Albany (NYSE:AIN) Misses Q1 Revenue Estimates

Industrial equipment and engineered products manufacturer Albany (NYSE:AIN) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 7.8% year on year to $288.8 million. The company’s full-year revenue guidance of $1.22 billion at the midpoint came in 1.4% below analysts’ estimates. Its non-GAAP profit of $0.73 per share was 17.4% above analysts’ consensus estimates.

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"Overall, I am pleased to report that our businesses are executing to the plan that we laid out at the start of this transition year. Our new business segment leaders are performing well as they restructure and strengthen their respective operations. Machine Clothing continues to deliver consistent strong results, and the integration of Heimbach is proceeding to plan. We expect to see the benefits of the Heimbach integration efforts accelerate into the second half of this year as our actions take effect. AEC is executing well on its current portfolio of programs, and the segment continues to win new business. The team is making progress on process improvements on our CH-53K and Gulfstream programs, and we had lower EAC adjustments in the quarter," said President and CEO, Gunnar Kleveland.

Company Overview

Founded in 1895, Albany (NYSE:AIN) is a global textiles and materials processing company, specializing in machine clothing for paper mills and engineered composite structures for aerospace and other industries.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Albany’s 3% annualized revenue growth over the last five years was sluggish. This was below our standard for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Albany’s annualized revenue growth of 6.7% over the last two years is above its five-year trend, but we were still disappointed by the results.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Machine Clothing and Engineered Composites, which are 60.5% and 39.5% of revenue. Over the last two years, Albany’s Machine Clothing revenue (paper manufacturing belts) averaged 10.7% year-on-year growth while its Engineered Composites revenue (aerospace components) averaged 2.3% growth.

This quarter, Albany missed Wall Street’s estimates and reported a rather uninspiring 7.8% year-on-year revenue decline, generating $288.8 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 2.4% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

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Operating Margin

Albany has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 15.4%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Albany’s operating margin decreased by 9 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q1, Albany generated an operating profit margin of 9.8%, down 2.7 percentage points year on year. Since Albany’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Albany, its EPS declined by 5.6% annually over the last five years while its revenue grew by 3%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Albany’s earnings to better understand the drivers of its performance. As we mentioned earlier, Albany’s operating margin declined by 9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Albany, its two-year annual EPS declines of 12% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q1, Albany reported EPS at $0.73, down from $0.90 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Albany’s Q1 Results

We enjoyed seeing Albany beat analysts’ EPS expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its revenue missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $65.60 immediately after reporting.

Albany’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.