ALBANY INTERNATIONAL CORP /DE/
For the period ended Mar 31, 2026. Filed Apr 30, 2026.
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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.
Mar 31, 2026 · Filed Apr 30, 2026
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 2025-09-30; filed 2025-11-06.
0001628280-25-050028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-looking statementsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-30.
0001628280-26-028744
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 123 previous paragraphs and 102 current paragraphs.
43 unchanged; 24 reworded; 35 added; 54 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 7 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 (35)
Current report
•Assets classified as held for sale may be sold for proceeds lower than currently estimated, or not sold within expected terms or timing;
Current report
•Proposed tariffs that may significantly and adversely impact our results of operations;
Current report
Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, potential changes in U.S. government policy positions, including changes in Department of Defense policies or priorities, geopolitical conflicts and strained international relations, U.S. and non-
Current report
U.S. tax law changes, foreign currency exchange rates, sanctions, tariffs, energy costs and supply, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses.
Current report
The MC segment continues to deliver resilient performance, with several areas performing well despite uneven market dynamics. In Asia, softer demand—across Paper Machine Clothing & Engineered Fabrics—continues to contribute to regional pressure. Packaging and Tissue continue to perform well, supported by growth across most regions. Looking ahead to the remainder of 2026, we expect Packaging and Tissue to remain positive contributors, with sales in Europe and the Americas holding broadly stable, while Asia’s trajectory remains uncertain. Publication grades remained under structural pressure, and the MC segment expects publication grade paper demand to continue declining through 2026 and beyond, offset by growing demand for tissue grade products.
Current report
The MC segment has been a significant generator of operating cash inflows for the Company. The Company seeks to maintain the cash-generating potential of this business by vigorously using our differentiated and technically superior products to reduce our customers’ total cost of operation while improving their paper quality, and by maintaining lower costs through a continued focus on cost-reduction initiatives and strategic investment.
Current report
The AEC segment's strategy is to continue to build on its global brand by leveraging its industry leading performance to drive future growth through technology differentiation. This includes continued investment in AEC's proprietary 3D-woven technology to accelerate solutions that can be offered across a set of broader applications; and by leveraging the AEC's non-3D technology capabilities and capacity, on high-value aerospace (both commercial and defense) applications, and other emerging markets such as space and advanced air mobility ("AAM"). The AEC segment provides longer-term growth potential for the Company as it ramps current production programs and captures new commercial and defense opportunities.
Current report
The AEC segment (including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group owns a 10% noncontrolling interest) supplies a number of customers in the aerospace industry. AEC’s largest aerospace customer is the SAFRAN Group ("SAFRAN") and sales to SAFRAN, through ASC, (consisting primarily of fan blades and cases for CFM International’s LEAP engine) accounted for approximately 15% of the Company’s consolidated Net revenues in 2025. The AEC segment, through ASC, also supplies 3D-woven composite fan cases for the GE9X engine. Outside of ASC, the AEC segment also supplies 3D-woven composite vanes for the F-35 Liftfan.
Current report
The AEC segment's current portfolio of non-3D programs includes components for the CH-53K helicopter, components for the F-35, missile bodies for Lockheed Martin’s JASSM air-to-surface missiles, fuselage components for the Boeing 787 aircraft, vacuum waste tanks for Boeing commercial aircraft and components and structures for other commercial, defense, and space and AAM programs. In 2025, approximately 35% of AEC net revenues were related to U.S. government contracts or programs.
Current report
During the fourth quarter of 2025, we announced that we will commence a strategic review of the Amelia Earhart Drive facility in Salt Lake City. This review is expected to be completed by the end of 2026, and management expects the review to result in a sale of the facility, including the CH-53K contract work. As of December 31, 2025, we determined that the assets and liabilities of this group meet the held-for-sale criteria, and they have been classified as such within our consolidated balance sheets for all periods presented. Upon classification as held for sale, the Company ceased depreciation and amortization of the related long-lived assets in accordance with applicable accounting guidance.
Current report
Net revenues for the three months ended March 31, 2026 increased 7.8% as compared to the three months ended March 31, 2025 primarily due to higher volume in the AEC segment partially offset by softness in the US region and temporary production interruptions in the MC business. Additionally, changes in currency translation rates increased comparative segment net revenues by $9.3 million as compared to the prior year.
Current report
The increase in gross profit for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was driven by the increased sales volume in AEC. Despite the favorable change to gross profit, increased production costs resulting from changes in the product mix within the MC business are the primary driver for the slight gross profit margin decrease to 32.1% from 33.4% for the three months ended March 31, 2026 and March 31, 2025, respectively.
Current report
The following table summarizes Consolidated Operating expenses by classification:
Current report
See the Segment Results of Operations section of this Management Discussion and Analysis of Financial Condition and Results of Operations for significant drivers of Operating income/(loss) for each business segment.
Current report
The MC segment accounted for 53.3% of our consolidated revenues for the three months ended March 31, 2026. A summary of MC's selected financial results is as follows:
Current report
Net revenues for the three months ended March 31, 2026 decreased 5.0% as compared to the three months ended March 31, 2025, driven by reduced sales volume in the US region, primarily due to temporary production interruptions, including scheduled maintenance at certain plants. This decline is slightly offset by a strong performance within the European market, particularly related to the Engineered Fabrics program. Further, changes in currency translation rates had the effect of increasing Net revenues by $6.1 million for the three months ended March 31, 2026, as compared to this period in 2025.
Current report
Gross profit for the three months ended March 31, 2026 decreased by $4.8 million as compared to the three months ended March 31, 2025, primarily driven by the volume declines noted above; with gross profit margin also decreasing slightly from 45.7% to 45.2% in the three months ended March 31, 2025 and 2026, respectively.
Current report
Operating income for the three months ended March 31, 2026 decreased $6.5 million or 16.9% as compared to the three months ended March 31, 2025, primarily as a result of gross profit declines and restructuring costs. Incremental restructuring expenses were primarily a result of manufacturing footprint optimization in connection with the Heimbach acquisition.
Current report
A summary of AEC's selected financial results is as follows:
Current report
Net revenues for the three months ended March 31, 2026 increased 27.4%, primarily driven by higher activity levels on various programs including ASC, GE LEAP Platforms, and B787 Frames, as well as lower unfavorable long-term contract adjustments. Further, changes in currency translation rates had the effect of increasing Net revenues by $3.1 million for the three months ended March 31, 2026, as compared to this period in 2025.
Current report
Gross profit for the three months ended March 31, 2026 increased $8.1 million as compared to the three months ended March 31, 2025, and Gross profit margin increased from 14.5% to 17.0% in the three months ended March 31, 2025 and 2026, respectively. The change was driven primarily by increases in revenue, as well as performance improvements on various programs, resulting in lower unfavorable EAC adjustments.
Current report
Operating income for the three months ended March 31, 2026 increased $7.0 million as compared to the three months ended March 31, 2025, principally due to favorable changes to Gross profit as noted above and the conclusion of restructuring activities from 2025. This was slightly offset by an increase in SG&A expenses of $1.5 million from the prior period, driven by personnel-related costs. Additionally, Technical and research expenses increased $0.9 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, driven by increased consulting costs to assist with continued innovation within the segment.
Current report
Net cash provided by operating activities during the three months ended March 31, 2026 was $5.6 million, compared to $2.1 million in the three months ended March 31, 2025. The increase was primarily driven by improved working capital management primarily driven by favorable cash collection activities at AEC.
Removed paragraphs (54)
Previous report
•Some of the Company’s competitors in the Machine Clothing segment have the capability to make and sell paper machines and papermaking equipment as well as other engineered fabrics;
Previous report
•Machine Clothing and Albany Engineered Composites segments are subject to significant risks related to the potential manufacture and sale of defective or non-conforming products;
Previous report
•Deterioration of global economic conditions could have an adverse impact on the Company's segments and overall business and results of operations;
Previous report
•In the Albany Engineered Composites segment, new and unique risks introduced by the U.S. Government's Department of Defense ("DoD") Cybersecurity Maturity Model Certification ("CMMC") program;
Previous report
•We may be unable to maintain effective systems of internal controls while consolidating dispersed corporate functions to our corporate headquarters in New Hampshire;
Previous report
•Our ability to attract and retain business and employees may depend on our reputation in the marketplace;
Previous report
•The Company's insurance coverage may be inadequate to cover significant risk exposures;
Previous report
•Potential adverse outcomes from current or future patent infringement claims could materially affect our business operations and financial condition;
Previous report
•Costs associated with defending or settling intellectual property disputes could be significant;
Previous report
•Increasing operational and compliance costs associated with increasing environmental, social and governance regulatory requirements, as well as the risk of noncompliance;
Previous report
•Impairment of goodwill and other intangible assets;
Previous report
•Disruptions or challenges arising from the implementation or upgrading of new information technology systems;
Previous report
•Rapid advancements in artificial intelligence may introduce unforeseen regulatory, ethical, and operational challenges;
Previous report
•Integration of AI technologies may involve data privacy, security, and compliance risks;
Previous report
•Evolving legal frameworks around AI and IP protection could impact our competitive position and innovation strategies;
Previous report
•Significant changes in critical estimates and assumptions related to pension and other post-retirement benefit costs and liabilities;
Previous report
•Failure to adequately protect our proprietary technology or intellectual property, which would allow competitors or others to take advantage of our research and development efforts;
Previous report
•Impacts on our stock price and trading volume if securities or industry analysis do not publish research or publish inaccurate or unfavorable research about our business, or by future sales of shares by our existing stockholders and the impact of any changes in cash dividend payments;
Previous report
•The impact of shareholder activism on our operations, strategy, and overall performance; and
Previous report
•In the Albany Engineered Composites segment, our exploration and pursuit of strategic alternatives for our structures assembly business may not be successful.
Previous report
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 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 report
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 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.
Previous 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.
Previous 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.
Previous report
On July 4, 2025, the One Big Beautiful Bill (OBBB) Act, which includes a broad range of tax reform provisions, was signed into law in the United States and we continue to assess its impact.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Showing the first 40 of 54 passages. Open the source sections for the rest.
Reworded paragraphs (24)
Previous wording
•In the Albany Engineered Composites segment, longer-than-expected timeframe for the aerospace industry to utilize existing inventories, unanticipated reductions in demand, delays, technical difficulties, and cancellations in aerospace programs that are expected to generate revenue and drive long-term growth;
Current wording
•In the Albany Engineered Composites segment, longer-than-expected timeframe for the aerospace industry to utilize existing inventories, and unanticipated reductions in demand, delays, technical difficulties or cancellations in aerospace programs that are expected to generate revenue and drive long-term growth;
Previous wording
•Inability of our Machine Clothing or Albany Engineered Composite segments to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as a result of geopolitical crises, natural disaster, public health crises and epidemics/pandemics, regulatory or otherwise);
Current wording
•Inability of our Machine Clothing or Albany Engineered Composites segments to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as a result of geopolitical crises, natural disaster, public health crises and epidemics/pandemics, regulatory or otherwise);
Previous wording
•Changes in geopolitical conditions impacting countries where the Company does or intends to do business, including the effects of the implementation of trade tariffs on imported goods;
Current wording
•Changes in geopolitical conditions impacting countries where the Company does or intends to do business;
Previous wording
•In the Albany Engineered Composites segment, future funding and compliance risks associated with our contracts with government entities, OEM customers or prime contractors on contracts with government entities;
Current wording
•In the Albany Engineered Composites segment, future funding and compliance risks associated with our contracts with government entities, OEM customers or prime contractors on contracts with governmental agencies;
Previous wording
•Costly and disruptive legal disputes and settlements and the Company's ability to provide adequate insurance coverage;
Current wording
•Costly and disruptive legal disputes and settlements;
Previous wording
•Cybersecurity incidents or significant computer system compromises or data breaches to our information technology systems, processes, sites and cloud-based providers;
Current wording
•Cybersecurity incidents or significant computer system compromises or data breaches;
Previous wording
•Failure to adequately integrate acquired companies into our business systems and processes within the expected timeframe or, failure to or delayed realization of anticipated benefits of the acquisition could adversely impact the Company’s business, financial condition and results of operations;
Current wording
•Failure to successfully integrate the Heimbach Group companies into our business systems and processes within the expected timeframe or, failure to or delayed realization of anticipated benefits of the acquisition could adversely impact the Company’s business, financial condition and results of operations; and
Previous wording
MC believes it is well-positioned in key markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, technical product support, and manufacturing technology. Some of the markets in which MC's products are sold are expected to have volume trends that are in line with global GDP. MC continues to face pricing pressures in all markets. Despite these market pressures on revenue growth, the MC segment is expected to improve earnings in the future through cost controls and manufacturing productivity efficiencies.
Current wording
We believe the MC segment is well-positioned in key markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, technical product support, and manufacturing technology. Some of the markets in which MC's products are sold are expected to have volume trends that are in line with global GDP. Despite pricing and demand pressures on revenue growth, the MC segment is expected to improve earnings in the future through technological innovations, manufacturing productivity efficiencies and cost controls.
Previous wording
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 wording
The AEC segment is dependent on global supply chains and has experienced disruptions in recent years. In addition, higher inflation levels increased material costs, higher labor rates and other supplier costs that have impacted the AEC segment’s results of operations. The AEC segment attempts 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. In addition, as the AEC segment ramps-up larger complex programs, such as those associated with the CH-53 program, it continues to face challenges in staffing and training its workforce to support production rates, which has impacted operational productivity, particularly at its Salt Lake City facility, and contributed to increased labor and scrap costs.
Previous wording
The following table summarizes our consolidated Net revenues:
Current wording
The following table summarizes our Consolidated Net revenues and Gross profit:
Previous wording
Selling, General, and Administrative ("SG&A")
Current wording
Consolidated Selling, general and administrative ("SG&A") expenses increased $4.5 million or 8.3% as compared to the three months ended March 31, 2025. The overall changes are primarily the result of higher personnel costs as well as costs incurred related to the strategic review of the Amelia Earhart Drive facility.
Previous 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.
Current wording
Consolidated Technical and research expenses increased by $1.1 million as compared to the three months ended March 31, 2025, primarily due to new business ventures initiatives in 2026.
Previous wording
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 wording
Restructuring expenses, net, of $3.2 million in the three months ended March 31, 2026, increased by $0.7 million compared to $2.5 million in the three months ended March 31, 2025. The change in restructuring actions for the three month period are a result of workforce reductions and global production consolidation activities.
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.
Current wording
Interest expense, net, increased over the prior year primarily due to higher average debt balances as well as a lower 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 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.
Current wording
Other (income)/expense, net, included foreign currency related transactions which resulted in gains of $(2.2) million in the three months ended March 31, 2026, as compared to losses of $3.2 million in the same period last year. These changes were primarily the result of unrealized gains and losses on intercompany loans. In addition, changes in the fair value of derivative instruments included gains of $1.2 million in the three months ended March 31, 2026, as compared to gains of $2.5 million for the three months ended March 31, 2025. 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. See Note 6, Other (Income)/Expense, net, in the Notes to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.
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 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.
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 first quarter of 2026 was 33.1%, compared to 26.6% for the same period in 2025, mainly due to favorable discrete tax adjustments in the prior period. For more information, see Note 7, Income Taxes, in the Notes to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.
Previous 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 50 percent and 33 percent of segment revenue for the three months ended September 30, 2025 and September 30, 2024, respectively.
Current wording
The AEC segment accounted for 46.7% of our consolidated net revenues for the three months ended March 31, 2026. 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 33% and 35% of segment revenue for the three months ended March 31, 2026 and 2025, respectively.
Previous 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.
Current 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.
Previous 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.
Current wording
Net cash used in investing activities included capital expenditures totaling $9.3 million and $15.6 million for the three months ended March 31, 2026 and March 31, 2025, respectively, with continued maintenance capital and capital designed to improve operating efficiencies across the Company.
Previous 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.
Current wording
Net cash provided by financing activities was $13.8 million for the three months ended March 31, 2026 as compared to net cash used of $15.1 million for the three months ended March 31, 2025. During 2026, we had net borrowings of $23.0 million as compared to $94.0 million of borrowings in the prior year, which were offset by share repurchases of $69.2 million. Additionally, the Company has returned cash to shareholders through dividends of $7.9 million in the first three months of 2026.
Previous 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.
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 March 31, 2026, $476.5 million of borrowings were outstanding under our $800 million unsecured committed Amended Credit Agreement.
Previous 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.
Current wording
As of March 31, 2026, we had cash and cash equivalents of $122.6 million and borrowing capacity under our Amended Credit Agreement of $323.5 million, for a total liquidity of approximately $446.0 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.
Previous 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.
Current wording
As of March 31, 2026, $101.2 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$158.9 million, as of March 31, 2026 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
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.
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 $11 million. There were no material changes in the Company’s off-balance sheet arrangements during the first quarter of 2026.
Rearranged previous paragraphs (2)
Previous report — wording carried 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 37 percent and 40 percent of segment revenue for the first nine months of 2025 and 2024, respectively.
Previous report — wording carried 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.