Albany International Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Albany International Q2 2022 Earnings Conference Call. At this time, all telephone lines are on the listen-only mode. Later, there will be an opportunity for questions and answers with instructions given at that time. If you should require assistance during the conference call, please press star, then zero. An AT&T specialist will assist you offline. As a reminder, your conference call today is being recorded. I'll now turn the conference call over to your host, Director of Investor Relations, John Hobbs. Please go ahead.

Thank you, Alan, and good morning, everyone. Welcome to Albany International's second quarter 2022 conference call. As a reminder for those listening on the call, please refer to our press release issued last night detailing our quarterly financial results. Contained in the text of the release is a notice regarding our forward-looking statements and the use of certain non-GAAP financial measures to and their associated reconciliation to GAAP. For the purposes of this conference call, those same statements apply to our verbal remarks this morning. Today, we'll make statements that are forward-looking, that contain a number of risks and uncertainties, among which are the potential effects of the COVID-19 pandemic and the potential effects of the Russian invasion of Ukraine on our operations, the markets we serve, and our financial results. For a full discussion, including a reconciliation of non-GAAP measures we may use on this call, their most comparable GAAP measures, please refer to our earnings release of July 25, 2022, as well as our SEC filings, including our 10-K. Now I'll turn the call over to Bill Higgins, our President and Chief Executive Officer, who will provide opening remarks. Bill?

Thank you, John. Good morning and welcome, everyone. Thank you for joining our second quarter earnings call. Today, I'll comment on our business conditions, and then Stephen will cover our financial results in more detail. We're reporting another strong quarter with revenue of $261 million up on both a year-over-year and a sequential basis. The growth was driven by rebounding lead production and revenues from the CH-53K helicopter content we recently won with Sikorsky. We're excited about this growth program, and our teams are doing a great job expanding our manufacturing capacity in our Salt Lake City facility. GAAP EPS of $1.25 per share includes 20 cents of foreign exchange revaluation gains. Adjusted EPS of $1.06 per share was higher than $1.01 adjusted EPS reported in Q2 last year. Our machine clothing segment had another great quarter. Overall, customer demand remained steady. Segment sales were down 1.8% on a constant currency basis from last year's exceptionally strong levels, in part a result of our exit from the Russian market. Underlying business conditions at our customers remain strong. Our MC team has done an outstanding job maintaining margins despite the inflationary pressures they've experienced, again delivering gross margins over 50%, with adjusted EBITDA margins of more than 38%. Looking forward in the MC business, demand remains resilient with order levels up year over year going into Q3. In general, papermakers continue to enjoy attractive demand, and they've been pushing price increases for the products resulting in healthy cash flow from their operations. Machine clothing is essential to our customers' ability to keep their machines running, and our team has done a great job meeting that demand despite supply chain challenges that seem ever-present. This ability to navigate dynamic logistics markets has become even more important to our success in this environment where supply chains are constrained and customers value the ability to deliver on time. Our engineered composite segment delivered a good quarter as well. The segment reported significant year-over-year revenue growth of $35 million driven by two primary factors. One, the revenues from the CH53K content I mentioned earlier, and two, a year-over-year increase in LEED production. Adjusted EBITDA margins rebounded to just under 20% as the revenue mix improved. During the quarter, Boeing notified us they would no longer cover ongoing production of 787 frames in order to keep our production line warm. Therefore, we have temporarily idled our Boeing 787 frame manufacturing. We've redeployed those employees to other growing programs. And with excellent performance continuing in both segments, we're raising company-level guidance for 2022, which Stephen will cover in a minute. Let me make a few comments on the environment and how we've managed through it. Supply chain constraints, logistics, material availability, inflation continue to challenge our teams. Tight labor markets and being able to recruit talent is another challenge in this environment. Our teams have done remarkably well managing through it by working together. For example, to overcome supply chain shortages and delays, We've taken a cross-functional approach that connects supply chain with engineering, with operations, and with customers to optimize material and manufacturing uptime and performance. We've been able to deliver on time and maximize profitability. We continue to experience inflationary pressures and worked hard to offset higher costs with ongoing productivity improvements across our operations and with selective price increases. In engineered composites, the structure of many of our contracts has helped soften the impact of inflation on our results. In machine clothing, our global operating footprint places us close to our customers, an advantage in this environment. In both our businesses, we've remained nimble and continue to support our customers. We're encouraged by early signs that transportation availability and pricing appear to be stabilizing. In engineered composites, we just returned from a very successful Farnborough air show where the level of engagement with current and potential customers, suppliers, and aerospace industry peers was exceptional. During the show, I heard nothing but positive comments from our customers. And because of that, all of our discussions were about future business opportunities, which translates into growth opportunities for us. The air show confirmed that we're increasingly recognizing the industry as a dependable and preferred partner of choice. I'm most proud of how both of our teams in both segments are performing. Our customers are pleased with our performance, and we continue to pursue new growth opportunities because of it. And our balance sheet is rock solid, which enables us to continue to invest in our future. So with that, I'll hand it over to Stephen. Stephen?