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Reportable Segments and Revenue Recognition | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
Reportable Segments and Revenue Recognition | Reportable Segments and Revenue Recognition In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments. Machine Clothing: The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate. We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure. Albany Engineered Composites: The Albany Engineered Composites (“AEC”) segment provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group (“Safran”) owns a 10 percent noncontrolling interest. AEC, through ASC, is the exclusive supplier of the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft . AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM's LEAP engine) accounted for approximately 12 percent of the Company's consolidated Net sales in 2021. AEC net sales to Safran were $125.4 million and $81.6 million in the first nine months of 2022 and 2021, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $76.4 million and $79.6 million as of September 30, 2022 and December 31, 2021, respectively. Other significant programs by AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing 7-Series programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine. In 2021, approximately 47 percent of AEC sales were related to U.S. government contracts or programs. The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:
| Three months ended September 30, | Nine months ended September 30,
(in thousands) | 2022 | 2021 | 2022 | 2021
Net sales |  |  |  |
Machine Clothing | $ | 153,389 |  | $ | 154,171 |  | $ | 459,121 |  | $ | 462,298 |
Albany Engineered Composites | 107,174 |  | 78,271 |  | 306,980 |  | 227,024 |
Consolidated total | $ | 260,563 |  | $ | 232,442 |  | $ | 766,101 |  | $ | 689,322 |
Operating income/(loss) |  |  |  |
Machine Clothing | $ | 57,247 |  | $ | 55,467 |  | $ | 161,752 |  | $ | 161,731 |
Albany Engineered Composites | 9,958 |  | 2,917 |  | 20,688 |  | 13,019 |
Corporate expenses | (13,561) |  | (13,898) |  | (39,327) |  | (38,479) |
Operating income | $ | 53,644 |  | $ | 44,486 |  | $ | 143,113 |  | $ | 136,271 |
Reconciling items: |  |  |  |
Interest income | (965) |  | (654) |  | (2,463) |  | (1,584) |
Interest expense | 4,759 |  | 4,388 |  | 13,799 |  | 13,105 |
Pension settlement expense | 49,128 |  | — |  | 49,128 |  | — |
AMJP grant | — |  | (5,832) |  | — |  | (5,832) |
Other (income)/expense, net | (6,918) |  | 2,753 |  | (17,891) |  | 4,215 |
Income before income taxes | $ | 7,640 |  | $ | 43,831 |  | $ | 100,540 |  | $ | 126,367 |
A subsidiary within our Machine Clothing segment has been a partner in a joint venture (“JV”) that supplies paper machine clothing products to local papermakers in Russia. In March 2022, we made the decision to cease doing business in Russia, including giving notice to our JV partner of our intent to exit the venture. As a result, we recognized $1.6 million expense in the consolidated statement of operations, representing reserves against the risk of uncollectible customer receivables and obsolescence of certain inventory destined for Russian customers. We also wrote down the net book value of our investment in the aforementioned JV to reflect our intent to exit such venture, resulting in $0.8 million impairment loss during the first quarter of 2022. In the third quarter, we took actions to settle certain pension plan liabilities in the U.S., leading to charges totaling $49.1 million, which were included as Corporate expenses and other. This led to a reduction of unfunded pension liabilities of $6.2 million. Revenue Recognition: Products and services provided under long-term contracts represent a significant portion of sales in the Albany Engineered Composites segment and we account for these contracts using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors. Changes in the estimated profitability of long-term contracts increased operating income by $2.6 million for the third quarter of 2022 and $2.0 million for the first nine months of 2022. Ad justments in the estimated profitability of long-term contracts increased operating income by $2.1 million and $2.4 million for the three and nine month periods ended September 30, 2021, respectively. We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes. The following table disaggregates revenue for each product group by timing of revenue recognition:
| Three months ended September 30, 2022
(in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total
Machine Clothing | $ | 152,490 |  | $ | 899 |  | $ | 153,389 |
Albany Engineered Composites |  |  |
ASC | — |  | 41,463 |  | 41,463 |
Other AEC | 5,819 |  | 59,892 |  | 65,711 |
Total Albany Engineered Composites | 5,819 |  | 101,355 |  | 107,174 |
Total revenue | $ | 158,309 |  | $ | 102,254 |  | $ | 260,563 |
| Three months ended September 30, 2021
(in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total
Machine Clothing | $ | 153,306 |  | $ | 865 |  | $ | 154,171 |
Albany Engineered Composites |  |  |
ASC | — |  | 26,904 |  | 26,904 |
Other AEC | 3,589 |  | 47,778 |  | 51,367 |
Total Albany Engineered Composites | 3,589 |  | 74,682 |  | 78,271 |
Total revenue | $ | 156,895 |  | $ | 75,547 |  | $ | 232,442 |
| Nine months ended September 30, 2022
(in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total
Machine Clothing | $ | 456,423 |  | $ | 2,698 |  | $ | 459,121 |
Albany Engineered Composites |  |  |
ASC | — |  | 122,836 |  | 122,836 |
Other AEC | 14,750 |  | 169,394 |  | 184,144 |
Total Albany Engineered Composites | 14,750 |  | 292,230 |  | 306,980 |
Total revenue | $ | 471,173 |  | $ | 294,928 |  | $ | 766,101 |
| Nine months ended September 30, 2021
(in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total
Machine Clothing | $ | 459,703 |  | $ | 2,595 |  | $ | 462,298 |
Albany Engineered Composites |  |  |
ASC | — |  | 80,158 |  | 80,158 |
Other AEC | 11,901 |  | 134,965 |  | 146,866 |
Total Albany Engineered Composites | 11,901 |  | 215,123 |  | 227,024 |
Total revenue | $ | 471,604 |  | $ | 217,718 |  | $ | 689,322 |
The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing (PMC) and engineered fabrics), and, for PMC, the geographical region to which the paper machine clothing was sold:
| Three months ended September 30, | Nine months ended September 30,
(in thousands) | 2022 | 2021 | 2022 | 2021
Americas PMC | $ | 83,124 |  | $ | 81,780 |  | $ | 240,173 |  | $ | 237,425 |
Eurasia PMC | 49,828 |  | 53,277 |  | 157,751 |  | 164,320 |
Engineered Fabrics | 20,437 |  | 19,114 |  | 61,197 |  | 60,553 |
Total Machine Clothing Net sales | $ | 153,389 |  | $ | 154,171 |  | $ | 459,121 |  | $ | 462,298 |
We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year. Most contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $600 million and $155 million as of September 30, 2022 and 2021, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of September 30, 2022, we expect to recognize as revenue approximately $46 million during 2022, $124 million during 2023, $107 million during 2024, and the remainder thereafter.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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