Albany International Corporation

Hello everyone, thank you for joining us and welcome to Albany International's second quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference call over to Karen Bloomquist, Director of Investor Relations. Karen, please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Albany International's second quarter 2026 earnings call. As a reminder for those listening on the call, please refer to our press release issued this morning 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 reconciliation to GAAP. For the purposes of this conference call, those same statements apply to our verbal remarks this morning. Additionally, our remarks today may reference our earnings presentation, which is available on the investor relations section of our website, albint.com. Today, we will make certain 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 discussion of these risks and uncertainties, please refer to both our earnings release of August 4th, 2026, as well as our SEC filings, including our 10Q and our 10K. Now I will turn the call over to Gunnar Kleveland, our president and CEO who will provide opening remarks. Gunnar.

Thank you, Karen. Good morning and welcome everyone. Thank you for joining our second quarter earnings call. Before providing an overview of our performance for the quarter, I'd like to summarize our recent visit to the Farnborough International Airshow. Over the course of the week, we had highly productive engagements where we met with leading aerospace and defense OEMs as well as government officials to discuss the growing demand for advanced composite manufacturing solutions. Notably, the Department of War requested time with our team to explore how our differentiated commercial capabilities, including out-of-autoclave processing technologies, can support faster production rates and lighter weight solutions for critical defense applications such as solid rocket motors and titanium replacements. Also, as announced at the show, AEC has been selected as a collaboration partner on the Aerospace Technology Institute's Advanced Wing Enabling Ultra-Efficient Propulsion II project. We're excited to work with Airbus and the other partners to apply our advanced composite technologies to help develop composite wing applications for the next generation single aisle aircraft. We'll share more as the project gets underway. In addition, we continue to rapidly develop our high temperature ceramic matrix composite capabilities utilizing our advanced 3D woven and infusion technologies in support of solid rocket motors and hypersonic missile applications. We will have exciting news to share in the coming months as we grow our collaborative partnerships and expand our facilities to support the significant opportunities on this front. Turning to our second quarter highlights, our performance reflects a more focused and disciplined operating model built around the actions we have taken over the past few years to strengthen and de-risk the business. Across the company, our focus is on areas where we have a clear competitive advantage in industrial weeping and material science, which drive more durable, higher return growth. In a quarter, we delivered adjusted EPS that exceeded our forecast range despite modestly lowered unexpected consolidated revenue. On an adjusted EBITDA basis, we achieved the strongest results we've had in the past two years. We executed well and profitability strengthened with good execution across both segments. We're now seeing the benefits of our refined operating model in engineered composites that is focused on our proprietary 3D woven components. Our major programs are continuing to ramp, we're winning new business, execution has improved, and the portfolio contains materially less program risk. This is translating to stronger, healthier, and more reliable growth. Next, I'd like to discuss the result by segment beginning with machine clothing. Revenue for the quarter was $178.7 million. Underlying sales and volume were broadly consistent with our plan. However, we incurred additional downtime related to the machine we were replacing. To restore capacity on a permanent basis, we relocated a machine from one of our closed European facilities to the US. The machine has now arrived on site and the reassembly is underway with completion expected by the end of the year. We expect this action to strengthen our production capabilities and support our ongoing efforts to recover lost volume and customer demand. Excluding the effect of the machine downtime, demand trends are mixed across geographies. By region, China continued to show stabilization, while Europe remained a source of strength. In the Americas, volume was below expectations as we were seeing some moderation tied to customer facility closures and consolidations, lower inventory levels, and a softer demand environment in South America. Additionally, ongoing geopolitical uncertainty and elevated energy costs across the paper manufacturing value chain could extend the challenges affecting the region. The situation remains fluid, and we're closely monitoring potential implications for demand and market conditions. During the second quarter, Will and I had the opportunity to spend time in China with our incredible team there. We were encouraged by the focus on safety, operational excellence and the commitment to winning in a changing market environment. We still have limited visibility in the market, but are encouraged by more stable volumes in that region for the past three quarters. By grade, Tissue and packaging demand remains favorable, particularly in Asia. These areas of strength are partially offset by long-term secular decline in publication rates and softer pulp demand in South America. Adjusted EBITDA for machine clothing was $50 million, roughly flat with the prior year period. A stable demand, continued execution, and benefits from integration activities largely offset the impact of additional equipment downtime and modestly lower volume. Turning to engineered composites, revenue for the quarter was $150.8 million compared to $130.5 million in the prior year. The 16% increase was driven by higher production rates across multiple programs, including LEAP, Boeing programs, and CS53K. As we work to scale on a strategic next generation contract with a defense prime, the tooling which we anticipated receiving in the second quarter has shifted into the back half of the year. This shift caused revenue to be slightly lower than our expectations. As an update on our strategic review, we're progressing according to our planned timeline and have received multiple indications of interest. while at the same time our team's focus remains on executing for Sikorsky and supporting the efforts of the DLW. We continue to engage closely with our customer throughout the strategic assessment process and we will ultimately make the decision that we believe maximizes value for our shareholders. Looking ahead, we remain confident in the growth prospects for engineered composites. Demand across our core commercial aerospace and defense programs remain strong and we continue to see production rates built across multiple platforms. Missile demand also remains elevated and we're working closely with our customers to increase output within our current capabilities. In addition, new programs continue to advance and represent important long-term growth opportunities for the segment, like the recently announced collaboration with AMP that combines their leading braiding capabilities with our resin transfer molding expertise to support current and next generation aeroengine programs as well as a broad range of additional opportunities. Taken together, we believe engineered composite remains well positioned for long-term growth as we scale higher value programs and increase new program categories and sales. As we look to the balance of 2026, our priorities remain clear. were focused on discipline execution, continued recovery and machine clothing, and scaling engineered composites around higher value programs where Albany has a clear differentiation. While the operating environment remains fluid, we believe the actions we have taken to strengthen the business are creating greater stability, improved visibility, and a stronger foundation for profitable growth. We remain committed to driving improved cash generation investing in innovation and returning capital to shareholders in a balanced and disciplined manner. I would like to thank our employees for their continued dedication as well as our customers, partners, and shareholders for their ongoing support. With that, I'll turn the call over to Will to review the financial results in more detail.