Earnings Analysis October 30, 2026

Albany International Corp ($AIN) Q3 2026 Earnings Analysis: Revenue Up 34% Beating Estimates, Q4 Guidance Maintained

Earnings Report

Revenue: $349.54 million (up 34% YoY, vs. expected $326.12 million) ✅ Beat

EPS (Earnings Per Share): $1.68 (up 13.5% vs. expected $1.48) ✅ Beat

Guidance: Maintained · Q4 revenue $325 million–$335 million, adjusted EPS $0.65–$0.75, effective tax rate outlook lowered from 31.5% to 29.5%

Stock Reaction: +4.0% (based on closing price the day after AMC)

Highlights

Record Revenue: Reached a quarterly high of $349.54 million, beating expectations of $326.12 million by 7.2%.

Adjusted EPS of $1.68: Exceeded the expected $1.48 by $0.20, and GAAP earnings also turned profitable.

Engineered Composites grew 107%: Reached a quarterly high with $179.74 million in revenue, driven by LEAP, 787, and missile programs.

The directions of the two business segments diverged. Machine Clothing, which produces belts for paper mills, saw a decline in revenue, but the aerospace composites segment offset that decrease. Free cash flow was $36.48 million, up from $25.66 million a year ago.

Lowlights

One-time gain of $0.88: Of the $1.68 adjusted EPS, $0.88 resulted from contract changes.

Deteriorating profitability in Machine Clothing: Revenue decreased by 3.0%, and the adjusted EBITDA margin fell to 27.2% from 31.0% a year ago.

Projected Q4 earnings decline: Adjusted EPS of $0.65–$0.75 is significantly lower than the $1.68 in Q3.

The quality of earnings is also worth examining. The company stated during the earnings call that the 36.5% adjusted EBITDA margin for Engineered Composites would be at the 12.5% level if the effect of contract changes were excluded. SG&A expenses were $61.5 million, an 18% increase from a year ago.

What the Company Said

CEO Gunnar Kleveland expressed confidence in the team regarding the Q3 performance led by Engineered Composites and stated that, having completed the strategic review, the focus will shift to missiles, hypersonics, space, and next-generation aircraft. The company maintained its Q4 revenue and adjusted EPS guidance at the levels presented in September, only lowering the effective tax rate outlook.

Market Reaction and Future Key Points

Third-quarter revenue reached a quarterly record high, and Engineered Composites, which had a net loss of $148 million a year ago, turned a net profit of $43.35 million. It was also confirmed that the risk of losses, which had been a drag previously, has decreased due to the CH-53K contract modification.

Whether fourth-quarter revenue falls within the guidance of $325 million to $335 million

Whether Engineered Composites' adjusted EBITDA margin maintains the 12.5% level excluding the effect of the contract modification

Whether outlines for post-2030 targets and new orders for missiles and hypersonic systems emerge at the Investor Day in December

Earnings Call Key Summary

We have summarized the key points from the Albany International earnings call.

[Neutral] Illusion of Composites Margin: The reason the composites segment margin looks good is that it includes significant profits from contract renegotiations. Excluding that effect, actual profitability is noticeably lower. Why UST viewed this as neutral: Actual margins are low when one-time contract profits are excluded. "However, if we strip away all the impacts just mentioned, the EBITDA margin for the composites segment this quarter is approximately at the 12.5% level, excluding those items." (Albany International CFO)

[Bullish] Composites Margin to Rise Further: Due to improved contract terms and new contracts, profitability in the composites segment is expected to reach a higher level starting from the second half of next year. Why UST viewed this as bullish: Improved contract terms will add more margin. "Looking ahead, we expect additional margin expansion starting from the second half of 2027 as the CH-53K contract modification takes effect and new contracts are added to the portfolio." (Albany International CEO)

[Bullish] Missile Revenue Accelerating: As demand for missile components grows, mass production is being moved forward. The company expects related revenue to appear earlier than expected. Why UST viewed this as bullish: Increased demand is accelerating the timing of mass production. "Part of the growth we are seeing now comes primarily from the JASSM and LRASM programs, where significant demand is already emerging, and we are increasing production through new contracts received from customers." (Albany International CEO)

[Bearish] Aftermath of Paper Customer Consolidation: Belt orders have decreased as paper companies merge and reduce facilities. The company expects revenue from this business to decrease slightly this year compared to last year. Why UST viewed this as bearish: Volume decreased due to customer consolidation. "As mentioned earlier, in the Americas, volumes in some markets have decreased due to customer consolidations and facility rationalizations undertaken by paper companies over the past year." (Albany International CFO)