Albany International Corporation

Good day and thank you for standing by. Welcome to the Albany International Corporate Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Hobbs, Director of Investor Relations. Please go ahead.

Thank you, Jacinda, and good morning, everyone. Welcome to Albany International's second quarter 2023 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 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 which could cause actual results to differ from those expressed or implied. For a full discussion of these risks and uncertainties, including a reconciliation of non-GAAP measures we may use on this call to their most comparable GAAP measures, please refer to our earnings release of July 26, 2023, as well as our SEC filings, including our 10-Q and 10-K. Now I'll turn the call over to Bill Higgins, President and Chief Executive Officer, who will provide opening remarks. Bill?

Thanks, Sean. Good morning and welcome, everyone. Thank you for joining our second quarter earnings call. We're pleased to report another strong quarter of results with revenues of $274 million, up nearly 5% compared to the same period last year, and solid execution across our operations. Gap EPS of 86 cents was down from last year's $1.25, impacted by non-operational items that Rob will cover. Adjusted EPS was 90 cents, and adjusted EBITDA was nearly $65 million in the quarter. As a result, we finished the first half of the year in good shape, and we're raising our guidance for the full year. The machine clothing segment continues to deliver healthy results, with revenue growth of 5.6% on a constant currency basis. Gross margins in excess of 50% and adjusted EBITDA margins exceeding 37%. Our machine clothing team has done an outstanding job navigating the challenges posed by macroeconomic headwinds in Europe and China, inflation, and the effects of the war in Ukraine. Since the end of 2022, trends in machine clothing's revenues, operating profit, and adjusted EBITDA have all been positive and now exceed our pre-pandemic performance. These impressive results are testament to the effectiveness of machine clothing's disciplined operating model, the consumable nature of our products, and our well-earned reputation as a supplier of mission-critical paper machine clothing products with exceptional reliability and value to our customers. Last month, we announced our agreement to acquire the Heimbach Group, a manufacturer of machine clothing based in Germany. Heimbach is a great fit and creates opportunities to provide our customers with even more value. Geographically, Heimbach is strong in Central Europe, which complements our Northern European presence. The addition of Heimbach's Asian operations will augment our presence in faster growing Asia as well. Heimbach and Albany each have long, proud legacies in machine clothing, and we look forward to working with the Heimbach team and leveraging the best of both companies to add value for our customers and shareholders. We expect the transaction to be accretive in both earnings and cash flow in our second year of ownership. And we have good news this morning. We just heard from the regulatory authorities that we've been approved to proceed with the closure of the deal, and we're going to move towards closing. So, as we've said before, we expect closing to be in the second half of the year. We're pretty excited on the news we received this morning. The engineer composite segment achieved top-line growth of approximately $5 million in the second quarter, up nearly 5% compared to Q2 of 2022. Growth in the quarter was driven by higher revenues from commercial programs and from some smaller programs that we've brought on over the past 12 months. Our aerospace team continues to ramp up the CH53K production line and is doing a great job managing supply chain delays and supporting our customers. Adjusted EBITDA in this segment was about $21 million, relatively flat with the second quarter of last year. AEC continues to do a great job for customers in on-time delivery, quality, and customer satisfaction. And this strong operational performance is notable in an industry that's still hampered by supply chain delays and other challenges. It gives our customers confidence in our ability to take on new business, either through more content on existing platforms or new programs. Our aerospace team did a great job at the Paris Air Show, and our business team, our business development teams, our engineering teams had a full slate of meetings to discuss new opportunities for growth. In many ways, it built on the momentum we achieved last year at Farnborough. We continue to build our reputation as the premier partner of choice in composites manufacturing. Finally, I can report that our board of directors is working diligently on my succession. The CEO search process is well underway. I'm committed to a smooth transition, working with the board and the management team to continue executing our strategy and doing a great job for customers and shareholders. And we'll let you know as soon as we have an announcement to make. So with that, I'll hand the call over to Rob.