Albany International Anticipates Charge for Revisions in Estimated Contract Profitability

July 17 2017

Albany International Corp. expects to record a second-quarter pre-tax charge of approximately $16 million associated with revisions in the estimated profitability of two contracts in the Albany Engineered Composites segment (AEC). The charge is principally due to second-quarter 2017 downward revisions of estimated customer demand for the components manufactured by AEC related to the two contracts.

AEC has a contract for the manufacture of composite components for the Rolls-Royce BR 725 engine, which powers Gulfstream’s G-650 business jet. The contract obligates AEC to supply these components for the life of the BR 725 program. During the second quarter of 2017, the Company revised its estimate of the profitability of this contract and determined that an additional charge of approximately $10 million should be recorded as a provision for anticipated losses through the end of the program.

AEC’s subsidiary, Albany Aerospace Composites LLC, has a contract for the manufacture of composite struts for the Airbus A380, under which it is obligated to supply composite wing box struts through 2020 and floor beam struts through 2023. During the second quarter of 2017, the Company revised its estimate of the profitability of this contract and determined that a charge of approximately $6 million should be recorded as a provision for anticipated losses through contract completion.

The estimated total charge of $16 million for both contracts will be included in Cost of goods sold for the AEC segment.

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