Albany International's Q2 2025: Navigating Contradictions in CH-53K and LEAP Production Dynamics

CH-53K production ramp and challenges, LEAP program and production capabilities, CH-53K program ramp-up and performance, Boeing production rates and inventory are the key contradictions discussed in Albany International's latest 2025Q2 earnings call.



Financial Performance and Market Challenges:
- Albany International reported revenue of $311 million for Q2 2025, a 6.2% decrease from the previous year.
- The decline was primarily due to operational issues, including unplanned equipment downtime and slower-than-expected ramp-up of transfer production, as well as softness in Asia, particularly China.

Machine Clothing Segment Trends:
- Machine Clothing reported revenue of $181 million, a 6.5% decrease year-over-year, adjusted for strategic business exits.
- This decline was driven by lower volumes from unplanned equipment downtime, a lag in ramping transfer production, and softness in Asia, but the majority of the production shortfall is expected to recover in the second half.

Engineered Composites Segment Dynamics:
- Engineered Composites reported revenue of $130 million, down 5.7% year-over-year, mainly due to unfavorable cumulative catch-up impacts from EAC adjustments.
- Revenue growth is expected from new programs, with a particular focus on increasing activity in the defense sector and accelerated growth in commercial aerospace over the next several years.

Operational Investments and Program Ramp-ups:
- The company continues to invest in operational excellence and program ramp readiness, especially for the CH-53K program, with expectations of achieving a 2 per month production rate by the end of the year.
- Investment in frontline leader coaching and operator training has led to improved output and reduced scrap and rework, contributing to improved performance in the third quarter.

Outlook and Shareholder Returns:
- The company expects the second half of 2025 to be stronger than the first, driven by continued ramping at AEC, recovery in shipments at MC, and bottom-line improvement from operational efficiencies across both businesses.
- Shareholder returns were maintained through a regular quarterly dividend and share repurchase program, with $119 million worth of shares repurchased in the first half of the year.