Albany’s second quarter was met with a significant negative market reaction as results showed a 6.2% year-over-year sales decline and a sharp drop in non-GAAP profitability, falling well below Wall Street’s earnings expectations. CEO Gunnar Kleveland attributed underperformance to operational disruptions, including facility closures and equipment downtime, which delayed shipments and compressed margins. Management described these issues as largely temporary, though they acknowledged that program ramp-ups, particularly in the Engineered Composites segment, are taking longer and requiring more investment than initially planned.
Is now the time to buy AIN? Find out in our full research report (it’s free).
Albany (AIN) Q2 CY2025 Highlights:
- Revenue: $311.4 million vs analyst estimates of $303.6 million (6.2% year-on-year decline, 2.6% beat)
- Adjusted EPS: $0.57 vs analyst expectations of $0.73 (22.4% miss)
- Adjusted EBITDA: $51.88 million vs analyst estimates of $60 million (16.7% margin, 13.5% miss)
- The company reconfirmed its revenue guidance for the full year of $1.22 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $3.20 at the midpoint
- EBITDA guidance for the full year is $250 million at the midpoint, above analyst estimates of $247.8 million
- Operating Margin: 7.2%, down from 12.9% in the same quarter last year
- Market Capitalization: $1.85 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Albany’s Q2 Earnings Call
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Peter J. Arment (Baird) asked about build rates in aerospace and alignment with OEM production; CEO Gunnar Kleveland indicated momentum is building and inventory levels are matching customer demand, particularly in LEAP and Boeing programs.
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Chigusa Katoku (JPMorgan) pressed on AEC margin pressure and investments; Kleveland explained that higher labor and overhead costs in CH-53K reflect longer ramp-up times, but recent investments are improving performance as parts availability and team training increase.
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Katoku (JPMorgan) followed up on the implied second half ramp in results; Kleveland cited Heimbach synergies, recovery of lost Machine Clothing revenue, and new program growth in both commercial and defense as key reasons for holding guidance.
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Michael Frank Ciarmoli (Truist Securities) questioned the rationale behind reaffirming guidance despite recent challenges; Kleveland responded that improved program performance, particularly in CH-53K, underpins their confidence, but acknowledged execution risk remains.
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Alexander Christian Preston (Bank of America) asked about the timeline and market opportunity for 3D woven composite parts; Kleveland highlighted positive initial adoption, with certification expected in 18 months and a focus on both replacement and new development programs.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will track (1) the pace of recovery in Machine Clothing shipments as operational disruptions are resolved, (2) the margin impact from ongoing investments in CH-53K and other aerospace programs, and (3) tangible progress in 3D woven composite certification and customer adoption. The integration of the new CFO and execution on facility optimization will also be closely watched.
Albany currently trades at $62.80, down from $71.03 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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