Albany International (AIN)

John Hobbs Director of Investor Relations
Andrew Higgins President & Chief Executive Officer
Stephen Nolan Chief Financial Officer & Treasurer
Eric Ruden Robert W. Baird & Co.
Gautam Khanna Cowen & Company
Michael Ciarmoli Truist Securities
Ronald Epstein Bank of America
Call transcript
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Ladies and gentlemen, thank you for standing by, and welcome to the Albany International Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. [Operator Instructions] I would now like to turn the conference over to our host, Mr. Investor of Director Hobbs, Relations. John sir. Please go ahead,

John Hobbs

Welcome Thank Second International's everyone. you and good Tony, to Quarter Albany morning, XXXX call. conference

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

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

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

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

Andrew Higgins

Earnings. Thanks, we pleased segments. John. and everyone. Call. to you to joining performance Good our quarter Earnings Quarter report welcome for that with strong delivered Second both another Thank excellent morning, I'm in

on really operations to of focused employees cost proud productivity, I'm delivery, our great stayed do and job a quality for how savings Our improvements. service. continue Kaizen safety, process best-in-class our customers in with and Lean they

achieved achieved XX% quarterly our margins levels profitability. of our highest As [ph] offset cost EPS XX%, generating margin the the and face both inflation second cash line of chain challenges million cash revenue quarter. for adjusted over materials, and flow second on company's in to EPS record in in a supply an $X.X second impact our performance. the were manage and of quarter, of million that keep we quarter $XX revenues going we on of year-over-year of and $X.XX forward. teams free We in margins did free and their best company, We growing in bottom GAAP sequentially Gross operating $XXX eye able delivered history, these some successfully and we'll the logistics flow in and through near

pay balance We continue and growth. investment which future to a debt down have healthy in sheet, enables

the less-vaccinated positions out variant affect watching air particularly world. footprint markets before, in this said, and take our development trends. Engineered international travel segment. key research in mentioned In advantage our might and In we've delta company. secular As of these the global the pandemic product Composites recovery, Albany's investment by favorable technology how are we're market of the That regions economic cautiously We're long-term in coming increasing and general, of we're slowdown. across the recovery trends the encouraged

As we domestic our in airline to our on with benefit engines expect with position aircraft Safran. partnership travel LEAP from recovers, narrow-body

production picks quarter, last LEAP recovering narrow-body production. up closely we're Safran OEM on mentioned as ramping we coordinate to As demand with working

grow for RISE exit long-term partner to with important future. preparing three development in increased Safran workers we production customer LEAP the and include plans Our and next in facilities announcement an We GE and in excited hiring very as XXXX recent Safran's additional generation as view our about We're the engine. partner.

helicopter. and skins capabilities. with on customer complex fiber grow Fighter cases, broaden we're Sikorsky using Martin's fan engine, composites, to placement the mentioned, to used This our from with components products, LEAP and projects, R&D ranges particularly wing automated currently composite customers material science advanced this our previously and investing new As year diversify the base, materials XD-woven as Strike such F-XX proprietary new we our our on XD-woven Lockheed CH-XXK blades goal for composites Joint to fan in more

We hypersonic capabilities continue are trends, demand superior XD-woven investing AeroSystems future earlier of along we ability to optimistic applications on recovering hypersonic the and it In scale. capitalizes growth. the our of with new program our these to this technology proprietary composite the industries types announce example business on builds and expect we're products. Tomorrow develop This segment, from the Clothing lines, XD-woven is global Spirit to long-term of vehicles. collaboration pleased about to This with commercial which airbus and Wing month secular using and for demonstrative Machine achieve of unique applications our XD-woven secure in help technologies, companies manufacture the for for to both collaboration design manufacturability efficient we're composite advanced underpin develop Albany's technology today composites paper exciting to an advanced at should benefit long-term growth, to programs solutions

and supplier business since markets Clothing the tissue Machine benefited globally, Our we're in industry the in has packaging growing end a as products. leading particularly for well-positioned

to technical development continue these markets. improvements target end product strategies, service growth operational Our and higher

operating half year. the expect the teams execution firing cylinders we second of our in been Our on all strong continue have and to

et shopping markets. say pulp with building products, benefiting me strongest return end words and tissue, few in about at-home Let products, a offices, a shift packaging to be retail markets demand the people through we have restaurants, sub-segments Packaging, Machine as settles Clothing's end from increasing tissue, In down transition and goes remained may a corrugated online cetera. vacations, school, whereby fundamental phase worldwide.

success strong, more XX% while likely emerging revenues yet in and North the time well a strategy. away-from-home higher This China which pickup with industry. perform growth the recognized of COVID advantage segment around decline paper leader America economies a and in robust a world Clothing requiring surprisingly, of however, We execution grades our Not belts, result our Machine vaccination in is serving well, the rates In eventually taking improve. of rebound. and sub-segments to disciplined low for markets long-term are MC Markets to only their of in summary, quarter. our operations should global grappling are still the see our continue publication as second have to continues and represented the customers

sheet we investing mentioned, and expand position a balance the flow allows our segments. cash generation, which strong I to and in free that both in programs have broaden As customer technologies competitive continue and us good

allocation strategy. priority then is invest for both acquisitions growth first and that Our in organic seek capital to long-term segments to programs fill across our business

a and brand materials the and Our Machine reputation is long-term for partner. supplier aerospace both our opportunities engineered excellence We're reliable in optimistic reliability, service segments. growing in well-established and technical is as in Clothing about

to the on I'll that, over for financials. deal it Stephen So with turn Stephen?

Stephen Nolan

the first the on results business the everyone. then for to balance for comment about of Thank year. the quarter you, and Bill, and talk good morning outlook our the I'll for

for LEAP in a Tissue production increase For partially sales X% CH-XXK, significant sales driven sales those declined the last use, in due other platform. support by we in also in Publication of compared the Engineered and MC's the year-over-year by the translation grades. away-from-home million date effects, year by Bill rose second as level X.X%, delivered in only increases effects, customer engineered grades offset were currency represented on a after Clothing, X% declines for recovery XX% again $XXX.X over this mentioned, in saw packaging without sales, on quarter. partially to over to driven year-over-year for grades growth million, for Composites X.X% and were quarter. and net the primarily the at-home XXX in to declined revenue quarter net translation quarter, product also an adjusting decline currency the year-over-year, adjusting all fabrics, by effects, grades to up net $XXX by In resulting quarter by decline translation last Machine X.X% for highs normal net year. same by offset grew for of total grades. company currency revenue more of Adjusting from that grades demand the

During the LEAP the quarter. XX inventory $XX Comparable generated with quarter from leaving engine on second of engine our shipsets At but this sheet over program second $XX reduced same first in end LEAP-XB of we to goods finished XXX by million shipsets of the balance last the us the LEAP-XB at million the over quarter, up the the quarter, of ASC time, about in year, revenue. little year. quarter the over

shipsets Also during in sheet. $X will recognized last generated previously the quarter, on about second you we million the was balance the revenue we most million of less program, quarter, from up from recall, in XXX revenue value their reported our in than quarter engine recent on and these $XX As the but almost assets year. on contract down million $X first under

from year. margin XX.X% the The $XXX.X quarter gross million, a decreased reduction XXX basis XX.X% by profit points period company the net of comparable of was gross overall last sales. for to X% from Second

costs of from partially net MC XX.X% margin higher to currency segment, gross absorption. higher the sales due XX.X% principally improved input fixed offset and foreign by Within costs, declined to effects,

For profitability estimated contracts. driven segment, from of to margin long-term smaller in net the by gross the AEC sales, XX.X% primarily the of from XX% impact declined changes a

$X change the favorable estimated of profitability During this a But year. million of and The on quarter, ongoing adjustment a in just specific long-term quarter to of contracts net the to expectations over recognize reduction last a is million. the over volume favorable we net change in reserves to this compares as favorable this previously loss principally of enhancements in to not changes of same profitability. due necessarily of therefore result was programs reflective quarter a established $X couple

declines of profitability price discussed, program In leading we fact, the previously as are some year. year programs our to in expected fixed to long-term headwinds this this revenue

The adjustments. offset our in STG adjusted lower net partially offset higher by operating selling, XX.X% $XXX,XXX, profit per per the caused tax and million, income rates, offset the XX.X% $X.XX $X income was expense. this EBITDA quarter $X.X represented was adjusted lower the prior caused partially increased quarter. quarter Net $XX.X expense, foreign a lower for partially adjusted was to the expenses sales. of integration, fell losses, and incentive year. $XX.X this restructuring [ph] million, revaluation $XX to last compared higher impact R&D with fell down Second to sales level share and higher year. was year. of lower year general profit, currency currency year. quarter million EBITDA restructuring compensation most $XX The tax million, tax quarter, tax X.X% also was restructuring the from of this our caused amount caused discrete sales. quarter our million expense, operating million, Clothing jurisdictions The CirComp from losses. percentage lower by in foreign and the current quarter was a $X higher earnings year's down million higher net XX%, last Machine the by in a in share rate lower $XX.X expenses year. last the offset $XX.X The from flat to net reduction partially by the the Machine profits last year for lower the $XX.X in Total essentially AEC profit year as company higher same higher increase of technical, compared period gross in million rate. same with And quarter by last expenses XX% declined expense and Clothing million prior XX.X% and of by to this gains net by $XX.X and quarter of income $XX.X global for After year by prior or quarter $X.XX generation compared compared higher the the XX.X% Adjusted STG increased income and research primarily $XX.X $X.XX was gross the XX.X%. expenses for by adjusting higher the the operating million expense. attributable by from of to for to to or share recent million Earnings reflects last travel of unfavorable by AEC revaluation to spending, income reduction company in in from expense, operating of was associated income and in EBITDA compared acquisition quarter rate million of was sales,

quarter of to of last million in $X the by Turning approximately the Machine at at debt in current debt in same just million Clothing. debt, about debt caused during Total capital compared consists to $XX million amounts $XXX $XX primarily resulting the the long-term end to maturities reported year. in from over debt our the QX quarter, balance XXXX cash Capital increased million. $XXX of as which expenditures of reduction and million quarter of was our $XX net sheet The were or end position. long-term million the in increase declined on by expenditures QX higher

to the the forward XXXX, over to second same remains balance segment XX% in Machine of period As the year-to-date. the MC we Compared year, strong. last quarter up X% look the outlook up and for orders Clothing were

to also Euro, previously same half for from to that tailwinds and of are still and guidance $X Clothing, another dollar seeing tailwinds XXXX. although revenue, with increase in in We in foreign our travel still normal From unlikely versus we strong $XXX million, primarily foreign during $XXX back but the of of not Overall, raising million, million are the we of quarter, the prior the currency are we segment's revenue million the expense up level some issued Machine of the we euro the range level the strength in EBITDA the $XXX our a to driven same quarter travel some the in of adjusted delivered almost the see year. the by We almost margins between currency quarter in XX%. margin in the means quarter perspective the recent strong back to saw a MC million. the below segment level are travel $XXX was

in may from pressure we normal. we see balance as additional continue So, the year the return of to some with that the

and some expect to pressures year. raw and pressure through We balance continue the these both of have materials the increased seen logistics expenses input also from

of We continue impact by the possible increases to to production greatest extent down our work cost to through cost these offset improvement the driving continuous initiatives.

has foreign start to expenses currencies bottom we margin currencies of more and by increasing had we of more revenues see rate real driven the the seen headwind as provided strong rising XXXX us as euro, peso do year, we back Brazilian we MC anticipated line those both revenues of in currencies. a currency of those expenses. costs. pressures from than in the of in expected travel from in the At input expenses as and have the we Year-to-date, we we've the exchange than have half have and devaluation those profitability, much recovery overall currency middle year, seeing the benefit by expect not pressures However, also caused since Mexican on the the particularly benefited a where had both

to exchange overall modest As benefit with a a result, year-to-date, us foreign last compared rates have actually EBITDA year. provided same period the adjusted

will However, based foreign currency the in comparable rates, year. on half same current the back of benefit exchange the we not see

a are results segment in We resurgence back cautious in the cases potential of the about on of effects also year. the half COVID

range a EBITDA up $XXX $XXX of million. these in of are the increase segment all prior MC of $XXX result a the we factors to the As $XXX to our revenue increasing adjusted and guidance, million, to from range for guidance million of million

net to were our aided We from we to last we for Absent what adjustment year. strong the representing Composites. delivered consistent QX be contract the trough to quarter, by favorable indicated that pickup, results the had what QX, Engineered with profitability. of long-term Turning down quarter expected a had

segment highest given with be quarter expect of favorable more profitability now in-line will in the QX as we what the quarter delivered on results, and year be QX profitability the adjustment However, we QX net that QX. with expect second the we the to impact this

rate, but $XX program roughly upside that any in the recent in on With be last we all expect revenue XXX possibility the million $XX million year. build year, of Boeing's down full later to the for year. eliminating a program on program from reduction that announcement the still over For XXX generated

year. We be expect with also and still in-line roughly expectations LEAP last revenue prior to to flat

the our are to same guidance to driven be we $XX quarter $XX However, not of revenue, confidence the on has factors, long-term in the million improvements million, expected. order by perspective F-XX range areas, $XXX $XXX revenue given in and several period quarter raising increased million up adjusted other our the raising was and guidance to down profitability compared the in of to profitability us $XXX had $XXX $XX will EBITDA revenue volume a confidence more to to previously we the previous note, range recent AEC million, are positive F-XX see we from be same segment a Overall, million between we slightly the the revenues due that second adjustments up year, million. for last between million. million decline contract that this and full-year to in $XX from prior F-XX while From

$XX are income in company-level $XX prior ranges of $XXX from $XXX $XX $XX end share between increased updating and prior earnings million between increased of of between $X.XX to results, $XXX million performance from $X.XX; the be increased GAAP overcoming and work share including tax increased million, down of million guidance guidance; the of and are by to top challenges expenditures per and $XXX our also $X.XX, EBITDA effective for million, of both for $XXX earnings -- globe. very to million; input Machine the and million. adjusted face market our rate for $XXX like is We million; capital previously-issued $X.XX; of XX%, million we the Both amortization approximately rising that, commercial to $XXX primarily of prior aerospace Composites would I range Overall, of performance million of of $X.XX $XX guidance cost guidance; guidance million, $X.XX prior from of revenue of but from million, from to guidance XX% $XXX per depreciation and recovering prior $X.XX to prior unchanged segments the guidance call across guidance all prior challenges to segments, Tony? to with pleased and open With Engineered and $X.XX testament from the continue hard between strong for questions. employees delivering segments. adjusted a both of Clothing which the of the for to million


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

Eric Ruden

Hi, morning. good

saw this to geography if the just there, Eric environment the order current the bigger the pressures maybe the off, for costs seeing half I input rising Peter have of what just items called Stephen, the guess shift and you're sales a in reason could wondering I'm the that there. the once in surrounding, back looking at start out more actually today. of how Ruden year You to line for you on other and I margin in MC. quarter compares there? the any any with or being Is are driver headwinds particular there causing you mix

Stephen Nolan

Certainly morning, That's order now little the see right -- in of a Eric. strength overall was half. we've back as margin the pressure the Good There of has part which before margins we've lower the that. been the discussed back certainly is we to China in -- at business. from seen, somewhat pressure bit strengthen market on recent particular Asian of

Eric Ruden

of then of input quarter? for to been looking of And what how the kind second at already second what Okay. does seen have you've managing half rising costs, you're in terms year through in compared the the

Stephen Nolan

first the current didn't the of the increasing see we year. the for instance; certainly and half still in costs even secondly, level of full is certainly It first elevated

So, an where see increased we environment we're pressures. in

those the you've seen cost for costs six typically a It's of of the some our the half previously, themselves make year that of from a before There sold cost cost sold. actual environment in materials, and our -- of also we rising rising these about takes gets goods product of as impact then different and of as inventory We goods sales. a is it we've for lag first raw input in to months in of while goes reflect the and sure. some discussed than

Eric Ruden

Appreciate about to XXXX headwind details bit moving like the to that. offsets that's kind as It on the Okay, But destock quick number. the And the for the we around but Maybe a is just the one be right million $XX the inventory for on going year is longer, helpful. there? pieces million moving a F-XX, $XX of pieces destock maybe AEC. talk through maybe just could still a sounds on full talked of if you XXX there. one headwind

Stephen Nolan

because Yes, number but lower the is indicated. decline certainly now we the F-XX right don't I as certainly, face

and So at around the destocking million this about stage. them for the year somewhere $XX is

Eric Ruden

hop Okay, queue. back the thanks. I'll in

Stephen Nolan

Thank you, Eric.


Thank you.

question Khanna Please, the comes got next Cowen. from ahead. with go line Our Gautam of

Gautam Khanna

Hey guys, morning. good

Stephen Nolan

Gau. morning, Good

Andrew Higgins

Gautam. Hi,

Gautam Khanna

Are think couple questions. Machine I it longer-term of a Clothing do EBITDA of up we kind just right revert had annual at Machine we're we down? adjusted thought think continues EBITDA a million Or better paradigm is, will a What in new you framework. for looking when going be do do mean plus? where the business? we're $XXX it to to the Clothing you would than ultimately is

Stephen Nolan

pretty it's Yes, hard.

and internally with it discussion feel hard It's crystal that but a going better what say and operations look really up a have to level well. to it's like gotten been ball does be, We holding a quite have to bit. pretty it's out

going to we're it level. that keep at try So, to

Gautam Khanna

got it. Okay,

$XX you just last that is to the that sort F-XX? the million the actually variance changed on million, quarter? of in just destocking curious, so, And $XX that full -- the changed? what what Secondly, all million goes on F-XX, I'm is $XX

Andrew Higgins

we our so little on in that F-XX and just with more spoke level-load the flow got financials. the last customer, rates Maybe the to order quarter as that did helped can the quarter. we factory, color Lockheed that have expected weren't a We production and improved the actually work then keep we reducing when Stephen we add in with

Stephen Nolan

some the overall, fiber making up range us thing a the really $XX million was some that which from picking fixed-wing work is referenced got the range, We year. automated continue But work, the on about the the we of allowed additional of to to sure the continuation machine. some $XX yes, talked we're that extension not that, skins to driven you F-XX. certainly includes million of had a in contract by of placement And on which Gautam decline earlier that, previously

programs that we what look most no XXX, there at change out expected other months been six from The material notably we there, has ago.

Gautam Khanna

we F-XX change, otherwise the this with in stabilizes effectively XXXX, or planned said at when XXX And see production does might then growth Because we XXXX? prevent the I in XXX their that Okay. out. XXX in their mute think the next year deliveries, differently, and year planned look -- it's range two years

up So, XXXX it's based are [ph]? beyond so that that and think we we in will going seeing pick if be how Lockheed? you to on with the this about just discussions growth flattish problems and Or year, should your

Stephen Nolan

jump conclusion wouldn't yet. I that to just

think XXXX But production mix what got aircraft get as yes, out like. further to new to looks through use. here well a we as little a along our of I figure goes sustainment

So, I program. aircraft the don't future eats think it into

Andrew Higgins

yet. guidance do Yes, would clearly XXXX see any in giving we to expect and in still some aren't clearly XXXX. numbers, don't Gautam. We F-XX in We growth

Gautam Khanna

got Okay, it. Last turn it before I over. one

Just on LEAP program. the

So, balance And on that you all have also up you of inventory, on facilities the you if are no expect XB. the do there sort to talked updates you will? three when Any inventories excess mentioned LEAP. with about ramping and

or to of this program? next you're If gearing you do year year the production could explain on terms what in up just

Andrew Higgins

phase production does. more long going is up aircraft with of That out gearing the AXXXneo fast. production are of new destocking of alignment them. the sort facilities before We and comes XXX the into the program program in obviously

we flat three year. So, up as we but through part growth into It's next look ramping next all year. facilities of the are relatively into this rest year,

Stephen Nolan

engine I at of of we close shipsets year. to inventory from in Yes, have mentioned down quarter. the end Gautam, the the hand That's look, the start XXX of level, the on at roughly terms XXX

shipping, it's for have level, at producing need the because certain weeks is on therefore really zero that. a no at the have nor contractual a to desire the The exact on to nice ships we on year-to-date. which XX to, a depends client, we intention requirement get to been of we're hand. Boeing get rate decline inventory So, number volume, of of I

clear. not It's a it's exactly So, calculation. kind complicated of

to declining wouldn't on looking and have at say, going at that's idea potentially If below give through. let's certainly go then somewhere, but hand get you what burn to to we of point we you're when how it cross, many XXX up an shipsets we

XX. recent the burned through we So, most quarter

Obviously, So, if getting it to several take quarters, it likely ahead but so that and it's down XXX depends of we're us. several they're up think quarters, or Boeing will productions take quarters of all as ready meet all that when but doing of we there one kind you ramping on two still job to us production, at hit to they'll are back get rate to up point. lot what to point Boeing is great a getting what a uncertainty time. in But

Gautam Khanna

guys. much, very you Thank

Stephen Nolan

Gautam. Thank you,

Andrew Higgins



Truist from the Ciarmoli Please, Instructions] question line Thank of [Operator ahead. with comes Securities. Michael go Our you. next

Michael Ciarmoli

of plan costs. for be the about here. I morning. or some thinking on seeing and to what call of guess input Hey the with the the of Thanks on to able one those some but potentially you're most Maybe orders Are you're to you you side, guys, the through productivity Clothing. of attack just going good taking Machine was flexibility maybe think pass what alluded the I seeing is costs? there? just rising

Stephen Nolan

a Yes, question. good it's

a cost. can we It's if longer picture contracts because are mixed to through We that working pass others. are some than see we have

time. up with customers So, time a price of negotiations different different come period at over

next we at that year. looking go We into are as

that. do to work will we So,

to been continuous Our primary inflation improvement drive to cost. approach has offset

we've general, years. that in done Just for

Michael Ciarmoli

color When want got think the some out on you Airbus Got LEAP And it, engineered production. it. take obviously one about specific then to the just on other maybe program, has put where one they side.

XX program potentially guys capacity to you to re-accelerating the are that assuming and from to on and guys potential looking set are How and and the ability path a labor program, the you at MAX everything demand? potential meet Assuming [ph]? machining tooling

Stephen Nolan

I'd the here We've Things well. been facility good have working as job challenge. the that on love over last have a of slower done to year.

production as throughput we're than in ramps XXXX. productivity, even up, improving back improving better we in much were our shape we believe So,

eyes So, facilities. That the yes, thing in is our the and folks hiring people. get be are we're will we how easy keeping as it operators to on

So be XXXX we back have. far a place think a of the put lot in Yes, so equipment that to good. so place, would we great problem capacity have to in in grow, we

Michael Ciarmoli

Got but we've the last the should obviously one, weaker to but you begins got XXXX, see half may going And here? revenue, step-up guidance, second as EPS, exit looks world know I to talk kind then the as recover, it. you're to a board, presumably travel clearly EBITDA. of in you not weakness be half, lift across XXXX but recovers, the second be the we

Andrew Higgins

think as I on already ordered downtime at to little of summer do MC have that favor this the the quarter slowdowns quarter, companies look year. equipment side, typically bit would quarter getting with are in of third and the a a Yes, and first second softer maintenance. we our They

there's best back So, the half of third then run at the well-planned side, on they the Not And second kick year year. level-low and so much commercial our as well slower in our we next in I going we've we the half predictable the year. And on and that's of the AEC go plans. this the of think look second of so programs bit can a into we of on kind tried in execute a rate some destocking at growth side factory particularly then quarter there. where as kind the little to

Stephen Nolan

on factor, unusual the the the America of -- amount million $XX guidance of -- very in at of we the These compression Asia in largely a of We we long-term amount in we've it, amount second attributable a do and and Clothing performance pressure pieces to of those are by back travel margin have FX less pickup the and Machine pressure huge the expensive misspoke back year, that limit and try you lose is million the Asia. at you contract the is the and in year than look back a can't which rising get by it's in in really $XX look reserves, very segment $XX we're limited including factors North of the have puts that this [ph] forth and sight between our if if earlier, The to half of for driven is million at that large environment AEC we margins, pieces. you quarter, some $XX move was $X not the million, and the reduction costs size year. to costs, here transoceanic there That's with look margin for the now seen while you certainly AEC. between back the of risen back to loss fair believe puts average favorable pressure being if shipment way, half very the example, said It's and puts half I for -- I RISE logistics them to but EBITDA out and at pressure million which Yes, significantly. I the of take and input forth, described Europe year-to-date, us the significant going of. we if

factories a mix -- bit be some pressure, the believe around overall time. COVID some factories how region. We've -- also there also of and fair, I down upfront our various of Eric of COVID to just to shut little Some it because our concern necessarily about shift asked is and had markets, outbreaks impacts the just of place not points but our at in in

half the year uncertainty the little there. in is a So, as there of back well

Michael Ciarmoli

Got Thanks guys. a lot, it.

Stephen Nolan

Thank you.


you. Thank

with question ahead. next go of Epstein the of Our America. Please, line comes Ron Bank from

Ronald Epstein

bit? you deliver the looks year. is here might through little Could on that like guys. the a maybe there chance Just that for on the guys? clarify business. Boeing the that does Hey, not it confused Meaning flow XXX of not you the till business any little How a impact a end for of a XXXs while,

Andrew Higgins

the It's communicated line as operations running doing been just of production. customers. don't guess such as before, I our lose it channel to talent, a going. warm a low we've level keep the people to We keep start we've the want the and capability, running that enough with and XXX

things a The us disappointing in from push is it's level. very beyond. to next and recent while be into really to to may probably year the this going a very, Boeing going we low It's little look announcement as not year. affect more So, further right

Stephen Nolan


said we $XX On for revenue year, So let's XXX, six Ron, in somewhere the this say of the expect of in year-to-date, so we've to year. range million delivered four back the half.

firm six have fixed is important than material a is not So, price contract. it's It to lower it that understand going whether a closer, to or effect. it's that,

that some of incremental we revenue, fact be program as margins earnings price margin absorbing just average And sort the ago, in EBITDA lose the we that so are when XXs I about of some is [ph]. months revenue. decremental the of it's fourth six I on absorption. obviously because margins with guidance fixed I our overhead cost in loss that The our lose level fixed on to drop-through that not call provided had the believe going programs of margins the as talked that quarter certainly

level for a what question. impact, even revenue so level. this things increase lower year, change, this that year's closer this an could next had or seeing respect year, that's happens, to in next what anticipated repeat an a see year certainly from And not certainly year, zero open but we If obviously but we're we huge

Ronald Epstein

handle to it. month, Got that? follow guys just up. to set Airbus a If then you And to up maybe AXXXs XX actually one were are get

Stephen Nolan

But competitive our it. not now. It's to environment right brought obviously this have the in on very production headcount need we touched It's facilities. We there's certainly challenge in Bill just to down that Look, moments go labor and volumes up with few Yes. staff as we switch, flipping a operators certainly a needs. achievable. up can decreased. a we our The Not state. hiring CapEx some obviously competitive unmet may meet that but It's need. those in have be we required, that nothing to labor plant the require today, would the some that on but needs would is physical those significant we staffing force level getting just There challenge big our market.

Andrew Higgins

I going think and XX more XX XX, we're near-term plus, as from about for Yes we ready think the that. to

add capital but We have in already. have we our facilities to the people,

Ronald Epstein

you. Thank Super.


we questions at in no this have the remaining And you. queue Thank time.

Andrew Higgins

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