, and other actuarial assumptions. We establish our discount rate assumption annually and review whether to change our long-term return on assets assumption annually.
Significant changes in critical estimates and assumptions related to pension and other post-retirement benefit (“OPEB”) costs and liabilities could affect our earnings and pension contributions in future periods. The determination of our pension and other post-retirement benefit plans’ expense or income involves significant judgments, specifically related to our discount rate, long-term return on assets, and other actuarial assumptions.
Low rates of unemployment in key geographic areas in which the Company operates can lead to high rates of turnover and loss of critical talent, which could in turn lead to higher labor costs. Our ability to attract and retain business and employees may depend on our reputation in the marketplace.
Low rates of unemployment in key geographic areas in which the Company operates can lead to high rates of turnover and loss of critical talent, which could in turn lead to higher labor costs. We may be unable to maintain effective systems of internal controls while consolidating dispersed corporate functions to our corporate headquarters in New Hampshire.
Future changes in the interest rate benchmark could affect the Company’s cost of borrowing and its cash flows, or the effectiveness of the hedges, which could have an effect on net income. 23 Index As of December 31, 2023, we had approximately $354 million of additional borrowing capacity under our $800 million revolving credit facility.
From time to time, we use interest rate swaps to manage the interest cost associated with our borrowings. Future changes in the interest rate benchmark could affect the Company’s cost of borrowing and its cash flows, or the effectiveness of the hedges, which could have an effect on net income.
Conditions in the paper industry have required, and could further require, the Company to reorganize its operations, which could result in significant expense and could pose risks to the Company’s operations. In the recent past, we engaged in significant restructuring that included the closing of manufacturing operations.
Damage to our reputation could also reduce investor confidence in the Company, materially adversely affecting our share price. Conditions in the paper industry have required, and could further require, the Company to reorganize its operations, which could result in significant expense and could pose risks to the Company’s operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Director of Information Security has over 30 years of IT experience, 10 of which have been spent leading the Company’s cybersecurity efforts. The Information Security Director plays a key role in shaping our cybersecurity strategy, ensuring alignment with industry standards and integration into our broader IT strategy.
Biggest changeThe Information Security plays a key role in shaping our cybersecurity strategy, ensuring alignment with industry standards and integration into our broader IT strategy. Regular reporting channels between the Director of Information Security, the Chief Information Officer, and the Chief Financial Officer facilitate a cohesive, well-informed approach to managing cybersecurity risks.
It is led by our Chief Financial Officer and its actions are reported to our Board of Directors on a quarterly basis. 27 Index Our Chief Information Officer and Director of Information Security, along with members of their respective teams, are responsible for identifying and managing cybersecurity risk.
It is led by our Chief Financial Officer and its actions are reported to our Board of Directors on a quarterly basis. Our Chief Information Officer and Director of Information Security, along with members of their respective teams, are responsible for identifying and managing cybersecurity risk.
Unauthorized disclosure of, denial of access to, or other incidents involving sensitive or confidential Company, employee, customer or supplier data, whether through systems failure, employee negligence, fraud, misappropriation, or cybersecurity, ransomware or malware attacks, or other intentional or unintentional acts, could damage our reputation and our competitive positioning in the marketplace, disrupt our or our customer’s business, cause us to lose customers and result in significant financial exposure and legal liability.
Unauthorized disclosure of, denial of access to, or other incidents involving sensitive or confidential Company, employee, customer or supplier data, whether through systems failure, employee negligence, fraud, misappropriation, or cybersecurity, ransomware or malware attacks, or other intentional or unintentional acts, could damage our reputation and our competitive positioning in the marketplace, disrupt our business or our customers' businesses, cause us to lose customers and result in significant financial exposure and legal liability.
The Board has delegated primary 28 Index responsibility for reviewing and discussing with management our strategies, initiatives and policies relating to cybersecurity to the Audit Committee, which regularly reports to the full Board regarding such review and discussions.
The Board has delegated primary responsibility for reviewing and discussing with management our strategies, initiatives and policies relating to cybersecurity to the Audit Committee, which regularly reports to the full Board regarding such review and discussions.
Quarterly, the Chief Information Officer presents detailed cybersecurity reports to the Enterprise Risk Committee, focusing on strategic initiatives and evolving threats. The Enterprise Risk Committee, meeting quarterly, evaluates cybersecurity within the broader organizational risk context, ensuring consistent assessment and management. The Chief Financial Officer chairs quarterly Enterprise Risk Management Committee meetings to review and evaluate various risk factors, including cybersecurity.
The Enterprise Risk Committee, meeting quarterly, evaluates cybersecurity within the broader organizational risk context, ensuring consistent assessment and management. 30 Index The Chief Financial Officer chairs quarterly Enterprise Risk Management Committee meetings to review and evaluate various risk factors, including cybersecurity.
In addition, we provide regular security awareness education and training for all employees and consultants, conduct internal “phishing” testing and training for “clickers,” require mandatory security training for all new hires and publish periodic cybersecurity newsletters to highlight any emerging or urgent security threats. We also carry insurance that provides protection against the potential losses arising from a cybersecurity incident.
In addition, we provide regular security awareness education and training for all employees and consultants, conduct internal “phishing” testing and training for “clickers,” require mandatory security training for all new hires and publish 29 Index periodic cybersecurity newsletters to highlight any emerging or urgent security threats.
The Director of Information Security, reporting to and collaborating with the Vice President of Information Technology & the Chief Information Officer, manages our Enterprise Cybersecurity team. Day-to-day responsibilities include the implementation of cybersecurity strategies, cybersecurity risk management, and enhancing defenses against evolving threats.
The Director of Information Security, reporting to and collaborating with the Chief Information Officer, manages our Enterprise Cybersecurity team. Day-to-day responsibilities include the implementation of cybersecurity strategies, cybersecurity risk management, and enhancing defenses against evolving threats. Our Director of Information Security has over 30 years of IT experience, 10 of which have been spent leading the Company’s cybersecurity efforts.
Once engaged, we regularly monitor the cybersecurity posture of these providers through surveys and reports, audits, and performance reviews.
Once engaged, we regularly monitor the cybersecurity posture of major providers through log reports and intelligent threat protection analysis.
Regular reporting channels between the Director of Information Security, the Chief Information Officer, and the Chief Financial Officer facilitate a cohesive, well-informed approach to managing cybersecurity risks. These reports include detailed analyses of potential threats, incident response readiness, and the effectiveness of existing cybersecurity measures.
These reports include detailed analyses of potential threats, incident response readiness, and the effectiveness of existing cybersecurity measures.
Added
We also carry insurance that provides protection against the potential losses arising from a cybersecurity incident.
Added
Quarterly, the Chief Information Officer presents detailed cybersecurity reports to the Enterprise Risk Committee, focusing on strategic initiatives and evolving threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe aggregate square footage of our operating facilities in the United States is approximately 2.1 million square feet, of which 1.2 million square feet are owned and 0.9 million square feet are leased.
Biggest changeItem 2. PROPERTIES Our principal manufacturing facilities are located in Belgium, Brazil, Canada, China, France, Germany, Italy, Mexico, Spain, Sweden, the United Kingdom, and the United States. The aggregate square footage of our operating facilities in the United States is approximately 2.1 million square feet, of which 1.2 million square feet are owned and 0.9 million square feet are leased.
Our facilities located outside the United States 29 Index comprise approximately 5.6 million square feet, of which 4.8 million square feet are owned and 0.8 million square feet are leased. We consider these facilities to be in good condition and suitable for our purpose.
Our facilities located outside the United States comprise approximately 4.9 million square feet, of which 4.3 million square feet are owned and 0.6 million square feet are leased. We consider these facilities to be in good condition and suitable for our purpose. The capacity associated with these facilities is adequate to meet production levels required and anticipated through 2025.
Removed
Item 2. PROPERTIES Our principal manufacturing facilities are located in Belgium, Brazil, Canada, China, France, Germany, Italy, Mexico, South Korea, Spain, Sweden, Switzerland, the United Kingdom, and the United States.
Removed
The capacity associated with these facilities is adequate to meet production levels required and anticipated through 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS The information set forth above is described in Note 21, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Item 4. MINE SAFETY DISCLOSURES Not applicable. 30 Index PART II
Biggest changeItem 3. LEGAL PROCEEDINGS The information set forth above is described in Note 21, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Item 4. MINE SAFETY DISCLOSURES Not applicable. 31 Index PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur cash dividends, and the high and low prices per share of our Class A Common Stock, were as follows for the periods presented: Quarter Ended March 31 June 30 September 30 December 31 2023 Cash dividends per share $ 0.25 $ 0.25 $ 0.25 $ 0.26 Class A Common Stock prices: High $ 113.72 $ 93.28 $ 96.89 $ 98.96 Low $ 85.28 $ 84.92 $ 83.53 $ 78.48 2022 Cash dividends per share $ 0.21 $ 0.21 $ 0.21 $ 0.25 Class A Common Stock prices: High $ 91.25 $ 87.91 $ 97.20 $ 104.34 Low $ 80.84 $ 75.94 $ 77.50 $ 81.62 31 Index The graph below compares the cumulative 5-Year total return of holders of Albany International Corp.’s common stock with the cumulative total returns of the Russell 2000 index and a customized peer group of nineteen companies included in the customized peer group which are: Astronics Corp, Idex Corp, Barnes Group Inc, Enpro Inc, Tredegar Corp, Ducommun Inc, Curtiss-Wright Corp, Watts Water Technologies Inc, Hexcel Corp, Nordson Corp, Glatfelter Corp, Heico Corp, Esco Technologies Inc, Enerpac Tool Group Corp, Rogers Corp, Trimas Corp, Kadant Inc, National Presto Industries Inc, and Mativ Holdings Inc.
Biggest changeOur cash dividends, and the high and low prices per share of our Class A Common Stock, were as follows for the periods presented: Quarter Ended March 31 June 30 September 30 December 31 2024 Cash dividends per share $ 0.26 $ 0.26 $ 0.26 $ 0.27 Class A Common Stock prices: High $ 97.34 $ 91.16 $ 94.16 $ 87.46 Low $ 85.76 $ 79.75 $ 81.29 $ 67.92 2023 Cash dividends per share $ 0.25 $ 0.25 $ 0.25 $ 0.26 Class A Common Stock prices: High $ 113.72 $ 93.28 $ 96.89 $ 98.96 Low $ 85.28 $ 84.92 $ 83.53 $ 78.48 32 Index The graph below compares the cumulative 5-Year total return of holders of Albany International Corp.’s Common Stock with the cumulative total returns of the Russell 2000 index and a customized peer group of eighteen companies which are: Astronics Corp, Idex Corp, Barnes Group Inc, Enpro Inc, Tredegar Corp, Ducommun Inc, Curtiss-Wright Corp, Watts Water Technologies Inc, Hexcel Corp, Nordson Corp, Heico Corp, Esco Technologies Inc, Enerpac Tool Group Corp, Rogers Corp, Trimas Corp, Kadant Inc, National Presto Industries Inc, and Mativ Holdings Inc.
Disclosures of securities authorized for issuance under equity compensation plans are included under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Annual Report on Form 10-K. 32 Index In 2021, the Company's Board of Directors authorized the Company to repurchase shares of up to $200 million through open market purchases, privately negotiated transactions or otherwise, and to determine the prices, times and amounts.
Disclosures of securities authorized for issuance under equity compensation plans are included under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Annual Report on Form 10-K. 33 Index In 2021, the Company's Board of Directors authorized the Company to repurchase shares of up to $200 million through open market purchases, privately negotiated transactions or otherwise, and to determine the prices, times and amounts.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2018 and tracks it through December 31, 2023. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* *$100 invested on 12/31/18 in stock or index, including reinvestment of dividends.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2019 and tracks it through December 31, 2024. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* *$100 invested on 12/31/19 in stock or index, including reinvestment of dividends.
Copyright© 2024 Russell Investment Group. All rights reserved. Fiscal year ending December 31.
Copyright© 2025 Russell Investment Group. All rights reserved. Fiscal year ending December 31.
Issuer Purchases of Equity Securities during the three months ended December 31, 2023 Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approx. dollar value of shares that may yet be purchased under the program (in thousands) October 1 to October 31, 2023 — — — 90,561 November 1 to November 30, 2023 — — — 90,561 December 1 to December 31, 2023 — — — 90,561 Total — — 90,561 Item 6. [RESERVED]
Issuer Purchases of Equity Securities during the three months ended December 31, 2024 Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approx. dollar value of shares that may yet be purchased under the program (in thousands) October 1 to October 31, 2024 — $ — — $ 90,561 November 1 to November 30, 2024 20,174 79.21 20,174 88,963 December 1 to December 31, 2024 162,727 79.56 162,727 76,016 Total 182,901 182,901 $ 76,016 Item 6. [RESERVED]
According to Broadridge, as of December 31, 2023, there were over 50,000 beneficial owners of our Class A Common Stock, including employees owning shares through our 401(k) defined contribution plan. Dividends are paid on our Class A Common Stock.
According to Broadridge Financial Solutions, Inc., as of December 31, 2024, there were over 70,000 beneficial owners of our Class A Common Stock. Dividends are paid on our Class A Common Stock.
December 31, 2018 2019 2020 2021 2022 2023 Albany International Corp. 100.00 122.79 120.44 146.48 164.88 166.07 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Peer Group 100.00 136.04 145.75 173.93 164.96 190.56 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
December 31, 2019 2020 2021 2022 2023 2024 Albany International Corp. $100.00 $98.09 $119.30 $134.28 $135.25 $111.47 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 Peer Group 100.00 107.29 128.14 122.40 141.47 152.39 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
In total, the Company has repurchased 1,308,003 shares for a total cost of $109.4M, of which 1,022,717 shares were repurchased in 2022 for $85.1 million and 285,286 shares were repurchased in 2021 for $24.3 million. The Company made no share repurchases during 2023.
Of this, 182,901 shares were repurchased in 2024 for $14.5 million, 1,022,717 shares were repurchased in 2022 for $85.1 million and 285,286 shares were repurchased in 2021 for $24.3 million. As of December 31, 2024, we were authorized to repurchase shares up to $76.0 million.
Added
The timing and amount of any share repurchases will be based on the Company’s liquidity, general business and market conditions, debt covenant restrictions and other factors, including alternative investment opportunities and capital structure. In total, the Company has repurchased 1,490,904 shares for a total cost of $124.0 million as of December 31, 2024.
Added
On February 21, 2025, the Company's Board of Directors authorized the Company to repurchase shares up to $250 million (excluding any fees, commissions, taxes or other expenses related to such purchases), which replaces the 2021 authorization. The purchases may be made through open market purchases, privately negotiated transactions or otherwise.
Added
The program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company's discretion.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe change in SG&A by segment is driven by the following: • MC SG&A expenses increased $25.9 million as compared to 2022, of which $20.5 million of the increase relates to the acquisition of Heimbach and $4.6 million was due to changes in currency translation rates.
Biggest changeThe overall decrease in SG&A expenses was due to the net effect of the following: • MC SG&A expenses increased $4.9 million as compared to 2023, with a $13.5 million increase related to Heimbach, partially offset by a $8.2 million decrease due to changes in currency translation rates and a $0.5 million decrease due to personnel-related costs. • In AEC, SG&A expenses decreased $1.4 million, driven by a $0.8 million decrease in marketing costs and a $0.6 million decrease in personnel-related costs, partially offset by an increase in global information systems costs. 37 Index • Corporate SG&A expenses decreased $7.5 million, driven by a $4.4 million decrease in personnel-related costs, a decrease of $1.9 million in professional fees, and a decrease of $1.1 million in global information system costs.
Recent Accounting Pronouncements See Note 1, Accounting Policies , of the Notes to the Consolidated Financial Statements for Recent Accounting Pronouncements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Recent Accounting Pronouncements See "Recent Accounting Pronouncements" in Note 1, Accounting Policies , of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there can be no assurance that we will be able to cost effectively repatriate funds in the future.
Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there 44 Index can be no assurance that we will be able to cost-effectively repatriate funds in the future.
MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes included under Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The MD&A generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes included under Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The MD&A generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Under this contract, there is judgment involved in determining applicable contract costs and the amount of revenue to be recognized. 42 Index We also have fixed price long-term contracts, for which revenue is generally recognized over time using an input method as the measure of progress.
Under this contract, there is judgment involved in determining applicable contract costs and the amount of revenue to be recognized. We also have fixed price long-term contracts, for which revenue is generally recognized over time using an input method as the measure of progress.
This method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs.
This method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract 45 Index revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs.
Income Taxes 43 Index We regularly assess the likelihood that deferred tax assets will be realized through the reversal of existing temporary differences and/or future taxable income. To the extent we believe that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established.
Income Taxes We regularly assess the likelihood that deferred tax assets will be realized through the reversal of existing temporary differences and/or future taxable income. To the extent we believe that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established.
The AEC segment primarily serves customers in the commercial and defense aerospace market through both engine and airframe applications. AEC's working capital levels rose sharply in the last few years in line with the segment's growth.
The AEC segment primarily serves customers in the commercial and defense aerospace market through both engine and airframe applications. AEC's working capital levels rose sharply in the last several years in line with the segment's growth.
If estimates or assumptions used to complete the enterprise valuation and estimates of the fair value of the acquired assets and assumed liabilities significantly differed from assumptions made, the resulting difference could materially affect the fair value of net assets.
If estimates or assumptions used to complete the enterprise valuation and estimates of the fair value of the acquired assets and assumed liabilities significantly differ from assumptions made, the resulting difference could materially affect the fair value of net assets.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results or Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023, incorporated herein by reference.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results or Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 26, 2024, incorporated herein by reference.
For more information on the revolving credit agreement, see Note 17, Financial Instruments, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. 41 Index As of December 31, 2023, $133 million of our total cash and cash equivalents was held by non-U.S. subsidiaries.
For more information on the revolving credit agreement, see Note 17, Financial Instruments, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. As of December 31, 2024, $97.6 million of our total cash and cash equivalents was held by non-U.S. subsidiaries.
AEC’s largest aerospace customer is the SAFRAN Group ("SAFRAN") and sales to SAFRAN, through ASC, (consisting primarily of fan blades and cases for CFM International’s LEAP engine) accounted for approximately 16 percent of the Company’s consolidated Net revenues in 2023. AEC, through ASC, also supplies 3D-woven composite fan cases for the GE9X engine.
AEC’s largest aerospace customer is the SAFRAN Group ("SAFRAN") and sales to SAFRAN, through ASC, (consisting primarily of fan blades and cases for CFM International’s LEAP engine) accounted for approximately 14% of the Company’s consolidated Net revenues in 2024. The AEC segment, through ASC, also supplies 3D-woven composite fan cases for the GE9X engine.
On August 31, 2023, we acquired Heimbach, a privately-held manufacturer of paper machine clothing headquartered in Düren, Germany, which provides MC with an increase in scale and complementary technology that further drives MC's differentiated manufacturing sales and service network.
In August, 2023, the Company acquired Heimbach, a privately-held manufacturer of paper machine clothing headquartered in Düren, Germany, which provides the MC segment with an increase in scale and complementary technology that further drives MC's differentiated manufacturing sales and service network.
Our subsidiaries outside of the United States may also maintain working capital lines with local banks. Under our $800 million unsecured credit agreement, $446 million of borrowings were outstanding as of December 31, 2023.
Our subsidiaries outside of the United States may also maintain working capital lines with local banks. Under our $800 million unsecured credit agreement, $318.5 million of borrowings were outstanding as of December 31, 2024.
Goodwill is recorded as the difference in the fair value of the acquired assets and assumed liabilities and the purchase price, as applicable. The Heimbach acquisition did not result in any goodwill. Goodwill and Intangible assets Goodwill is not amortized, but is tested for impairment at least annually.
Goodwill is recorded as the difference in the fair value of the acquired assets and assumed liabilities and the purchase price, as applicable. Goodwill and Intangible assets Goodwill is not amortized, but is tested for impairment at least annually.
Our analysis gives consideration to recent plan performance and historical returns; however, the assumptions are primarily based on long-term, prospective rates of return. The weighted average long-term rate of return on plan assets for our defined benefit pension plans is 5.2 percent for 2023.
Our analysis gives consideration to recent plan performance and historical returns; however, the assumptions are primarily based on long-term, prospective rates of return. The weighted average long-term rate of return on plan assets for our defined benefit pension plans is 4.98% for 2024.
The Company has targeted for repatriation $160.8 million of current year and prior year earnings of the Company’s foreign operations. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were approximately $154.8 million, and are intended to remain indefinitely invested in foreign operations.
The Company has targeted for repatriation $163.0 million of current year and prior year earnings of the Company’s foreign operations. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were approximately $132.9 million, and are intended to remain indefinitely invested in foreign operations.
See Note 4, Pension, Postretirement, and Other Benefit Plans, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
No similar charges were incurred during 2024 or 2023. See Note 4, Pension, Postretirement, and Other Benefit Plans, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $7 million. There were no material changes in the Company’s off-balance sheet arrangements during 2023.
The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $12 million. There were no material changes in the Company’s off-balance sheet arrangements during 2024. During the first quarter of 2025, the Company decided to consolidate headquarters in Portsmouth, NH.
While seasonality is generally not a significant factor in the Albany Engineered Composites segment, the commercial terms of the supply agreement governing the LEAP program resulted in fourth quarter sales volatility in recent years. 40 Index Cash Flow Summary (in thousands) For the years ended December 31, 2023 2022 2021 Net income $ 111,610 $ 96,508 $ 118,768 Depreciation and amortization 76,733 69,049 74,255 Changes in working capital (a) (44,214) (63,478) 16,488 Changes in long-term liabilities, deferred taxes and other credits (11,829) (18,629) (1,532) Non-cash portion of pension settlement expense — 42,657 — Other operating items 15,756 2,107 9,496 Net cash provided by operating activities 148,056 128,214 217,475 Net cash used in investing activities (217,899) (96,348) (53,699) Net cash used in financing activities (52,641) (23,652) (99,635) Effect of exchange rate changes on cash flows 4,128 (18,474) (3,421) Increase/(decrease) in cash and cash equivalents (118,356) (10,260) 60,720 Cash and cash equivalents at beginning of year 291,776 302,036 241,316 Cash and cash equivalents at end of year $ 173,420 $ 291,776 $ 302,036 _________________________ (a) Includes Accounts receivable, Contract assets, Inventories, Accounts payable and Accrued liabilities.
While seasonality is generally not a significant factor in the Albany Engineered Composites segment, the commercial terms of the supply agreement governing the LEAP program resulted in fourth quarter sales volatility in recent years. 43 Index Cash Flow Summary (in thousands) For the years ended December 31, 2024 2023 2022 Net income $ 88,055 $ 111,610 $ 96,508 Depreciation and amortization 89,294 76,733 69,049 Changes in working capital (a) 54,321 (44,214) (63,478) Changes in long-term liabilities, deferred taxes and other credits (23,033) (11,829) (18,629) Non-cash portion of pension settlement expense — — 42,657 Other operating items 9,804 15,756 2,107 Net cash provided by operating activities 218,441 148,056 128,214 Net cash used in investing activities (80,180) (217,899) (96,348) Net cash used in financing activities (183,832) (52,641) (23,652) Effect of exchange rate changes on cash flows (12,566) 4,128 (18,474) Increase/(decrease) in cash and cash equivalents (58,137) (118,356) (10,260) Cash and cash equivalents at beginning of year 173,420 291,776 302,036 Cash and cash equivalents at end of year $ 115,283 $ 173,420 $ 291,776 _________________________ (a) Includes Accounts receivable, Contract assets, Inventories, Accounts payable and Accrued liabilities.
Excluding the effect of changes in currency translation rates, the increase in Net revenues was 11.7 percent. AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 40 percent of segment revenue for 2023 and 2022.
Changes in currency translation rates had an insignificant effect on Net revenues. AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 37% of segment revenue for 2024 and 2023.
In accounting for these contracts, we estimate the profit margin expected at the completion of the contract and recognize a pro-rata share of that profit during the course of the contract using a cost-to-cost approach.
In addition, AEC has long-term contracts in which the selling price is fixed. In accounting for those contracts, we estimate the profit margin expected at the completion of the contract and recognize a pro-rata share of that profit during the course of the contract using a cost-to-cost approach.
Net cash used in financing activities during 2023 was $52.6 million compared to $23.7 million in 2022, driven by increased principal payments on debt and increased dividends paid to shareholders during 2023. Liquidity and Capital Structure We finance our business activities primarily with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below.
The significant increase in net cash used during 2024 was due to increased principal payments on debt, increased share repurchases, and increased dividends paid to shareholders. Liquidity and Capital Structure We finance our business activities primarily with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below.
Terms vary with product, competitive conditions, and the country of operation. In some markets, customer agreements require us to maintain significant amounts of finished goods inventory to assure continuous availability of our products.
In some markets, customer agreements require us to maintain significant amounts of finished goods inventory to assure continuous availability of our products.
Critical Accounting Policies and Estimates For the discussion of our accounting policies, see Note 1, Accounting Policies , of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Payments for these commitments are not representative of all our future cash requirements, which will vary based on future needs. Critical Accounting Estimates For the discussion of our accounting policies, see Note 1, Accounting Policies , of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
MC has been a significant generator of cash, and we seek to maintain the cash-generating potential of this business by maintaining the low costs that we have achieved through continuous focus on cost-reduction initiatives, and competing vigorously by using our differentiated and technically superior products to reduce our customers’ total cost of operation and improve their paper quality.
The Company seeks to maintain the cash-generating potential of this business by maintaining lower costs through a continued focus on cost-reduction initiatives and strategic investment, and by vigorously using our differentiated and technically superior products to reduce our customers’ total cost of operation and improve their paper quality.
Business Combinations As we enter into business combinations, we perform acquisition accounting requirements including the following: • Identifying the acquirer, • Determining the acquisition date, • Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and • Recognizing and measuring goodwill, as applicable We complete valuation procedures and record the resulting fair value of the acquired assets and assumed liabilities in accordance with the acquisition method under ASC 805, Business Combinations.
Business Combinations As we enter into business combinations, we perform acquisition accounting requirements including the following: • Identifying the acquirer, • Determining the acquisition date, • Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and • Recognizing and measuring goodwill, as applicable.
AEC’s current portfolio of non-3D programs includes components for the CH-53K helicopter, components for the F-35, missile bodies for Lockheed Martin’s JASSM air-to-surface missiles, fuselage components for the Boeing 787 aircraft, and vacuum waste tanks for Boeing commercial aircraft. AEC is actively engaged in research to develop new applications in both commercial and defense aircraft engine and airframe markets.
The AEC segment's current portfolio of non-3D programs includes components for the CH-53K helicopter, components for the F-35, missile bodies for Lockheed Martin’s JASSM air-to-surface missiles, fuselage components for the Boeing 787 aircraft, vacuum waste tanks for Boeing commercial aircraft and components and structures for other commercial, business jet, defense, and space and AAM programs.
The following table summarizes technical and research expenses by business segment: (in thousands, except percentages) Years ended December 31, 2023 2022 2021 Machine Clothing $ 24,651 $ 24,588 $ 26,032 Albany Engineered Composites 15,976 15,353 12,890 Total technical and research expenses $ 40,627 $ 39,941 $ 38,922 % of net revenues 3.5 % 3.9 % 4.2 % Consolidated Technical and research expenses increased 1.7 percent as compared to 2022, however, as a percentage of Net revenues, it decreased from 3.9 percent in 2022 to 3.5 percent in 2023.
The following table summarizes technical and research expenses by business segment: (in thousands, except percentages) Years ended December 31, 2024 2023 2022 Machine Clothing $ 29,832 $ 24,651 $ 24,588 Albany Engineered Composites 16,265 15,976 15,353 Total technical and research expenses $ 46,097 $ 40,627 $ 39,941 % of net revenues 3.7 % 3.5 % 3.9 % Consolidated Technical and research expenses increased 13.5% as compared to 2023 and as a percentage of Net revenues increased from 3.5% in 2023 to 3.7% in 2024. • MC Technical and research expenses increased $5.2 million as compared to 2023, driven primarily by a $5.1 million increase related to Heimbach. • AEC Technical and research expenses increased $0.3 million as compared to 2023, driven by increased research material and labor costs.
We believe we are well-positioned in key markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, technical product support, and manufacturing technology.
The MC segment's backlog continues to be stable going into 2025. MC believes it is well-positioned in key markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, technical product support, and manufacturing technology.
Other Earnings Items The following table summarizes other earnings items that are presented below Operating income: (in thousands) Years ended December 31, 2023 2022 2021 Interest expense, net $ 13,601 $ 14,000 $ 14,891 Pension settlement expense — 49,128 — AMJP grant — — (5,832) Other (income)/expense, net (6,163) (14,086) 3,021 Income tax expense 48,846 35,472 47,163 Net income/(loss) attributable to the noncontrolling interest 490 746 290 Interest Expense/(income), net Interest expense/(income), net, decreased over the prior year as a result of higher interest earned on Cash and cash equivalents, in addition to lower interest expense on finance leases.
Other Earnings Items The following table summarizes other earnings items that are presented below Operating income: (in thousands) Years ended December 31, 2024 2023 2022 Interest expense, net $ 12,549 $ 13,601 $ 14,000 Pension settlement expense — — 49,128 Other (income)/expense, net 1,721 (6,163) (14,086) Income tax expense 29,034 48,846 35,472 Net income/(loss) attributable to the noncontrolling interest 432 490 746 Interest Expense/(income), net Interest expense/(income), net, decreased over the prior year primarily due to lower average debt balances, in part offset by less interest income earned on cash equivalents during the current year.
The acquisition methodology requires management to make assumptions and apply judgment to determine the fair value of assets acquired and liabilities assumed.
We complete valuation procedures and record the resulting fair value of the acquired assets and assumed liabilities in accordance with the acquisition method under ASC 805, Business Combinations. The acquisition methodology requires management to make assumptions and apply judgment to determine the fair value of assets acquired and liabilities assumed.
Consolidated Results of Operations Net Revenues The following table summarizes our Net revenues by business segment: (in thousands, except percentages) Years ended December 31, 2023 2022 2021 Machine Clothing $ 670,768 $ 609,461 $ 619,015 Albany Engineered Composites 477,141 425,426 310,225 Total net revenues $ 1,147,909 $ 1,034,887 $ 929,240 % change 10.9 % 11.4 % 3.2 % Changes in currency translation rates had the effect of decreasing 2023 Net revenues by $0.8 million, driven by the weaker Renminbi, which was partially offset by the stronger Euro, as compared to 2022.
Consolidated Results of Operations Net Revenues The following table summarizes our Net revenues by business segment: (in thousands, except percentages) Years ended December 31, 2024 2023 2022 Machine Clothing $ 749,907 $ 670,768 $ 609,461 Albany Engineered Composites 480,708 477,141 425,426 Total net revenues $ 1,230,615 $ 1,147,909 $ 1,034,887 % change 7.2 % 10.9 % 11.4 % Net revenues increased 7.2% compared to 2023, driven by an increase of Net revenues from the Heimbach acquisition in 2023 and marginally higher Net revenues in AEC, partially offset by lower organic Net revenues at MC.
Gross Profit The following table summarizes Gross profit by business segment: (in thousands, except percentages) Years ended December 31, 2023 2022 2021 Machine Clothing $ 331,558 $ 312,285 $ 322,457 Albany Engineered Composites 92,160 77,497 55,934 Total $ 423,718 $ 389,782 $ 378,391 % of net revenues 36.9 % 37.7 % 40.7 % The increase in 2023 Gross profit, as compared to 2022, was principally due to increased Net revenues in both segments and the acquisition of Heimbach.
Changes in currency translation rates had an insignificant effect on Net revenues. 36 Index Gross Profit The following table summarizes Gross profit by business segment: (in thousands, except percentages) Years ended December 31, 2024 2023 2022 Machine Clothing $ 346,044 $ 331,558 $ 312,285 Albany Engineered Composites 55,732 92,160 77,497 Total $ 401,776 $ 423,718 $ 389,782 % of net revenues 32.6 % 36.9 % 37.7 % The decrease in Gross profit during 2024, as compared to 2023, was driven by increased cost assumptions that adjusted the expected profitability of certain long-term contracts in the AEC segment.
Restructuring In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, operating income was affected by Restructuring expenses, net, which was insignificant in both the current and prior year, and was related primarily to the winding down of restructuring actions taken in prior periods.
Restructuring In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, Operating income was affected by Restructuring expense, net, of $13.4 million in 2024, as compared to $0.3 million in 2023.
See Government Grants under Note 1, Accounting Policies, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
Corporate expenses include global information system costs of $1.0 million in 2024, $2.1 million in 2023 and $1.0 million in 2022. For more information on our segments, see Note 3, Reportable Segments and Geographic Data, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
The change in gross profit as a percentage of revenues for each segment is as follows: • MC gross profit margin decreased from 51.2 percent in 2022 to 49.4 percent in 2023 in MC.
Gross profit as a percentage of revenues was as follows: • MC's gross profit margin decreased from 49.4% in 2023 to 46.1% in 2024.
SG&A expenses also increased as a percentage of Net Revenues from 16.3 percent in 2022 to 18.7 percent in 2023.
Consolidated SG&A expenses decreased 1.9% as compared to 2023 and as a percentage of Net revenues, SG&A expenses decreased from 18.7% in 2023 to 17.1% in 2024.
We estimate these contractual commitments amount to approximately $716 million as of December 31, 2023, of which we expect to pay $58 million within the next year. Such commitments are not representative of all our future cash requirements, which will vary based on future needs.
We estimate these contractual commitments amount to approximately $538 million as of December 31, 2024, of which we expect to pay $62 million within the next year.
The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15 percent intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation.
The amount of the tax expense needed to book the valuation allowance could also change depending on additional activities. The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% effective on January 1, 2024.
Pension plan, in line with the Company's plan to reduce pension obligations over time. No similar payment was made during the current year (see discussion in Note 4, Pension, Postretirement, and Other Benefit Plans , of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K ) .
For more information on the revolving credit agreement, see Note 17, Financial Instruments , for payments related to leases see Note 20, Leases , and for payments related to pension and postretirement plans see Note 4, Pension, Postretirement, and Other Benefit Plans , as included in the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
A summary of AEC's selected financial results is as follows: Review of Operations (in thousands, except percentages) Years ended December 31, 2023 2022 2021 Net revenues $ 477,141 $ 425,426 $ 310,225 % change 12.2 % 37.1 % -5.3 % Gross profit 92,160 77,497 55,934 % of net revenues 19.3 % 18.2 % 18.0 % SG&A expenses 34,597 30,565 26,852 Technical and research expenses 15,976 15,353 12,890 Operating income/(loss) 41,587 31,579 16,160 Net revenues 39 Index AEC's Net revenues increased 12.2 percent primarily due to revenue growth across AEC's portfolio of commercial programs including LEAP, Boeing 787 Frames, GE9x and other commercial programs.
A summary of AEC's selected financial results is as follows: (in thousands, except percentages) Years ended December 31, 2024 2023 2022 Net revenues $ 480,708 $ 477,141 $ 425,426 % change 0.7 % 12.2 % 37.1 % Gross profit 55,732 92,160 77,497 % of net revenues 11.6 % 19.3 % 18.2 % SG&A expenses 47,421 48,833 42,339 Technical and research expenses 16,265 15,976 15,353 Restructuring expenses, net 3,649 — — Operating income $ (11,603) $ 27,351 $ 19,805 % of net revenues -2.4 % 5.7 % 4.7 % Net revenues Net revenues increased 0.7%, primarily driven by growth on certain commercial and space programs, which were partially offset by lower revenues on the LEAP, F-35 and CH-53K programs.
A summary of MC's selected financial results is as follows: Review of Operations (in thousands, except percentages) Years ended December 31, 2023 2022 2021 Net revenues $ 670,768 $ 609,461 $ 619,015 % change 10.1 % -1.5 % 8.0 % Gross profit 331,558 312,285 322,457 % of net revenues 49.4 % 51.2 % 52.1 % SG&A expenses 107,246 81,391 79,570 Technical and research expenses 24,651 24,588 26,032 Operating income 199,378 206,214 215,654 Net revenues MC's Net revenues increased 10.1 percent in 2023, driven by the acquisition of the Heimbach business in August, which contributed Net revenues of $51.2 million.
A summary of MC's selected financial results is as follows: (in thousands, except percentages) Years ended December 31, 2024 2023 2022 Net revenues $ 749,907 $ 670,768 $ 609,461 % change 11.8 % 10.1 % -1.5 % Gross profit 346,044 331,558 312,285 % of net revenues 46.1 % 49.4 % 51.2 % SG&A expenses 123,120 118,196 91,393 Technical and research expenses 29,832 24,651 24,588 Restructuring expenses, net 9,460 282 92 Operating income $ 183,632 $ 188,429 $ 196,212 % of net revenues 24.5 % 28.1 % 32.2 % Net revenues Net revenues increased 11.8% as compared to 2023, driven by the addition of Heimbach Net revenues of $95.0 million as well as better performance in tissue, pulp, and engineered fabrics.
Some of the markets 33 Index in which our products are sold are expected to have low levels of growth and we face pricing pressures in all markets. Despite these market pressures on revenue, the MC business retains the potential for maintaining stable earnings in the future.
Some of the markets in which MC's products are sold are expected to have volume trends that are in line with global GDP. MC continues to face pricing pressures in all markets. Despite these market pressures on revenue growth, the MC segment is expected to improve earnings in the future through cost controls and manufacturing productivity efficiencies.
Other (income)/expense, net Other (income)/expense, net included foreign currency related transactions that resulted in gains of $2.9 million during 2023 and gains of $10.0 million during 2022. During 2023, the stronger Mexican Peso primarily drove transaction gains on nonfunctional currency monetary liabilities, while during 2022, the weaker Euro primarily drove transaction gains related to nonfunctional currency monetary assets.
Other (income)/expense, net Other (income)/expense, net included foreign currency related transactions that resulted in gains of $3.9 million in 2024 and $2.9 million in 2023.
There were no similar gains of this nature during 2023. 37 Index Income Taxes Years ended December 31, 2023 2022 2021 Effective tax rate 30.4% 26.9% 28.4% The effective tax rate represents the combined federal, state and foreign tax effects attributable to pretax earnings.
See Note 6, Other (Income)/Expense, net , of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information. 39 Index Income Taxes Years ended December 31, 2024 2023 2022 Effective tax rate 24.8% 30.4% 26.9% The effective tax rate represents the combined federal, state and foreign tax effects attributable to pretax earnings.
For more information on income tax, see Note 7, Income Taxes, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. 38 Index Segment Results of Operations Machine Clothing Segment The MC segment accounted for 58 percent of our consolidated revenues during 2023.
For more information on income tax, see Note 7, Income Taxes, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The Company has continuously monitored its ability to realize deferred tax assets as it pertains to Heimbach GmbH due to their existing net operating loss carryovers.
See the Working Capital, Liquidity and Capital Structure section for further discussion of borrowings and interest rates. Pension settlement expense During 2022, the Company took actions to settle certain pension plan liabilities in the U.S., leading to charges totaling $49.1 million. No similar charges were incurred during 2023.
For more information, see Note 17, Financial Instruments, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Pension settlement expense During 2022, the Company took actions to settle certain pension plan liabilities in the U.S., leading to charges totaling $49.1 million.
As currently designed, Pillar Two will ultimately apply to our worldwide operations. Although we do not expect these rules to materially increase our global tax costs in 2024, there remains uncertainty as to the final Pillar Two model rules. We will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.
While the U.S. has indicated that it will not adopt the Pillar Two rules, various other governments around the world are enacting legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. We have evaluated the impact of these rules and have determined that it did not materially increase our global tax costs in 2024.
As of December 31, 2023, we had cash and cash equivalents of $173.4 million and availability under our Credit Agreement of $354 million, for a total liquidity of approximately $527 million.
As of December 31, 2024, we had cash and cash equivalents of $115.3 million and availability under our Credit Agreement of $481.5 million, for a total liquidity of approximately $596.8 million. Bank debt at the Company's Heimbach subsidiary was paid down to less than $0.1 million as of December 31, 2024.
The amount of a valuation allowance is based upon our best estimate of our ability to realize the deferred tax assets.
The amount of a valuation allowance is based upon our best estimate of our ability to realize the deferred tax assets. 46 Index Tax positions taken or expected to be taken in a tax return are recognized when it is more-likely-than-not, based on technical merits, to be sustained upon examination by taxing authorities.
Net cash used in investing activities also included capital expenditures totaling $84.4 million in 2023, compared to $96.3 million in the same period last year, including investments to improve productivity and produce a meaningful impact on energy and resource efficiency.
Net cash used in investing activities included capital expenditures totaling $80.2 million and $84.4 million during 2024 and 2023, respectively, including investments in new aerospace programs and to improve productivity in our MC segment.
Expected losses on projects include losses on contract options that are probable of exercise, excluding profitable options that often follow. Gross Profit Net revenues growth on key programs, as noted above, contributed to improved overhead absorption, driving a Gross profit increase of $14.7 million as compared to 2022.
Expected losses on projects include losses on contract options that are probable of exercise, excluding profitable options that often follow. Gross Profit Gross profit decreased $36.4 million as compared to last year and Gross profit margin decreased from 19.3% in 2023 to 11.6% in 2024.
The sum of net adjustments to the estimated profitability of long-term contracts decreased AEC operating income by $4.1 million in 2023, compared to an increase in AEC operating income of $0.5 million in 2022. Working Capital, Liquidity and Capital Structure Working Capital Payment terms granted to paper industry and other machine clothing customers reflect general competitive practices.
Backlog at AEC was $1.4 billion as of December 31, 2024. Working Capital, Liquidity and Capital Structure Working Capital Payment terms granted to paper industry and other machine clothing customers reflect general competitive practices. Terms vary with product, competitive conditions, and the country of operation.
The following table summarizes SG&A by business segment: (in thousands, except percentages) Years ended December 31, 2023 2022 2021 Machine Clothing $ 107,246 $ 81,391 $ 79,570 Albany Engineered Composites 34,597 30,565 26,852 Corporate 73,072 56,757 53,705 Total $ 214,915 $ 168,713 $ 160,127 % of net revenues 18.7 % 16.3 % 17.2 % Consolidated SG&A expenses increased 27.4 percent as compared to 2022.
The following table summarizes SG&A by business segment: (in thousands, except percentages) Years ended December 31, 2024 2023 2022 Machine Clothing $ 123,120 $ 118,196 $ 91,393 Albany Engineered Composites 47,421 48,833 42,339 Corporate 40,341 47,886 34,981 Total $ 210,882 $ 214,915 $ 168,713 % of net revenues 17.1 % 18.7 % 16.3 % Certain prior year amounts have been reclassified in order to conform to current year presentation.
Net revenues also increased due to better performance in tissue and packaging grades, which was partially offset by lower revenues in engineered fabrics. Changes in currency translation rates had the effect of decreasing 2023 Net revenues by $2.6 million, driven by the weaker Renminbi, which was partially offset by the stronger Euro, as compared to 2022.
MC's Net revenues increased 11.8% compared to 2023 driven by an increase in Heimbach Net revenues of $95.0 million as well as better performance in tissue, pulp, and engineered fabrics. This was partially offset by $14.0 million of lower Net revenues in the rest of the segment, driven primarily by weakness in publication and packaging globally.
For more information on our restructuring charges, see Note 5, Restructuring, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. 36 Index Operating Income The following table summarizes operating income/(loss) by business segment: (in thousands, except percentages) Years ended December 31, 2023 2022 2021 Machine Clothing $ 199,378 $ 206,214 $ 215,654 Albany Engineered Composites 41,587 31,579 16,160 Corporate (73,071) (56,771) (53,803) Total operating income $ 167,894 $ 181,022 $ 178,011 % of net revenues 14.6 % 17.5 % 19.2 % See the Segment Results of Operations section of this Management Discussion and Analysis of Financial Condition and Results of Operations for significant drivers of Operating income/(loss) for each business segment.
This change impacts approximately 100 employees, will take place over the next year and a half, and will cost an estimated $7 million over that period related to retention, relocation, severance, and professional costs. 38 Index Operating Income The following table summarizes operating income/(loss) by business segment: (in thousands, except percentages) Years ended December 31, 2024 2023 2022 Machine Clothing $ 183,632 $ 188,429 $ 196,212 Albany Engineered Composites (11,603) 27,351 19,805 Corporate (40,670) (47,886) (34,995) Total operating income $ 131,359 $ 167,894 $ 181,022 % of net revenues 10.7 % 14.6 % 17.5 % See the Segment Results of Operations section of this Management Discussion and Analysis of Financial Condition and Results of Operations for significant drivers of Operating income/(loss) for each business segment.
Repatriating such cash from certain jurisdictions, that is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes. Bank debt at the Company's Heimbach subsidiary, of which $32.7 million was assumed in the acquisition, is held by several European financial institutions.
Repatriating such cash from certain jurisdictions, which is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes. We have also returned cash to shareholders through dividends and share repurchases. We paid dividends of $32.5 million and $31.2 million during 2024 and 2023, respectively. The Company repurchased 182,901 shares during 2024 for $14.2 million.
AEC (including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group owns a 10 percent noncontrolling interest) supplies a number of customers in the aerospace industry.
The AEC segment provides longer-term growth potential for the Company and the AEC segment continues to penetrate new programs and applications, as well as ramping up production on certain long-term programs, such as the CH-53K and other commercial aircraft programs that have not yet returned to pre-COVID production rates. 35 Index The AEC segment (including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group owns a 10% noncontrolling interest) supplies a number of customers in the aerospace industry.
MC net revenues also improved due to better performance in tissue and packaging grades, which was partially offset by lower revenues from engineered fabrics. AEC's Net revenues increased 11.7 percent, excluding the effect of changes in currency translation rates, primarily due to revenue growth across AEC's portfolio of commercial programs including LEAP, Boeing 787 Frames, GE9X and other commercial programs.
Changes in currency translation rates had the effect of decreasing Net revenues $1.9 million. AEC's Net revenues increased 0.7%, primarily driven by growth on certain commercial and space programs, which were partially offset by lower revenues on the LEAP, F-35 and CH-53K programs.
Gross profit margin increased from 18.2 percent in 2022 to 19.3 percent in 2023. Operating Income/(Loss) Operating income increased $10.0 million in 2023, principally due to an increase in Gross profit, as described above, partially offset by a $4.0 million increase in SG&A expenses related to incentive compensation, personnel-related costs, and investments in business development activities.
The strong Gross profit performance noted above was more than offset by increased SG&A, Technical and Research, and Restructuring expenses. SG&A expenses increased $4.9 million as compared to 2023, with a $13.5 million increase related to Heimbach, partially offset by a $8.2 million decrease due to changes in currency translation rates and a $0.5 million decrease due to personnel-related costs.
See Note 24, Business Combination, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information. The AEC segment provides significant longer term growth potential for the Company.
Backlog differs from unsatisfied performance obligations for contracts disclosed in Note 2, Revenue Recognition, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K, which excludes unsatisfied performance obligations with an original expected duration of one year or less.
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Business Environment Overview and Trends Our reportable segments, Machine Clothing (“MC”) and Albany Engineered Composites (“AEC”) draw on the same advanced textiles and materials processing capabilities, and compete on the basis of product-based advantage that is grounded in those core capabilities. The MC segment is the Company’s long-established core business and primary generator of cash.
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Business Environment Overview and Trends We conduct our business under two reportable segments: Machine Clothing (“MC”) and Albany Engineered Composites (“AEC”) each rooted in similar materials sciences know-how that forms a common approach to customer 34 Index value proposition in design and manufacturability.
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While it has been negatively impacted by declines in publication grades in the Company’s traditional markets, there has been some offsetting effect due to growth in demand for packaging and tissue grades, as well as the expansion of paper consumption and production in Asia and South America.
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MC competes on the basis of its deep industry knowledge, customer reputation and customer service and global advanced textile manufacturing capabilities, which has enabled it to develop a robust and market leading product offering that can be tailored to customer specific requirements.
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Our strategy is to grow by focusing our proprietary 3D-woven technology, as well as our non-3D technology capabilities, on high-value aerospace (both commercial and defense) applications, while at the same time performing successfully on our portfolio of growth programs.
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AEC competes on the basis of its innovative technology solutions, extensive composite manufacturing capabilities and capacity that enable it to offer high quality specific part and assembly solutions that achieve its customers’ application performance requirements.
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In 2023, approximately 39 percent of AEC net revenues were related to U.S. government contracts or programs.
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General Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, potential changes in U.S. government policy positions, including changes in Department of Defense policies or priorities, geopolitical conflicts and strained intercountry relations, U.S. and non-U.S. tax law changes, foreign currency exchange rates, sanctions, tariffs, energy costs and supply, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses.
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Excluding the effect of changes in currency translation rates, consolidated Net revenues increased 11 percent. Net revenues in MC increased 10.5 percent, excluding the effect of changes in currency translation rates, compared to 2022, driven by the acquisition of the Heimbach business in August 2023, which contributed Net revenues of $51.2 million.
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Machine Clothing Prior to the acquisition of Heimbach, the MC segment experienced declining revenues due to changing global market consumption of publication grade paper.
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Recurring production revenues for defense programs grew year-over-year, however, the defense growth was more than offset by lower non-recurring revenues associated with the start-up of the CH-53K aft transition program. Backlog Backlog represents the summation of the value of all firm, open orders from customers at both segments.
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The MC segment expects revenues to continue to decline for publication grade paper into 2025 and beyond, however, we see an offsetting effect due to growth in demand for packaging, and to a lesser degree, tissue grade products.
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Backlog in the MC segment was $256 million at December 31, 2023, which included $72 million related to Heimbach, and $172 million at December, 31 2022. Backlog in the AEC segment increased to $494 million at December 31, 34 Index 2023, compared to $414 million at December 31, 2022.
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During 2024, the MC segment saw stronger revenue in tissue, pulp, and engineered fabrics, and weaker revenue in packaging and publication grades, with softness in Asia, particularly China, and Europe. Going into 2025, the MC segment expects a modest recovery in Europe beginning in late 2025; however, China's recovery remains unclear.
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The increase in AEC’s backlog was primarily due to growth on the LEAP and CH-53K programs. All of the backlog in MC and approximately 75 percent of the AEC backlog is expected to be invoiced during the next 12 months.
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The MC segment has been a significant generator of cash for the Company.
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This margin decrease was partially driven by increased cost of goods sold at Heimbach, which included the non-recurring amortization of the fair value step-up of acquired inventory of $5.5 million.
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Unlocking the full benefits and value of Heimbach is a complex integration process that is well underway and tracking to expectations. It is a multi-year program that started with harmonizing Heimbach operations with our legacy MRP systems and establishing a new global customer and operations organization.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOn December 31, 2023, we had the following variable rate debt: (in thousands, except interest rates) Current maturities of long-term debt: Foreign bank debt (at an end of period rate ranging from 5.22% to 5.52% in 2023) $ 43 Long-term debt: Credit agreement with borrowings outstanding, net of fixed rate portion, at an end of period interest rate of 7.08% in 2023, due in 2028 96,000 Foreign bank debt (at an end of period rate ranging from 5.22% to 5.52% in 2023) 49 Total $ 96,092 Assuming borrowings were outstanding for an entire year, an increase of one percentage point in weighted average interest rates would increase interest expense by $1.0 million .
Biggest changeOn December 31, 2024, we had the following variable rate debt: (in thousands, except interest rates) Long-term debt: Credit agreement borrowings outstanding (net of fixed rate portion, due in 2028): USD borrowings (end of period all-in interest rate of 6.00%) 100,000 EUR borrowings (end of period all-in interest rate of 4.40%) 46,742 Foreign bank debt (end of period all-in interest rate ranging from 4.27% to 5.10%) 46 Total $ 146,788 Assuming borrowings were outstanding for an entire year, an increase of one percentage point in weighted average interest rates would increase interest expense by $1.5 million.
(See Note 18, Fair-Value Measurements , of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). 50 Index
(See Note 18, Fair-Value Measurements , of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). 48 Index
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have market risk with respect to foreign currency exchange rates and interest rates. The market risk is the potential loss arising from adverse changes in these rates as discussed below.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to changes in both foreign currency exchange rates and interest rates. From time to time, the Company enters into derivative agreements to manage these risks. The market risk is potential losses arising from adverse changes in these rates as discussed below.
This amount includes, on an absolute basis, exposures to assets and liabilities held in currencies other than our local entities' functional currency. On a net basis, we had $29.4 million of foreign currency assets as of December 31, 2023. As currency rates change, these nonfunctional currency balances are revalued, and the corresponding adjustment is recorded in the income statement.
Furthermore, related to foreign currency transactions, we have exposure to various nonfunctional currency balances totaling $146.2 million. This amount includes, on an absolute basis, exposures to assets and liabilities held in currencies other than our local entities' functional currency. On a net basis, we had $74.0 million of foreign currency assets as of December 31, 2024.
To manage this risk, we periodically enter into forward exchange contracts either to hedge the net assets of a foreign investment or to provide an economic hedge against future cash flows. The total net assets of non-U.S. operations and long-term intercompany loans denominated in nonfunctional currencies subject to potential loss amount to approximately $716.5 million.
This risk is composed of both potential losses from the translation of foreign currency financial statements and the remeasurement of foreign currency transactions. To manage this risk, we periodically enter into forward exchange 47 Index contracts either to hedge the net assets of a foreign investment or to provide an economic hedge against future cash flows.
Foreign Currency Exchange Rate Risk We have manufacturing plants and sales transactions worldwide and therefore are subject to foreign currency risk. This risk is composed of both potential losses from the translation of foreign currency financial statements and the remeasurement of foreign currency transactions.
Foreign Currency Exchange Rate Risk We have manufacturing plants and sales transactions worldwide and, therefore, are subject to foreign currency risk. Our operational results can be materially impacted depending on the volatility and magnitude of foreign rate changes.
A hypothetical change of 10 percent in currency rates could result in an adjustment to the income statement of approximately $2.9 million. Actual results may differ. Interest Rate Risk We are exposed to interest rate fluctuations with respect to our variable rate debt, depending on general economic conditions.
As currency rates change, these nonfunctional currency balances are revalued, and the corresponding adjustment is recorded in the income statement. A hypothetical change of 10% in currency rates could result in an adjustment to the income statement of approximately $7.4 million. Actual results may differ.
The potential loss in fair value resulting 49 Index from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates amounts to $71.7 million. Furthermore, related to foreign currency transactions, we have exposure to various nonfunctional currency balances totaling $117.3 million.
The total net assets of non-U.S. operations and long-term intercompany loans denominated in nonfunctional currencies subject to potential loss amount to approximately $576.4 million. The potential loss in fair value resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to $57.6 million.
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Interest Rate Risk We are exposed to interest rate fluctuations with respect to our variable rate debt, depending on general economic conditions.

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