Investor Presentation€¦ · 2016 2017 2018 Key Metrics 4 2016 2017 2018 Sales $582.2 $590.4...

© 2019 Albany International Corp.

Investor Presentation

March 4, 2019

www.albint.com | AIN | #albint

http://www.albint.com/


This presentation contains the following non-GAAP measures:

Adjusted EBITDA (in absolute dollars and as a percentage of sales; for each segment,

and the Company as a whole); and

Net debt.

We think such items provide useful information to investors regarding the Company’s operational

performance.

This presentation also may contain statements, estimates, or projections that constitute “forward-

looking statements” as defined under U.S. federal securities laws. Forward-looking statements are

subject to certain risks and uncertainties that could cause actual results to differ materially from

the Company’s historical experience and our present expectations or projections. We disclaim

any obligation to update any information in this presentation to reflect any changes or

developments after the date on the cover page.

Certain additional disclosures regarding our use of these ‘non-GAAP’ items (including

reconciliations to GAAP measures) and forward-looking statements are set forth in the Appendix

to this presentation and in our SEC filings, including our most recent annual and quarterly reports.

Our use of such items in this presentation is subject to those additional disclosures, which we

urge you to read.

‘Non-GAAP’ Items andForward-Looking Statements

2


NYSE: AIN

$2.4B Market Cap

Headquartered in Rochester, NH

22 plants

10 countries

4,400 employees

Albany International Corp.

3

Two Businesses

Machine Clothing

(paper industry)

Aerospace

Composites


* Non-GAAP measures. See slides 30 and 31 for definition, reconciliation and other information.

Adjusted EBITDA*($ million)

$168.9 $169.4

$228.9

$0

$40

$80

$120

$160

$200

$240

$280

2016 2017 2018

Key Metrics

4

2016 2017 2018

Sales $582.2 $590.4 $611.9

Adj.

EBITDA*$194.6 $194.8 $212.1

2016 2017 2018

Sales $197.6 $273.4 $370.6

Adj.

EBITDA*$16.4 $15.5 $63.3

MC Segment($ million)

AEC Segment($ million)

Net Sales($ million)

$779.8$863.7

$982.5

$0

$200

$400

$600

$800

$1,000

2016 2017 2018


One Advanced Textiles and Materials Processing Company - Two Businesses

5

Machine Clothing Paper and other process

industries Global market leader Mature Stable, strong cash generation

Albany Engineered Composites Aerospace Uniquely positioned Tier 2 Emerging Negative cash flow, but

intense growth potential


One Investment Proposition

6

A small cap that combines:

The cash generation potential of a value stock

The revenue potential of a growth stock

with

MC Adjusted EBITDA($ million)

$194.6 $194.8$212.1

$0

$40

$80

$120

$160

$200

$240

2016 2017 2018

AEC Organic Revenue Potential($ million)

$370.6

$0

$100

$200

$300

$400

$500

$600

2018 2020 potential

$500-$550


Albany Engineered Composites

7

Establish AEC as the broadest and most capable Tier 2 supplier of advanced composite parts in the aerospace industry

$500M - $550M sales, 18%-20% Adjusted EBITDA as a percentage of sales by 2020

Execute on existing contracts

Leverage breadth of technology and operational capabilities for additional organic growth

Stay open to opportunities to accelerate growth through complementary acquisitions

Vision

Objective

Strategy


AEC Operations

8

LEAP Plant 1

Rochester

300,000 ft2

Boerne

150,000 ft2

LEAP Plant 2

Commercy

300,000 ft2

Salt Lake City

610,800 ft²

LEAP Plant 2

Commercy

300,000 ft2

Rochester

200,000 ft²

LEAP Plant 3

Querétaro 1

288,850 ft2

8 Plants

1,250 Employees

$16M R&D

Albany

Headquarters

R&DGE9X

Querétaro 2

78,000 ft²


AEC Technology

9

LEAP Plant 2

Commercy

300,000 ft2

3D Woven Composites Simulation Analysis & DesignThrough Thickness Reinforcement

2D Laminated Composites Automated Material PlacementBraiding

Filament Winding


AEC Growth Potential

10

Program Area Type

Composite

Technology

2020 $

potential*

Upside

after 2020

LEAP Civil, Engine 3D RTM (primary),

2D RTM

$240-260M Volume, Next- Gen

Engine for New Platform

CH-53K Military, Aerostructures 2D Prepreg Autoclave,

Subassembly

$50-60M Ramp, Foreign Military

Sales, Additional Content

Boeing 787 Fuselage

Frames

Civil, Aerostructures 2D Prepreg Autoclave $45-50M New Platforms

F-35 Military, Aerostructures 2D prepreg Autoclave,

Automated Fiber

Placement

$55-65M Spares

Lockheed Missiles (JASSM, LRASSM)

Military, Aerostructures Braiding, Resin Infusion $15-20M New Variants, Volume,

Additional Content

Other Engines (eg, GE 9x,

F-35 LiftFan® components)

Civil, Military, Engines 3D/2D RTM $60-75M New Wins, Additional

Content, Volume

Other Aircraft Equipment (eg, Waste Tanks,

Evacuation Slide Packs)

Civil, Aircraft Equipment Filament Winding, 2D

Prepreg Autoclave

$20-25M New Platforms

Boeing NMA Civil, Engine, Airframe 3D RTM, 2D Prepreg

Autoclave

NA 2025 EIS?

New DOD Platforms Air, Space, Land 3D/2D Resin Infusion $5-10M New Wins,

New Platforms

*existing contracts only


The LEAP Engine

Single-Aisle = ~70% of all new

aircraft*

CFM (GE + Safran) = ~70% of

engines for single-aisle aircraft

LEAP is the new CFM engine

AIN is exclusive, life-of-

program supplier of composite

cases and blades for LEAP

11

©CFM

* Boeing Current Market Outlook, 2017


The LEAP Engine

12

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

$240

$260

$280

$300

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Annual AEC Revenue PotentialMillions

Backlog: 15,620 engines

Share:

o 100% Boeing 737Max

o ~59% Airbus A320neo

o 100% Comac C919

©CFM


AEC Major Programs, Airframes

13

F-35 Joint Strike Fighter Airframe

787 Forward Fuselage Frames

CH-53K Airframe

Forward Fuselage

FramesWing Skins

Access CoverBull Nose

Blade Seal

Tail Rotor Plyon

Sponsons

Horizontal

Stabilizer

Ramp: 2016 – 2019 Boeing 787-9 and -10 $45-50M/year potential

by 2020

Ramp: 2018 – 2020 228 parts across

CTOL, STOVL, CV $55-65M/year

potential by 2020

Ramp: 2019 – 2023 $50-60M/year

potential by 2020 $>100M/year

potential by full production

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCJjc8PrBisYCFQeNDQodmZUPmQ&url=http://globalaviationreport.com/tag/ch-53k-king-stallion/&ei=sgB7VZg7h5o2mau-yAk&bvm=bv.95515949,d.cWc&psig=AFQjCNErHW5egenfqp8hgCvnUVAAOaY05Q&ust=1434210801049347


AEC Organic Growth Potential

14

0

100

200

300

400

500

600

2018 2020 potential

engine airframe

$500M - $550M

$371M

$ Millions


Machine Clothing

15

Consumable

High value-added

High switching costs

Low threat of product

substitutes


PRESSINGFORMING

PROCESS

BELTS

Shoe Press Belt,

Transbelt

DRYING

Consumable Product # Fabrics Average Life

Forming 2 45-60 Days

Pressing 4 40-50 Days

Drying 8 6-18 Months

Belts 2 8-16 Months

Paper Machine Clothing

16


Paper Production, Global

17

2017 2018 2019 2020 2021 2022 2023

World

Demand

% CH

424

1.9

424

0.1

430

1.3

435

1.3

434

-0.3

439

1.3

448

2.0

Operating Rate 0.89 0.88 0.88 0.88 0.87 0.88 0.89

North America

Production

%CH

82

0.2

83

0.7

85

2.1

86

2.1

86

-0.7

87

0.9

88

2.1

Western Europe

Production

%CH

86

1.9

87

0.8

87

0.4

87

0.2

87

-0.9

87

0.3

87

0.4

China

Production

%CH

116

2.1

111

-3.9

110

-0.9

109

-0.7

109

-0.9

109

0.7

111

1.8

Other Far East

(x Japan)

Production

%CH

51

3.5

54

5.4

56

3.6

59

5.1

60

1.8

62

3.3

64

3.0

Latin America

Production

%CH

22

0.1

23

3.6

23

3.0

24

3.1

24

1.4

25

3.2

26

2.6

© 2018 RISI, Inc. All Rights Reserved.

Million Tons


World Demand for Paper

18

1993-

2002

2003-

2012

2013-

2022 2015 2016 2017 2018

World GDP 3.2 4.0 3.4 3.1 3.0 3.6 3.8

Total Paper 2.9 2.0 1.2 0.3 1.1 1.8 1.7

Printing and Writing Papers 3.3 0.7 -1.5 -2.3 -2.2 -0.7 -0.8

Newsprint 1.3 -1.9 -5.8 -8.7 -4.6 -7.0 -5.5

Tissue 4.0 3.4 3.5 4.1 3.9 3.4 3.5

Containerboard 4.0 3.7 2.8 2.5 2.8 4.2 3.4

Other Paper 1.6 2.2 1.8 0.7 2.0 2.0 2.2

© 2018 RISI, Inc. All Rights Reserved.

~22% MC sales

Average Annual Growth Rates


Market leader ~ 30% global share

Broadest product line, geographic reach

Overexposed to growth grades, regions

#1 supplier to top papermakers, every region

Deepest talent

Technology leader, rich R&D pipeline

Global footprint aligned with market High-quality, low-cost production in growth

markets

Reduced fixed costs in mature markets

Strong field presence in all regions

Historical Annual Adj. EBITDA of

$180M - $195M (above historical range

in current economic and currency

environment)

Albany Machine Clothing

19

Albany, approx. 30%

Next Largest Competitor,

est. 18%

All Other Competitors

Global PMC Market Share


One Investment Proposition

20

A small cap that combines:

The cash generation potential of a value stock

The revenue potential of a growth stock

with

MC Adjusted EBITDA($ million)

$194.6 $194.8$212.1

$0

$40

$80

$120

$160

$200

$240

2016 2017 2018

AEC Organic Revenue Potential($ million)

$370.6

$0

$100

$200

$300

$400

$500

$600

2018 2020 potential

$500-$550


Appendix

21


• Businesses with a strategic fit to existing competencies, including adjacencies

that enhance our competitive position.

• Specifically for AEC:

• Engineered aerospace composite businesses (both commercial and

defense), non-metallic components, subassemblies & solutions.

• Differentiated materials, processes and products with proprietary

knowhow and IP.

o CMCs, Thermoplastics, CNTs, and Specialty Composites.

o Automated Processes.

o Aero Engines, Aero Structures, and Equipment.

• Businesses with existing content on growth aero engine and structure

programs.

Acquisition Criteria

22


2D Laminated Composites

23

Sheets of fiber pre-impregnated with resin (“prepreg”) cut on machine into “plies”

Plies are individually layered onto a tool(“lay-up”)

“Lay-up” is vacuum-bagged to tool and put into an autoclave to cure

Conventional Composites


3D Woven RTM Composites

Thousands of individually controlled fibers,

Woven in three dimensions into a near net-shape “preform,”

Which is trimmed and formed,

And into which resin is injected and then cured in a net-shaped tool.

The weight-savings of 2D Laminated composites

Greater impact resistance

More complex shapes

No delamination

Use of high-temp fibers

24

Innovative Results


3D Weaving

25


3D Weaving Proprietary Capabilities

Manufacturing

Process

3D Weaving

Contour, Steered Weaving

3D Woven RTM, Resin

Infusion

Fiber Insertion

Woven

Structures

3D, 2D/3D hybrid, T Forms,

3D spiraled cones, Pi

preforms,

etc .

Manufacturing

Equipment

Loom designs

Loom operating systems

Loom take-up, harness

configuration, etc

Thru thickness fiber

insertion

SoftwareCAD/CAM

CAE

26


Joint R&D

General Collaboration

Agreement Mutual exclusivity on

engines to 2025

Long-term Supply

Agreement Life of LEAP program

Co-located in Rochester

and Commercy

Albany Safran

Composites AEC subsidiary

dedicated to Safran

Mutual exclusivity for all

Safran applications

Rights to AEC IP

10% Safran ownership

Initial Valuation, $280M

Safran Buy-out Option if

and only if AIN is sold to

a competitor or fails to

perform

2000 2019

The Safran-Albany Partnership

19 Years of Joint Effort

27


AIN Consolidated Capital Structure

($ millions) Dec. 31, 2017 Dec. 31, 2018

Ratios:

- Debt to Total Invested Capital 47.4% 46.3%

- Debt to Total Market Capital 20.7% 17.7%

Data:

Total Debt 516.2 524.9

Shareholder's Equity (Book) 573.0 608.3

Total Invested Capital 1,089.2 1,133.2

AIN Stock Price 61.45 75.47

Outstanding Shares at Period End 32.2 32.3

Market Value of Equity 1,978.7 2,437.7

Total Market Equity plus Debt 2,494.9 2,962.6

Less: Cash 183.7 197.7

Enterprise Value 2,311.2 2,764.9

28


Matures Rate

$685m Revolving Credit November 2022 L+ 150 bps

$186m UNdrawn 27.5 bps

__________________________________________________

$198m Total Available Cash

__________________________________________________

As of 12/31/18:

AIN Consolidated Financial Capacity

29


Non-GAAP Reconciliation

$ millions

Total Company2016 2017 2018

Net income $52.8 $32.6 $83.0

Interest expense, net 13.5 17.1 18.1

Income tax expense/ (benefit) 25.4 22.1 32.2

Depreciation and amortization 67.5 72.0 79.0

Restructuring 8.4 13.5 15.6

Currency revaluation (gain)/

loss(4.0) 8.8 (0.3)

Pension Settlement/Curtailment - - 1.5

Write-off of inventory in a

discontinued product line- 2.8 -

Acquisition expenses 5.4 - -

(Income)/ loss attributable to

noncontrolling interest in ASC (0.1) 0.5 (0.2)

Adjusted EBITDA $168.9 $169.4 $228.9

$ millionsDec. 31

2016

Dec. 31

2017

Dec. 31

2018

Notes and

loans payable$0.3 $0.3 $ -

Current

maturities of

long-term debt

51.7 1.8 1.2

Long-term

debt432.9 514.1 523.7

Total debt 484.9 516.2 524.9

Cash 181.7 183.7 197.7

Net debt $303.2 $332.5 $327.2

* From continuing operations

Total Adjusted EBITDA* and Net Debt

30


Non-GAAP Reconciliation Segment-Adjusted EBITDA*

31

Machine Clothing AECCorporate expenses and

Other

$ millions 2016 2017 2018 2016 2017 2018 2016 2017 2018

Net income $152.5 $153.9 $169.8 ($15.4) ($31.7) $16.6 ($84.4) ($89.7) ($103.5)

Interest expense, net - - - - - - 13.5 17.1 18.1

Income tax expense/

(benefit)- - - - - - 25.4 22.1 32.2

Depreciation and

amortization36.4 33.5 30.8 24.2 33.5 43.2 6.8 4.9 5.0

Restructuring 6.1 3.4 12.3 2.3 10.1 3.1 - - 0.3

Currency revaluation (gain)/

loss(0.4) 4.0 (0.8) - 0.3 0.6 (3.4) 4.6 -

Pension

Settlement/Curtailment- - - - - - - - 1.5

Write-off of inventory in a

discontinued product line- - - - 2.8 3.2 - - -

Acquisition expenses - - - 5.4 - - - - -

(Income)/ loss attributable to

noncontrolling interest in

ASC

- - - (0.1) 0.5 (0.2) - - -

Adjusted EBITDA $194.6 $194.8 $212.1 $16.4 $15.5 $63.3 ($42.1) ($41.0) ($46.4)

* From continuing operations

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