AIN Albany International

John Hobbs Director of Investor Relations
Andrew Higgins President and Chief Executive Officer
Stephen Nolan Chief Financial Officer and Treasurer
Peter Arment Robert W. Baird & Co.
Daniel Flick Cowen and Company, LLC
Stephen Tusa JPMorgan Chase & Co.
Call transcript
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Ladies and gentlemen, thank you for standing by. Welcome to the Albany International Fourth Quarter Earnings 2020 Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. to Investor conference Relations. like Hobbs, to now of Director would turn over the John I Please ahead, go sir.

John Hobbs

Thank you, fourth call. International’s Welcome to Brad, and good quarter morning, XXXX everyone. Albany conference

measures refer listening night, release, last our about their of and notice, quarterly and particular statements the those contained release with regarding for the results, our certain to reminder, detailed press forward-looking to a call, As non-GAAP reconciliation use the please GAAP. reference to financial in our issued text financial on associated of the the

effects For results. same looking, the our on will verbal morning. call, are of financial purposes markets of make the of and this operations, our potential uncertainties, a we containing statements remarks serve the conference those and COVID-XX Where forward our apply which, risks to pandemic are we number statements that among this the

a full earnings our as use to our including the XX-K. call, discussion, a we refer SEC well measures, both For comparable please may including XX, of filings, XXXX on of measures, February to most reconciliation their as non-GAAP GAAP release our

I'll the Now Bill Officer, Bill? who over Higgins, will turn provide to remarks. opening Chief and some President call Executive

Andrew Higgins

welcome fourth and morning, thank Good joining and our John. Thanks, for quarter you call. earnings everyone,

challenging pandemic depth. fourth solid highlights our was Let year a We delivered finished quarter our XXXX the and results than strategy results expected. share guidance our comment We on much me cover fourth my quarter and provide XXXX quarter on Stephen that year and then going performance, XXXX expectations another more in will better unpredictable. for strong forward. with for in And

to pressure of end the our the story agility downturns safety wellbeing some XXXX, topline on results, bottom in and the throughout swift serve, and line early great employees. to we demonstrated was deliver our operations of Beginning action this year. the our took ensure we and in relentless that and markets focus Our despite

costs reset they to many year and tirelessly early improvements. chains as Our our great our levels and outstanding the teams manufacturing for to balance We efficiency delivery to to for continue meet job productivity and sheet. customers our on-time times and changed. a generate margins and work to cash shareholders during our action are we free deliver consequently, needs able supply We took to did solid customer's drive service, well, are add customer and metrics our Also our manage record at and for flow and quality. strong performance notable,

the the best Our safety company. performance of history in the year as the ended

are the we bottom accident we over by initiatives. we of found initiatives pleased productivity kaizen well only It's factory not all the precautions and employees am managed In following line supply to social an how work, Our not distancing, of executive remote in COVID-XX. world, how ways safely of improve number to to how we work do contributed to our they've we employees to proud innovated and I and our employee but of training development chain our to a most do success. recognized launch And it. for and bonus completed XXXX, improvement employees, $X,XXX our despite our that restraints projects December, of excluding accomplishments team the these working award gratitude. with XXX around and lean

safely together great do As during support to for another to customers. proud a how this employees I I am continued pulled pandemic said, job our and of one work and

about Now this a let beyond. the and comments few year me outlook for make

the exited gaining be this end strength. with global and Our solid year book, Machine to markets improves. Clothing We appear order a for year as which bodes last segments well economy beyond

with well areas, positioned in tissue and clothing, higher the in our leader machine packaging. we growth customers, a are to As grow especially

has and during its served product of in a in strategy investment the of market longstanding more middle than operating worst technology this, decade. discipline in us MC adjusted the by a along has our than points. well Consider EBITDA our XXXX, margin basis segment basis expanded Our XXX continuous development recession, since pandemic downturn MC with EBITDA its global by And points margin adjusted our more segment expanded more XXX in impressive, XXXX.

are We Engineered Composites segments our about optimistic also future.

our managing XXXX, inventory to are and our since customers, commercial the longer-term planning travel. of Salt for components Lake for particularly it's continue on supply degree, just and Sunlines Although slower for inventory chain pandemic XXX face and still XXXX, recent we the downturn demand, reduction City because AEC the our XXX XXX Boeing of headwinds from revision the XXX excess F-XX. and the a our lesser Boeing where for we we downward airline workforce yesterday aerospace production in frames. MAX, the produced facilities and pretends in To in a and costs implemented of to and because the Through by

engineered While expected longer-term. composites to XXXX resume expect in be inventory because is we to growth destocking, slower of

engines see are first. commercial military expected the should well and Safran as since lead the engine to expected recession F-XX growth programs, missile, the aerospace LEAP in the our to is domestic powers commercial both And travel early We the on recovery are with in recover position markets narrow-body which air as out aircraft, positioned LEAP with LEAP. CH-XXK, solid the JASSM such and of

International for developing is say and strategy. innovation Albany about history that materials customers. a Next, our let new of add XXX-year a me our few words value

a engineered help on to the are materials committed this their advanced and focus continuing next-generation legacy products composites and developing processes. production customers with improve of our We to

our performance. are reliably most range which it higher overall speeds because reputation earned in cost belts on durability of at paper offers at high our to segment intensive in state-of-the-art including that Our machines, full of using our advanced And collaborative material products partnership segment, Engineered PMC our technology closely our a pandemic, of a advance – produce Safran improving to We've used engine with customers Machine them. we severe environment. for cases. continue In Clothing the fan is our materials is composites, manufacturing LEAP production XD-woven operate cost In This work despite composite our the constantly conditions. in demanding to technology, value. and and the under continue proprietary lower Composites belt leader the advanced improving XD-woven our material blades a to customers and quality XXXX, paper because of composite advancements, reduce fan able a we the

So more will as even commercial aerospace be rebounds competitive.

our with customers customer collaboration for our expanded new also and future new base growth to develop applications We diversify areas. and

development technology Wing with Airbus on pandemic. Tomorrow program the continued Our the of through has

in technologies and military imperative ongoing medium early aircraft. areas. an call is design program efforts, it's we seat bring get next-generation of both the to near-term, the we development R&D term, our that commercial have incubator While this and In longer I and the at table what projects other

For proprietary is structures team materials. XD-woven and our composite materials using major example, a prime supporting OEM R&D hypersonic our next-generation the in of development

of efficiency metallic environmental unmanned to and in trend higher of market reduce with projects will and thermoplastics. as have efficient aerospace will aircraft. We industry downturn also the replacement with importance ongoing components its gain drive next-generation transitory, current more the We energy and the vehicles, forces materials lighter long-term impact that believe the commercial This an seeks in composites. temperature is in

in our the can to demanding for is participation technology structural lighter the applications high commercially and aerospace. most we and weight need in strength meet proven, Our composite grow XD-woven intend

a technology growth. product materials for of we committed investing As and in to development company, advanced remain organic

only fact, not budgets in Organic investment that segments capital, is over our products and by such been the capital, XXXX. are production and this expertise, successfully by critical as both products, new has but driven our investment our our capital in time intellectual are for developing tooling strategy. new time. increasing hard In also the part necessary we R&D process growth And in know-how in equipment, and of a effort allocation

guide on returns In use future. success. our how in the are We investment based to returns. criteria optimistic best direct programs measure we we we are to the capital about disciplined adjusted in invest summary, to capital and with expected shareholders, decisions risk those we the We

continued We to strong solid which have balance and grow. enables investment flow free cash sheet a generation,

with to hand it Stephen. over So I'll that,

Stephen Nolan

Thank the our I outlook then quarter first you, the to year. morning initial and Bill. everyone. in for our talk results will for about business coming the Good about

company quarter, compared grades declines represented sales of our again, X.X% of product, growth driven fabrics. sales net currency year-over-year, about on Clothing, million of in in were effects, net by translation quarter. significant the fourth declined in basis also the major MC to grades, year-over-year was same of decline the Machine delivered offset partially in in sales were $XXX.X effects, total XX% Once currency the a constant publication most over most quarter the million, across sales XX% Adjusting engineered currency XX.X% adjusting which translation XX% down for a decrease net by $XXX.X the For year. In for quarter. last by

signs However, we do with see market. improving clothing generally machine

see and in grades those we declines by than saw in smaller we fourth while year-over-year we year-over-year did driven packaging our the call, declines in factors the third were seen on we the quarter. in that First, quarter discussed quarter same quarter considerably had tissue the in the grades third

reductions XXX growth exceeded than revenue, platforms. sales to and the and translation year, the net program effects for sequentially after again, significant compared were Engineered modestly composites segment in by declined fourth by quarter on CH-XXK last primarily our Second, adjusting sales, offset F-XX by quarter third net LEAP Boeing and XX.X% higher the currency partially expectations. caused in

During million the last generated $XX the quarter, little of the year. million under a compared $XX same LEAP quarter to program revenue in ASC

significantly the ASC X.X% XXX the quarter. sales. gross million, by driven However, quarter, that net The increased were than to revenue for this reduction points on overall of the company XX% for a third XX.X% operational period quarters three basis basis, facilities of was gross $XX.X of was LEAP year. the margin Fourth by LEAP last up a the fourth comparable ASC profit from full quarter higher XX.X% from fact sequential our all

from AEC by net driven efficiencies in XX.X% Within favorable mix revenues, XX.X% gross profitability margin net by the primarily improved long-term favorable a margin sales partially and increased favorable contracts. to mix. of improved to rates, by product program exchange MC lower driven currency the a in from segment, XX.X% of foreign change gross net of sales offset XX.X%

this income and technical, to research million year change and to offset incentive by net quarter. quarter, revaluation in and about recognized profit compared to of restructuring an and offset expense was expense $XXX,XXX sales increase in million quarter the $X.X While expense operating lower $XX.X million the corporate, for operating income year recognize expense recorded Other long-term AEC from this an we The XX.X%. profit, fourth driven in for the revaluation was $XXX,XXX, fourth income and in expense $X.X by QX for effect items and employee was lower income both STG&R currency XXXX. in improvement the to of increase amount million that from Total of higher million a $X.X million partially same XX.X% The caused million higher quarters compared note lower favorable partially of quarter of caused totaling beneficial These the in travel incentive the Machine expense to $XX.X both percentage estimated in income the by referenced. special as we foreign the the of clothing fourth lower XXXX in The income $XX.X the tax quarter. was from in of third compensation quarter and the operating by primarily in XX.X% by $X,XXX current $X.X net the this prior the combined were the the $X higher foreign increased expenses that down to more quarter period expense year. compares like XXXX. expenses million a to of XXXX selling, in quarters gross compared prior last $X.X $XXX,XXX improvement bonus a prior quarter primarily for gross currency of included million period XX.X% about of to quarter by to quarter. quarter. XXXX this accruals decreased would quarter fell the general same Bill at higher in company about $XX netted across the year expense. contracts expense, restructuring rate increased compensation driven in in by STG&R million while by I from higher in that did Fourth the profitability losses

true-up the have earlier XX.X% of in XX.X%. $X.XX currency at due rate full-year. would provisions XX% $X.XX EPS That foreign million quarter EPS the of $XX.X lower net tax last with As quarter. the to discrete XX.X% attributable entity quarter’s this of this restructuring for EBITDA The improved income known by partially million from integration, earnings compares a the for revaluation than income, to year’s XX.X%, a XX.X% $XX.X in whole. year. year. of losses, was X.X% year. an net this in for excluding tax adjusted sales the been AEC quarter expenses, this last After XXXX by charges currency the or reduction per quarters. $X.XX a XX.X% year the was adjusted tax expense. EBITDA this operating result we tax EPS the mainly compared full-year rate and from at the higher is was is Had recognized $XX.X net items the where million associated driven million down a to pension to discrete $X.XX lower The and other In of our reduction adjusting provision excluding was adjusted share by or tax as increased as no foreign quarter. XX.X%, prior XX.X% the rate of million sales from to earlier recent million of significantly the sales. gain $X.XX quarter income acquisition year those is period most of last $X.XX somewhat additional a company rate CirComp lower year XXXX and rate compared the as expenses XX.X% that adjusted tax was or lower last rate rate required, to our down which quarter final $XX.X impact earlier for last sales for and a adjusted to and revaluation Adjusted whole, associated Net adjusted gains the quarter primarily compared was Machine per Earnings EBITDA $XX.X share curtailment was $XX.X offset clothing same net fell items in year. or with

Turning to during about quarter. our by balance sheet. declined million fourth Net $XX debt the

like segment end net our the the strong a to generation cash principally declined X.XX flow in absolute of at X.XX As of ratio QX caused in Machine end and was The operating leverage LEAP towards expenditures from at debt by QX. our result, reduction comparing due reduction Clothing the turn by I principally the XXXX. by XXXX program. of coming for capital during expenditures quarter, lower the it to to year capital resulting guidance on and the now would to providing initial financial

expect deliver year strong in We segments. performance of Machine the Clothing to another

comfort of when For the about million from million change quarter of about three was X% fourth about the year to gives down QX in net QX in the cumulative fourth XXXX a full-year we of particular, in delivered level X% sales of this XXXX, in orders XXXX. of we we some up us XXXX. up first sales do the compared as were be the $XXX This the low in compared been the had sales period This to same delivered Orders quarter into to XXXX. that In $XXX from of compared expect segment of will quarters XXXX. down relatively XXXX XXXX. in marked head

a of providing to XXXX, We very segment perspective, adjusted net had $XXX machine in From million delivering clothing the million. a of initial $XXX sales profitability $XXX for are year guidance million strong EBITDA.

results However, XXXX. that it make to effects there replicate three are hard will those in

of particularly currencies the rates real revenues of more net contributed expenses we as Brazilian in $X with Overall which peso, previously exchange and foreign rates both than have in of compared we weakness Mexican respect both. which in disclosed, are EBITDA benefited XXXX. short exchange favorable that First, million have rates in are very foreign to from XXXX we exchange in XXXX, adjusted foreign favorable and to over prevailing we the the

However, the had some year. dissipated effects of those by of the end favorable

XX end pesos. under XX pesos under of in weakened was to the QX. had peso rate the XX year, Mexican the of in example, the almost But per dollar per back For U.S. dollar from XXXX pesos QX by

due segment expense COVID-XX we prior Second, XXXX of than in lower the in years. incurred level travel the in significantly to pandemic,

the insight this help on perspective million, relationships about customer we of development bottom needs and $X customer as from this was While to tune into a not drive product the business depend line strong support. ideal to develop to and

We resume from suffer our travel COVID in to are likely continue will effects. QX, level expecting during travel to prior of XXXX, although some

on freight input right a that we all of pressure million months to considerably Third, In higher. XX to there were input typical see over $X pressure cost to air reason believe could and see higher where and particularly now we are this ago. logistics, rail than with sea, costs, costs be continue in year, XXXX, they respect was

be withstanding typical, pricing Clothing that Not profit million. to costs of implement million will, expect we strong able offset all these are on Machine of initial is improvement to segment course, to profitability, as and to as through year we pressures performance While initiatives three to guidance much be possible. providing unlikely believe will adjusted $XXX EBITDA another of as the increases, remainder to recover $XXX for we the of the deliver cost segment work of that we increased

our across a we up trends inventory of a the programs. Overall, shaping growth year be million by are in see a the Turning XXX goods supply by of driven sales principally military year XXXX, XXXX, about to and chains. Composites. segment from revenue the some challenging in of compared finished customer same by Engineered destocking XXXX revenue lower commercial Unfortunately segment to was other XXXX XXXX in LEAP, declined perspective. programs to with for offset going on in a $XXX continuation to

for which MAX variant, to LEAP-XB expect we LEAP the ASC components the program, low levels. powers produce continue the at very to On XXX

than then at While own at in recognized the for currently on we considerable in goods the expect annually is not and In components deliver expected number XXXX, our inventory there in by recognized ASC total to offset in was higher certain recognized the long-term. XXXX. resulting produce revenue now shipsets a finished Safran we XXX much engine MAX production revenue goods XXXX was components of far to for LEAP-XA, shipsets somewhat well we have be shipsets in level the in of fewer the from Overall, of that channel, there XXX in is delivery. the engine channel over facilities we XXXX non-recurring at would finished below the to and already This of to XXXX. as XXXX, On reentering revenue while time service, produced expect absence lower as Boeing, produced engine plus expenses we that the revenues make XXXX. engines inventory LEAP is recoverable expect flat which X,XXX XXX in roughly in to LEAP-XB ASC were for

Our goods some finished already XX% challenges. the In commercial from frames and XXX next to has had were we Boeing Boeing's seen program XXXX, the decision XXXX effect inventory program from from rate our build largest over down also revenues to for the XXXX. produce in destocking XXX reduce

there for build delivery buildup order quantities our Boeing reduced as finished been However, further, resulting an in supply in in the XXXX. rate reductions chain, in of drastic increased Boeing goods XXX has

revenues $XX XXX lower chain it into Overall $XX we supply startup production we mid-XXXX million fuselage as of XXX take in expect already by we in previous now that be the the will longer to parts recognized XXXX, will the frames our were from to supplier. the program to consume in late frames shift expect addition, the XXXX. million than of XXXX on In our produced

recognized F-XX contracts Lockheed both at we Salt On edge support F-XX for and several platform has Lake XXXX, different more engine of seals Martin parts, been the locations. recognized revenue platform City military skins, for was and us. over Burney side, million through in including wing up remains the components on our and overall a from than the very we XX% important what XXXX. $XX In

to a the and sustainment at F-XXs finished pandemic had supply Martin rate they parts. Lockheed XXXX, than by chain originally during caused predicted lower issues fewer consumed due However,

XXXX. be result, smaller will F-XX we As than will aircraft. is million our supply F-XX of in we several XXXX We be patterns chain, situation than in expect more to buildup a reverse programs there at We close those million lower completing revenue in that to rebalance supply a $XX than in across $XX our revenues This during which The build similar now finished XXXX lower programs XXXX, the Martin on the to was lower be the expect we in XXXX. where expect the that chain. in segment our XXXX. commercial recognized rate see recognized year than Lockheed rate the goods in itself will

these growth for reductions notably be Composites million. guidance initial most million providing Overall net CH-XXK. of $XXX segment, the other All will to on Engineered we $XXX for the programs, on by offset are sales of

three Turning strong profitability. period of factors. net Two, adjustment in performance operating by margins XXXX contract Composites in as largely favorable profitability. $XX segment strong benefit. was to adjusted about evidenced Engineered to mix the million by enabled a sales One, over long-term year XX%, the with EBITDA

profit which the cost limited factors the cost margin. of As the ASC us was not decline plus those costs loss to lower despite of declined absorption of in three as still XXXX. average ASC revenue, the And LEAP to help on our program, LEAP recover XXXX ASC will from than three, of the allowed fixed XXXX is there the again facilities. was Unfortunately, majority program all fixed in the us operating nature of revenue

the and non-ASC upward revenue create work operation, of lower at overhead our will most XXX has facilities, Salt our First, Lake performed all pressure on in XXXX notably F-XX our our planned bulk where of City work the rates.

lower be workforce announced pressures. City difficult contract few improvements not the production reduction the at required a rate created the to That Lake our achieve for offset we our This base revenue us alone mentioned, non-ASC unit these have from Bill facilities facility. as to when contract change growing While long-term Salt it tailwind profitability. such years environment, will the a long-term to In profitability. will past at to to significant costs deliver is an

Second, on profit in XXXX, expect due million decline third, average programs, fixed higher we than And revenue we we the the nature unlike will a mix declining revenues. with absorption as $XX price roughly margin. see XXXX, year suffer fixed this fixed which loss to to a product cost shift will a $XX million is price programs from of of have

result, the larger a will than much be decremental programs. As margins the average margins those on

our In range. margins fact, contribution atypical not EBITDA it XX% have in is for programs XX% to the fixed to price

million million, and initial to as million providing income range tax and we follows: fall are low-XXs. $XXX $XX the guidance providing million $XX level, from of capital to level engineered we in and million. $X.XX $XX $XXX As the and those are guidance expenditures company adjusted composites three Therefore, million reduction the and discussed adjusted between earnings the XXXX a XXXX into between EBITDA $XXX not the I the we only for factors margins XX.X% earlier, result delivered of expect of $X.XX, million, of $XX impact segments of At in but and per EBITDA of XXXX $XX between share adjusted expect do of depreciation between GAAP XX% in to revenue to initial effective XXXX, the of we XX%, for EBITDA amortization the total also million, and of topline $XX million million. $XXX rate

a cash guidance XX% note providing be for $XXX higher XXXX, XXXX expect were the like also that be performed to in earlier. environments, both we flow needs to do While in in segments than with investments the Returning maintaining explicit to in XXXX. generated they present, XXXX, environment. XXXX very the will overall. than and ongoing pleased to not in working we we expenses cash Despite while in both would generate company are segments more well challenging million R&D operating we our I reflecting XXXX, how all outstanding above roughly that customer's the expect delivered performance flow the safe met are we Bill referenced free that

of to Brad? for of segments. the it one open to future returned With growth we in the I destocking have Engineered call appear for While both does channel the remain before about very more ahead that, that Composites questions. we we prospects segment, year would excited like us


from Arment with [Operator of Instructions] today question Peter Our go Baird. sir. ahead, first comes Please line the

Peter Arment

destocking? quarter, us how and which you how $XX maybe cadence if million – a morning, to challenging Bill around maybe a that's and year. level I on know if kind Stephen implies, revenue guess, of all the play – on the I I I the I you could strong probably walk Stephen. given around first touch revenues at wanted AEC Yes. pieces not look Congrats But out. Good going guess results it's I just high midpoint the the just guidance of base to think through given the revenue moving

Stephen Nolan

to not guidance. quarterly look, quarterly into provide We going yes, So don't I'm get guidance.

expect I the lumpy year. be to it Although, as terribly through we don't go

by four, suggested quarterly far off. that So you not guidance, but midpoint not just you're the probably given dividing the

is, Look, is approach we they flat, certainly challenge will lumpy general while more face fairly were ASC be the in correct. your revenues So nominally XXXX.

quarters, no So those the spread more that throughout which as in the should quarter quarter be XXXX. saw will mean for we evenly worst is bad ASC, as

the However, from in than considerable spread out a in top XXX will and F-XX and be on the production will holiday was both, start be of inventory programs. other needs And production which QX. be we F-XX it's that and cleared of the that there decline year. that channel we the recognize effect That at before will can In smaller to year. in revenue. we throughout produce spread have commercial to take XXX to not layer decline in means, The as – throughout

need some the producing half be up in we get back business in the if the year catching a we'll ways, year. of be as be think and like first up to ahead the half of So into of the little you'd catching – they'll

well. Bill, as those you I have have thoughts somewhat production other on quantities year So level don't the we know if loaded that. throughout

Andrew Higgins

would just add. I

we’re destocking I more year CH-XXK probably little of the planning the then programs, where are think have the as and programs the half destocking get a we're to projecting for like longer-term grows production. that other we half maybe volume in through expect a XXXX there. year, growth the grow back the we the some go of year, as of pickup from see beyond into in bit and back We'll and level low and and

of be Stephen back think probably there'll the will be said, it bit as So But year. a lumpy. I little half in more don't real the

Peter Arment

we're Okay. That's really of just think on of the it's helpful. us that little some not to end about thinking your that bit I struggle could just of the range then lower maybe what adjusted we a I getting you around implied you’re sensitivity thinking range. there EPS mean, EPS maybe about? the some provided, through, walk that you the that factors of you maybe And assumptions

Stephen Nolan

release it's EPS There's range. how table range we Well, earnings in range adjusted get derived the lower to shows our the segments. two for EBITDA the from that our of the end obviously from our EBITDA

unfavorable. upward our that we're planning there's headwinds which actually look, we long-term to questions there. the declining we an risk through We from you the to a in certainly have really the carefully are be contract face adjustments generates the perspective, AEC year. on would very is placing long-term mentioned profitability rates. something to obviously could assuming the but on have range, certainly EBITDA It with manage volumes now So the that, contract, adjusted at risk not That's going pressure

biggest risks So AEC on that's side. one the of the

a are on Clothing Machine of offset is There's clothing, we'll given offsetting cost margin to rising of machine which for the guarantee costs, be even raise given as initiatives there's entered issue us go of those the there's to through the where with as prices but offset environment completely going side, differences certainly talked as identify a initiatives could input And savings also product. exactly bottom competitive costs. end. no which the to those I year in some FX to inflation bit try in towards that unable and previously, always we those. increases, we margin, we've there's we reduction grades risk, spread between about, we to but cost try successful the the mix of offset push to We input just On regional certainly discussed come the year all differences

product So there's us a certainly of could mix drive well. risk, which range the the as lower towards end

Peter Arment

lastly sheet. Okay. a and of thank – maybe got just you Bill, Stephen. generating on just are you've lot lastly, guys just – your thoughts strong cash balance And then for that, really a you And

thinking Just just M&A you're pandemic? the in thoughts how Thanks. this environment on given about

Andrew Higgins

Yes. Sure, Peter.

investment advanced composites. cash consider our We growth But make flow are down organic generating technology, on. objective, we will and is free around and interested that processes and us paying particularly I engineered said, M&A. things the great debt. we our materials We're to as the programs be would advance working product primary going And and our we're in the development help

would we've consider been have nature we conservative that along, So prices year. fairly it if past and been over something high came the in the right is property

property along, So it. the consider would right But we'll if we came keep looking.

Peter Arment

much. very Thanks


And we Gautam have do question a go with line of Please Khanna the Company. ahead. from and Cowen

Daniel Flick

Gautam. Dan morning. on for Yes. Good Hey This is guys.

So versus XXXX, through rates listen, the mean kind to F-XX last. and And expect how and substantial still And deliveries a little and at kind you to Thanks. you could pretty of detail they long guess what year? that that were delivered a just producing just I what behind so kind more out? that in on wanted this there's like ramp the bit I play destock puts I how of of ask takes

Andrew Higgins

is Hey, Dan. Bill. This

what this add We've We're first could is we'll this XXXX. year grew it's – that maybe we color production to expecting growing this inventory was was ahead great for surprise rate program F-XX Stephen the of at that in in find Lockheed think some with it. overall been been And question getting a there the work the program we're came part looking at. through capability the program, I just – the the that us, The of the to somewhat a quickly. year added of channel and it. end of Martin out

to a the short-term longer-term. rates growth So revision it's

back we'll healthy growth XXXX, in the rate at a think on I So be program.

Daniel Flick

snapback, to is delivering guys? follow-up big goes pretty that Got Or I the say, it. is like all XXX right, that, you big already Lockheed Then step at in it as of for channel? to guess Okay. if a a pretty that's kind that XXXX. that's a up, is it that of inventory

Andrew Higgins

over XXXX. it it's would But is said, I operational describe as We'll yes, it's don't back. to beyond that I a a I increase. we as expect good so program. And think, manage step a that it it a snapback. come it time, I back well-managed do know

Daniel Flick

occurs. What on in just amount then partially you partially that QX And was in Cool. Is it of cash QX? Safran have Okay. the – that? the true-up, right, the and guys

Andrew Higgins


We’re Stephen, we've I numbers that – don't in or something… you the expecting have a QX. if true-up know on

Stephen Nolan

disclosed stage, digits than years being giving any number. that. not of we've of We said we're prior dollars. that haven't this Typically, millions high-single And guidance in at further

Daniel Flick


the then Sounds pretty progress run that just or LEAP going facilities, it have good. the reopening any snags how's smoothly? And – is into lastly, you

Andrew Higgins

now. the going up. up. gone very brought it's the happy remarks, right third where We've picked We said, manufacturability going partially I we're productions in all right well. it's closed the as online. back in rest just three product, slow, remarkably for all and waiting on the quarters We've closed made strides of product my they’re were to in improving After market how still and with the while some well. things of and and pick facilities – We're It's working the second back

Daniel Flick


Thanks good. guys. Sounds


a do Steve line go we have with ahead. of the Tusa from JPMorgan. question And Please

Stephen Tusa

morning. Good guys. Hey

Andrew Higgins

Good morning, Steve.

Stephen Tusa

way in of million revenue million So AEC the comments. we your roughly at kind to of headwinds I $XX from $XX think of counted

growing $XX million to kind we I million million calculating of guess is million the how is – what $XX Your correctly of destock? of $XX down to much is I are guide the guess. kind and that $XX What and $XX the would at million – is be midpoint, $XX million to

Stephen Nolan


take me first. that Let

It's $XX board and this new are I'm not So growth your million on is talked coming. about, that talking correct. million. have we The stage. programs generally some not CH-XXK and we is growing that mentioned We about about $XX to have at other math

some of there. the is million depends in smaller they're $XX vast it that to million, destock you The So of how it quite see $XX right nature growth you for frankly. now delivering count destock. majority The

get $XX look I those are that $XX XXX to range to at three together, those your you million add million $XX primary If into of the is being all And think and driver destock. you F-XX, if you of million million. $XX LEAP-XB,

the transitory manages be – On certainly their while it's we to predict is back we does XXX on Boeing a post we pandemic and not XXX, revenue to challenges. back event supply to build chain the of and on lot to a – So big appears just rate rates after this Lockheed there get what the Obviously do planned relying difficult future, destocking with forward. we're go as question track F-XX build year. get should certainly

to consume that on XXXX go inventory. which revenue, to revenue XXXX, – by sorry, really we significantly is channel Boeing's quickly decision is at question build as unlikely how or be into depends the therefore they So build XXXX rate to But recovers our that the and rates. affected

vast So it quarter is where to we right on it's exact to growth the programs. in now of those a return But little difficult destocking. majority predict some, the

Stephen Tusa

a production expect a if to of to ahead I you they that back little XXXX. kind a the as would assume kind bit at of look think in increases to to on go regularly LEAP? of Would start them more kind there of ramp those potential these you rate stocking bit about in guys start an increase XXX, bit kind that If of XXXX that of flips

Stephen Nolan

they in back-end lot their to face sentence would getting we caveat as They your if rates, of expect The challenges up little, one well then being meet there, of if back ramp XXXX. a build flip start it to they rate. sure in stated Yes. publicly in the a

not to to And us. this stage. on that's – guiding So XXXX we're I when flip know exactly in at pretend to that's why don't going XXXX want

Stephen Tusa

of But the the front on normalized end away, goes headwind be today Right. by from you'll like know you XXXX. what that

you So that then it's It's hit Is benefit XXX? goes cash right to on it'd your away guys because more aligned. a customers, be but today. XXXX that a in to

Stephen Nolan

That's would yes. what expect, we

Stephen Tusa

Okay. Great.

Andrew Higgins

production and LEAP-XA. Airbus with Yes. rates the thing for to too AXXXneo. They've about the just We'll On watch say, talked as is on raising rates. other we the LEAP-XB build XXXX exit

as to go XXXX. beyond us help we would that So

Stephen Tusa


about. XB really kind most it's that dynamic So talking a of you’re

the I for Thanks. Thanks appreciate Great. detail. Okay. it. all


to further [Operator queue. time turn Instructions] Mr. remarks. back no does questions And appear closing at there it I'll are for it in Higgins this

Andrew Higgins

Albany's today. Thank you, Thank good safe on Brad, across the And everybody. continued your We us a like and thank joining call employees XXXX. you, the interest you, Albany globe thanks a for would in I to everyone and International. reiterate successful appreciate my day. for to delivering Have


for today. participation service. And AT&T and conference using ladies for your conclude gentlemen, your conferencing that for Thank and does you

You disconnect. may now