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Reportable Segments and Revenue Recognition
 6 Months Ended
Jun. 30, 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 $54.0 million and $57.0 million in the first six months of 2021 and 2020, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $105.1 million and $127.1 million as of June 30, 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 June 30,Six months ended June 30,
(in thousands)
2021202020212020
Net sales
Machine Clothing
$159,921 $153,433 $308,127 $290,035 
Albany Engineered Composites74,598 72,557 148,753 171,719 
Consolidated total
$234,519 $225,990 $456,880 $461,754 
Operating income/(loss)
Machine Clothing
$55,902 $56,543 $106,264 $103,718 
Albany Engineered Composites7,164 8,299 10,102 15,922 
Corporate expenses
(13,100)(12,115)(24,581)(27,319)
Operating income$49,966 $52,727 $91,785 $92,321 
Reconciling items:
Interest income(401)(348)(930)(795)
Interest expense
4,619 4,171 8,717 8,595 
Other expense/(income), net862 1,091 1,462 16,660 
Income before income taxes
$44,886 $47,813 $82,536 $67,861 

There were no material changes to total assets of the reportable segments in the first six months of 2021.
The table below presents restructuring costs by reportable segment (also see Note 4):
Three months ended June 30,Six months ended June 30,
(in thousands)2021202020212020
Machine Clothing$10 $388 $(58)$1,030 
Albany Engineered Composites(48)2,248 41 2,248 
Corporate expenses29 201 60 201 
Total$(9)$2,837 $43 $3,479 

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. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors. Changes in the estimated profitability of long-term contracts increased operating income by $4.3 million and $3.7 million for the second quarter and first half of 2021, respectively. Adjustments in the estimated profitability of long-term contracts increased operating income by $7.4 million and $6.4 million for the second quarter and first half of 2020, respectively.
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 June 30, 2021
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$159,056 $865 $159,921 
Albany Engineered Composites
ASC
— 26,170 26,170 
Other AEC4,432 43,996 48,428 
Total Albany Engineered Composites
4,432 70,166 74,598 
                                         
Total revenue$163,488 $71,031 $234,519 
Six months ended June 30, 2021
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$306,397 $1,730 $308,127 
Albany Engineered Composites
ASC— 53,254 53,254 
Other AEC8,312 87,187 95,499 
Total Albany Engineered Composites8,312 140,441 148,753 
Total revenue$314,709 $142,171 $456,880 

Three months ended June 30, 2020
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$152,585 $848 $153,433 
Albany Engineered Composites
ASC
— 17,576 17,576 
Other AEC4,143 50,838 54,981 
Total Albany Engineered Composites
4,143 68,414 72,557 
Total revenue
$156,728 $69,262 $225,990 
Six months ended June 30, 2020
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$288,339 $1,696 $290,035 
Albany Engineered Composites
ASC— 55,470 55,470 
Other AEC10,463 105,786 116,249 
Total Albany Engineered Composites10,463 161,256 171,719 
Total revenue$298,802 $162,952 $461,754 
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 June 30,Six months ended June 30,
(in thousands)
2021202020212020
Americas PMC$82,343 $81,225 $155,645 $154,902 
Eurasia PMC
55,900 54,166 111,043 99,297 
Engineered Fabrics21,678 18,042 41,439 35,836 
Total Machine Clothing Net sales
$159,921 $153,433 $308,127 $290,035 

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 $149 million and $85 million as of June 30, 2021 and 2020, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of June 30, 2021, we expect to recognize as revenue approximately $48 million during 2021, $62 million during 2022, $24 million during 2023, and the remainder during 2024.