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Reportable Segments and Revenue Recognition
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Reportable Segments and Revenue Recognition Reportable Segments and Revenue Recognition
The Company is organized based on the nature of its products and is composed of two reportable segments, Machine Clothing ("MC") and Albany Engineered Composites ("AEC"), each overseen by a Segment President. These segments are reflective of how the Company's Chief Executive Officer, who is its Chief Operating Decisions Maker ("CODM"), reviews operating results for the purpose of allocating resources and assessing performance. The Company has not aggregated operating segments for purposes of identifying reportable segments.
Machine Clothing:
The Machine Clothing segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel products, nonwovens, fiber cement and for several other industrial applications. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure. We manufacture belts for each section of the paper machine and for every grade of paper. We sell our MC products directly to customer end-users in countries across the globe. MC's products, manufacturing processes, and distribution channels are substantially the same in each region of the world in which we operate.
On August 31, 2023, the Company completed the acquisition of Heimbach GmbH (“Heimbach”), a privately-held manufacturer of paper machine clothing and technical textiles. The financial results of the acquired company are included in the Machine Clothing reportable segment.
Albany Engineered Composites:
The Albany Engineered Composites 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, the SAFRAN Group (“SAFRAN”) owns a 10 percent noncontrolling interest. AEC, through ASC, is the exclusive supplier to the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract, where revenue is determined by a cost-plus-fee agreement. 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 International's LEAP engine) accounted for approximately 16 percent of the Company's consolidated Net revenues in 2023.
AEC net sales to SAFRAN were $101.3 million and $93.5 million in the first six months of 2024 and 2023, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $85.8 million and $93.8 million as of June 30, 2024 and December 31, 2023, respectively.
Other significant programs for AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing commercial programs, and specialty components for the Rolls Royce lift fan on the F-35, as well as the fan case for the GE9X engine. For the year ended December 31, 2023, approximately 39 percent of AEC revenues 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 June 30,Six months ended June 30,
(in thousands)
2024202320242023
Net revenues
Machine Clothing
$193,578 $159,217 $378,795 $312,439 
Albany Engineered Composites138,416 114,906 266,529 230,780 
Consolidated revenues$331,994 $274,123 $645,324 $543,219 
Operating income/(loss)
Machine Clothing
$53,685 $53,726 $101,795 $102,690 
Albany Engineered Composites9,434 8,668 18,622 18,086 
Corporate expenses(20,214)(16,893)(38,535)(34,733)
Consolidated Operating income$42,905 $45,501 $81,882 $86,043 
Reconciling items:
Interest income(959)(1,838)(2,082)(2,944)
Interest expense
3,909 4,944 8,351 9,340 
Other (income)/expense, net5,657 (4,511)2,675 (4,966)
Income before income taxes$34,298 $46,906 $72,938 $84,613 
Second quarter 2024 results include Heimbach, which was acquired August 31, 2023. Heimbach contributed $39.8 million and $77.7 million of net revenues and $0.5 million and $(2.4) million of operating income/(loss) for the three and six months ended June 30, 2024, respectively.
Corporate expenses include global information system costs of $8.1 million and $6.8 million for the three months ended June 30, 2024 and 2023, respectively, and $16.4 million and $13.0 million for the six months ended June 30, 2024 and 2023, respectively.
Revenue Recognition:
Products and services provided under long-term contracts represent a significant portion of revenues in the Albany Engineered Composites segment and we account for these contracts over time, primarily 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 decreased operating income by $5.0 million for the second quarter of 2024 and decreased operating income $7.6 million for the first half of 2024. Adjustments in the estimated profitability of long-term contracts decreased operating incomes by $1.9 million and decreased operating income by $4.0 million for the second quarter and first half of 2023, 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 for the three months ended June 30, 2024:

Three months ended June 30, 2024
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$192,596 $982 $193,578 
Albany Engineered Composites:
   ASC— 50,292 50,292 
   Other AEC6,008 82,116 88,124 
Total Albany Engineered Composites
6,008 132,408 138,416 
                                         
Total revenues$198,604 $133,390 $331,994 

The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2023:
Three months ended June 30, 2023
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$158,273 $944 $159,217 
Albany Engineered Composites:
   ASC— 47,417 47,417 
   Other AEC3,511 63,978 67,489 
Total Albany Engineered Composites
3,511 111,395 114,906 
Total revenues$161,784 $112,339 $274,123 
The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2024:
Six months ended June 30, 2024
(in thousands)
Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$376,831 $1,964 $378,795 
Albany Engineered Composites:
   ASC— 100,031 100,031 
   Other AEC11,766 154,732 166,498 
Total Albany Engineered Composites11,766 254,763 266,529 
Total revenues$388,597 $256,727 $645,324 

The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2023:

Six months ended June 30, 2023
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$310,551 $1,888 $312,439 
Albany Engineered Composites:
   ASC— 91,949 91,949 
   Other AEC9,304 129,527 138,831 
Total Albany Engineered Composites9,304 221,476 230,780 
Total revenues$319,855 $223,364 $543,219 
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 June 30,Six months ended June 30,
(in thousands)
2024202320242023
Americas PMC$88,533 $94,154 $172,034 $177,532 
Eurasia PMC
78,519 48,541 154,709 100,278 
Engineered Fabrics26,526 16,522 52,052 34,629 
Total Machine Clothing Net revenues$193,578 $159,217 $378,795 $312,439 

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 and certain 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 $1.1 billion and $792 million as of June 30, 2024 and 2023, respectively, and related primarily to firm fixed price contracts in the AEC segment. Of the remaining performance obligations as of June 30, 2024, we expect to recognize as revenue approximately $86 million during 2024, $191 million during 2025, $155 million during 2026, and the remainder thereafter.