Albany International Corporation

Thank you for standing by. My name is Roselle and I'll be your operator today. At this time, I would like to welcome everyone to the Q3 2025 Albany International Corp Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the conference call over to Joseph Gogh. Please go ahead.

Joseph Gogh Thank you, Rachel, and good morning, everyone. Welcome to Albany International's third quarter 2025 earnings conference call. As a reminder to those listening on the call, please refer to our press release issued last night detailing our quarterly financial results. Contained in the text of that release is a notice regarding our forward-looking statements and the use of certain non-GAAP financial measures and their 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 and contain a number of risks and uncertainties, which could cause actual results to differ from those expressed or implied. For a full disclosure of these risks and uncertainties, please refer to both our earnings release of November 5th, 2025, as well as our SEC filings, including our 10K. Now I will turn the call over to Gunnar Cleveland, our President and CEO, who will provide opening remarks. Gunnar. Thank you, Joe.

Good morning and welcome, everyone. Thank you for joining our third quarter earnings call. On today's call, I'd like to begin with a recap of some important developments that we have announced, followed by a high-level review of our go-forward strategy and conclude with an update by segment on our end markets and business developments. I will then turn the call over to Will to take you through the numbers. On October 28th, we announced a strategic review of our structures assembly business at our Amelia Earhart Drive facility in Salt Lake City, which could include the sale of the site. Together with our board, we have determined this is in the best interest of stakeholders for two primary reasons. First, structures, assemblies do not align with our long-term strategic priority to focus on 3D woven technology and engineered components, where we have a distinct competitive advantage with proprietary technology. Second, Typically, this type of work is characterized by large, long-term contracts with complex supply chains, high risk, and lower margins. As a result of these two factors, because they do not align with our strategic goals, we have decided to explore options for our structure assembly work. Alongside these decisions, we have also taken a loss reserve and a program adjustment to recognize a full expected loss on the CH53K program of $147 million over the next eight years. This follows a period of significant effort by our team taking decisive action over the past year to address program challenges, including upgrading the leadership, bringing in people with experience in planning, procuring, and executing structural assemblies, and addressing material availability. Despite these efforts, we now recognize that without changes to the contract, there is no path to profitability on the program as originally bid. In addition to these charges and our strategic review, we're also engaging with our customer to discuss potential solutions to the duration of the program. Similarly, we also announced today we have reached definitive agreement with Gulfstream to complete our current contract at the end of 2025. We're working to deliver the remaining components to Gulfstream by year end and look forward to a successful closeout of the program. Importantly, these two programs have primarily been responsible for the continued cost estimate adjustments over the past 16 months. Exiting these programs would mean our remaining portfolio is substantially de-risked from future charges. All of our remaining programs are performing well and carry attractive margin profiles. Following the conclusion of these activities, we expect to be a more focused and integrated company with two segments built around our core competency of industrial weaving technology. Our machine clothing business continues to be the backbone of Albany International. We're the global leader in paper machine clothing and process belts, serving every major grade of paper production. We also hold a leading position in engineered fabrics, supporting a range of other industrial industries applications like non-woven, fiber cement, and corrugated packaging. This is a business built on decades of technology leadership and deep customer partnership, supported by more than 700 worldwide patents. Our products are essential to how efficiently our customers' machines run, improving fiber use, reducing energy and chemical consumption, and helping them hit their quality and sustainability goals. The segment delivers strong EBITDA margins in excess of 30% with exceptional cash generation, which gives us the flexibility to reinvest in innovation and support growth across the company. Our competitive edge comes from the high consistency and quality of our products, our global service network, and continual investment in innovation. Our engineered composite business complements our expertise in weaving technology and is a long-term growth engine. Over the past decade, it's delivered an impressive 12% organic revenue CAGR and we see meaningful runway ahead as adoption of our proprietary technology continues to accelerate. The engineered composite business grew organically from our deep roots in weaving and process engineering, evolving into a leading global supplier of aerospace engine and structural composite components. Through our joint venture with Safran, we've industrialized proprietary 3D weaving technology used in LEAP and GE9X engines, making us the sole global aerospace supplier of 3D woven, resin-infused parts. As of today, we have delivered in excess of 220,000 fan blades and 11,000 cases to our customers. Outside the joint venture, we're expanding our dry fiber, 3D weaving, and resin transfer molding capability. enabling the replacement of titanium components with lighter, stronger composite alternatives. We're also advancing high-temperature ceramic matrix and carbon-carbon solutions, which open doors in hypersonics, missiles, and next-generation defense platforms, areas that are in high demand and rich with bidding activity. Our 3D woven parts offer superior strength-to-weight performance. faster lead times with full domestic sourcing, which helps customers reduce supply chain risk while improving performance. We're also leveraging our braiding and winding technologies and industry-leading resin transfer capabilities to support programs in missiles, engines, advanced air mobility, and defense programs. As our differentiated programs scale and improve our overall mix, we expect continued margin expansion and sustained profitable growth. Taken together, these complementary businesses deliver strong, consistent cash flow driven by the market-leading position of machine building and the growth of engineered composites. This is supported by our balanced capital allocation strategy, as we invest for growth while returning cash to shareholders. Over the past 12 months, we have deployed about 68 million in CapEx and 47 million in R&D, while returning more than 200 million to shareholders, including repurchasing roughly 8% of shares outstanding and 32 million of dividends. Together, these strengths give us the flexibility to invest for the future. return capital to shareholders, and continue building long-term value through disciplined execution. Turning to the conditions in each of our segments and end markets, I'll begin with machine clothing, where third-quarter dynamics were mixed across regions. In North America, shipments improved sequentially, though order intake remained soft, reflecting the impact of ongoing packaging and corrugator mill closures tied to industry consolidation. The weakness was partially offset by continued stability in the tissue market, which remains a solid and resilient end-use. In Europe, the market recovery continued but showed signs of moderating. Meanwhile, Asia remained challenged, with overall demand at low levels largely due to overcapacity. Our strategic focus on the tissue market remains a key source of strength, supported by several new investments to build on our market-leading position. Turning to engineered composites, as I noted, we announced a strategic review of our structures assembly business, including the related production site, as well as the planned closeout of Gulfstream program. These actions substantially reduce future program risk and allow us to sharpen our focus on higher return opportunities. All of our remaining programs are performing well with solid execution across both defense and commercial aerospace platforms. On the commercial side, The LEAP program continues to strengthen, supported by higher OEM production levels heading into 2026. In defense, we remain well positioned on the F-35 platform, as well as the JASM and LRASM missile programs, and we're continuing to invest in next-generation hypersonic capabilities and other missile programs. We're also proud to support Beta Technologies, as they advance aircraft certification and RABS production in the advanced air mobility market. Looking ahead, our pipeline of new business opportunities remains strong, spanning commercial engines, defense, space, and advanced air mobility. Across all of these areas, we're focused on leveraging Albany's differentiated materials, processes, and engineering expertise to drive high-value long-term growth. Overall, we've made a lot of progress in this year of transition to simplify the business and strengthen our focus. We're positioned around two great material science businesses linked by expertise in weaving. Machine clothing, our foundation, and cash generator, and engineered composites, our engine for long-term growth. Together, they give a solid platform for continued improvement and value creation. With that, I'll hand it over to Will to walk through the financials.