Albany International Corporation

good day and thank you for standing by welcome to albany international's third quarter 2023 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'll need to press star 1-1 on your telephone you will then hear an automated message advising your hand is raised to withdraw your question please press star 1-1 again please be advised that today's conference is being recorded i would now like to hand the conference over to your speaker today Mr. John Hobbs, Director of Investor Relations. Please go ahead, sir.

Well, thank you, Norma, and good morning, everyone. Welcome to Albany International's third quarter 2023 conference call. As a reminder for those of you listening on the call, please refer to our press release issued yesterday afternoon detailing our quarterly financial results. Contained in the text of the release is a notice regarding our forward-looking statements and the issue in 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 will 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, please refer to both our earnings release of November 6, 2023, as well as our SEC filings, including our 10Q. Now, I'll turn the call over to Gunnar Cleveland, our President and Chief Executive Officer, who will provide opening remarks. Gunnar? Thank you, John.

Good morning and welcome, everyone. Thank you for joining our third quarter earnings call. I'm pleased to be here today on my first call as President and CEO of Albany International. The company has again produced very good results in the third quarter, with excellent operational execution and positive free cash flow for both the quarter and on a year-to-day basis. Before we get into the details, I'd like to take a moment to acknowledge Bill Higgins' steadfast leadership of Albany as President and CEO through the past several years. While he has retired from his role, he continues to provide guidance and counsel as a member of the company's board of directors. My transition has proceeded smoothly, and Bill leaves a legacy of a great company with innovative proprietary technologies, businesses that are performing well, and a healthy balance sheet. The business segments each have impressive product quality and exceptional customer service. I know from experience these elements are the foundation of excellent customer relationships. continued business opportunities, and a sustainable competitive advantage. These factors weighed on my decision to join Albany. I spent my first few weeks getting more familiar with operations, traveling to numerous sites across the business, meeting with our team, and having meaningful conversations at all levels of the company, from the shop floor to the C-suite. Really spending my time focusing on the technology, operations, and getting more familiar with the culture, introducing myself as well as gathering impressions from our customers and the investment community. The company's technologies and track record of innovations really strike me as strategic assets. The same underlying weaving technology is fundamental to the company's businesses and driver of ongoing technical collaboration and interchange. Within aerospace, the push towards lighter weight, more environmentally friendly designs is the number one challenge to be solved for the next generation of commercial aircraft. Albany's proprietary composite technologies, such as our 3D woven composites, are well-positioned to play a role there. In machine clothing, it's clear from my conversations that customers value Albany's industry-leading product technology and technical expertise. In an industry that places a high value on operational reliability and operating efficiency, machine clothing's custom-tailored and consumable belts are a well-earned reputation, helping our customer make the most efficient use of their raw materials, energy, and labor. I believe a company's culture and people are the key to success. Albany's operational metrics in safety, quality, and customer service indicate to me a well-developed operational discipline. I think of continuous improvement as a lifestyle, which I also see across Albany's operations. From my operations leadership experience, I know how important on-time delivery and quality are to manufacturing operations. Finding a supplier with the performance of Albany International is very hard. And, well, as a customer, that just makes you want to give them more business. That kind of execution is a great foundation for a long-term and profitable business relationship and profitable growth. When you add the technology and innovation that we have to offer to all our customers, I think Albany International is an easy pick. Our challenge is to deliberately and strategically manage our growth while not losing sight of operational execution and capital discipline that is foundational to the business long-term success. Now let's look at third quarter results we announced last night. The company completed the acquisition of the Heimbach Group on August 31st of this year, so the GAAP results include one month of Heimbach operations and of course expenses associated with the transaction. The details are included in our press release. Rob will review these in more detail in his remarks. Heimbach Operations added nearly $16 million of revenue in the MC segment and reduced the segment's operating income by $500,000. We're reporting GAAP revenue of $281 million, up 7.9% year-over-year, driven by sales growth at AEC and one month of Heimbach results in MC. GAAP net income was $27 million, or $0.87 per share. up from the GAAP results of third quarter last year of $11 million or $0.34 per share, which incorporated $49 million of pension settlement charges. As expected, Heimbach was slightly dilutive to GAAP EPS for the quarter, about a penny per share. Excluding the impact of the Heimbach acquisition, revenue of $266 million was about 5 million, or 2%, higher than the third quarter of last year, driven by higher revenue at AEC. Adjusted EPS was $1.02 per share compared to $1.15 per share reported in third quarter of last year. Adjusted EBITDA, excluding Heimbach impact, was 63 million, or about 24% of sales, right on the company's stated long-term target. The machine clothing business continues to perform very well, particularly in light of challenging macroeconomic conditions in Europe and China. Excluding the effect of the Heimbach acquisition, machine clothing revenue of 151 million was about 2% lower on a currency-neutral basis, while adjusted EBITDA, again excluding the effect of the acquisition on this measure, was 56 million. This translates to 37% margin. North American markets continue to report sales growth year over year, while sales decline in other regions of the globe. The Heimbach integration is underway and proceeding as planned. Our segment president, Daniel Haftemeier, and his expanded team have been focusing on workforce engagement, ensuring operational stability, and financial integration in these first few weeks. We have a clear line of sight into the cost savings, and efficiency opportunities that the company previously announced, and expect acquisition will become accretive to earnings and cash flow in 2025. The aerospace composites business had a very good third quarter. Revenues of $115 million were up 6% year-over-year on a constant currency basis. Adjusted EBITDA of $22 million was up about 3%. The business is well-positioned and continues to win new programs, both commercial and defense, from existing and new customers. These will collectively contribute to AEC's long-term growth over the coming years. The company is executing well. It is in great financial health, and it is well positioned with unique technologies and know-how across the businesses. We are in an enviable position. We will continue pursuing continuous improvement across all of our operations, We expect to deliver the benefits of the Heimbach integration as planned. We're investing wisely today in technology development that will position the company to profitably grow well into the next decade. I'm excited about the opportunities. And with that, I will hand the call over to Rob to review the results in more detail and provide our updated guidance for the year. Rob?