ALBANY INTERNATIONAL CORP /DE/
For the period ended Sep 30, 2025. Filed Nov 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 6, 2025
AIN$67.28+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-07-30.
0000819793-25-000032
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-looking statementsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001628280-25-050028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-looking statementsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 151 previous paragraphs and 123 current paragraphs.
72 unchanged; 20 reworded; 29 added; 57 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 13 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
•In the Albany Engineered Composites segment, our exploration and pursuit of strategic alternatives for our structures assembly business may not be successful.
Current report
The AEC segment continues to ramp-up production levels on commercial, defense, and space programs. During the third quarter of 2025, we recognized a $147.3 million change in estimated profitability associated with the performance of the CH-53K contracts, inclusive of a loss reserve adjustment of $98.0 million, as a result of greater than planned labor content and higher material inputs caused by inflation estimated for the duration of the contract. This adjustment represents the estimated full loss anticipated over the remaining eight year life of the program, and we are engaging with our CH-53K customer to discuss potential solutions. In spite of these ongoing discussions, subsequent to the end of the third quarter, we announced that we will commence exploration of alternatives to exit the structures assembly portion of our business, including the CH-53K contract work. In addition to these events, we also updated our labor, material input and scrap assumptions along with estimates of certain other long-term programs that resulted in additional negative cumulative changes in estimated profitability.
Current report
On October 28, 2025, we announced that we are exploring strategic alternatives for our structures assembly business. These alternatives include a potential sale of all or a part of the business at our Salt Lake City facility and discussions with our customer about contract modifications. Our exploration of strategic alternatives, including a sale or contract modification, may not result in the identification or consummation of any transaction or contract modification. In addition, the process of exploring strategic and other alternatives may be disruptive to our operations and we may incur substantial expenses associated with identifying and evaluating potential strategic or other alternatives. Any potential transaction and the related valuation would be dependent upon a number of factors that may be beyond our control, including, among other factors, potential counterparties, market conditions and industry trends. Any potential contract modifications would be dependent on negotiations with our customer and other factors that we cannot control. Further, speculation regarding any developments related to the strategic alternatives process could cause our stock price to fluctuate significantly. Failure to identify and pursue these strategic alternatives could have a material adverse effect on our business, financial condition, and results of operations.
Current report
AEC believes it has the ability to mitigate raw material and supplier costs by entering into long-term supply agreements. However, in some cases, higher raw material and supplier costs adversely impacted certain firm-fixed price programs resulting in lower program gross margins. The AEC segment may continue to experience similar issues in further quarters as it ramps up production levels on these key programs.
Current report
The following table summarizes our consolidated Net revenues:
Current report
Net revenues for the three months ended September 30, 2025 decreased 12.4% compared to the three months ended September 30, 2024, MC's net revenues declined as a result of reduced demand in Asia, most significantly in China, while sales in all other regions remained stable. Net revenues declines in AEC were driven by revenue adjustments to the CH-53K program based on our long-term contract estimates, partially offset by higher activity levels on the LEAP program.
Current report
Net revenues for the nine months ended September 30, 2025 decreased 8.7% as compared to the nine months ended September 30, 2024, MC's net revenues declined as a result of reduced demand in Asia, most significantly in China, an unplanned equipment downtime in one of our production facilities. Further, full-year sales declines occurred in AEC, as a result of $54.3 million of adjustments to the CH-53K program based on our long-term contract estimates. Changes in currency translation rates decreased comparative segment net revenues by $4.0 million as compared to the prior year. AEC revenue declines are partially offset by higher activity levels on the LEAP program.
Current report
Consolidated SG&A expenses decreased $0.2 million or 0.4% as compared to the three months ended September 30, 2024, primarily due to increased integration costs incurred in the prior year associated with the Heimbach acquisition.
Current report
Consolidated SG&A expenses increased $1.8 million or 1.1% as compared to the nine months ended September 30, 2024, primarily resulting from increases in global information services costs to improve security and employee productivity.
Current report
Restructuring expense of $3.2 million in the three months ended September 30, 2025 were $0.9 million higher than expenses of $2.3 million in the three months ended September 30, 2024. Restructuring actions for the three month period are primarily a result of workforce reorganizational costs.
Current report
Restructuring expense, net, of $9.9 million in the nine months ended September 30, 2025, increased by $3.3 million compared to $6.6 million in the nine months ended September 30, 2024. The change in restructuring actions for the nine month period are a result of workforce reductions, reorganizational costs, fixed asset impairments, and inventory write-off costs, offset by a pension curtailment gain.
Current report
For the three months ended September 30, 2025, MC segment net revenues decreased $8.1 million or 4.4% as compared to the three months ended September 30, 2024, driven by reduced demand in Asia, particularly in China while all other regions remained stable. In addition, changes in currency translation rates had the effect of decreasing segment net revenues $2.6 million.
Current report
For the three months ended September 30, 2025, MC segment gross profit decreased by $6.9 million, primarily the result of lower revenues during the third quarter of 2025 as the gross profit margin decreased to 46.9% compared to 48.6% for the three months ended September 30, 2024. Gross margin was primarily impacted by lower Asia sales volume partially offset by the benefits of ongoing footprint optimization initiatives. Going forward, we will continue to execute our plan of rationalizing production across our network of facilities in order to realize productivity movements.
Current report
For the nine months ended September 30, 2025, MC segment net revenues decreased $31.3 million or 5.6% as compared to the nine months ended September 30, 2024, driven by reduced demand in Asia, particularly in China, and an unplanned equipment downtime in one of our production facilities. In addition, changes in currency translation rates decreased comparative segment net revenues by $3.1 million as compared to the prior year.
Current report
For the nine months ended September 30, 2025, MC segment gross profit decreased by $16.7 million, primarily the result of lower revenues during the nine months of 2025 and unplanned equipment downtime in one of our facilities.
Current report
For the three months ended September 30, 2025, segment gross profit decreased $133.5 million as compared to the three months ended September 30, 2024. This decrease in gross profit was driven primarily by approximately $147.3 million of increased life of contract cost assumptions surrounding the estimated profitability of our CH-53K long-term contracts. For the three months ended September 30, 2024, adjustments in the estimated profitability of long-term contracts decreased segment gross profit $13.3 million. Subsequent to quarter end, the Company announced that it has initiated a strategic review of its structures assembly business, including the CH-53K program and its production site. The strategic review may include a potential sale of all or part of the site.
Current report
For the nine months ended September 30, 2025, segment net revenues decreased $50.8 million or 13.3% as compared to the nine months ended September 30, 2024. This decrease is primarily driven by $54.3 million of revenue adjustments to the CH-53K program based on our long-term contract estimates. These reductions are partially offset by higher activity levels in the LEAP program.
Current report
Segment Operating Expenses, Segment Operating Income/(loss):
Current report
For the three months ended September 30, 2025, segment operating income decreased as compared to the three months ended September 30, 2024, decreasing $4.5 million or 9.5%. The weaker segment gross profit performance was offset by technical and research expenses and SG&A expenses decreasing by $2.1 million, primarily a result of cost containment and the realization of Heimbach integration synergies.
Current report
For the nine months ended September 30, 2025, segment operating income decreased $22.5 million as compared to the first nine months of 2024. The weaker segment operating income performance was impacted by lower gross profit in the current year, as well as general inflationary pressures. This change was slightly offset by a decrease in Heimbach integration costs that occurred in the first nine months of 2024, as this did not recur in 2025.
Current report
Albany Engineered Composites ("AEC") Segment
Current report
For the three months ended September 30, 2025, segment operating income decreased $133.7 million, principally due to contract loss reserve charges associated with the CH-53K program.
Current report
For the nine months ended September 30, 2025, segment operating income/(loss) decreased $145.4 million, principally due to reduced segment gross profit as noted above, offset by a decrease in compensation and personnel-related SG&A expenses and lower restructuring charges.
Removed paragraphs (57)
Previous report
The AEC segment continues to ramp-up production levels on commercial, defense, and space programs. In the first six months of 2025, the Company updated its labor, material input and scrap assumptions and estimates of certain long-term programs that resulted in a negative cumulative change in estimated profitability in the amount of $7.2 million for the second quarter of 2025 and $14.2 million for the six months June 30, 2025. The negative cumulative change in profitability during the second quarter of 2025 was primarily driven by a few large complex programs, including $8.1 million for various CH-53K programs, $0.8 million on our F-35 program, offset by a gain of $1.6 million on our Gulfstream program and $0.1 million, net gain on all other programs. The negative cumulative change in profitability during the six months ended June 2025 was driven by $10.1 million for various CH-53K programs, $2.1 million on our F-35 program, and $2.0 million, net on all other programs.
Previous report
The following table summarizes our Net revenues by business segment:
Previous report
The following tables provide a comparison of 2025 Net revenues, excluding currency translation effects, to 2024 Net revenues:
Previous report
Net revenues for the three months ended June 30, 2025 decreased 6.2% compared to the three months ended June 30, 2024, primarily driven by reduced demand in Asia, an unplanned equipment downtime in one of our production facilities within MC and a decrease in Net revenues in AEC due to a reduction in certain commercial and space programs.
Previous report
MC's Net revenues for the three months ended June 30, 2025 decreased 6.5% compared to the three months ended June 30, 2024 primarily driven by reduced demand in Asia and an unplanned equipment downtime in one of our production facilities. In addition, changes in currency translation rates had the effect of decreasing Net revenues $3.0 million.
Previous report
AEC's Net revenues for the three months ended June 30, 2025 decreased 5.7% compared to the three months ended June 30, 2024, primarily driven by reductions on certain commercial and space programs, which was partially offset by higher revenues on CH-53K and other programs. Changes in currency translation rates had the effect of decreasing Net revenues $0.9 million.
Previous report
Net revenues for the six months ended June 30, 2025 decreased 7.0% as compared to the six months ended June 30, 2024, primarily driven by reduced demand in Asia, an unplanned equipment downtime in one of our production facilities within MC and a decrease in Net revenues in AEC due to a reduction in certain commercial and space programs.
Previous report
MC's Net revenues for the six months ended June 30, 2025 decreased 6.1% as compared to the six months ended June 30, 2024, primarily driven by reduced demand in Asia and an unplanned equipment downtime in one of our production facilities. In addition, changes in currency translation rates had the effect of decreasing Net revenues $0.5 million.
Previous report
AEC's Net revenues for the six months ended June 30, 2025 decreased 8.2% as compared to the six months ended June 30, 2024, primarily driven by reductions on certain commercial and space programs, which was partially offset by higher revenues on CH-53K and other programs. Changes in currency translation rates had the effect of decreasing Net revenues $0.4 million.
Previous report
The following table summarizes Gross profit by business segment:
Previous report
•MC's gross profit margin increased slightly from 45.9% in 2024 to 46.3% in 2025.
Previous report
•AEC's gross profit margin decreased from 17.0% in 2024 to 10.5% in 2025, driven primarily by cumulative changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025, as compared to a decrease of $5.0 million in 2024.
Previous report
•MC's gross profit margin has increased slightly over the the prior year, from 45.8% in 2024 to 46.0% in 2025.
Previous report
•AEC's gross profit margin decreased from 17.8% in 2024 to 12.4% in 2025, driven primarily by cumulative changes in the estimated profitability of long-term contracts, which decreased gross profit by $14.2 million in 2025, as compared to a decrease of $7.6 million during the six months ended June 30, 2024.
Previous report
The following table summarizes SG&A expenses by business segment:
Previous report
Consolidated SG&A expenses increased 5.4% as compared to the three months ended June 30, 2024, as a percentage of Net revenues, SG&A expenses increased from 16.7% in 2024 to 18.8% in 2025.
Previous report
•MC SG&A expenses increased $5.1 million as compared to the three months ended June 30, 2024, primarily resulting from increases in unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies (changes in currency translation rates), consulting costs and impacts of general inflationary pressures, offset by lower personnel-related costs.
Previous report
•In AEC, SG&A expenses decreased $1.0 million, compared to the three months ended June 30, 2024 primarily driven by lower incentive compensation and personnel-related costs.
Previous report
•Corporate SG&A expenses decreased $1.1 million, compared to the three months ended June 30, 2024 principally due to lower incentive compensation and personnel-related costs, offset by a increase in professional fees.
Previous report
Consolidated SG&A expenses increased 1.8% as compared to the six months ended June 30, 2024, as a percentage of Net revenues, SG&A expenses increased from 17.1% in 2024 to 18.7% in 2025.
Previous report
•MC SG&A expenses increased $5.2 million as compared to the six months ended June 30, 2024, primarily resulting from increases in unrealized gains and losses arising from the remeasurement of monetary assets and liabilities denominated in non-functional currencies (changes in currency translation rates), consulting costs and impacts of general inflationary pressures, offset by lower personnel-related costs.
Previous report
•In AEC, SG&A expenses decreased $2.4 million, compared to the six months ended June 30, 2024 primarily driven by lower incentive compensation and personnel-related costs.
Previous report
•Corporate SG&A expenses decreased marginally $0.8 million, compared to the six months ended June 30, 2024 principally due lower incentive compensation and personnel-related costs, offset by a increase in professional fees and information technology costs.
Previous report
The following table summarizes technical and research expenses by business segment:
Previous report
Consolidated Technical and research expenses increased 5.8% as compared to the three months ended June 30, 2024 and as a percentage of Net revenues increased from 3.6% in 2024 to 4.0% in 2025.
Previous report
•MC Technical and research expenses decreased by $0.1 million as compared to the three months ended June 30, 2024 due to higher personnel and development related costs, offset by allocated costs to Corporate.
Previous report
•AEC Technical and research expenses decreased by $0.2 million as compared to the three months ended June 30, 2024, due to increases in research material and labor costs, offset by allocated costs to Corporate.
Previous report
Consolidated Technical and research expenses remained relatively flat and increased by 0.3% compared to the six months ended June 30, 2024 and as a percentage of Net revenues increased from 3.8% in 2024 to 4.1% in 2025.
Previous report
•MC Technical and research expenses decreased $0.4 million as compared to the six months ended June 30, 2024 primarily due to increased allocated costs to Corporate.
Previous report
•AEC Technical and research expenses decreased $1.7 million as compared to the six months ended June 30, 2024, due to decreases in research material and labor costs and increased allocated costs to Corporate.
Previous report
•Corporate expenses in the six months ended June 30, 2025 relate primarily to new business ventures initiatives and allocated costs from MC and AEC in 2025.
Previous report
In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, Operating income was affected by Restructuring expense, net, of $4.2 million in the three months ended June 30, 2025, compared to $2.1 million in the three months ended June 30, 2024; and $6.7 million in the six months ended June 30, 2025, compared to $4.3 million in the six months ended June 30, 2024.
Previous report
The following table summarizes Restructuring expenses, net by business segment:
Previous report
At MC, restructuring actions were taken in 2025 and 2024 to cease operations at five facilities.
Previous report
For the three month ended June 30, 2025, these actions related to workforce reductions. For the three month ended June 30, 2024, these actions related to workforce reductions and inventory write-off costs.
Previous report
For the six month ended June 30, 2025, these actions related to workforce reductions, fixed asset impairments and related costs and inventory write-off costs of $6.1 million offset by a $1.8 million pension curtailment gain. For the six month ended June 30, 2024 these actions related to workforce reductions and write-off of inventory of $1.1 million.
Previous report
At AEC, restructuring activities were related to reorganizational costs as well as a reduction in the workforce within AEC, which resulted in restructuring expenses of $0.5 million for the three months ended June 30, 2025 and $0.9 million for the three months ended June 30, 2024. For the six months ended June 30, 2025 and June 30, 2024, restructuring expenses were related to reductions in workforce and totaled $1.7 million and $3.1 million, respectively.
Previous report
The following table summarizes operating income/(loss) by business segment:
Showing the first 40 of 57 passages. Open the source sections for the rest.
Reworded paragraphs (20)
Previous wording
In addition, AEC has long-term contracts in which the selling price is fixed. In accounting for those contracts, we estimate the profit margin expected at the completion of the contract and recognize a pro-rata share of that profit during the course of the contract using a cost-to-cost approach. Changes in estimated contract profitability will affect revenue and gross profit when the change occurs, which could have a significant favorable or unfavorable effect on revenue and gross profit in any reporting period. For contracts with anticipated losses, a provision for the entire amount of the estimated remaining loss is charged against income in the period in which the loss becomes known. Contract losses are determined considering all direct and indirect contract costs, exclusive of any selling, general or administrative cost allocations, which are treated as period expenses. Expected losses on projects include losses on contract options that are probable of exercise, excluding profitable options that often follow.
Current wording
AEC has long-term contracts in which the selling price is fixed. In accounting for those contracts, we estimate the profit margin expected at the completion of the contract and recognize a pro-rata share of that profit during the course of the contract using a cost-to-cost approach. Changes in estimated contract profitability will affect revenue and gross profit when a change occurs, which could have a favorable or unfavorable effect on revenue and gross profit in any reporting period. For contracts with anticipated losses, a provision for the entire amount of the estimated remaining loss is charged against income in the period in which the loss becomes known. Contract losses are determined considering all direct and indirect contract costs, exclusive of any selling, general or administrative cost allocations, which are treated as period expenses. Expected losses on projects include losses on contract options that are probable of exercise, excluding profitable options that often follow.
Previous wording
Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024. The Annual Report on Form 10-K, along with the Company's other filings, can be found on the Securities and Exchange Commission's website, www.sec.gov, as well as on the Company's website: www.albint.com.
Current wording
Also, please refer to the Business Environment Overview and Trends in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024. The Annual Report on Form 10-K, along with the Company's other filings, can be found on the Securities and Exchange Commission's website, www.sec.gov, as well as on the Company's website: www.albint.com.
Previous wording
The MC segment expects revenues to continue to decline for publication grade paper and continued softness in Asia into 2025 and beyond, however, we see an offsetting effect due to growth in demand across Europe for packaging, and to a lesser degree, tissue grade products. The MC segment's backlog continues to be stable.
Current wording
The MC segment expects revenues to continue to decline for publication grade paper and continued softness in Asia, most significantly in China, in the remainder of 2025 and beyond, however, we see an offsetting effect due to growth in demand across Europe for packaging, and to a lesser degree, tissue grade products. The MC segment's backlog continues to be stable through the third quarter of 2025.
Previous wording
The decrease in gross profit for the three months ended June 30,2025, as compared to the three months ended June 30, 2024, was driven by increased cost assumptions that adjusted the expected profitability of certain long-term contracts in the AEC segment. Gross profit as a percentage of revenues by segment was as follows:
Current wording
The decrease in gross profit for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, was driven by increased cost assumptions that adjusted the expected profitability of the AEC segment's CH-53K long-term contracts and resulted in the recording of an expected loss provision of $147.3 million.
Previous wording
The decrease in gross profit for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was driven by increased cost assumptions that adjusted the expected profitability of certain long-term contracts in the AEC segment. Gross profit as a percentage of revenues by segment was as follows:
Current wording
The decrease in gross profit for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was driven by increased cost assumptions that adjusted the expected profitability of certain long-term contracts in the AEC segment resulted in the recording of an expected loss provision of $157.6 million.
Previous wording
•Corporate expenses in the three months ended June 30, 2025 relate primarily to new business ventures initiatives and allocated costs from MC and AEC in 2025.
Current wording
Consolidated Technical and research expenses increased by $0.6 million as compared to the three and nine months ended September 30, 2024, primarily due to new business ventures initiatives in 2025.
Previous wording
Interest expense, net, increased over the prior year primarily due to higher average debt balances, in part offset by a larger amount of interest income earned on cash equivalents during the current year. See Note 15. Financial Instruments in the Notes to Consolidated Financial Statements for further discussion of borrowings and interest rates.
Current wording
Interest expense, net, increased over the prior year primarily due to higher average debt balances, in part offset by a larger amount of interest income earned on cash equivalents during the current year.
Previous wording
Other (income)/expense, net, included foreign currency related transactions, which resulted in losses of $5.7 million and $8.8 million in the three and six months ended June 30, 2025, as compared to losses of $0.2 million and gains of $1.1 million in the same period last year. These changes were the result of unrealized losses on intercompany loans. In addition, changes in the fair value of derivative instruments included gains of $0.7 million and $3.3 million in the three and six months ended March 31, 2025, as compared to losses of $4.4 million and $4.3 million for the three and six months ended June 30, 2024, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. Other (income)/expense, net, also included net gains of $1.6 million from the divestiture of Arcari during the three and six months ended June 30, 2025 along with amortization of debt issuance costs, and other non-operating expenses.
Current wording
Other (income)/expense, net, included foreign currency related transactions which resulted in gains of $1.1 million and losses of $7.8 million in the three and nine months ended September 30, 2025, as compared to losses of $1.8 million and $0.7 million in the same periods last year. These changes were primarily the result of unrealized losses and gains on intercompany loans. In addition, changes in the fair value of derivative instruments included gains of $0.1 million and $3.4 million in the three and nine months ended September 30, 2025, as compared to gains of $0.5 million and losses of $3.8 million for the three and nine months ended September 30, 2024. Unrealized gains and losses on both derivative instruments and intercompany loans were driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. Other (income)/expense, net also included a gain of $1.6 million from the divestiture of Arcari during the nine months ended September 30, 2025.
Previous wording
The tax rate is affected by recurring items, such as the income tax rate in the U.S. and non-U.S. jurisdictions and the mix of pre-tax income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign pre-tax earnings, and by discrete items that may occur in any given year but are not consistent from year to year. The Company’s effective tax rate for the second quarter of 2025 was 31.3%, higher compared to 27.9% for the same period in 2024, mainly due to favorable discrete tax adjustments in the prior period exceeding favorable discrete tax adjustments in the current period. For more information, see Note 7, Income Taxes, in the Notes to the Consolidated Financial Statements.
Current wording
The tax rate is affected by recurring items, such as the income tax rate in the U.S. and non-U.S. jurisdictions and the mix of pre-tax income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign pre-tax earnings, and by discrete items that may occur in any given year but are not consistent from year to year. The Company’s effective tax rate for the third quarter of 2025 was 20.0%, compared to 6.6% for the same period in 2024, mainly due to favorable discrete tax adjustments in the prior period exceeding favorable discrete tax adjustments in the current period. For more information, see Note 7, Income Taxes, in the Notes to the Consolidated Financial Statements.
Previous wording
For the three months ended June 30, 2025, Net revenues decreased $7.9 million or 5.7% as compared to the three months ended June 30, 2024. This decrease is primarily driven by reductions on certain commercial and space programs, which was partially offset by higher revenues on CH-53K and other programs. Changes in currency translation rates had the effect of decreasing Net revenues $0.9 million.
Current wording
For the three months ended September 30, 2025, segment net revenues decreased $28.9 million or 25.0% as compared to the three months ended September 30, 2024. This decrease is primarily driven by $46.0 million of revenue adjustments to the CH-53K program based on our long-term contract estimates. These reductions are partially offset by higher activity levels in the LEAP program.
Previous wording
AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 34 percent and 40 percent of segment revenue for the first six months of 2025 and 2024, respectively.
Current wording
AEC is party to contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 37 percent and 40 percent of segment revenue for the first nine months of 2025 and 2024, respectively.
Previous wording
For the three months ended June 30, 2025, gross profit decreased $9.8 million as compared to the three months ended June 30, 2024, and as a percentage of revenues decreased from 17.0% in 2024 to 10.5% in 2025. This decrease in gross profit was driven primarily by changes in the estimated profitability of long-term contracts, which decreased gross profit by $7.0 million in 2025 due to increased cost assumptions. For the three months ended June 30, 2024, adjustments in the estimated profitability of long-term contracts decreased gross profit $5.0 million.
Current wording
For the nine months ended September 30, 2025, segment gross profit decreased $150.7 million as compared to the nine months ended September 30, 2024. This decrease in gross profit was driven primarily by changes in the estimated profitability of our CH-53K and other long-term contracts, including the recognition of an estimated loss reserve on CH-53K, which decreased gross profit by $157.6 million and $13.3 million in 2025 and 2024, respectively due to increased material, labor, and overhead cost assumptions. For the nine months ended September 30, 2024, adjustments in the estimated profitability of long-term contracts decreased segment gross profit $28.3 million.
Previous wording
Net cash provided by operating activities during the six months ended June 30, 2025 was $34.8 million, compared to $93.0 million in the six months ended June 30, 2024. The decrease was primarily driven by a reduction in the gross profit of both segments, resulting in a lower net income compared to the first six months of 2024 and an increase in working capital.
Current wording
Net cash provided by operating activities during the nine months ended September 30, 2025 was $78.8 million, compared to $140.0 million in the nine months ended September 30, 2024. The decrease was primarily driven by a reduction in the gross profit of both segments along with an inventory build in AEC early in the year in anticipation of production ramp. Non-cash adjustments to the CH-53K programs, including loss reserves of $98.0 million, are a component of other operating items within net cash provided by operating activities.
Previous wording
Net cash used in investing activities included capital expenditures totaling $30.5 million and $46.6 million for the first six months ended June 30, 2025 and June 30, 2024, respectively, with investments focused on aerospace program support, continued maintenance capex and capital designed to improve operating efficiencies across the Company.
Current wording
Net cash used in investing activities included capital expenditures totaling $48.8 million and $62.1 million for the nine months ended September 30, 2025 and September 30, 2024, respectively, with investments focused on aerospace program support, continued maintenance capex and capital designed to improve operating efficiencies across the Company.
Previous wording
Net cash used in financing activities was $24.5 million for the six months ended June 30, 2025 as compared to net cash used of $98.2 million for the six months ended June 30, 2024. During 2025 we had net borrowings of $113.9 million as compared to net repayments of $79.6 million in the prior year. Additionally, the Company repurchased $120.4 million of share repurchases and paid dividends of $16.7 million in the first six months of 2025.
Current wording
Net cash used in financing activities was $48.3 million for the nine months ended September 30, 2025 as compared to net cash used of $121.8 million for the nine months ended September 30, 2024. During 2025, we had net borrowings of $150.0 million as compared to net repayments of $94.6 million in the prior year. Additionally, the Company repurchased $171.0 million of share repurchases and paid dividends of $24.7 million in the first nine months of 2025.
Previous wording
We finance our business activities principally with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below.
Current wording
We finance our business activities principally with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below. As of September 30, 2025, $480.6 million of borrowings were outstanding under our $800 million unsecured committed Amended Credit Agreement.
Previous wording
As of June 30, 2025, we had cash and cash equivalents of $106.7 million and borrowing capacity under our Amended Credit Agreement of $355.3 million, for a total liquidity of approximately $462.0 million. We believe cash flows from operations and the availability of funds under our Amended Credit Agreement will be adequate to fund our operations and business needs over the next twelve months. For more information on credit agreements, see Note 15. Financial Instruments in the Notes to Consolidated Financial Statements.
Current wording
As of September 30, 2025, we had cash and cash equivalents of $108.3 million and borrowing capacity under our Amended Credit Agreement of $319.4 million, for a total liquidity of approximately $427.7 million. We believe cash flows from operations and the availability of funds under our Amended Credit Agreement will be adequate to fund our operations and business needs over the next twelve months.
Previous wording
As of June 30, 2025, $85.3 million of our total cash and cash equivalents were held by non-U.S. subsidiaries. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were in excess of $140.0 million, as of June 30, 2025 and are intended to remain indefinitely invested in foreign operations. Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there can be no assurance that we will be able to cost effectively repatriate funds in the future. Repatriating such cash from certain jurisdictions, which is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes.
Current wording
were in excess of$140.0 million, as of September 30, 2025 and are intended to remain indefinitely invested in foreign operations. Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate. While we have been successful in such endeavor to date, there can be no assurance that we will be able to cost effectively repatriate funds in the future. Repatriating such cash from certain jurisdictions, which is currently considered to be indefinitely reinvested in foreign operations, may also result in additional taxes.
Previous wording
We have also returned cash to shareholders through dividends and share repurchases. During the six months ended June 30, 2025, we paid $16.7 million in dividends and repurchased 1,670,858 shares for a total cost including excise taxes and fees of $120.4 million.
Current wording
We have also returned cash to shareholders through dividends and share repurchases. During the nine months ended September 30, 2025, we paid $24.7 million in dividends and repurchased 2,480,769 shares for a total cost of $171.0 million, including excise taxes and fees.
Previous wording
The Company is party to certain off-balance sheet arrangements, including certain guarantees. The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $10 million. There were no material changes in the Company’s off-balance sheet arrangements during the second quarter of 2025.
Current wording
The Company is party to certain off-balance sheet arrangements, including certain guarantees. The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $10 million. There were no material changes in the Company’s off-balance sheet arrangements during the third quarter of 2025.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
AEC is party to contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement. Revenue earned under these arrangements accounted for approximately 50 percent and 33 percent of segment revenue for the three months ended September 30, 2025 and September 30, 2024, respectively.
Current report — wording carried from elsewhere
As of September 30, 2025, $88.7 million of our total cash and cash equivalents were held by non-U.S. subsidiaries. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Also, please refer to the Business Environment Overview and Trends in the Management's Discussion and Analysis of
Previous report — wording carried elsewhere
Under our $800 million unsecured committed Amended Credit Agreement, $444.7 million of borrowings were outstanding as of June 30, 2025.