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Reportable Segments and Revenue Recognition
 3 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]  
Reportable Segments and Revenue Recognition Reportable Segments and Revenue Recognition
In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments.
The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate.
We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.
The Albany Engineered Composites (“AEC”) segment, including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group (“Safran”) owns a 10 percent noncontrolling interest, provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. AEC’s largest program relates to CFM International’s LEAP engine. Under this program, AEC through ASC, is the exclusive supplier of advanced composite fan blades and cases under a long-term supply contract. AEC net sales to Safran were $27.7 million and $38.0 million in the first three months of 2021 and 2020, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $107.7 million and $127.1 million as of March 31, 2021 and December 31, 2020, respectively. Other significant programs by AEC include the F-35, Boeing 787, Sikorsky CH-53K and JASSM, as well as the fan case for the GE9X engine. In 2020, approximately 46 percent of AEC sales were related to U.S. government contracts or programs.
The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:
Three months ended March 31,
(in thousands)
20212020
Net sales
Machine Clothing
$148,206 $136,602 
Albany Engineered Composites74,156 99,162 
Consolidated total
$222,362 $235,764 
Operating income/(loss)
Machine Clothing
$50,363 $47,175 
Albany Engineered Composites2,938 7,623 
Corporate expenses
(11,483)(15,204)
Operating income$41,818 $39,594 
Reconciling items:
Interest income(529)(447)
Interest expense
4,098 4,424 
Other expense/(income), net600 15,569 
Income before income taxes
$37,649 $20,048 

There were no material changes to total assets of the reportable segments in the first three months of 2021.
The table below presents restructuring costs by reportable segment (also see Note 4):
Three months ended March 31,
(in thousands)20212020
Machine Clothing$(69)$642 
Albany Engineered Composites89 — 
Corporate expenses32 — 
Total$52 $642 

Products and services provided under long-term contracts represent a significant portion of sales in the Albany Engineered Composites segment and we account for these contracts using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. Adjustments in the estimated profitability of long-term contracts increased operating income by $0.9 million for the first quarter of 2020, compared to an insignificant effect for the first quarter of 2021.
We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes.
The following table disaggregates revenue for each product group by timing of revenue recognition:
Three months ended March 31, 2021
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$147,341 $865 $148,206 
Albany Engineered Composites
ASC
— 27,084 27,084 
Other AEC3,880 43,192 47,072 
Total Albany Engineered Composites
3,880 70,276 74,156 
                                         
Total revenue$151,221 $71,141 $222,362 
Three months ended March 31, 2020
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$135,754 $848 $136,602 
Albany Engineered Composites
ASC
— 37,894 37,894 
Other AEC6,320 54,948 61,268 
Total Albany Engineered Composites
6,320 92,842 99,162 
Total revenue
$142,074 $93,690 $235,764 

The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing (PMC) and engineered fabrics), and, for PMC, the geographical region to which the paper machine clothing was sold:
Three months ended March 31,
(in thousands)
20212020
Americas PMC$73,302 $73,677 
Eurasia PMC
55,143 45,131 
Engineered Fabrics19,761 17,794 
Total Machine Clothing Net sales
$148,206 $136,602 

As permitted by ASC 606, we only disclose the value of unsatisfied performance obligations for contracts with an original expected duration of greater than one year. Contracts in the MC segment are generally for periods of less than a year. Most contracts in the AEC segment are short duration firm-fixed-price orders representing performance obligations with an original maturity of less than one year. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $76 million and $82 million as of March 31, 2021 and 2020, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of March 31, 2021, we expect to recognize as revenue approximately $51 million during 2021 and the remainder during 2022.