Albany International (NYSE:AIN) executives highlighted a strong finish to 2025 on the company’s fourth-quarter earnings call, pointing to accelerating growth in Engineered Composites, stable-to-soft conditions in Machine Clothing, and continued progress on a strategic review of its Amelia Earhart facility in Salt Lake City.
Q4 results: higher sales and improved profitability
Management said Albany delivered its “strongest financial performance of the year” in the fourth quarter. Total consolidated sales were $321.2 million, up 12% from $286.9 million a year earlier, driven primarily by higher volume in Engineered Composites and partially offset by weaker Machine Clothing demand in China.
Gross profit was $99.9 million versus $90.3 million, with gross margin of 31.1% compared with 31.5% last year. Operating income increased to $29.9 million from $24.3 million, lifting operating margin to 9.3% from 8.5%. Interest expense rose to $5.9 million from $3.9 million, reflecting higher borrowing costs. The effective tax rate for the quarter was 39.3%, up from 28%, which management said was driven by the expiration of a Foreign Tax Credit and a less favorable discrete tax adjustment versus Q4 2024.
Machine Clothing: China pressure, tissue strength, and a Q1 disruption
Machine Clothing segment revenue was $177.5 million, down from $188.1 million a year ago. Management said the decline reflected continued weakness in Asia—especially China—as well as certain strategic business exits in Europe. The company described regional conditions as mixed: volumes were largely stable in North America and Europe, while paper overcapacity continued to weigh on China demand. Executives noted tissue remained a global bright spot and said Albany plans to continue investing there; they also cited pockets of packaging strength in Europe and an anticipated secular decline in publication grades.
Adjusted EBITDA for Machine Clothing was $48.6 million versus $53.7 million last year, and margin declined to 27.4% from 28.5%. Management said lower volumes in Asia drove the decline, partially offset by efficiencies and integration initiatives.
Looking ahead, CEO Gunnar Kleveland said an equipment failure in January on a “critical” machine at a North America facility will unfavorably impact first-quarter results. He said the machine returned online in February and Albany expects to recover lost production through higher output at the site and production at other North American locations. The CFO quantified the first-quarter earnings impact as $0.10 to $0.15 of EPS, while adding the company expects to make up the lost volume over the balance of the year.
Engineered Composites: broad-based ramps and defense growth
Engineered Composites segment revenue increased to $143.7 million from $98.8 million in the year-ago period. Management attributed the growth to broad-based volume increases across multiple programs, as well as the absence of program adjustments that affected the prior year. The CFO also noted fourth-quarter results benefited from higher-than-expected material receipts and factory outputs ahead of plan, which the company does not expect to recur in the first quarter.
Adjusted EBITDA in Engineered Composites improved to $18.5 million from $6.0 million, reflecting the higher revenue base and improved margin performance driven by program ramps and the absence of prior-year program impacts.
On key platforms, Kleveland said the LEAP program remains a “backbone” commercial single-aisle program with projected double-digit growth over the next couple of years based on OEM production targets. In the Q&A, management said it is aligned with OEM production and cited year-over-year volume up about 27% on LEAP, with the factory “fully operating” to support ramps. Executives also pointed to F-35 as a stable contributor and said missile program volumes continued building.
Strategic review of Salt Lake City site and new CMC investment
Albany is continuing a strategic review of its Amelia Earhart facility in Salt Lake City and has retained Guggenheim as an advisor. Kleveland said the company has evaluated a range of options and, in the Q&A, described interest from both private equity and strategic buyers, citing the site’s autoclave capacity as “very attractive.” He added Albany is operating the facility to meet customer expectations and is tightly aligned with Sikorsky on deliveries, with updates expected “throughout the spring.”
During Q&A, executives also discussed efforts in high-temperature composites and Ceramic Matrix Composites (CMCs). Kleveland said Albany has been investing in using its proprietary 3D weaving to create near-net shape parts that are carbonized, adding the company now has capability in Rochester to make carbon-carbon and various CMCs. He cited potential applications ranging from “large acreage hypersonic missiles” to nozzles and exhausts for traditional missiles, and said he expects CMC work to be a growth engine initially in R&D and over time in production.
On program performance, management said issues around CH-53K have been “completely resolved” and covered by the loss carryforward taken in Q3. Executives said they do not expect large charges going forward, noting normal “give-and-takes” in estimate-at-completion adjustments and that a Gulfstream program had been removed from the portfolio. In response to a question about margins, management indicated the Salt Lake facility has been operating around a 10% overall margin and suggested a broader Engineered Composites margin profile in the low-to-mid teens as a target over time, with the strategic review a factor in the path to that outcome.
Cash flow, capital returns, and Q1 guidance
Albany reported $51 million of free cash flow in Q4, down from $59.3 million a year ago due to higher capital spending and working capital investment to support ramping programs. For full-year 2025, management said it generated approximately $81 million of free cash flow.
Capital allocation remained a focus, with the company reporting:
- $72 million of 2025 capital expenditures and $48 million of 2025 R&D investment
- Approximately $218 million returned to shareholders in 2025 through dividends and share repurchases, including repurchasing roughly 10% of shares outstanding
- Q4 share repurchases of $16.8 million and a quarterly dividend of $0.28 per share
Albany ended Q4 with $112.4 million of cash and $456 million of total debt, for net debt of roughly $343 million. Management said liquidity, including revolver availability, totaled more than $456.4 million.
For Q1, the company guided to consolidated revenue of $275 million to $285 million and adjusted EPS of $0.50 to $0.60. It expects the effective tax rate to be about 27% for the quarter and approximately 24.3% for the full year. Management said Q1 should be the lowest quarter of the year as the company absorbs costs tied to the Machine Clothing downtime, while Engineered Composites should show year-over-year growth at a more moderate pace than Q4 due to non-recurring benefits in the fourth quarter.
About Albany International (NYSE:AIN)
Albany International Corp. is a global advanced materials company specializing in engineered textiles and composites. Its business is organized into two primary segments: Process Media and Engineered Composites. The Process Media segment designs, manufactures and services press, forming and drying fabrics used in the production of paper and packaging materials, helping paper manufacturers improve efficiency, quality and sustainability. The Engineered Composites segment produces lightweight composite structures and components for aerospace and industrial applications, serving commercial and military aircraft programs as well as industrial markets that require high-performance, durable materials.
In the Process Media segment, Albany’s products include forming fabrics, press felts and dryer fabrics engineered to withstand extreme moisture and temperature conditions.
