XML 18 R8.htm IDEA: XBRL DOCUMENT v3.23.2
Reportable Segments and Revenue Recognition
 6 Months Ended
Jun. 30, 2023
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, the 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, where revenue is determined by a cost-plus-fee agreement. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft. AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM International's LEAP engine) accounted for approximately 16 percent of the Company's consolidated Net revenues in 2022. AEC net sales to SAFRAN were $93.5 million and $83.1 million in the first six months of 2023 and 2022, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $88.9 million and $80.8 million as of June 30, 2023 and December 31, 2022, respectively.
Other significant programs by AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 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. For the year ended December 31, 2022, approximately 46 percent of AEC revenues 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)
2023202220232022
Net revenues
Machine Clothing
$159,217 $151,670 $312,439 $305,732 
Albany Engineered Composites114,906 109,699 230,780 199,806 
Consolidated revenues$274,123 $261,369 $543,219 $505,538 
Operating income/(loss)
Machine Clothing
$53,726 $54,861 $102,690 $104,505 
Albany Engineered Composites8,668 9,535 18,086 10,730 
Corporate expenses(16,893)(13,681)(34,733)(25,766)
Consolidated Operating income$45,501 $50,715 $86,043 $89,469 
Reconciling items:
Interest income(1,838)(846)(2,944)(1,498)
Interest expense
4,944 4,779 9,340 9,040 
Other (income)/expense, net(4,511)(7,045)(4,966)(10,973)
Income before income taxes$46,906 $53,827 $84,613 $92,900 
Revenue Recognition:
Products and services provided under long-term contracts represent a significant portion of revenues in the Albany Engineered Composites segment and we account for these contracts over time, primarily 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 $1.9 million for the second quarter of 2023 and decreased operating income $4.0 million for the first half of 2023. Adjustments in the estimated profitability of long-term contracts increased operating income by $1.2 million and decreased operating income $0.6 for the second quarter and first half of 2022, 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 for the three months ended June 30, 2023:
Three months ended June 30, 2023
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$158,273 $944 $159,217 
Albany Engineered Composites:
   ASC— 47,417 47,417 
   Other AEC3,511 63,978 67,489 
Total Albany Engineered Composites
3,511 111,395 114,906 
                                         
Total revenues$161,784 $112,339 $274,123 
The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2022:
Three months ended June 30, 2022
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$150,770 $900 $151,670 
Albany Engineered Composites:
   ASC— 41,661 41,661 
   Other AEC5,018 63,020 68,038 
Total Albany Engineered Composites
5,018 104,681 109,699 
Total revenues$155,788 $105,581 $261,369 
The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2023:
Six months ended June 30, 2023
(in thousands)
Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$310,551 $1,888 $312,439 
Albany Engineered Composites:
   ASC— 91,949 91,949 
   Other AEC9,304 129,527 138,831 
Total Albany Engineered Composites9,304 221,476 230,780 
Total revenues$319,855 $223,364 $543,219 
The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2022:
Six months ended June 30, 2022
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$303,933 $1,799 $305,732 
Albany Engineered Composites:
   ASC— 81,373 81,373 
   Other AEC8,931 109,502 118,433 
Total Albany Engineered Composites8,931 190,875 199,806 
Total revenues$312,864 $192,674 $505,538 
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)
2023202220232022
Americas PMC$94,154 $79,062 $177,532 $155,678 
Eurasia PMC
48,541 52,368 100,278 107,854 
Engineered Fabrics16,522 20,240 34,629 42,200 
Total Machine Clothing net revenues$159,217 $151,670 $312,439 $305,732 
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 and certain contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $792 million and $579 million as of June 30, 2023 and 2022, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of June 30, 2023, we expect to recognize as revenue approximately $78 million during 2023, $131 million during 2024, $148 million during 2025, and the remainder thereafter.