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Reportable Segments and Revenue Recognition
 3 Months Ended
Mar. 31, 2022
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.
Machine Clothing:
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.
Albany Engineered Composites:
The Albany Engineered Composites (“AEC”) segment provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group (“Safran”) owns a 10 percent noncontrolling interest. AEC, through ASC, is the exclusive supplier of the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract.The LEAP engine is used on the Airbus A320neo and Boeing 737 MAX family of jets. AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM's LEAP engine) accounted for approximately 12 percent of the Company's consolidated Net sales in 2021. AEC net sales to Safran were $40.4 million and $27.7 million in the first three months of 2022 and 2021, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $83.7 million and $79.6 million as of March 31, 2022 and December 31, 2021, respectively.
Other significant programs by AEC include the F-35, Boeing 787, Sikorsky CH-53K and JASSM programs. AEC also supplies vacuum waste tanks for the Boeing 7-Series programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine. In 2021, approximately 47 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)
20222021
Net sales
Machine Clothing
$154,062 $148,206 
Albany Engineered Composites90,107 74,156 
Consolidated total
$244,169 $222,362 
Operating income/(loss)
Machine Clothing
$49,644 $50,363 
Albany Engineered Composites1,195 2,938 
Corporate expenses
(12,085)(11,483)
Operating income$38,754 $41,818 
Reconciling items:
Interest income(652)(529)
Interest expense
4,261 4,098 
Other expense/(income), net(3,928)600 
Income before income taxes
$39,073 $37,649 

A subsidiary within our Machine Clothing segment has been a partner in a joint venture (“JV”) that supplies paper machine clothing products to local papermakers in Russia. In March 2022, we made the decision to cease doing business in Russia, including giving notice to our JV partner of our intent to exit the venture. As a result, we recognized $1.8 million expense in the consolidated statement of operations, representing reserves against the risk of uncollectible customer receivables and obsolescence of certain inventory destined for Russian customers. We also wrote down the net book value of our investment in the aforementioned JV to reflect our intent to exit such venture, resulting in $0.8 million impairment loss during the first quarter of 2022.
The table below presents restructuring costs by reportable segment:
Three months ended March 31,
(in thousands)20222021
Machine Clothing$243 $(69)
Albany Engineered Composites— 89 
Corporate expenses11 32 
Total$254 $52 

Revenue Recognition:
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 decreased operating income by $0.7 million during the first three months of 2022, compared to an insignificant effect in the same period last year.
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, 2022
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$153,163 $899 $154,062 
Albany Engineered Composites
ASC
— 39,712 39,712 
Other AEC3,913 46,482 50,395 
Total Albany Engineered Composites
3,913 86,194 90,107 
                                         
Total revenue$157,076 $87,093 $244,169 
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 

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)
20222021
Americas PMC$76,616 $73,302 
Eurasia PMC
55,486 55,143 
Engineered Fabrics21,960 19,761 
Total Machine Clothing Net sales
$154,062 $148,206 

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. 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 $263 million and $76 million as of March 31, 2022 and 2021, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of March 31, 2022, we expect to recognize as revenue approximately $79 million during 2022, $45 million during 2023, $38 million during 2024, and the remainder thereafter.