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Albany International (AIN) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 4, 2026

Source: earnings call transcript

Executive summary

Albany International Q2 FY26 — Record Engineered Composites Revenue and Strong Adjusted EBITDA

Albany International delivered robust profitability in Q2 FY26, with record revenue in Engineered Composites and strong adjusted EBITDA, despite consolidated revenue modestly missing expectations. The company is actively managing a strategic review of its Salt Lake City site and addressing regional demand shifts in Machine Clothing, while investing in capacity and innovation for long-term growth.

Highlights

5

  • Adjusted EPS exceeded forecast range.

  • Adjusted EBITDA reached $57.8 million, the strongest result in the past 2 years, reflecting a 17.6% margin.

  • Engineered Composites revenue grew 16% year-over-year to a record $150.8 million, driven by higher production rates across multiple programs.

  • Machine Clothing maintained a strong adjusted EBITDA margin of 28% despite lower volumes.

  • Strategic review of the Salt Lake City site is progressing on plan with multiple indications of interest.

Concerns

3

  • Consolidated revenue was modestly lower than expected due to additional machine downtime in Machine Clothing and delayed tooling for a defense contract in Engineered Composites.

  • Machine Clothing revenue is now expected to be slightly down for the full year 2026 compared to 2025 due to softer demand in North and South America, customer consolidation, and capacity rationalization.

  • Free cash flow was a net use of $14.5 million, compared to a net gain of $17.8 million in the prior year, primarily due to inventory growth.

Guidance & targets

CategoryTargetConfidence
Full-year Machine Clothing revenue
slightly down
medium materiality
Medium
Full-year Engineered Composites revenue growth
continued year-over-year growth
medium materiality
High
Consolidated revenue
$320 million to $330 million
high materiality
High
Adjusted EPS
$0.60 to $0.70
high materiality
High
Effective tax rate
approximately 31.5%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Machine Clothing
Revenue was impacted by additional downtime related to a machine replacement. Adjusted EBITDA was roughly flat YoY, with stable demand and integration benefits offsetting downtime and lower volume.
Adjusted EBITDA margin: 28%Underlying sales and volume: broadly consistent with planDemand trends: mixed across geographiesChina demand: stabilizationEurope demand: source of strengthAmericas demand: below expectations, moderation tied to customer facility closures and consolidations, lower inventory, softer South AmericaTissue and packaging demand: favorable, particularly in AsiaPublication grades: long-term secular declinePulp demand: softer in South America
$178.7 million——$50 million
Engineered Composites
Achieved record quarterly revenue driven by higher production rates. Adjusted EBITDA improved significantly due to higher production rates and improved operational execution.
Prior year revenue: $130.5 millionAdjusted EBITDA margin: 13.3%Prior year Adjusted EBITDA: $11.1 millionPrior year Adjusted EBITDA margin: 8.5%Production rates: higher across LEAP, Boeing programs, CH-53KRevenue: slightly lower than expectations due to delayed tooling for defense contract
$150.8 million16%—$20 million

Product announcements

ProductTypeDetails
Advanced Wing Enabling Ultra-Efficient Propulsion 2 projectroadmap
High-temperature ceramic matrix composite capabilitiesroadmap
Pratt & Whitney Geared Turbofan engine componentslaunch

Deals & partnerships

Airbus and other partners Collaboration on Aerospace Technology Institute's Advanced Wing Enabling Ultra-Efficient Propulsion 2 project

AEC selected as a collaboration partner to apply advanced composite technologies for next-generation single-aisle aircraft wing applications.

A&P Collaboration combining braiding capabilities with resin transfer molding expertise

To support current and next-generation aero engine programs and a broad range of additional opportunities.

Pratt & Whitney Contract for resin transfer molded parts for Geared Turbofan engine inlets

Albany will produce parts in Mexico, with production starting early next year, for two engine variants.

Capital programs

Machine Clothing machine relocation to U.S. underway

Benefit:restore capacity, strengthen production capabilities and support ongoing efforts to recover lost volume and customer demand

Relocating a machine from a closed European facility to the U.S. to replace equipment that caused downtime. Reassembly is underway.

Risks & headwinds

Additional machine downtime in Machine Clothing Q2 FY26

modest impact for the quarter, miss in revenue for the quarter was completely attributable to the machine failure

Mitigation:Relocating a machine from Europe to the U.S.; reassembly underway with completion expected by year-end; lost volume expected to be caught up by year-end.

Delayed tooling for a next-generation defense contract Q2 FY26

revenue to be slightly lower than our expectations

Mitigation:Expected to benefit the second half of the year.

Softer demand in North and South America for Machine Clothing Q2 FY26 and Full Year 2026

volume was below expectations, full year Machine Clothing revenue to be slightly down compared to 2025

Mitigation:Maintaining pricing and cost discipline; adapting to market outlook; expecting healthy order backlog past Q3 into next year as papermakers consolidate and run newer machines.

Customer facility closures and consolidations in Americas paper industry past year and Q2 FY26

reduced volume levels in certain markets

Mitigation:Papermakers are increasing pricing due to reduced supply; company expects to get back into newer, more advanced machines with high-speed requirements.

Ongoing geopolitical uncertainty and elevated energy costs Q2 FY26

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Mitigation:Closely monitoring potential implications for demand and market conditions.

Overcapacity issue in Asia Machine Clothing market Q2 FY26

lower speeds basically on the machines, papermakers there, they're not making money or breaking even

Mitigation:Expects it to come back to a healthy level over the medium term; still moderated compared to 1-2 years ago.

Free cash flow net use due to inventory growth Q2 FY26

net use of $14.5 million compared to a net gain of $17.8 million in the prior year

Mitigation:Related to working capital timing; building excess inventory for Engineered Composites ramp-up and Machine Clothing seasonal shutdowns; expects cash flow to be consistent with historical patterns in Q3 and Q4.

What to watch in Q3 FY26

Machine Clothing Americas demand recovery

past the next quarter towards the end of fourth quarter and into next year
Current volume below expectations
Target healthy order backlog

Why it matters

Recovery in Americas is crucial for Machine Clothing segment performance, as it's currently a drag on revenue.

As we look at the outlook past the next quarter towards the end of fourth quarter and into next year, we see a pretty healthy order backlog.

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Q&A highlights

Inquired about the ramp-up of LEAP, new defense program wins, and the GTF contract.

Gunnar detailed the significant LEAP ramp-up to 7-day, 24-hour operations, expecting it to settle in late 2027/2028. He mentioned ongoing ramps for Boeing programs and missile programs (JASSM, LRASM), and confirmed the Pratt & Whitney GTF contract for resin transfer molded parts in Mexico, with production starting early next year.

“The ramp-up on LEAP obviously follow the ramp-up both from Boeing and Airbus and deliveries that we are seeing of engines... We are this summer moving to 7 days a week, 24-hour operations across our 3 sites.”

asked by Peter Arment · answered by Gunnar Kleveland

2 min read 6 chapters

Detailed narrative

Strategic Focus and Operating Model

The company is focused on areas with competitive advantage in industrial weaving and material science, driving durable, higher-return growth. A refined operating model in Engineered Composites, centered on proprietary 3D woven components, is yielding stronger, healthier, and more reliable growth, with major programs ramping up and new business wins.

Engineered Composites Performance and Outlook

The segment achieved record quarterly revenue of $150.8 million, a 16% YoY increase, driven by higher production rates on LEAP, Boeing programs, and CH-53K. Demand for core commercial aerospace and defense programs remains strong, with production rates building across multiple platforms and elevated missile demand. New programs and collaborations, such as with A&P for aero engine programs, are expected to drive long-term growth.

Machine Clothing Demand Dynamics

Revenue for the quarter was $178.7 million, with underlying sales consistent with plan but impacted by additional machine downtime. Demand trends are mixed, with stabilization in China, strength in Europe, and softer demand in the Americas due to customer facility closures, consolidations, lower inventory, and a softer South American market. The company is relocating a machine to the U.S. to restore capacity by year-end.

Strategic Review of Salt Lake City Site

The strategic review of the Engineered Composites Salt Lake City site is progressing on schedule, with multiple indications of interest received and a down-selection to 8 final candidates. The company is evaluating options to maximize shareholder value, including potential divestiture or renegotiation with Sikorsky, with a resolution expected soon.

Innovation and New Program Wins

Albany International is actively developing high-temperature ceramic matrix composite capabilities for solid rocket motors and hypersonic missile applications. The company announced a collaboration with Airbus on the Advanced Wing Enabling Ultra-Efficient Propulsion 2 project and secured a significant contract with Pratt & Whitney for Geared Turbofan engine components, to be produced in Mexico starting early next year.

Cash Flow and Capital Deployment

Free cash flow was a net use of $14.5 million, primarily due to inventory growth in Engineered Composites to support ramp-up and in Machine Clothing for seasonal shutdowns in Europe. Capital expenditures totaled $11.9 million, focused on facility optimization and key customer programs. The company ended the quarter with $77.3 million in cash and $427 million in available capital, committed to driving improved cash generation, innovation, and balanced capital returns.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.