Industrial equipment and engineered products manufacturer Albany (NYSE:AIN) reported Q2 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 6.2% year on year to $311.4 million. The company expects the full year’s revenue to be around $1.22 billion, close to analysts’ estimates. Its non-GAAP profit of $0.57 per share was 22.4% below analysts’ consensus estimates.
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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
StockStory’s Take
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.
Looking to the rest of the year, management reaffirmed full-year guidance and expects stronger performance by capitalizing on ramping aerospace programs and operational improvements. Kleveland highlighted that growth in new commercial and defense programs, such as the CH-53K and LEAP, along with recovering deliveries in Machine Clothing, are expected to drive a rebound. He cautioned that results hinge on successful execution of operational transitions, stating, "the team has come to a point where we will see the results of all of this impact," while also emphasizing the ongoing investment in 3D woven composites as a key strategic priority.
Key Insights from Management’s Remarks
Management pointed to operational disruptions, ongoing facility rationalization, and investment in high-potential aerospace programs as the primary factors influencing Q2 results and the outlook for the remainder of the year.
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Facility consolidation impacts: The closure of two additional manufacturing sites this quarter, part of a broader footprint optimization effort, resulted in transfer production challenges and temporary shipment delays, particularly affecting Machine Clothing.
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Equipment downtime: Unplanned equipment failures at a U.S. facility led to operational disruptions, delaying customer shipments and contributing to lower volumes and profits in the quarter.
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AEC program investments: The Engineered Composites segment required higher-than-expected investment in labor, training, and planning for the CH-53K helicopter program, leading to unfavorable cost adjustments and margin pressure. Management emphasized the long-term potential of these investments as output improves.
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3D woven composites focus: Albany is accelerating development of its 3D woven composite technology, which can replace titanium in aerospace applications. The company received positive feedback at the Paris Air Show and is targeting certification and broader adoption within 18 months.
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Leadership transition: The hiring of Will Station as Chief Financial Officer brings aerospace OEM experience and commercial finance expertise to the leadership team, complementing ongoing restructuring and operational initiatives.
Drivers of Future Performance
Management expects the recovery in aerospace and defense programs, alongside operational efficiency gains, to drive results in the second half of the year.
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Aerospace program ramp-ups: Growth in commercial programs like LEAP (single-aisle aircraft engines) and defense platforms such as CH-53K and JASSM-LRASM missiles is expected to accelerate revenue and improve profitability, contingent on successful execution and continued demand recovery in civil and military aerospace.
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Operational execution and efficiency: The company’s ability to recover delayed Machine Clothing shipments and optimize its manufacturing footprint will be critical. Management is betting on improved planning, supply chain reliability, and production ramp discipline to support margin recovery.
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Technology and product development: Albany’s strategic emphasis on 3D woven composites aims to capture market share by replacing titanium in new and existing aerospace programs, with the potential for new customer wins as certification and adoption progress over the next 18 months.
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. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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