Albany International's Q4 2024 Earnings: Contradictory Signals on LEAP and AEC Performance

These are the key contradictions discussed in Albany International Corp.'s latest 2024Q4 earnings call, specifically including: LEAP program expectations, AEC revenue expectations, LEAP production and inventory levels, and AEC program contribution to growth:



Revenue and Profitability Trends:
- Albany International reported nearly $1.25 billion in record revenue for the full year 2024, driven by organic growth at Engineered Composites and the Heimbach acquisition.
- The company's free cash flow was $59 million in Q4 and $137 million for the full year.
- The top line was slightly below expectations in Machine Clothing due to comparisons with a strong prior year and strategic divestments, while Engineered Composites faced EAC adjustments and lower LEAP revenues.

Heimbach Integration and Synergies:
- The Heimbach integration remains on track, with synergies contributing to free cash flow, achieving strong exit run rate expectations.
- The company consolidated operations and divested noncore assets, with a focus on returning value to shareholders through a share repurchase program.
- These actions are expected to result in a 150 basis point improvement in Machine Clothing's adjusted EBITDA margin for the full year 2025.

AEC Program Challenges and Recovery:
- Engineered Composites faced additional EAC adjustments for CH-53K and Gulfstream programs, with LEAP revenues also impacted by lower Boeing production rates.
- The company is optimistic about growth in Advanced Air Mobility and space programs, with a long-term agreement signed with a customer in Q4.
- The focus is on improving operations, workforce, and supply chain planning to drive future growth and profitability at Engineered Composites.

2025 Financial Outlook:
- For 2025, Machine Clothing sales are expected to decline by approximately 3%, with a forecasted 2% growth on a comparable basis after adjusting for foreign exchange and divestitures.
- Engineered Composites is projected to show modest growth led by CH-53K and Advanced Air Mobility, with adjusted EBITDA margins expected to be slightly more than 13%.
- Consolidated adjusted EBITDA is expected to grow by approximately 8%, reflecting improved performance at Machine Clothing and recovery at Engineered Composites.