# Albany International Corp: Form 10-K for the period ended Dec 31, 2025 - Company: [Albany International Corp](/companies/ain.md) (CIK 819793) - Form: 10-K - Filed: 2026-02-27 - Accepted by EDGAR: Feb 27, 2026, 17:00 ET - Period: 2025-12-31 - Accession: 0001628280-26-012906 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/819793/000162828026012906/ain-20251231.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/819793/000162828026012906/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2025-12-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 12 months, 2025-01-01 to 2025-12-31 | $1.18bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Cost of revenue | 12 months, 2025-01-01 to 2025-12-31 | $938.9m | us-gaap:CostOfGoodsAndServicesSold | | Gross profit | 12 months, 2025-01-01 to 2025-12-31 | $243.9m | us-gaap:GrossProfit | | Selling, general and administrative | 12 months, 2025-01-01 to 2025-12-31 | $218.3m | us-gaap:SellingGeneralAndAdministrativeExpense | | Operating income | 12 months, 2025-01-01 to 2025-12-31 | −$36.1m | us-gaap:OperatingIncomeLoss | | Interest expense | 12 months, 2025-01-01 to 2025-12-31 | $25.8m | us-gaap:InterestExpenseNonoperating | | Income tax | 12 months, 2025-01-01 to 2025-12-31 | −$4.8m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 12 months, 2025-01-01 to 2025-12-31 | −$57.3m | us-gaap:NetIncomeLoss | | Diluted EPS | 12 months, 2025-01-01 to 2025-12-31 | −$1.94 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 12 months, 2025-01-01 to 2025-12-31 | −$1.94 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 12 months, 2025-01-01 to 2025-12-31 | 29,566,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 12 months, 2025-01-01 to 2025-12-31 | $152.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 12 months, 2025-01-01 to 2025-12-31 | $69.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Dividends paid | 12 months, 2025-01-01 to 2025-12-31 | $32.5m | us-gaap:PaymentsOfDividends | | Share repurchases | 12 months, 2025-01-01 to 2025-12-31 | $186.0m | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2025-12-31 | $112.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2025-12-31 | $928.8m | us-gaap:AssetsCurrent | | Total assets | at 2025-12-31 | $1.72bn | us-gaap:Assets | | Current liabilities | at 2025-12-31 | $442.3m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2025-12-31 | $986.6m | us-gaap:Liabilities | | Long-term debt | at 2025-12-31 | $455.7m | us-gaap:LongTermDebtNoncurrent | | Current portion of debt | at 2025-12-31 | $0 | us-gaap:LongTermDebtCurrent | | Shareholders' equity | at 2025-12-31 | $726.2m | us-gaap:StockholdersEquity | ## Business As filed, 37,169 characters. ### General Founded in 1895, Albany International Corp. is a global leader in advanced textiles and materials processing specializing in designing and manufacturing high-performance engineered fabrics and composite components and assemblies that serve industries such as paper, industrial manufacturing, and aerospace. The terms the Registrant, the Company, Albany, we, us, or our mean Albany International Corp. and its subsidiaries, unless the context indicates another meaning. The following description of our business should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Item 7 of this Annual Report on Form 10-K, including the information contained therein under the heading “Business Environment Overview and Trends.” ### Business Segments The Company operates under two business segments: Machine Clothing and Albany Engineered Composites. Following is a table of Net revenues by segment for years ended December 31, 2025, 2024, and 2023. *(in thousands)* | | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Machine Clothing | **$708,066** | $749,907 | $670,768 | | Albany Engineered Composites | **474,747** | 480,708 | 477,141 | | Total net revenues | **$1,182,813** | $1,230,615 | $1,147,909 | The table that sets forth certain segment financial performance metrics and selected balance sheet data appears in Note 3, *Reportable Segments and Geographic Data,* of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. #### Machine Clothing The Machine Clothing (“MC”) segment is the world’s leading producer of custom-designed fabrics and high-speed process belts critical in the manufacture of all grades of paper products characterized primarily as Paper Machine Clothing (“PMC”). MC supplies highly engineered consumable permeable, and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, and pulp, referred to in the industry as “machine clothing” or “paper machine clothing.” The MC segment also supplies Engineered Fabric (“EF”) products that provide solutions for nonwovens, fiber cement and several other industrial applications. PMC Products: We design, manufacture, and market paper machine clothing 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. The design and material composition of paper machine clothing can have a considerable effect on the quality of paper products produced and a meaningful effect on the energy and resource efficiency of the paper machines on which it is used. Principal paper machine clothing products include forming, pressing, and drying fabrics, and process belts. PMC product revenues accounted for more than 80% of MC’s segment Net revenues. EF products: EF products are solution-focused, custom-designed fabrics and belts. These products are also utilized in process industries outside of papermaking such as nonwovens, corrugators, building products, tannery and textile industries and designed to improve production rates and lower the overall cost of operation. EF product revenue accounted for less than 20% of the MC segment’s Net revenues. The MC segment sells its products directly to customer end-users in countries across the globe. MC products, manufacturing processes, and distribution channels are substantially similar in each region of the world in which we operate. No individual customer accounted for as much as 10% of MC segment Net revenues in any of the periods presented. #### Albany Engineered Composites The Albany Engineered Composites (“AEC”) segment is a leader in innovative composite technology solutions and manufacturer of engineered components for demanding aerospace and defense applications. AEC provides highly engineered, advanced composite solutions to customers and platforms in the commercial and defense markets, as well as for space-launch vehicles and the emerging advanced air mobility market (“AAM”). The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, SAFRAN Group ("SAFRAN"), owns a 10% 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. The LEAP engine is used on the Airbus A320neo and A321neo, Boeing 737 MAX, and COMAC 919 aircrafts. AEC’s largest aerospace customer is SAFRAN and sales to SAFRAN (consisting primarily of fan blades and cases for CFM’s LEAP engine) accounted for approximately 15% of the Company’s consolidated net revenues in 2025. Other significant AEC programs include the CH-53K helicopter, F-35 fighter jet, Joint Air-to-Surface Standoff Missile ("JASSM"), Boeing 787 aircraft, Beta Alia, and other commercial, defense, space and AAM programs. AEC also supplies vacuum waste tanks for most Boeing commercial aircraft, as well as the fan case for the GE9X engine used on the Boeing 777 aircraft. In 2025, approximately 35% of the AEC segment’s revenues were related to U.S. government contracts or programs. During the fourth quarter of 2025, the Company announced that it is exploring strategic alternatives for its structures assembly business including a potential sale of all or a part of the business at the Amelia Earhart Drive Facility in Salt Lake City. ### International Operations Our MC business segment maintains manufacturing facilities in Belgium, Brazil, Canada, China, France, Germany, Italy, Mexico, Spain, Sweden, the United Kingdom, and the United States. MC's global manufacturing footprint is designed to most efficiently meet regional customer requirements. Our AEC business segment maintains manufacturing facilities in the United States, France, Mexico, and Germany to meet customer demand in those regions. Our global presence subjects us to certain risks, including tariffs and other restrictions on trade, foreign exchange exposure and our ability to repatriate funds from foreign jurisdictions. While global trade and tariff policies have not had a material impact to our past results of operations, there is risk that the impact of recent developments on companies in our supply chain could cause higher costs from affected suppliers. We have a cash repatriation strategy that returns a certain amount of foreign current year earnings that are not indefinitely reinvested. Changes in the trade or regulatory compliance in any country that we have significant cash balances could make it more difficult to repatriate foreign earnings cost-effectively in the future. ### Research, Development and Technology We invest in research, new product development, and technical analysis with the objective of maintaining our technological leadership in each business segment. While much of our research activity supports existing products, we also engage in significant research and development activities for new technology platforms, products and product enhancements. Our MC segment products are custom-designed for each user, depending on the type, size, and speed of the machine, and the products being produced. Products are specifically designed for each section and position on a machine, the grade of product being produced, and the quality of the stock used. Technical expertise, judgment, and experience are critical in designing the appropriate clothing for each machine, position, and application. As a result, many employees in sales and technical functions have engineering degrees, paper mill experience, or other manufacturing experience in the markets in which we operate. Our market leadership position reflects our commitment to technology innovation. This innovation has resulted in new products and enhancements across all of our product lines. AEC develops innovative solutions and manufactures advanced composite parts for complex aerospace applications, using a range of core technologies, including its proprietary 3D-woven reinforced composites technology, traditional 2D laminated composite structures, automated fiber placement for both thermoplastics and thermoset composites as well as rigid installation for through-thickness reinforcements, and braided structures. As critical materials are constraining the US industrial base, 3D-woven components are a critical replacement for titanium structures for commercial and defense applications with compression strengths far exceeding traditional titanium properties. In addition, AEC continues to leverage its 3D-woven technology to develop differentiated processing solutions for high-temperature applications, including hypersonic flight components. AEC is working closely with its customers to develop high performance alternatives to traditional thermal protection and energy absorption requirements. These preforms serve as the building blocks for an array of critical applications, ranging from thermal protection to energy absorption. In addition to continuous significant investment in core research and development activities in pursuit of new proprietary products and manufacturing processes, experienced research and development employees in each business segment also work collaboratively with customers, OEMs and suppliers on targeted development efforts to introduce new products and applications in their respective markets. Technical and research expenses totaled $48.0 million in 2025, $46.1 million in 2024, and $40.6 million in 2023. In 2025, these costs were 4.1% of total Company Net revenues. Research and development in the AEC segment include both Company-sponsored and customer-funded activities. Some customer funded research and development may be on a cost sharing basis, in which case, amounts charged to the collaborating entity are credited against research and development costs. For customer-funded research and development in which we anticipate funding to exceed expenses, we include amounts charged to the customer in Net revenues. Cost of goods sold associated with customer-funded research was $6.4 million in 2025, $5.6 million in 2024, and $6.4 million in 2023. ### New Business Ventures The Company maintains a New Business Ventures team dedicated to developing innovative products and business opportunities that address high growth opportunities which are adjacent to our current business portfolio utilizing our existing developed technologies, materials science and extensive expertise across our MC and AEC segments. The team's strategy is to unlock further potential in focus areas, such as 3D weaving, resin transfer molding, large scale flat weaving, and the application of technically diverse composite materials and coatings, to create and certify groundbreaking products. For instance, we are currently exploring the use of our 3D weaving expertise in combination with our resin and coatings capabilities to enhance the effectiveness of products that can be used in various defense and space applications. In coordination with raw material providers and equipment OEMs, we are developing an enhanced value proposition for the market that further reduces weight and improves overall performance of identified products in applications across various industries. We are also innovating within our MC segment, with our material science focus on constantly improving our work within the polymer business. Our innovation allows us to produce new, hybrid polymer systems that not only increase our performance in the field, but accomplish this in a sustainable manner. Our expertise in materials extends into many of our core technologies, such as weaving, coatings, and extrusions, for example. This allows us to create new systems, improving resilience and temperature resistance. Our goal is to leverage our existing subject matter experts across our Research, Development and Technology teams to drive future profitable growth of new products addressing an expanded range of applications and end-markets. Although we do not expect meaningful revenue growth from New Business Ventures until 2027, the investments we are making today will be a pillar for new innovative product opportunities. ### Intellectual Property We continue to develop proprietary intellectual property that supports the industries we serve. Our portfolio includes patents and trademarks registered worldwide, as well as, copyrights, trade secrets, research and development outputs, and engineering and manufacturing know-how. We also license intellectual property to and from third parties. While our portfolio provides meaningful competitive advantages, in general, we do not believe that any single patent, trademark, license or other intellectual property right or group of related intellectual property rights is of such importance that its loss or termination would have a material adverse effect on our business taken as a whole. ### Raw Materials Primary raw materials for our MC products are polymer monofilaments and fibers, which have generally been available from a number of suppliers. In addition, we manufacture polymer monofilaments, a basic raw material for all types of machine clothing, at our facility in Homer, New York, which supplies approximately 20% of our worldwide monofilament requirements. In our AEC segment, the primary raw materials are carbon fiber and resin. While there are a number of potential suppliers of carbon fiber and other raw materials used by AEC, the use of certain suppliers may be mandated by customer agreements, and alternative suppliers would be subject to material qualification or other requirements that may preclude or delay their availability. In the case of mandated suppliers, AEC endeavors to enter into long-term supply agreements to help mitigate cost and availability risks. Currently, the primary raw materials used in each segment are derived from petroleum, and are therefore sensitive to changes in the cost of petroleum and petroleum intermediates. ### Competition #### Machine Clothing Price and technology are the primary means of competitive differentiation in the industry. Our MC product portfolio is broad and deep, with products for every part of the machine and a wide range of machine types and paper grades. MC's research and development team works closely with the sales and technical organization to develop new products to meet changes in customer needs, and also pursues targeted joint development activities with customers and equipment manufacturers to create new products. Albany’s experienced sales and technical team members – many of whom have worked in the industries that we serve – work closely with each customer to acquire deep understanding of the customer’s combination of raw materials, manufacturing equipment, manufacturing processes, and paper, pulp, nonwovens or other product being produced – a combination that is unique to each customer, plant and machine. This experience and knowledge, combined with knowledge of and experience with MC’s own extensive product portfolio, allows the sales and technical teams to ensure that the appropriate machine clothing products are being supplied for each part of the machine, to customize those products as needed for best performance, and to continuously propose new products that offer each customer the possibility of even better performance and increased savings. MC's machine clothing solutions enable our customers to reduce energy and water consumption, improve resource efficiency, and help maintain and improve water quality. These efforts – which effectively integrate MC’s experience and technological expertise into each product we sell – are reflected in MC’s strong competitive position in the marketplace. Some of the MC’s paper machine clothing competitors also supply paper machines, papermaking equipment, and aftermarket parts and services, and often bundle machine clothing products with original or rebuilt machines and/or aftermarket services. #### Albany Engineered Composites Competitive factors in the markets in which our AEC segment competes are product performance, delivery performance, quality, and price. Achieving lower weight without sacrificing strength is the key to improving fuel efficiency, which helps reduce the carbon emissions footprint of global aviation, and is a critical performance requirement in the aerospace industry. Our broad array of capabilities in composites enables us to offer customers the opportunity to displace metal components and, in some cases, conventional composites with lower-weight, higher-strength, and higher-temperature and corrosion resistant composites. The dominant competitive factor is the relative importance the customer places on these performance benefits, which include fuel savings/emissions reductions due to lower weight, against the possible cost advantage of more traditional metal and composite components. ### Human Capital Resources At our company, we are proud to employ approximately 5,700 people across North America, South America, Europe, and Asia. Our team’s talent and creativity are our biggest strengths, and we are deeply committed to fostering a workplace culture that values respect, engagement, and well-being. We focus on our employees’ physical, mental, and social health, offer career development opportunities, and provide competitive pay and benefits. In addition, our people strategy is closely aligned with our business goals. Our top priority is keeping our employees safe. We aim for zero workplace injuries and track safety metrics throughout the year, such as Total Recordable Incident Rate (TRIR), Serious Injuries and Fatalities (SIFs), safety behaviors, and proactive safety actions taken. Our safety culture is reinforced by linking a portion of each Executive Officer's incentive compensation to achieving company-wide TRIR goals. We work hard to create an inclusive and fair environment where a broad range of experiences, backgrounds, and skills are celebrated and respected. We believe that this culture boosts innovation and helps our people reach their full potential. Our hiring strategy seeks out people with varying backgrounds, knowledge, and experiences and results in the most qualified candidates. As of December 31, 2025, our total workforce is 28.0% female. In the U.S., our headcount is approximately 2,400 employees, with 34.1% self-identifying as a minority. Our talent management strategy focuses on developing our internal talent for promotion, hiring the best people from outside the company when no internal candidate is available, and using our internship program to identify future talent and build the talent pipeline. We believe in continuous learning and development and offer various training opportunities, including on-the-job training, virtual courses, and external learning programs. All employees regularly participate in safety, ethics, and compliance training. Our Leadership Training Programs are targeted at different segments of our employee population with programs for new and potential managers, more experienced leaders, and executives. Our employees around the world enjoy competitive compensation and benefits. In the U.S., this includes 401(k) matching, profit sharing, generous vacation time, health and dental insurance, and recognition programs, among others. We also emphasize work-life balance and well-being. We support global human rights, aligning our policies with the United Nations Global Compact and the Universal Declaration of Human Rights. Our strategy is to focus on the advantages inherent in combining our individual strengths for collective success and promoting an inclusive company culture. Our Albany Values focus on actions our employees can take to set the foundation for our future growth and success. The Albany Values are as follows: - **Albany wins together** (Teamwork) - We combine our individual strengths for collective success - We share knowledge to grow it - We embrace the advantage of our diversity - **Count on each other** (Trust & Respect) - We empower each other - We welcome input and value differences - We treat each other fairly and equitably - **Own your actions** (Accountability) - We do what we say and say what we do - We act with integrity - We pursue ever better solutions - **Care about each other** (Safety) - We are all responsible for a safe and sustainable environment - We make safe choices - We value well-being (mental, physical, and social) - **Share your enthusiasm** (Passion) - We are excited to be part of Albany - We put our hearts into every task - We lift each other up We live these values every day at Albany. ### Sustainability Business Impact and Value Creation Our business is centered around driving success for our customers. Our products are designed for performance and consistency, while enabling our customers to meet their organizational goals around product performance, process efficiency, and product sustainability. As described above, our paper machine clothing products enable our paper-making customers to reduce their own environmental footprint by reducing their energy consumption, and improving both resource and operating efficiency. For example, energy is one of the top three cost components in the paper making process; our machine clothing solutions use innovative technologies to reduce the amount of heat energy required for paper production. In aerospace, weight savings that drive fuel efficiency are essential for the industry to achieve its goals for sustainable aviation. This fundamental design goal has driven the increased use of lightweight composite structures in an ever-broadening sphere of aerospace applications. We have applied learnings from our 130 years of experience manufacturing machine clothing to pioneer 3D weaving technologies to manufacture our composite material. The process involves layering and interweaving fibers in a precise process to create complex, high-strength parts that allows for the production of lightweight and strong composite parts with high-performance properties, well-suited for use in aerospace, defense and industrial applications. These structurally demanding applications have historically been served by heavier, metallic structures, and traditional laminated composites do not possess the required structural characteristics that 3D woven can offer. As such, our proprietary 3D woven technology expands the role that lightweight composites can serve as the next generation of aircraft is designed and built. #### Supporting customers through innovation and performance We continue to innovate and remain focused on developing and bringing to market proprietary products aimed at improving the energy and resource efficiency needed for our customers’ products and their production processes. This includes working with our partner on Product Carbon Footprints, leveraging AI to accelerate insights. To support our customers we can design for circularity and product recycling at the end of life, and we can also design for lower Product Carbon Footprints. Our customer objectives guide us in raw material and supplier selection as well as specialized partnerships for product recycling and reuse. Since many of our customers have waste reduction and circularity goals, providing cutting edge solutions for product end of life has been an increasing focus for Albany International. Additionally, many of our customers have Scope 3 emissions reduction goals, therefore we focus on our own operational efficiency and emissions reduction as an integral part of our customers’ value chain. #### Driving business value for Albany International As a global manufacturer, energy is a significant expense for Albany International, and therefore we have a goal of reducing our energy consumption and our associated Scope 1 and 2 emissions by 50% by 2030. Energy consumption reductions are critical both in supporting our customers in their organizational sustainability goals, and to advance our own business strategy and operational resilience. We have been progressing a number of global on-site solar initiatives where there is a compelling business case, which provides operational cost savings to our facilities as well as securing a portion of our energy supply, in addition to reducing our emissions. We have invested in a virtual power purchase agreement (“VPPA”) related to our U.S. operations, and where appropriate we have also been entering into renewable energy contracts, demonstrating our commitment to supporting our customers’ Scope 3 emissions reduction goals. We are also committed to reducing waste, both from our own operations as well as our customers’, and we have a goal of zero waste to landfill by 2030 for our operations in the Americas and Europe. We continue to look for opportunities to reduce waste generated across our operations and our products, and where waste materials have market value, to ensure they are repurposed appropriately. In addition to partnering with several third parties who recycle and reuse our scrap materials in other applications such as plastic furniture, textile yarn, and reinforced concrete, we have engaged in several pilot programs through universities and start-ups to test new technologies to increase circularity and recycling for our products at the end of life. We believe further developing this capability provides a significant benefit for our customers and partners. Innovation has been integral to our story for over 130 years and continues to be a focus for Albany International. As described above, we have a New Business Ventures group focused on broader applications of our proprietary technology, in consideration of broader macroeconomic trends and sustainability evolution. #### Aligning with global frameworks for compliance and transparency Compliance with global and local environmental regulation throughout our operations is a clear imperative both for our customers and for meeting our own organizational values and expectations. We have a robust global and local EHS and sustainability program to ensure we continue to evolve our operations in line with regulatory and customer requirements, managing risk and opportunity. This continuous evolution drives new insights for our business, and increasing reporting transparency provides the opportunity for greater comparability and collaboration across companies and industries. A key element of our EHS and sustainability program is to identify material topics, through assessment of double materiality, to identify areas for improvement, discover new opportunities, and drive value creation. This process also facilitates compliance and helps to articulate our unique stories of innovation and our value proposition. ### Executive Officers The following table sets forth certain information with respect to the executive officers of the Company: *Gunnar Kleveland, 56, President and Chief Executive Officer*, joined the Company in 2023 and serves the Company as President and Chief Executive Officer. Prior to joining the Company, Mr. Kleveland served as President and Chief Executive Officer of Textron Specialized Vehicles Inc. He has also served as the President of TRU Simulation + Training Inc. and Executive Vice President of Integrated Operations for Bell Helicopter Textron Inc. Prior to joining Textron in 2004, Mr. Kleveland was a fighter pilot in the Royal Norwegian Air Force (RNoAF). *Willard Station, 50, Executive Vice President and Chief Financial Officer,* joined the Company in 2025. Prior to joining the Company, Will served as Senior Vice President of Primary Care Sales for McKesson Medical-Surgical, a McKesson Corporation subsidiary, leading a team of more than 1,200 account executives and specialists supporting primary care physicians, ambulatory surgery centers, as well as community hospitals and laboratories. Prior to that, he was the subsidiary’s Chief Financial Officer and Senior Vice President of Finance. Will’s career also includes 16 years at The Boeing Company, where he held a number of increasingly senior finance roles, notably Vice President and Chief Financial Officer of Commercial Derivatives Airplanes and Director of Financial Operations for Boeing Commercial Airplanes (BCA). *Merle Stein, 49, President – Machine Clothing*, joined the company in 2011. He brings deep experience in the pulp and paper industry, extensive knowledge of the Machine Clothing business, and a strong strategic understanding of its markets. His background includes broad leadership roles with a particular focus on operational excellence and customer-facing functions. Before becoming President, he served as Division Chief Operating Officer beginning in 2024, overseeing all operational aspects of the segment and leading the Sales & Marketing, Operations, Procurement, R&D and Human Resources functions. Earlier roles included Vice President Sales & Marketing/Applications for the Americas, as well as several other sales and marketing leadership positions such as Vice President Sales MC – North America, Regional Business Director. Prior to joining the company, Mr. Stein managed papermaking operations at Essity’s greenfield mill in Alabama, ultimately rising to the role of Papermill Manager. He earned a Bachelor’s degree in Chemical Engineering as well as an Executive MBA degree from Auburn University in Auburn, AL. *Chris Stone, 53, President – Albany Engineered Composites*, joined the company in 2024. He brings a deep knowledge of the A&D industry, and considerable broad experiences to his new role. He has held a wide range of leadership positions at public companies, with a focus in manufacturing and supply chain management, business operations, production control, logistics and organizational transformation. Most recently he served as Vice President & Chief Supply Chain Officer at Lockheed Martin Corporation from 2021 to 2024. Prior to joining Lockheed Martin, he was Vice President – Supply Chain & Material Management at Aerojet Rocketdyne from 2018 to 2021, and previously held various management positions at Textron companies, including Textron Marine & Land System and Bell Helicopter from 2005 to 2018. He is a former Aviation Officer with the United States. *Suzanne Purdum, 57, Chief Human Resources Officer*, joined the company in 2024. Ms. Purdum brings more than 25 years of experience in a number of HR disciplines including development and execution of HR strategy, organization design and effectiveness, learning and development, talent management, employee and labor relations, change management, and compensation and benefits. She is an experienced HR leader and business professional who has held executive level positions in Business Partnering, Total Rewards, and Talent Acquisition at a global level for large US multinational companies. Most recently, Ms. Purdum served as the Senior Executive Director for Boeing Global Human Resources – Europe, Israel and Ukraine. Prior to this role, Ms. Purdum held multiple leadership roles of increasing responsibility at Boeing, TRU Simulation + Training, Bell Helicopter, and Textron. *Joseph M. Gaug, 62, Senior Vice President – General Counsel and Secretary,* joined the Company in 2004. Mr. Gaug is responsible for the Company's global legal, compliance, sustainability, risk management, and intellectual property functions, overseeing a team of lawyers, paralegals and other professionals. He has served as General Counsel and Secretary since 2020. He previously served as Associate General Counsel from 2004 and as Associate General Counsel and Assistant Secretary from 2006 to May 2020. Prior to 2004 he was a principal at the law firm of McNamee, Lochner, Titus & Williams, PC, where, among other clients, he had represented the Company in various matters as outside counsel. *Robert A. Hansen, 68, Senior Vice President and Chief Technology Officer,* joined the Company in 1981. Mr. Hansen has served the Company as Senior Vice President and Chief Technology Officer since January 2010. He previously served as Vice President – Corporate Research and Development from April 2006 to January 2010, and Director of Technical and Marketing – Europe Press Fabrics from 2004 to April 2006. From 2000 to 2004, he served as Technical Director – Göppingen, Germany. Before 2000, he served the Company in a number of technical management and research and development positions in Europe and the U.S. *Sean Valashinas, 54, Vice President – Controller and Chief Accounting Officer*, joined the Company in 2025. Prior to joining the Company, Mr. Valashinas served as Vice President of Accounting, Treasury, and Tax at Resonetics. Previously, he spent 17 years at Standex International Corporation, where he held roles of Chief Accounting Officer, Assistant Treasurer, and Vice President of Finance for the Standex Engineering Technologies Group. Mr. Valashinas began his career at PricewaterhouseCoopers and later held management roles at The Hershey Company. ### Governance We are incorporated under the laws of the State of Delaware and are the successor to a New York corporation originally incorporated in 1895, which was merged into the Company in August 1987 solely for the purpose of changing the domicile of the corporation. References to the Company that relate to any time prior to the August 1987 merger should be understood to refer to the predecessor New York corporation. We embrace uncompromising honesty and behave ethically and fairly. We are committed to following the laws, regulations, standards, and ethical practices everywhere we do business. Ethics and compliance play an integral part in our decision making and business operations. Our Corporate Governance Guidelines, Business Ethics Policy, and Code of Ethics for the Chief Executive Officer, Chief Financial Officer, and Controller, and the charters of the Audit, Compensation, and Governance Committees of the Board of Directors are available at the Corporate Governance section of our website (www.albint.com). Data security is a top priority at the Company. To protect our Company and customer data, we employ industry best practices and adhere to the Center for Internet Security ("CIS") 20 and National Institute of Standards and Technology ("NIST") SP 800-171 cyber security frameworks. Our Data Security strategy is overseen by the Audit Committee of our Board of Directors, regularly reviewed at the executive level, directed by our Chief Information Officer, and managed by our Enterprise Cyber Security (ECS) team. For information on our approach, see Item 1C, Cybersecurity in this Part I and the Sustainability section of our website at https://www.albint.com/sustainability/. ### Regulatory Matters Our AEC segment business is heavily regulated. We may contract with U.S. Government agencies and entities, or we are a subcontractor to an OEM who contracts directly with U.S. Government agencies and entities. We must comply with, and are affected by, laws and regulations relating to the formation, administration and performance of U.S. Government contracts and contracts with foreign governments. The U.S. Government, and other foreign governments, may terminate any government contract at their convenience or for default, if we fail to meet specified performance measurements. If such contracts were to be terminated for convenience, we would generally be entitled to receive payment for work completed and allowable termination and cancellation costs. If the U.S. Government, and other foreign governments, terminate a contract due to our default, generally, we would only be paid for work that has been accepted by our customer and our customer can require us to pay the differential between the original contract price and cost to re-procure the contract items, net of work accepted from the original contract. In addition, we can be held liable for damages resulting from our default and may be responsible to provide transition services to another supplier or the customer. ### Available Information Our principal executive offices are located at 325 Corporate Drive, Portsmouth, New Hampshire 03801. Our telephone number is 603-330-5800 and our website is www.albint.com. Our current reports on Form 8-K, quarterly reports on Form 10-Q, and annual reports on Form 10-K, proxy statements for our annual stockholders' meetings and amendments to those reports are electronically filed with the Securities and Exchange Commission (the “SEC”), and all such reports and amendments to such reports have been and will be made available, free of charge, through our website at www.albint.com as soon as reasonably practicable after such filing. In addition, copies of our Annual Report on Form 10-K will be made available, free of charge, upon written request. We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K. ## Risk factors As filed, 80,681 characters. *The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties facing the Company. This list is not all-inclusive or necessarily in order of importance. If any of the events contemplated by the following risks occur, our business, financial condition, or results of operations could be materially adversely affected. Some of these risks are described below and in the documents incorporated by reference, and investors should take these risks into account when evaluating any investment decision involving the Company.* ### Risks related to our business and operations ***A number of industry factors have had, and in future periods could have, an adverse impact on net revenues, profitability and cash flow in the Company’s MC and AEC segments.*** Significant consolidation and rationalization in the paper industry in recent years have reduced global consumption of paper machine clothing in certain markets and for certain grades. Developments in digital media have adversely affected demand for newsprint and for printing and writing grades of paper, which has had, and is likely to continue to have, an adverse effect on demand for paper machine clothing in those markets. In addition, changes in shipping, fulfillment, and consumer packaging practices—including a shift from traditional corrugated boxes to alternative packaging formats such as bags, lighter‑weight materials, and smaller boxes—have reduced demand growth for certain packaging paper grades, which may further negatively affect demand for paper machine clothing used in those applications. At the same time, technological advances in papermaking, including in paper machine clothing, while contributing to the papermaking efficiency of customers, have in some cases lengthened the useful life of our products and reduced the number of pieces required to produce the same volume of paper. These factors have had, and in the future are likely to have, an adverse effect on paper machine clothing net revenues. The market for paper machine clothing in recent years has been characterized by continuous pressure to provide more favorable commercial terms, which has in turn placed pressure on our operating results. We expect such pressure to remain intense in all paper machine clothing markets, especially during periods of customer consolidation, plant closures, or when major contracts are being renegotiated. The increasing changes within our Asian competitors, particularly in China, heightens the challenge of maintaining sales in that region. This challenge is further intensified by a preference among Chinese customers and government entities to source products from domestic manufacturers, which can adversely impact our ability to compete effectively in the Chinese market. Similar pressures in the markets in which AEC serves are highly competitive and price sensitive. AEC competes with domestic and international companies that have substantially greater manufacturing, purchasing, marketing, and financial resources than the Company. Some of AEC's facilities also compete for labor with other industrial and commercial businesses. If we are unable to successfully compete for new business, our net revenues, growth, and operating margins may decline. Net revenues from the LEAP contract peaked at over $210 million in 2019 but dropped sharply in subsequent years due to factors beyond the Company's control, such as Boeing production issues and the COVID-19 pandemic. Although conditions have improved, similar disruptions could occur again and impact AEC's performance Additionally, many of AEC’s customers, as well as the companies supplied by our customers, are under pressure to improve returns on their substantial investments made in recent years in new technologies, new programs and new product introductions. This has contributed to a relentless focus on capital investments to reduce costs, resulting in continuous pressure for cost reductions and customer pricing improvement throughout the supply chain. Future consolidation in the aerospace industry could intensify these pressures. ***Some of the Company’s competitors in the MC segment have the capability to make and sell paper machines and papermaking equipment as well as other engineered fabrics.*** Although customers historically have tended to view the purchase of paper machine clothing and the purchase of paper machines as separate purchasing decisions, the ability to bundle fabrics with new machines and after-market services could provide an advantage to our competitors. This underscores the importance of our ability to maintain the technological competitiveness and value of our products, and a failure to do so could have a material adverse effect on our business, financial condition, and results of operations. Moreover, we cannot predict how the nature of competition in this segment may continue to evolve as a result of future consolidation among our competitors, or consolidation involving our competitors and other suppliers to our customers. ***AEC is subject to significant risks related to the potential manufacture and sale of defective or non-conforming products.*** AEC manufactures and sells products that are incorporated into commercial and military aircraft. If AEC were to supply products with manufacturing defects, or products that failed to conform to contractual requirements, we could be required to recall and/or replace them, and we could also be subject to substantial contractual damages or warranty claims from our customers, including claims to pay the differential between the original contract price and cost to re-procure defective contract items, net of work accepted from the original contract, or claims to provide transition services to another supplier or the customer. AEC could also be subject to product liability claims if such failures were to cause death, injury or losses to third parties, or damage claims resulting from the grounding of aircraft into which such defective or non-conforming products are incorporated. We are required to meet, and maintain continuous independent certification to, certain international industry standards including AS/EN9100 quality management system standards and Nadcap Special Processes certifications that are designed to assure rigorous quality standards are maintained throughout the aerospace industry supply chain. Additionally, although we maintain product liability insurance at levels we believe to be prudent and consistent with industry practice to help mitigate these risks, these coverages may not be sufficient to fully cover AEC’s exposure for such risks, which could have a material adverse effect on AEC’s results of operations and cash flows. ### The long-term organic growth prospects of AEC are subject to a number of risks. The prospect of future successful organic growth in AEC depends in large part on its ability to maintain and grow a healthy pipeline of potential new products and applications for its technologies, to transform a sufficient number of those potential opportunities into commercial supply agreements, and to then execute its obligations under such agreements. In addition, existing and future supply agreements, especially for commercial and defense aerospace, are subject to the same curtailment or cancellation risks as the programs they support. AEC is currently working on potential new product applications in the aerospace industry. These development projects may or may not result in commercial supply opportunities. In the event that AEC succeeds in developing products and securing contracts to manufacture and supply them, it will face the same industrialization and manufacturing ramp-up risks that it currently faces on its existing contracts, and AEC may or may not be successful in meeting its obligations under these contracts. Failure to manage these development, commercialization and execution risks could have a material adverse impact on AEC’s prospects for revenue growth. In addition to these development and manufacturing execution risks, future AEC growth will likely require additional cash to fund the investments in equipment, capital, and development efforts needed to achieve this growth. Until AEC is able to consistently generate cash flows sufficient to fund its existing operations and any future investments needed to support its growth, it will remain dependent on the MC segment’s ability to generate cash. A significant decline in MC net revenues, operating income or cash flows could therefore have a material adverse impact on AEC’s ability to invest and deliver on future growth. ***Deterioration of global economic conditions could have an adverse impact on the Company’s business and results of operations.*** The Company identifies in this section a number of risks, the effects of which may be exacerbated by an unfavorable economic climate. For example, a recession could lead to lower consumption in all paper grades including tissue and packaging, which would not only reduce consumption of paper machine clothing, but could also increase price competition in the machine clothing industry. Similarly, in the Company’s AEC segment, a decline in global or regional economic conditions could result in reduced orders for aircraft or aircraft engines, or the cancellation of existing orders, which would in turn result in reduced demand for the AEC components utilized on such aircraft or engines. Customer demand for AEC’s lightweight composite aircraft components is driven by market demand for the lighter, more fuel-efficient aircraft engine and other applications into which they are incorporated, such as the CFM International LEAP engine. Fuel costs are a significant part of operating costs for airlines and, in many cases, may constitute a carrier’s single largest operating expense. A sustained drop in oil prices, and related decline in the price of jet fuel, could prompt airlines to defer orders or delivery dates for such newer, more fuel-efficient airframes and aircraft engines, as the urgency to reduce fuel consumption may be lessened. In addition, any economic conditions that led to sustained high interest rates could affect the airline’s ability to finance new aircraft and engine orders. Weak or unstable economic conditions also increase the risk that one or more of our customers might be unable to pay outstanding accounts receivable, whether as the result of bankruptcy or an inability to obtain working capital financing from banks or other lenders. Furthermore, both the MC and AEC business segments manufacture products that are custom-designed for a specific customer application. In the event of a customer liquidity issue, the Company could be required to write off amounts that are included in Contract assets or Inventories. In the case of AEC, such write-offs could also include investments in equipment, tooling, and non-recurring engineering costs, some of which could be significant depending on the program. ***The U.S. Government’s Department of Defense (“DoD”) Cybersecurity Maturity Model Certification (“CMMC”) program introduces new and unique risks for DoD contractors.*** Under the applicable federal regulations for DoD contractors, AEC is required to comply with the agency's current cybersecurity regulations. In addition to these current regulations, AEC will be required to comply with the new CMMC program requirements on future contracts as they are flowed down from our DoD prime customers in the coming years. Given the current and planned future portfolio of U.S. Government-related business and based on the CMMC Proposed Rule released by the DoD in December 2023, AEC announced in December 2025 that it had achieved the U.S. Department of War (DoW) Cybersecurity Maturity Model Certification (CMMC) Level 2 certification through an accredited CMMC Third-Party Assessment Organization (C3PAO). AEC expects to be required to comply fully with CMMC Level 3 for certain programs as those requirements are further defined. This will require a DCMA Defense Industrial Base Cybersecurity Assessment Center (DIBCAC) assessment for any required Level 3 certification. The CMMC compliance requirements are complex, the costs are significant, and the DoD timelines for certifications are aggressive. To the extent that AEC is unable to achieve the required CMMC certifications within the timeframes required by the DoD, AEC may be unable to maintain or grow its business with the DoD and its prime customers. ***The Company continues to experience increasing raw material, energy, logistics, and labor costs due to supply chain constraints and inflationary pressures.*** The Company is a significant user of raw materials that are based on petroleum or petroleum derivatives. Increases in the prices of petroleum or petroleum derivatives, particularly in regions that are experiencing higher levels of inflation, could increase our costs, and we may not be able to fully offset the effects through price increases, productivity improvements, or cost-reduction programs. There is a limited number of suppliers of polymer fiber and monofilaments, key raw materials used in the manufacture of machine clothing, and of carbon fiber and carbon resin, key raw materials used by AEC. In addition, there are a limited number of suppliers of some of the equipment used in each of the MC and AEC segments. The risks associated with limited suppliers increased as a result of the COVID-19 pandemic, which has put pressure on the supply chain in general, and on transportation companies that deliver raw materials to us and our products to customers. While we have been able to meet our raw material and equipment needs, the limited number of suppliers of these items creates the potential for disruptions in supply. AEC currently relies on single suppliers under contracts we have with SAFRAN to meet the carbon fiber and carbon resin requirements for the LEAP program. Lack of supply, delivery delays, or quality issues relating to supplied raw materials or for our key manufacturing equipment could harm our production capacity. Such issues could require the Company to attempt to qualify one or more additional suppliers, which could be a lengthy, expensive and uncertain process. These disruptions could make it difficult to supply our customers with products on time or at all, which could have a negative impact on our business, financial condition, and results of operations. The Company also relies on the labor market to meet our operational requirements, advance our technology and differentiate our products. Low rates of unemployment in key geographic areas in which the Company operates can lead to high rates of turnover and loss of critical talent, which could in turn lead to higher labor costs. ***We may be unable to maintain effective systems of internal controls while consolidating dispersed corporate functions to our corporate headquarters in New Hampshire.*** The Company is relocating corporate staff working remotely or working in offices outside of New Hampshire to the Company's corporate headquarters in New Hampshire. If we lose critical personnel before transferring roles and responsibilities and fail to maintain an effective system of internal controls, we may be unable to accurately report our results of operations and meet our reporting obligations. ***Our ability to attract and retain business and employees may depend on our reputation in the marketplace.*** We believe our brand names and reputation are important corporate assets that help distinguish our products and services from those of our competitors and also contribute to our efforts to recruit and retain talented employees. However, our reputation is susceptible to material damage by events such as disputes with customers, suppliers, or competitors, cybersecurity incidents or service outages, internal control deficiencies, delivery failures, regulatory compliance violations, government investigations or legal proceedings. We may also experience reputational damage from employees, advocacy groups, regulators, investors or other stakeholders that disagree with the way we conduct our business. Similarly, our reputation could be damaged by actions or statements by current or former customers, suppliers, employees, competitors, joint venture partners, adversaries in legal proceedings, legislators or government regulators, as well as members of the investment community or the media, including social media influencers. Our brand and reputation are also associated with our sustainability strategy, including our public commitments related to climate, the environment and other matters. Increasing stakeholder environmental, social and governance expectations, evolving sustainability and social regulation, contractual requirements, and policy requirements may pose risk to our brand and reputation. Our failure to meet stakeholder expectations could harm our reputation and adversely affect our relationships with customers and suppliers or our talent recruitment and retention efforts, which may impact our ability to achieve our long-term business objectives. In addition, positions we take or do not take on environmental or social issues may be unpopular with some of our employees, suppliers, customers or potential customers, which may in the future impact our ability to attract or retain employees, suppliers or customers. We also may choose not to conduct business with potential customers or suppliers or discontinue or not expand business with existing customers or suppliers due to these positions. There is a risk that negative or inaccurate information about the Company, even if based on rumor or misunderstanding, could adversely affect our business. Damage to our reputation could be difficult, expensive and time-consuming to repair, could make potential or existing customers reluctant to select us for new opportunities or could negatively impact our relationships with existing customers and suppliers, resulting in a loss of business, and could adversely affect our talent recruitment and retention efforts. Damage to our reputation could also reduce investor confidence in the Company, materially adversely affecting our share price. ***Conditions in the paper industry have required, and could further require, the Company to reorganize its operations, which could result in significant expense and could pose risks to the Company’s operations.*** We continue to engage in significant restructuring that has included the closing of manufacturing operations. These restructuring activities were intended to match manufacturing capacity to shifting global demand, and also to improve the efficiency of manufacturing and administrative processes. Future shifting of customer demand, the need to reduce costs, or other factors could cause us to determine in the future that additional restructuring steps are required. Restructuring involves risks such as employee work stoppages, slowdowns, or strikes, which can threaten uninterrupted production, maintenance of high product quality, meeting of customers’ delivery deadlines, and maintenance of administrative processes. Increases in output in remaining manufacturing operations can likewise impose stress on remaining facilities as they undertake the manufacture of greater volume and, in some cases, a greater variety of products. Competitors can attempt to exploit these situations. Although we plan each step of the process carefully, and work to reassure customers who could be affected that their requirements will continue to be met, we could lose customers and associated revenues if we fail to execute properly on any restructuring. ***Natural disasters at one or more of our facilities could make it difficult for us to meet our supply obligations to our customers.*** AEC’s production of LEAP engine components is currently located in three facilities. A natural disaster at any of these locations could have a significant adverse effect on AEC’s ability to timely satisfy orders for LEAP components. Production of almost all of AEC’s other legacy and growth programs is located primarily in facilities in Salt Lake City, Utah, Boerne, Texas, or Queretaro, Mexico. Significant consolidation of manufacturing operations in our MC segment over the past decade has reduced the number of facilities available to produce our products, and increased utilization significantly at remaining facilities. Not all product lines are produced at, or are capable of being produced at, all facilities. Based on our assessment of our manufacturing facilities for natural disaster risk, our three facilities in China and an office site in Switzerland are located in areas of high risk for flooding. Our facilities in Belgium, the U.S., and Mexico are at medium-high risk for flooding. Physical impacts of climate change such as increased frequency of severe and extreme weather events could materially impact our facilities and production continuity. We are unable to predict these events with certainty; however, we perform ongoing assessments of physical risk, including climate risk, to our business. Weather events such as more extreme and volatile temperatures, increased storm intensity and flooding, and more volatile precipitation leading to changes in lake and river levels may significantly impact our business. A significant interruption in the operation of any one or more of our plants, whether as the result of a natural disaster or other causes, could significantly impair our ability to timely meet our supply obligations to customers being supplied from an affected facility. While the occurrence of a natural disaster or other business interruption event in an area where we have a facility may not result in any direct damage to the facility itself, it may cause disruptions in local transportation and public utilities on which such locations are reliant, and may also hinder the ability of affected employees to report for work. Although we carry property and business interruption insurance to help mitigate the risk of property loss or business interruption that could result from the occurrence of such events, such coverage may not be adequate to compensate us for all loss or damage that we may incur. ***The Company’s insurance coverage may be inadequate to cover other significant risk exposures.*** The Company has been named as defendant in a large number of suits relating to the actual or alleged exposure to "asbestos-containing products." In addition to asbestos-related claims, the Company may be exposed to other liabilities related to cyber incidents and the products and services we provide. AEC is engaged in designing, developing, and manufacturing components for commercial jet aircraft and defense and technology systems and products. We expect this portion of the business to grow in future periods. Although we maintain insurance for the risks associated with our businesses, there can be no assurance that the amount of our insurance coverage will be adequate to cover all claims or liabilities. In addition, there can be no assurance that insurance coverage will continue to be available to us in the future at a cost that is acceptable. Any material liability not covered by insurance could have a material adverse effect on our business, financial condition, and results of operations. Also see "*The Company is subject to legal proceedings and legal compliance risks".* ***The Company has significant manufacturing operations outside of the U.S., which could involve many uncertainties.*** We currently have manufacturing facilities outside the U.S. which are subject to a number of risks and uncertainties, including: governments may impose withholding or other taxes on remittances and other payments from our non-U.S. operations, or the amount of any such taxes may increase; an outbreak or escalation of any insurrection or armed conflict may occur; governments may seek to nationalize our assets; or governments may impose or increase investment barriers or other restrictions affecting our business. In addition, emerging markets pose other uncertainties, including the protection of our intellectual property, pressure on the pricing of our products, and risks of political instability. The occurrence of any of these conditions could disrupt our business or prevent us from conducting business in particular countries or regions of the world. The military invasion of Ukraine by Russia, and the ensuing sanctions are likely to continue to have an impact on our business. We have previously stopped shipping our products to Russia and abandoned a small joint venture in that country which supplied dryer fabrics to local papermakers, resulting in lost sales. Net assets were written-off in 2022 and the Company does not expect future write-offs in this country. However, we expect that there could be further indirect impacts. For instance, the conflict has caused disruption in the availability of shipping options between Asia and Europe. Supply chain disruptions could make it more difficult to find favorable pricing and reliable sources for the raw materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials or services we need to continue to make and deliver certain products. Moreover, these same pressures could hinder our customers’ ability to source materials needed for their own manufacturing efforts, thereby reducing or slowing their demand for our products. There can be no assurance that we will be able to pass through input cost increases to our customers or to fully offset them via operational efficiencies. If we are unsuccessful in managing such cost increases, they could have a material adverse effect on our business, financial position, results of operations, and liquidity. Geopolitical tensions have heightened elsewhere as well, including between China and Taiwan. MC has significant manufacturing operations in China and vendors that support AEC import significant materials from China, and any escalation in this region could disrupt either segment of our business. These ongoing conflicts, along with other geopolitical uncertainties such as the current conflict in the Middle East, could have broader adverse impacts on macroeconomic factors that impact our business, cash flows, financial condition and results of operations. Changes in U.S. trade policy with foreign countries, or other changes in U.S. laws and policies governing foreign trade, as well as any responsive or retaliatory changes in regulations or policies by such countries, could have an adverse impact on our business, either directly or in the form of increased costs on our supply chain. While the direct impact to date of recent developments in global trade and tariff policy has not been significant, there is a risk that the impact of such developments on our supply chain will be reflected in higher costs from affected suppliers. In addition, our global presence subjects us to certain risks, including controls on foreign exchange and the repatriation of funds. While we have been able to repatriate current earnings in excess of working capital requirements from certain countries in which we operate without substantial governmental restrictions, there can be no assurance that we will be able to cost effectively repatriate foreign earnings in the future. ***The implementation of trade tariffs could result in significant impacts on our business operations, financial condition, and overall market environment.*** In 2024, the Company imported over $100 million into the U.S. from other countries, of which approximately 45% of the imports were from Mexico and 29% of the imports were from Canada. Tariffs on imported goods may lead to higher costs for raw materials, components, or finished products that we procure from affected countries. These increased costs may not be fully absorbed or passed on to customers, thereby impacting our profit margins. Tariffs may lead to disruptions in our supply chain if suppliers face increased costs or decide to relocate production. Delays or shortages could also affect our ability to meet customer demand on time. Trade partners affected by these tariffs may impose retaliatory tariffs on goods exported from the United States. This could reduce demand for our products in international markets and limit our growth opportunities. Tariff-related policies could further create price volatility and uncertainty in global markets. This may lead to fluctuations in customer demand and difficulty in forecasting revenues. Higher costs stemming from tariffs could lead customers to seek alternative products or services from competitors in regions not affected by such trade policies. Navigating the complexities of new trade regulations and compliance requirements may increase administrative burdens and operational costs. We continue to monitor developments regarding trade tariffs and assess their potential impact on our business. While we are exploring strategies to mitigate these risks, the full extent of tariffs' impact on our operations remains uncertain and may vary depending on the scope and duration of the policies. ***Our growth strategy includes evaluating selected acquisitions, which entails certain risks to our business, and presents financial, managerial and operational challenges that may adversely affect our operating results and financial condition.*** Our growth strategy includes acquisitions. Acquisitions involve various inherent risks, such as our ability to assess accurately the fair value, strengths, weaknesses, internal controls, contingent and other liabilities and potential profitability of the acquired business. We cannot assure that all potential risks or liabilities are adequately discovered, disclosed, or understood in each instance. We may fail to achieve anticipated synergies and lose key employees of the acquired business. In addition, internal controls over financial reporting of acquired companies may not be compliant with required standards. Issues may exist that could rise to the level of significant deficiencies or, in some cases, material weaknesses, particularly with respect to foreign companies or non-public U.S. companies. Customer dissatisfaction or performance problems with an acquired business, technology, service or product could also have a material adverse effect on our reputation and business. ***We might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.*** We have a history of making acquisitions, entering new markets, and pursuing joint ventures and we expect to opportunistically seek to make acquisitions, invest in strategic growth initiatives including possible entry into new markets, or enter into joint ventures in the future. We are subject to numerous risks as a result of our growth strategy, including, but not limited to, the following: - We may invest time and capital pursuing acquisitions, joint ventures, or new products that do not materialize; - We may incur costs and expenses associated with any unidentified or potential liabilities of the acquired companies; - We may not achieve anticipated revenue and cost benefits from the acquisitions, joint ventures, or new product development; - We may encounter unforeseen difficulties in integrating acquired operations, joint ventures, or new businesses into our existing operations; - Even if integration is successful, the financial and operational results may differ materially from our assumptions and forecasts due to unforeseen expenses, delays, conditions and liabilities; and - Our past or future acquisitions, joint ventures, or new businesses might not ultimately improve our competitive position and business. We also periodically evaluate, and have engaged in, the disposition of assets and businesses. Divestitures could involve difficulties in the separation of operations, services, products and personnel, the diversion of management’s attention, the disruption of our business and the potential loss of key employees. After reaching an agreement with a buyer for the disposition of a business, the transaction may be subject to the satisfaction of pre-closing conditions, including obtaining necessary regulatory and government approvals, which, if not satisfied or obtained, may prevent us from completing the transaction. Divestitures may also involve continued financial involvement in or liability with respect to the divested assets and businesses, such as indemnities or other financial obligations, in which the performance of the divested assets or businesses could impact our results of operations. Any divestiture we undertake could adversely affect our results of operations. We have previously announced the initiation of a strategic review of our structures assembly business which could include a potential sale of all or part of a production site in Salt Lake City, Utah. In connection with this review, we will incur costs and expenses and may not succeed in completing any strategic initiatives identified. A divesture of the business may not materialize or may not be completed without disruption. We may face additional risks related to such activities. For example, risks related to our ability to find appropriate buyers, obtain applicable contractual, regulatory, and/or governmental approvals, execute a transaction on favorable terms, separate divested business operations with minimal impact to our remaining operations, and effectively manage any transitional service arrangements. Further, any divestiture of the business may require us to recognize impairment charges. Any of these factors could materially and adversely affect our financial condition and operating results. ***We may fail to realize all of the anticipated benefits of the acquisition of Heimbach or those benefits may take longer to realize than expected.*** We continue to devote significant management attention to integrating the business practices and operations of Heimbach. We may experience disruptions to our business and, if integrated ineffectively, it could restrict the realization of the full expected benefits of the acquisition. The failure to meet the challenges involved in the integration process and to realize the anticipated benefits of the acquisition of Heimbach could cause an interruption or loss of momentum in our operations. Difficulties in the integration of the acquired business may include rationalizing the operations, processes and systems of the acquired business, retaining and motivating key management and employees, and integrating existing business relationships with suppliers and customers. Even if integration is successful, the financial and operational results may differ materially from our assumptions and forecasts due to unforeseen expenses, delays, conditions and liabilities. In addition, we may incur unanticipated costs or expenses following an acquisition, including postclosing asset impairment charges, expenses associated with eliminating duplicate facilities, and other liabilities. Furthermore, the acquisition of Heimbach may result in material unanticipated problems, expenses, charges, liabilities, competitive responses, loss of customers and other business relationships, and diversion of management’s attention. Additional integration challenges may include difficulty in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the acquisition; difficulties in the integration of operations and systems, including pricing and marketing strategies; and difficulties in conforming standards, controls, procedures, financial reporting and accounting and other policies, business cultures and compensation structures. Many of these factors will be outside of our control and any one of them could result in increased costs, including restructuring charges, decreases in revenues and diversion of management’s time and energy, which could adversely affect our business, financial condition and results of operations. ### Risks related to our contracts ***AEC is subject to significant financial risk related to potential quality escapes that could cause customer recalls, or production shortfalls that could cause delays in customer deliveries.*** AEC manufactures critical aerospace parts and must meet increasingly demanding quality, delivery, and cost targets across a broad spectrum of programs and facilities. AEC’s ability to realize its full financial objectives will depend on how effectively it meets these challenges. Failure to accomplish these customer quality, delivery, and cost targets on any key program could result in material losses to the Company and have a material adverse impact on the amount and timing of anticipated AEC revenues, segment operating income, and cash flows, which could in turn have a material adverse impact on our consolidated financial results. ### Long-term supply contracts in our AEC segment pose certain risks. AEC has a number of long-term contracts with fixed pricing, and is likely to enter into similar contracts in the future. While long-term contracts provide an opportunity to realize steady and reliable revenues for extended periods, they pose a number of risks, such as program cancellations, reductions or delays in orders by customers, the termination of such contracts or orders, changes in the customers’ requirements that may not entitle AEC to additional compensation or payment, or the occurrence of similar events over which AEC has no or limited control. Accounting for long-term contracts and related assets requires estimates and judgments related to our progress toward completion and the long-term performance on the contract. Significant judgments include potential risks associated with the ability and cost to achieve program schedule, including customer-directed delays or reductions in scheduled deliveries, and technical and other specific contract requirements including customer activity levels and variable consideration based upon that activity. Due to the size and long-term nature of many of AEC contracts, the estimation of total revenues and cost at completion is complex and subject to many variables. Management must make assumptions and estimates regarding contract revenue and cost (which may include estimates of variable consideration, including award fees and penalties), including, but not limited to, labor productivity and availability, complexity and scope of the work to be performed, availability and cost of materials, length of time to complete the performance obligation, availability and timing of funding from our customers, as well as overhead cost rates. In 2025, the Company recorded negative cumulative adjustments to the estimated profitability of long-term contracts in the amount of $165.8 million, primarily related to our CH-53K, Boeing waste tank, F-35, and Joint Strike Fighter programs. Because of the significance of management’s judgments and estimation processes, it is likely that materially different estimates could be recorded in the future if we used different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may adversely affect our future results of operations and financial condition. Sales of components for a number of programs that are currently considered to be important to the future revenue-growth of AEC are pursuant to short-term purchase orders for a finite period or number of parts, or supply agreements with terms of one to four years. Such programs include airframe components for the F-35; forward fuselage frames for the Boeing 787; AFT assembly including skins and longerons, sponson assemblies, tail rotor pylon and the horizontal stabilizer for the CH-53K helicopter, and other long-term programs. As a result, while AEC reasonably expects to continue as a supplier on these programs for so long as it meets its obligations, there can be no assurance that this will be the case, or that, in programs where it is currently a sole supplier, this sole supplier status will continue. Even if AEC’s status as a supplier is extended or renewed, there can be no assurance that such extension or renewal will be on the same or similar commercial or other terms. Any failure by AEC to maintain its current supplier status under these programs, or any material change in their commercial or other terms, could have a material adverse effect on AEC’s future revenues and segment operating income. ***AEC derives a significant portion of its revenue from contracts related to U.S. Government Department of Defense, which are subject to unique risks.*** The funding of DoD programs is subject to congressional appropriations. Many of the DoD programs in which we participate may last several years, but they are normally funded annually. Changes in military strategy and priorities may affect future opportunities and/or existing programs. Long-term DoD contracts and related orders are subject to cancellation, delay or restructure if appropriations for subsequent performance periods are not made. The termination or reduction of funding for existing or new DoD programs could result in a material adverse effect on our earnings, cash flow and financial position. Additionally, our business funded by the U.S. Government is subject to extensive federal and DoD agency acquisition regulations. As a result, specific business systems and processes, as well as our proposed contract costs, are subject to audits by U.S. Government agencies. U.S. Government representatives may audit our compliance with these required federal regulations, and such audits could result in adjustments to allowable contract costs. Any costs found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed must be refunded. Certain business systems or processes found to be non-compliant to federal and agency regulations could result in a suspension of work until such compliance issues are corrected. If any audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the U.S. Government. Realization of any of these risks could result in a material adverse effect on our earnings, cash flow and financial position. See also “*The U.S. Government’s Department of Defense ("DoD") Cybersecurity Maturity Model Certification (“CMMC”) program introduces new and unique risks for DoD contractors.”* ***The loss of one or more major customers could have a material adverse effect on Net revenues and profitability.*** In the AEC segment, our customer Safran accounted for approximately 37% of AEC's Net revenues in 2025, substantially all of which was under an exclusive long-term supply agreement relating to parts for the LEAP engine. Although we are an exclusive supplier of such parts, and although this is a cost-plus-fee arrangement, our customer is not obligated to purchase any minimum quantity of parts, and cancellation or significant reduction in demand for the LEAP program would have a material adverse impact on AEC’s Net revenues and profitability. LEAP engines are currently used on the Boeing 737 MAX, Airbus A320neo, Airbus A321neo and COMAC 919 aircraft. The LEAP long-term supply agreement contains certain events of default that, if triggered, could result in termination of the agreement by the customer, which would also have a material adverse impact on segment Net revenues and profitability. A substantial portion of AEC’s non-LEAP revenue in the near term, and revenue growth opportunity in the longer term, is dependent upon a small number of customers and programs. Unlike the 3D-woven composite components supplied by ASC, parts supplied for such non-LEAP programs are capable of being made by a number of other suppliers. Such programs include airframe components for the F-35, forward fuselage frames for the Boeing 787, and sponsons, tail-rotor pylons, horizontal stabilizers and struts for the CH-53K helicopter. Any failure by AEC to maintain its current supplier status under these programs, or any material change in their commercial or other terms, could have a material adverse effect on AEC’s future Net revenues and operating income. Our top ten customers in the MC segment accounted for a significant portion of our Net revenues in 2025. The loss of one or more of these customers, or a significant decrease in the amount of machine clothing they purchase from us, could have a material adverse impact on MC's Net revenues and profitability. We could also be subject to similar impacts if one or more such customers were to suffer financial difficulties and be unable to pay us for products they have purchased. While we normally enter into long-term supply agreements with significant MC customers, the agreements generally do not obligate the customer to purchase any products from us, and may be terminated by the customer at any time with appropriate notice. ### Risks related to information technology and cybersecurity ***We are dependent on information technology networks, systems and cloud-based services to securely process, transmit and store electronic information and to communicate among our locations around the world and with our employees, customers and suppliers. The failure to prevent attacks on our operational systems and/or infrastructure or our cloud-based providers could result in disruptions to our businesses, loss or disclosure of regulated data, or the loss or disclosure of confidential and proprietary intellectual property or other assets.*** As the breadth and complexity of this infrastructure continues to grow, including the increasing reliance on, and use of, mobile technologies and cloud-based services, and as some of our global employees work remotely, the risk of security incidents and cyberattacks has increased. Cybersecurity threats are constantly expanding and evolving, becoming increasingly sophisticated and complex, increasing the difficulty of detecting and defending against them and maintaining effective security measures and protocols. The use of emerging technologies by organized cyber criminals, such as artificial intelligence and quantum computing, has increased the range of security threats faced by the Company. As AEC continues to perform aerospace and defense work, attacks from threat actors could become more persistent, including attacks from highly organized adversaries such as nation state actors, which target the defense industrial base and other critical infrastructure sectors. The improper conduct of our employees or others working on our behalf who have access to export controlled or other sensitive information could also adversely affect our business and reputation. Our customers, suppliers, and subcontractors experience similar security threats and an incident at one of these entities could adversely impact our business. These entities are typically outside our control and may have access to our information with varying levels of security and cybersecurity resources, expertise, safeguards and capabilities. Breaches in our supply chain could compromise our data and adversely affect customer deliverables. We also rely on our supply chain to adequately detect and report cyber incidents, which could affect our ability to report or respond to cybersecurity incidents effectively or in a timely manner. ***Our information technology systems, processes, sites and cloud-based providers may suffer interruptions or failures, or we may experience disruptions or challenges arising from the implementation or upgrading of new information technology systems, which may affect our ability to conduct our business.*** Our information technology systems may be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages and security breaches (including destructive malware such as ransomware) resulting in unauthorized access or cyber-attacks. If our business continuity plans, incident response capabilities, and security controls do not function effectively, we may experience partial or complete interruptions in our operations, which may adversely impact our business, financial condition, results of operations and cash flows. As part of our ongoing efforts to enhance operational efficiency and support our growth strategy, we implemented a significant upgrade to our Enterprise Resource Planning ("ERP") system by transitioning to a cloud-based platform. This upgrade is expected to streamline our business processes, improve data accessibility, and provide greater scalability. However, the implementation of a new ERP system involves substantial operational and internal controls risks. We cannot assure that all potential risks or liabilities are adequately discovered, disclosed, or understood in each instance. We may fail to achieve anticipated synergies. In addition, internal controls over financial reporting of acquired companies may not be compliant with required standards. Issues may exist that could rise to the level of significant deficiencies or, in some cases, material weaknesses. ***We face legal, reputational and financial risks from any failure to protect customer and/or Company data from security incidents or cyberattacks.*** Such incidents could lead to shutdowns or disruptions of or damage to our systems and those of our customers and suppliers, and unauthorized disclosure of sensitive or confidential information, potentially including personal data and proprietary business information. Unauthorized disclosure of, denial of access to, or other incidents involving sensitive or confidential Company, employee, customer or supplier data, whether through systems failure, employee negligence, fraud, misappropriation, or cybersecurity, ransomware or malware attacks, or other intentional or unintentional acts, could damage our reputation and our competitive positioning in the marketplace, disrupt our or our customer’s business, cause us to lose customers and result in significant financial exposure and legal liability. We are subject to numerous laws and regulations designed to protect this information, such as the European Union’s General Data Protection Regulation (“GDPR”) and the United Kingdom’s GDPR, the Cybersecurity Law of the People's Republic of China, as well as various other U.S. federal and state laws governing the protection of privacy, health or other personally identifiable information and data privacy and cybersecurity laws in other regions. We are subject to U.S. federal procurement regulations such as the DFARS clause 252.204-7012, based on the NIST 800-171 framework whose goal is protecting controlled unclassified information in non-federal systems and organizations. In 2025, we achieved the U.S. DoW CMMC Level 2 certification through an accredited CMMC Third-Party Assessment Organization (C3PAO) in support of our AEC business segment. This will impact us in the coming years as it is formalized through the DFARS and those regulations are incorporated into our contracts for government programs. These laws and regulations continue to evolve, are increasing in complexity and number and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us. Various privacy laws impose compliance obligations regarding the handling of personal data, including the cross-border transfer of data, and significant financial penalties for noncompliance. If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to Company, employee, customer or supplier data, or otherwise mismanages or misappropriates that data, we could be subject to significant litigation, monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions. These monetary damages might not be subject to a contractual limit of liability or an exclusion of consequential or indirect damages and could be significant. In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security incidents, cyberattacks and other related incidents. ### Risks related to our liquidity and financial matters ***Fluctuations in currency exchange rates could adversely affect the Company’s business, financial condition, and results of operations.*** We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results. The effect of currency rate changes on gross profit in the MC segment can be difficult to anticipate because we use a global sourcing and manufacturing model. Under this model, while some non-U.S. Net revenues and associated costs are in the same currency, other non-U.S. Net revenues are denominated in currencies other than the currency in which most costs of such sales are incurred. At the same time, the geographic sources of materials purchased (and the currencies in which these purchases are denominated) can vary depending on market forces, and the Company may also shift production of its products between manufacturing locations, which can result in a change in the currency in which certain costs to produce such products are incurred. Changes in exchange rates can result in revaluation gains and losses that are reflected in our Consolidated Statements of Income. Revaluation gains and losses occur when our business units hold financial assets or liabilities denominated in a currency other than their functional currency. Operating results can also be affected by the translation of Net revenues and costs from each non-U.S. subsidiary’s functional currency to the U.S. dollar. Changes in the value of foreign currencies relative to the U.S. dollar could impact the reported level, in U.S. dollars, of Net revenues and operating expenses which are denominated in those currencies. Changes in currency exchange rates could adversely affect the Company’s business, financial condition or results of operations. ***We have a substantial amount of indebtedness. At December 31, 2025, the Company had outstanding long-term debt of $456 million.*** At December 31, 2025, our leverage ratio (as defined in our primary borrowing agreement) was 1.66 to 1.00, and we had borrowed $456 million under our $800 million revolving credit facility. While we feel that we generate sufficient cash from operations and have sufficient borrowing capacity to make required capital expenditures to maintain and grow our business, any decrease in our cash generation could result in higher leverage. Higher leverage could hinder our ability to make acquisitions, capital expenditures, or other investments in our businesses, pay dividends, or withstand business and economic downturns. Our primary borrowing agreement contains a number of covenants and financial ratios that the Company is required to satisfy. The most restrictive of these covenants pertain to prescribed leverage and interest coverage ratios and asset dispositions. Any breach of any such covenants or restrictions would result in a default under such agreement that would permit the lenders to declare all borrowings under such agreement to be immediately due and payable and, through cross-default provisions, could entitle other lenders to accelerate their loans. In such an event, the Company would need to modify or restructure all or a portion of such indebtedness. Depending on prevailing economic conditions at the time, the Company might find it difficult to modify or restructure the debt on attractive terms, or at all. From time to time, we use interest rate swaps to manage the interest cost associated with our borrowings. Future changes in the interest rate benchmark could affect the Company’s cost of borrowing and its cash flows, or the effectiveness of the hedges, which could have an effect on net income. As of December 31, 2025, we had approximately $344 million of additional borrowing capacity under our $800 million revolving credit facility. The incurrence of additional indebtedness could increase the above-described risks associated with higher leverage. In addition, any such indebtedness could contain terms that are more restrictive than our current facilities. ***Significant changes in critical estimates and assumptions related to pension and other post-retirement benefit (“OPEB”) costs and liabilities could affect our earnings and pension contributions in future periods.*** The determination of our pension and other post-retirement benefit plans’ expense or income involves significant judgments, specifically related to our discount rate, long-term return on assets, and other actuarial assumptions. We establish our discount rate assumption annually and review whether to change our long-term return on assets assumption annually. These estimates and actuarial assumptions could change significantly as a result to changes in economic, legislative, and/or demographic profiles. Such changes could result in unfavorable changes to our pension and OPEB expense and funded status, and our cash contributions thereof, which could have a negative impact on our results of operations. Further, the difference between actual investment returns and our long-term return on asset assumptions would result in a change to our pension and OPEB expense, funded status, as well as our required contributions to the plans. We manage our plan assets in accordance with our investment management objectives, and they are subject to market volatility and other conditions. Differences may also arise due to changes in regulatory, accounting and other requirements applicable to pension plans. ***The Company is exposed to the risk of increased expense in health-care related costs.*** We are largely self-insured for some employee and business risks, including health care programs in the U.S. Losses under all of these programs are accrued based upon estimates of the ultimate liability for claims reported and an estimate of claims incurred but not reported, with assistance from third-party actuaries and service providers. However, these liabilities are difficult to assess and estimate due to unknown factors, including the severity of an illness and the number of incidents not reported. The accruals are based upon known facts and historical trends, and management believes such accruals to be adequate. The Company also maintains stop-loss insurance policies to protect against catastrophic claims above certain limits. If actual results significantly differ from estimates, our financial condition, results of operations, and cash flows could be materially impacted by losses under these programs, as well as higher stop-loss premiums in future periods. ***Goodwill and other intangible assets represent a significant portion of our assets, and any impairment of these assets could negatively impact our results of operations and financial conditions.*** Goodwill and other intangible assets that have indefinite useful lives must be evaluated at least annually for impairment. The specific guidance for testing goodwill and other non-amortized intangible assets for impairment requires management to make certain estimates and assumptions when allocating goodwill to reporting units and determining the fair value of reporting unit net assets and liabilities, including, among other things, an assessment of market conditions, projected cash flows, investment rates, cost of capital and growth rates, which could significantly impact the reported value of goodwill and other intangible assets. Changes in our estimates and assumptions could adversely impact projected cash flows and the fair value of reporting units. Fair value is generally determined using a combination of the discounted cash flow, market multiple and market capitalization valuation approaches. Absent any impairment indicators, we generally perform our evaluations annually, using available forecast information. If at any time we determine an impairment has occurred, we are required to reflect the reduction in value as an expense within operating income, resulting in a reduction of earnings and a corresponding reduction in our net asset value in the period such impairment is identified. In the event there is deterioration in business conditions or estimated cash flows beyond amounts previously or currently forecasted, there is a risk of impairments on our goodwill and indefinite-lived intangible balances. ***Unanticipated changes in tax laws or exposure to additional tax liabilities could affect our future profitability.*** We are subject to income taxes in both the U.S. and various non-U.S. jurisdictions. Unanticipated changes in foreign and domestic tax laws, regulations, or policies, or their interpretation and application by regulatory bodies, or exposure to additional tax liabilities could affect our future profitability and cash flows. Our domestic and international tax liabilities are dependent upon the distribution of income among these jurisdictions. Our future results of operations could be adversely affected by changes in the effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, as well as changes in the overall profitability of the Company, tax legislation, and generally accepted accounting principles. As of December 31, 2025, we have approximately $49.1 million of net operating loss (“NOL”) carryforwards in various taxing jurisdictions. Our ability to utilize the NOL carryforward could be adversely impacted by several factors, including but not limited to significant changes to tax legislation and lower than expected future earnings. We are subject to tax audits by various tax authorities in many jurisdictions. Following the acquisition of Heimbach, the open tax years in these jurisdictions range from approximately 2019 to 2024. We regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes. The results of tax audits and examinations of previously filed tax returns or related litigation and continuing assessments of our tax exposures could materially affect our financial results. ### Risks related to our legal and regulatory environment ***The Company may fail to adequately protect its proprietary technology or intellectual property, which would allow competitors or others to take advantage of its research and development efforts.*** Proprietary trade secrets are a source of competitive advantage in each of our segments. If our trade secrets were to become available to competitors, it could have a negative impact on our competitive strength. We employ measures to maintain the confidential nature of these secrets, including maintaining employment and confidentiality agreements, maintaining clear policies intended to protect such trade secrets, educating our employees about such policies, clearly identifying proprietary information subject to such agreements and policies, and vigorously enforcing such agreements and policies. Despite such measures, our employees, consultants, and third parties to whom such information may be disclosed in the ordinary course of our business may breach their obligations not to reveal such information, and any legal remedies available to us may be insufficient to compensate our damages. Our success depends on our ability to protect our intellectual property. We rely on a combination of patents, trade secrets, and contractual agreements to safeguard our intellectual property. However, there is a risk that these measures may not be sufficient to prevent the unauthorized use or infringement of our intellectual property rights. We may also face intellectual property disputes and litigation. These disputes could arise from allegations of infringement by third parties of our intellectual property or from claims that our operations infringe the intellectual property rights of others. Such litigation can be costly, time-consuming, and may divert management's attention and resources from other business operations. If we are unsuccessful in defending our intellectual property, or if our intellectual property rights are deemed invalid or unenforceable, we may lose valuable competitive advantages. This could result in a decline in market share, reduced revenue, and a material adverse effect on our business, financial condition, and results of operations. Furthermore, we may be required to license our technology to third parties or to license technology from third parties to settle intellectual property disputes. Such licenses may not be available on commercially reasonable terms, or at all, which could further harm our business and financial performance. ### The Company is subject to legal proceedings and legal compliance risks. We are subject to a variety of legal proceedings in multiple jurisdictions where we conduct business. Litigation is an inherently unpredictable process and unanticipated negative outcomes are always possible. An adverse outcome in any period could have an adverse impact on the Company’s operating results for that period. We are also subject to a variety of legal compliance risks. While we believe that we have adopted appropriate risk management and compliance programs, the global and diverse nature of our operations means that legal compliance risks will continue to exist and related legal proceedings and other contingencies, the outcome of which cannot be predicted with certainty, are likely to arise from time to time. Failure to resolve successfully any legal proceedings related to compliance matters could have an adverse impact on our results in any period. ***Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these regulations could harm our business.*** We are subject to numerous, and sometimes conflicting, legal regimes on matters as diverse as anti corruption, import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, sustainability and climate initiatives, human capital requirements, anti-competition, anti-money-laundering, data privacy and protection, government compliance, wage-and-hour standards, employment and labor relations and human rights. The global nature of our operations further increases the difficulty of compliance. Compliance with diverse legal requirements is costly, time-consuming and requires significant resources. Violations of one or more of these regulations in the conduct of our business could result in significant fines, enforcement actions or criminal sanctions against us and/or our employees, prohibitions on doing business and damage to our reputation. Violations of these regulations in connection with the performance of our obligations to our customers also could result in liability for significant monetary damages, fines, enforcement actions and/or criminal prosecution or sanctions, unfavorable publicity and other reputational damage and restrictions on our ability to effectively carry out our contractual obligations and thereby expose us to potential claims from our customers. Due to the varying degrees of development of the legal systems of the countries in which we operate, local laws may not be well developed or provide sufficiently clear guidance and may be insufficient to protect our rights. In particular, in many parts of the world, including countries in which we operate and/or seek to expand, practices in the local business community might not conform to international business standards and could violate anti corruption laws, or regulations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010. The Company provides, and all employees must participate in, regular training activities with respect to the Company's business ethics standards and expectations. Our employees, subcontractors, suppliers, and agents, any companies we may acquire and their employees, subcontractors, suppliers and agents, and other third parties with which we associate, could take actions that violate policies or procedures designed to promote legal and regulatory compliance or applicable anti corruption laws or regulations. Violations of these laws or regulations by us, our employees or any of these third parties could subject us to criminal or civil enforcement actions (whether or not we participated or knew about the actions leading to the violations), including fines or penalties, disgorgement of profits and suspension or disqualification from work, including U.S. federal contracting, any of which could materially adversely affect our business, including our results of operations and our reputation. ***Our global operations are subject to increasing environmental, social and governance regulatory requirements, increasing operational and compliance costs, as well as the risk of noncompliance.*** Evolving sustainability and social regulation, contractual requirements, and policy requirements, including transition risks associated with climate change, may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain, and production continuity, which may impact our ability to achieve long-term business objectives. Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investment in product and packaging designs, result in carbon offset investments or otherwise could negatively impact our business and/or competitive position. Increasing industry performance standards, increasing sustainability disclosure requirements in the U.S. and globally, and requirements on manufacturing and product air pollutant emissions, especially GHG emissions, may result in increased costs or reputational risks and could limit our ability to manufacture and/or market certain of our products at acceptable costs, or at all. Increasing global chemical restrictions and bans, increasing regulation related to product end-of-life and packaging materials, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities. Changes in laws and regulations could mandate significant and costly changes to the way we conduct our business, including increasing the cost of compliance, or could impose additional taxes. Changes in sustainability reporting requirements may also impact our global operations as we continue collecting information for reports to be published according to new standards. We will face significant challenges in being able to implement separate but overlapping standard-setting initiatives, which may contain inconsistencies. We are devoting substantial resources to sustainability reporting to ensure compliance; however, the reporting landscape is highly dynamic and uncertainty remains. Implementing separate but overlapping newly introduced standard-setting initiatives in short timetables may result in inconsistencies and higher costs. Non-compliance could result in various penalties, including liability for significant monetary damages, fines, enforcement actions and/or sanctions. Given the reach of new and proposed regulations in the jurisdictions where we operate, there is the possibility that we may not be able to comply, or may not be able to comply in time. We also may not be able to ensure that relevant companies within our supply chain are compliant with applicable supply chain due diligence acts, which may require us to embark on new due diligence processes with other companies and in some cases parting ways with suppliers. Changes to several international regulatory frameworks including the European Union's Corporate Sustainability Reporting Directive (“CSRD”) and Corporate Sustainability Due Diligence Directive (“CSDDD”) have increased thresholds and moved out compliance timeframes by several years. We continue to closely monitor developments in sustainability- and climate change-related laws, regulations and policies for their potential effect on our business, however, we are currently not able to accurately predict the materiality of any potential costs associated with such developments. In addition, climate change-related litigation and investigations have increased in recent years and any claims or investigations against us could be costly to defend, and our business could be adversely affected by the outcome. ***Certain provisions of our Certificate of Incorporation, our Bylaws and Delaware law could hinder, delay or prevent a change in control of us that you might consider favorable, which could also adversely affect the price of our Common Stock.*** Certain provisions under our Certificate of Incorporation, our Bylaws and Delaware law could discourage, delay or prevent a transaction involving a change in control of the Company, even if doing so would benefit our stockholders. These provisions could delay or prevent a change in control and could limit the price that investors might be willing to pay in the future for shares of our Common Stock. Our Certificate of Incorporation authorizes our Board of Directors to issue new series of preferred stock without stockholder approval. Depending on the rights and terms of any new series created, and the reaction of the market to the series, the rights or value of our Common Stock could be negatively affected. For example, subject to applicable law, our Board of Directors could create a series of preferred stock with superior voting rights to our existing common stock. The ability of our Board of Directors to issue this new series of preferred stock could also prevent or delay a third party from acquiring us, even if doing so would be beneficial to our stockholders. ### We may not pay cash dividends on our Common Stock. It is our current practice to pay cash dividends on our common stock. There can be no assurance, however, that we will pay dividends in the future in the amounts that we have in the past, or at all. Our Board of Directors may change the timing and amount of any future dividend payments or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders. Our ability to pay dividends will depend upon many factors, including our financial position and liquidity, results of operations, legal requirements, restrictions that may be imposed by the terms of our current and future credit facilities and other debt obligations and other factors deemed relevant by our Board of Directors. For example, we have a substantial amount of indebtedness and while we feel that we generate sufficient cash from operations and have sufficient borrowing capacity to make required capital expenditures to maintain and grow our business, any decrease in our cash generation could result in higher leverage. Higher leverage could hinder our ability to make acquisitions, capital expenditures, or other investments in our businesses, pay dividends, or withstand business and economic downturns. In the future, we may also enter into other credit agreements or other borrowing arrangements or issue debt securities that, in each case, restrict or limit our ability to pay cash dividends on our common stock. In addition, since a significant portion of our cash is generated from operations of our subsidiaries, our ability to pay dividends is in part dependent on the ability of our subsidiaries – some of which are located outside of the U.S. – to make distributions to us. Such distributions will be subject to their operating results, cash requirements and financial condition, as well as our ability to repatriate cash held by non-U.S. subsidiaries. Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our common stock. ***If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.*** The trading market for our Class A Common Stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our Class A Common Stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Class A Common Stock could decrease, which could cause our stock price and trading volume to decline. ***Future sales of shares by us or our existing stockholders could cause our stock price to decline.*** Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline or might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of February 19, 2026, we had 28.3 million shares of Class A Common Stock outstanding. In addition, shares of Common Stock are issuable upon the vesting of outstanding equity awards, and certain shares are reserved for future issuance under our equity compensation plans. ***Shareholder activism can have a significant impact on our operations, strategy, and overall performance.*** Activist shareholders may attempt to influence or enact changes in our corporate governance, business strategies, or financial decisions. This can lead to substantial disruptions and pose various risks. Activist campaigns can divert the attention of our management team and board of directors from executing our business strategy and managing day-to-day operations. The need to respond to shareholder activists' demands or proposals can be time-consuming and may detract from our ability to focus on long-term goals. Shareholder activists may propose changes to our board composition, executive compensation, or other governance practices. Proposed changes could lead to instability or conflict within our leadership, potentially affecting the company's strategic direction and decision-making processes. Shareholder activism often brings increased scrutiny from the media, investors, and analysts. Negative publicity or heightened market perception of instability could adversely affect our stock price, investor confidence, and overall market reputation. This could also lead to increased volatility in our stock and potential loss of shareholder value. Activist shareholders may push for changes in our business strategies, such as divestitures, acquisitions, cost-cutting measures, or shifts in focus. While some suggestions may align with broader market trends or opportunities, others may conflict with our long-term vision or operational capabilities, potentially leading to suboptimal business outcomes. Engaging with activist shareholders may also increase the risk of legal challenges or regulatory scrutiny. Activist campaigns can result in proxy battles, litigation, or regulatory investigations, which can be costly, time-consuming, and damaging to our reputation. Prolonged activist campaigns and the associated uncertainty can negatively affect employee morale and retention. Employees may become concerned about the stability of their positions or the overall direction of the company, potentially leading to decreased productivity and higher turnover rates. Implementing changes advocated by activists may involve substantial costs or capital expenditures, which could impact our financial position and operating results. We are vigilant in monitoring and addressing potential activism to safeguard our long-term interests and those of our shareholders. ## Cybersecurity As filed, 11,758 characters. ### Risk Management and Strategy Albany International Corp. views cybersecurity risk management as a cornerstone of our Enterprise Risk Management ("ERM") strategy, and we are committed to protecting our digital assets and sustaining investor confidence. Cybersecurity risks we face include data breaches, operational disruptions, reputational harm, and regulatory fines. Such incidents could lead to shutdowns or disruptions of or damage to our systems and those of our customers and suppliers, and unauthorized disclosure of sensitive or confidential information, potentially including personal data and proprietary business information. Unauthorized disclosure of, denial of access to, or other incidents involving sensitive or confidential Company, employee, customer or supplier data, whether through systems failure, employee negligence, fraud, misappropriation, or cybersecurity, ransomware or malware attacks, or other intentional or unintentional acts, could damage our reputation and our competitive positioning in the marketplace, disrupt our business or our customers' businesses, cause us to lose customers and result in significant financial exposure and legal liability. These risks are identified, assessed and managed within the broader context of our ERM strategy, ensuring a comprehensive approach to organizational risk. We incorporate cybersecurity risk assessments into our overall enterprise risk assessment process. This integration ensures that cyber risks are evaluated and managed alongside other operational, financial, and strategic risks, offering a holistic view of our risk landscape. Our ERM strategy is overseen by an Enterprise Risk Management Committee, which is made up of representatives from our finance, legal, accounting, internal audit and global information systems functions, our business leaders and members of the Senior Leadership Team. It is led by our Chief Financial Officer and its actions are reported to our Board of Directors on a quarterly basis. Our Chief Information Officer and Senior Director of Information Security, along with members of their respective teams, are responsible for identifying and managing cybersecurity risk. The Senior Leadership Team, the Board of Directors and the Board’s Audit Committee receive regular updates and engage in regular strategic discussions relating to cybersecurity risk management as part of their overall oversight of risk management. Our cybersecurity framework leverages internationally recognized standards, including the CIS 20 and the NIST SP 800-171 frameworks, and is required to comply with the Department of War Cybersecurity Maturity Model Certification (CMMC). We have policies and procedures in place designed to maintain compliance with relevant cybersecurity and data privacy laws and regulations in the jurisdictions in which we operate, such as the European Union GDPR and the California Consumer Privacy Act. Our cybersecurity strategy includes policies, procedures, and technology that proactively safeguard our operations against cybersecurity threats. Internal teams and external experts regularly conduct risk assessments and audits to identify cybersecurity threats, ensure regulatory compliance, and adhere to control process best practices. Continuous monitoring of our networks and systems for threats and vulnerabilities is a key component of our strategy, supported by the analysis of threat intelligence from external sources. This multi-layered approach enables early detection and facilitates prompt response to potential cybersecurity threats. We regularly review and update our cybersecurity strategies, policies and procedures, taking into consideration the latest advancements in cybersecurity practices and changes to the threat landscape. We have a cybersecurity incident response and crisis management plan in place, which incorporates regular training and simulation exercises, including with senior management, to ensure readiness and efficacy in responding to cybersecurity incidents. Our incident response and crisis management plan coordinates the activities we will take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate reputational damage. In addition, we provide regular security awareness education and training for all employees and consultants, conduct internal “phishing” testing and training for “clickers,” require mandatory security training for all new hires and publish periodic cybersecurity newsletters to highlight any emerging or urgent security threats. We also carry insurance that provides protection against the potential losses arising from a cybersecurity incident. We engage qualified third-party cybersecurity experts for in-depth cyber risk assessments, penetration tests, and compliance audits, which provide impartial perspective and insight into our cybersecurity posture and we engage consultants for the development and refinement of our cybersecurity strategy and maturity, drawing upon industry best practices and regulatory knowledge. These collaborations also include the refinement of our incident response and crisis management plan and employee training, emphasizing the transfer of knowledge for sustainable in-house capabilities. Our cybersecurity risk management processes extend to the oversight and identification of threats associated with our use of third-party service providers. We set clear objectives for third-party service providers, and we assess cybersecurity practices and any history of security incidents before engaging any potential service providers. Our contracts explicitly include requirements relating to cybersecurity, including adherence to certain standards, to ensure compliance with our security protocols. Once engaged, we regularly monitor the cybersecurity posture of major providers through log reports and intelligent threat protection analysis. Our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, including as a result of previous cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks and any future material incidents. Based on our review of past cybersecurity incidents, we believe that all such incidents were addressed promptly and effectively. In the last fiscal three years, we have not experienced any material information cybersecurity incidents and the expenses we have incurred from any cybersecurity incidents were immaterial. See Item 1A, “Risk Factors” of this Annual Report on Form 10-K for more information on our cybersecurity-related risks. ### Governance #### Board of Directors The Board of Directors oversees our risk management processes, including with respect to cybersecurity risk, and the Board considers cybersecurity risk management an enterprise priority. The Board has delegated primary responsibility for reviewing and discussing with management our strategies, initiatives and policies relating to cybersecurity to the Audit Committee, which regularly reports to the full Board regarding such review and discussions. In addition, in connection with its oversight of cybersecurity risks in relation to financial reporting and internal controls, the Audit Committee plays a crucial role in the Board’s understanding and management of the financial and operational impacts of cybersecurity risks. As part of their oversight of cybersecurity risk, the Board and Audit Committee regularly review detailed cybersecurity reports, which include analyses of the threat landscape, recent incidents, and the efficacy of our cybersecurity strategy. In addition, the Chief Information Officer and Senior Director of Information Security provide bi-annual updates to the Audit Committee and annual briefings to the full Board on our cybersecurity posture, strategy, and risk management. These reviews and updates are complemented by ongoing cybersecurity training for board members to enhance their decision-making and oversight effectiveness. Regular active engagement in strategic discussions by the Board and Audit Committee ensures that cybersecurity considerations are effectively integrated into our overall business strategy and align with Company objectives and demonstrates the Board’s commitment to proactive cybersecurity oversight. #### Management Although the Board oversees our overall risk management, day-to-day management of cybersecurity risk is the responsibility of management. Management’s critical role involves assessing and managing these risks through regular evaluations, deploying advanced security measures, and developing policies. Management integrates these strategies across all our operations, fostering a culture of cybersecurity awareness within the Company. This proactive stance is essential to safeguarding digital assets and ensuring operational resilience against evolving cyber threats. Quarterly, the Chief Information Officer and Senior Director of Information Security present detailed cybersecurity reports to the Enterprise Risk Committee, focusing on strategic initiatives and evolving threats. The Enterprise Risk Committee, meeting quarterly, evaluates cybersecurity within the broader organizational risk context, ensuring consistent assessment and management. The Chief Financial Officer chairs quarterly Enterprise Risk Management Committee meetings to review and evaluate various risk factors, including cybersecurity. The Chief Financial Officer's expertise in financial risk management, strategic planning, and organizational leadership is instrumental in guiding the committee's discussions and decisions. The Chief Financial Officer ensures that appropriate financial and operational implications of cybersecurity risk are considered and integrated into our Enterprise Risk Management Strategy. The Chief Information Officer oversees our broader IT strategy, including cybersecurity, and presents quarterly to the Enterprise Risk Management Committee, bi-annually to the Audit Committee, and annually to the Board. The Chief Information Officer's expertise in information technology, cybersecurity, and strategic planning, forged over 25 years, 20 of which has been spent in leadership at global publicly traded companies, is integral to our approach to cybersecurity risk management. This expertise is crucial in aligning our cybersecurity initiatives with business objectives, ensuring that our strategies effectively support the Company's overall goals. The Senior Director of Information Security, reporting to and collaborating with the Chief Information Officer, manages our Enterprise Cybersecurity team. Day-to-day responsibilities include the implementation of cybersecurity strategies, cybersecurity risk management, and enhancing defenses against evolving threats. Our Senior Director of Information Security has over 35 years of IT experience, 12 of which have been spent leading the Company’s cybersecurity efforts. The Information Security plays a key role in shaping our cybersecurity strategy, ensuring alignment with industry standards and integration into our broader IT strategy. Regular reporting channels between the Senior Director of Information Security, the Chief Information Officer, and the Chief Financial Officer facilitate a cohesive, well-informed approach to managing cybersecurity risks. These reports include detailed analyses of potential threats, incident response readiness, and the effectiveness of existing cybersecurity measures. ## Properties As filed, 764 characters. Our principal manufacturing facilities are located in Belgium, Brazil, Canada, China, France, Germany, Italy, Mexico, Spain, Sweden, the United Kingdom, and the United States. The aggregate square footage of our operating facilities in the United States is approximately 2.1 million square feet, of which 1.2 million square feet are owned and 0.9 million square feet are leased. Our facilities located outside the United States comprise approximately 4.5 million square feet, of which 4.0 million square feet are owned and 0.5 million square feet are leased. We consider these facilities to be in good condition and suitable for our purpose. The capacity associated with these facilities is adequate to meet production levels required and anticipated through 2026. ## Legal proceedings As filed, 236 characters. The information set forth above is described in Note 21, *Commitments and Contingencies,* of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. ## Management's discussion and analysis As filed, 45,104 characters. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of the Company. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes included under Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The MD&A generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results or Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 26, 2025, incorporated herein by reference. ### Business Environment Overview and Trends We conduct our business under two reportable segments: Machine Clothing (“MC”) and Albany Engineered Composites (“AEC”) each rooted in similar materials sciences know-how that forms a common approach to customer value proposition in design and manufacturability. MC competes on the basis of its deep industry knowledge, customer reputation and customer service and global advanced textile manufacturing capabilities, which has enabled it to develop a robust and market leading product offering that can be tailored to customer specific requirements. AEC competes on the basis of its innovative technology solutions, extensive composite manufacturing capabilities and capacity that enable it to offer high quality specific part and assembly solutions that achieve its customers’ application performance requirements. #### General 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-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. #### Machine Clothing During 2025, the MC segment delivered a resilient performance, with several areas performing well despite uneven market dynamics. In Asia, softer demand—across Paper Machine Clothing & Engineered Fabrics—contributed to regional pressure, while EF also declined due to strategic divestment and planned plant consolidation in Europe. Packaging and Tissue continued to perform well, supported by growth across most regions. Publication grades remained under structural pressure, and the MC segment expects publication grade paper demand to continue declining into 2026 and beyond, offset by growing demand for tissue grade products. Looking ahead to 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. 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, particularly within the pressing market, manufacturing productivity efficiencies and cost controls. The MC segment has been a significant generator of cash 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. In August, 2023, the Company acquired Heimbach, a privately-held manufacturer of paper machine clothing headquartered in Düren, Germany, which provides the MC segment with an increase in scale and complementary technology that further drives MC's differentiated manufacturing sales and service network. The Heimbach integration is a multi-year program that started with harmonizing Heimbach operations with our legacy MRP systems and establishing a new global customer and operations organization. There is a disciplined focus to realize not only the combined benefits from procurement and overhead, but also to leverage best practices in manufacturing and a deep realignment of our operational footprint. During 2024, the Company announced several initiatives to further rationalize MC's operating footprint, including the closure of the South Korea facility, the consolidation of activities and facilities across the United Kingdom and the closure of Heimbach's Switzerland facility. The Company made progress and realized significant synergies from these efforts during 2025, and announced additional closures of engineered fabrics facilities in Italy, France and the United Kingdom. #### Albany Engineered Composites 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 advance 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. 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. 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. 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. As a result of the higher costs and operational challenges, the AEC segment updated labor, material input and scrap assumptions and estimates for certain long-term programs that resulted in negative cumulative changes in estimated profitability in the amount of $165.8 million in 2025. This amount includes a $155.9 million change in estimated profitability associated with the performance of the CH-53K contracts, of which $147.3 million was recognized in the third quarter and was inclusive of a loss reserve adjustment of $98.0 million for 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 a strategic review of the Amelia Earhart Drive facility in Salt Lake City. Such review could result in a sale of the facility and would include an exit of the structures assembly portion of our business, including the CH-53K contract work. As of December 31, 2025, we have determined that the assets of this group meet the held-for-sale criteria, and have been classified as such within our Consolidated Balance Sheet. ### Consolidated Results of Operations ### Net Revenues and Gross Profit The following table summarizes our Consolidated Net revenues and Gross profit: *(in thousands, except percentages)* | Years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Net revenues | **$1,182,813** | $1,230,615 | $1,147,909 | | Gross profit | **243,920** | 401,776 | 423,718 | | Gross profit margin | **20.6%** | 32.6% | 36.9% | | % change in net revenues | **-3.9%** | 7.2% | 10.9% | Consolidated Net revenues decreased 4% compared to 2024, driven by reduced demand for MC products in Asia and AEC revenue adjustments primarily related to the CH-53K program based on our long-term contract estimates. These decreases are partially offset by higher revenue on the AEC LEAP program. The decrease in Consolidated Gross profit during 2025, as compared to 2024, was driven primarily by increased cost assumptions that adjusted the expected profitability of the AEC segments CH-53K long-term contracts. Gross profit as a percentage of revenues was 21%. ### Operating Expenses The following table summarizes Consolidated Operating expenses by classification: *(in thousands, except percentages)* | Years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Selling, general and administrative expenses | **$218,326** | $210,882 | $214,915 | | Technical and research expenses | **48,015** | 46,097 | 40,627 | | Restructuring expenses, net | **13,682** | 13,438 | 282 | | Total operating expenses | **$280,023** | $270,417 | $255,824 | | Total operating expenses as a % of net revenues | **23.7%** | 22.0% | 22.3% | Consolidated SG&A expenses increased 3.5% as compared to 2024 and as a percentage of Net revenues, SG&A expenses increased from 17.1% in 2024 to 18.5% in 2025. The overall increase in Consolidated SG&A expenses was due to the net effect of a $4.4 million increase in personnel-related costs, an increase of $1.9 million in professional fees, and an increase of $3.2 million in global information system costs. Consolidated Technical and research expenses increased 4.2% as compared to 2024 and as a percentage of Net revenues increased from 3.7% in 2024 to 4.1% in 2025. This change is primarily driven by increased activity within our New Business Ventures group. In addition to the items discussed above affecting Gross profit, SG&A and Technical and research expenses, Operating income was affected by Restructuring expense, net, of $13.7 million in 2025, as compared to $13.4 million in 2024. At MC, restructuring actions were taken throughout 2024 and 2025 in order to cease operations at several facilities. Prior year actions at the Company's MC forming fabric manufacturing facility in Chungju, South Korea, at the Company's Heimbach engineered fabric manufacturing facility in Rochdale, UK, and at the Company's Heimbach paper machine clothing facility in Olten, Switzerland, concluded in 2025. Additional actions were announced in 2025 to close engineered fabric facilities in Ballo, Italy and Saint Junien, France as well as a facility in Manchester, United Kingdom. These actions drove $8.3 million of restructuring charges during 2025, compared to $11.2 million in 2024, a decrease that is primarily due to the timing of the announced actions, workforce reductions, and related costs. We expect to incur additional restructuring expenses related to these actions into 2026. At AEC, restructuring activities were related to reductions in the workforce at various AEC locations, which resulted in restructuring expenses of $3.3 million for the year ended 2025 and $3.6 million for the year ended 2024. During the first quarter of 2025, the Company decided to consolidate headquarters in Portsmouth, NH. This change impacts approximately 100 employees and will continue through the first half of 2026. Through December 31, 2025, this has resulted in expenses of $2.0 million related to retention, relocation, severance, and professional costs. ### Operating Income The following table summarizes operating income/(loss) by business segment: *(in thousands, except percentages)* | Years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Machine Clothing | **$156,212** | $183,632 | $188,429 | | Albany Engineered Composites | **(145,135)** | (11,603) | 27,351 | | Corporate | **(47,180)** | (40,670) | (47,886) | | Total operating income (loss) | **$(36,103)** | $131,359 | $167,894 | | % of net revenues | **-3.1%** | **10.7%** | **14.6%** | 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. ### Other Earnings Items The following table summarizes other earnings items that are presented below Operating income: *(in thousands)* | Years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Interest expense, net | **$20,605** | $12,549 | $13,601 | | Other (income)/expense, net | **5,079** | 1,721 | (6,163) | | Income tax (benefit)/expense | **(4,828)** | 29,034 | 48,846 | | Net income/(loss) attributable to the noncontrolling interest | **383** | 432 | 490 | ### Interest Expense, net Interest expense, net increased by $8.1 million over the prior year primarily due to higher average borrowings, in part offset by $1.1 million of greater interest income earned on cash equivalents during the current year. For more information, see Note 17, *Financial Instruments,* of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. ### Other (income)/expense, net Other (income)/expense, net included foreign currency related transactions that resulted in losses of $8.9 million in 2025 as compared to $3.9 million of gains in 2024. In addition, changes in the fair value of derivative instruments included gains of $3.7 million in 2025 and losses of $3.5 million in 2024, driven by currency rate movements, most notably the Brazilian Real and Mexican Peso. See Note 6, Other (Income)/Expense, net, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information. ### Income Taxes | Years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Effective tax rate | 7.8% | 24.8% | 30.4% | The effective tax rate represents the combined federal, state and foreign tax effects attributable to pretax earnings. For more information on income tax, see Note 7, *Income Taxes,* of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The Company has continuously monitored its ability to realize deferred tax assets as it pertains to Heimbach GmbH due to their existing net operating loss carryovers. After reviewing the positive and negative evidence available as of December 31, 2025, we continue to assert that we will more likely than not be able to utilize the net deferred tax assets. Net operating losses, which make up the majority of the deferred tax assets, have an unlimited carryforward period in Germany and we expect continued improvements in the business post-acquisition due to synergies and efficiencies that will be realized in the near future. The current net deferred tax asset position at Heimbach GmbH as of December 31, 2025 is $16.5 million. If it was determined that a valuation allowance was required, a deferred tax expense of $16.5 million as of December 31, 2025 would be required to create a reserve against those net deferred tax assets. The assessment of the need for a valuation allowance could change in future periods if additional negative evidence is observed. The amount of the tax expense needed to book the valuation allowance could also change depending on additional activities. The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% effective on January 1, 2024. While the U.S. has indicated that it will not adopt the Pillar Two framework at this time, various jurisdictions in which we operate have enacted, or are in the process of enacting, legislation to implement these rules. Based on their current design, the Pillar Two rules are expected to apply to our global operations. We have evaluated the impact of these rules and have determined that it did not materially increase our global tax costs in 2025. We will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts. ### Segment Results of Operations ### Machine Clothing Segment The MC segment accounted for 59.9% of our consolidated revenues during 2025. A summary of MC's selected financial results is as follows: *(in thousands, except percentages)* | Years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Net revenues | **$708,066** | $749,907 | $670,768 | | % change | **-5.6%** | 11.8% | 10.1% | | Gross profit | **323,732** | 346,044 | 331,558 | | % of net revenues | **45.7%** | 46.1% | 49.4% | | SG&A expenses | **131,175** | 123,120 | 118,196 | | Technical and research expenses | **28,090** | 29,832 | 24,651 | | Restructuring expenses, net | **8,255** | 9,460 | 282 | | Operating income | **$156,212** | $183,632 | $188,429 | | % of net revenues | **22.1%** | 24.5% | 28.1% | ### Net revenues Net revenues decreased 5.6% as compared to 2024, driven by reduced demand in Asia, most significantly in China, and by site consolidations, unplanned equipment downtime in one of our production facilities and lower than anticipated sales pricing. This decline is slightly offset by a strong performance within the European market, particularly related to the drying and pressing programs. Further, changes in currency translation rates had the effect of increasing Net revenues $1.2 million. ### Gross Profit Gross profit decreased by $22.3 million as compared to 2024, primarily driven by the volume declines noted above; with gross profit margin also decreasing slightly from 46.1% in 2024 to 45.7% in 2025. ### Operating Income Operating income decreased $27.4 million or 14.9% as compared to 2024, primarily as a result of gross profit declines and increased SG&A costs. Incremental SG&A expenses were primarily a result of increased revaluation losses on monetary operating assets. ### Backlog Backlog at MC can include certain unconfirmed customer indications that may be cancelled prior to release into production. Additionally, a significant amount of orders do not enter backlog due to short lead times. As such, we believe that the segment’s backlog is not a strong indicator of expected future revenue. ### Albany Engineered Composites Segment The AEC segment accounted for 40.1% of our consolidated net revenues during 2025. 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 39% of segment revenue for 2025 and 2024. 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. A summary of AEC's selected financial results is as follows: *(in thousands, except percentages)* | Years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Net revenues | **$474,747** | $480,708 | $477,141 | | % change | **-1.2%** | 0.7% | 12.2% | | Gross profit | **(79,812)** | 55,732 | 92,160 | | % of net revenues | **-16.8%** | 11.6% | 19.3% | | SG&A expenses | **46,449** | 47,421 | 48,833 | | Technical and research expenses | **15,615** | 16,265 | 15,976 | | Restructuring expenses, net | **3,259** | 3,649 | — | | Operating income/(loss) | **$(145,135)** | $(11,603) | $27,351 | | % of net revenues | **-30.6%** | -2.4% | 5.7% | ### Net revenues Net revenues decreased 1.2%, primarily driven by $54.9 million of revenue adjustments to the CH-53K program based on our long-term contract estimates. These reductions are partially offset by higher activity levels on various programs including LEAP. Further, changes in currency translation rates had the effect of increasing Net revenues $1.4 million. ### Gross Profit Gross profit decreased $135.5 million as compared to last year, and Gross profit margin decreased from 11.6% in 2024 to (16.8)% in 2025. The reduction was driven primarily by approximately $155.9 million of increased life of contract cost assumptions surrounding the estimated profitability of our CH-53K long-term contracts. ### Operating Income/(Loss) Operating income decreased $133.5 million, principally due to reduced Gross profit as noted above. This was slightly offset by a decrease in SG&A expenses of $1.0 million, driven by a $0.7 million decrease in personnel-related costs. Technical and research expenses decreased $0.7 million as compared to 2024, driven by decreased research material and labor costs. Lastly, restructuring activities were related to reductions in the workforce at various AEC locations and resulted in restructuring expenses of $3.3 million, further reducing Operating income. ### Backlog Backlog at AEC represents the aggregate dollar value of products and services for the given term of our contracts with customers where we have enforceable rights, including both funded and unfunded contract scope, for which products have not been provided or services have not been performed, but excluding unexercised contract options and potential orders under ordering-type contracts. For new contract awards, the initial backlog recorded may only reflect a portion of the total value of the contract award, particularly for ordering-type contracts. Backlog may increase over time as the orders placed against a contract include enforceable rights. For our ASC LEAP contract with our partner Safran, our backlog reflects the agreed business plan values with Safran for the subsequent full twelve-month calendar year. Orders included in our backlog may be modified, canceled, or rescheduled by our customers, although customers may incur cancellation penalties as defined in the terms of such customer contracts; and which such terms may vary from contract to contract. If any of our enforceable contracts were to be terminated, our backlog would be reduced by the expected value of the unfilled orders of such contracts. Backlog differs from unsatisfied performance obligations for contracts disclosed in Note 3, *Revenue Recognition,* of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K, which excludes unsatisfied performance obligations with an original expected duration of one year or less. Backlog at AEC was $1.4 billion as of December 31, 2025. ### Working Capital, Liquidity and Capital Structure ### Working Capital Payment terms granted to paper industry and other machine clothing customers reflect general competitive practices. Terms vary with product, competitive conditions, and the country of operation. In some markets, customer agreements require us to maintain significant amounts of finished goods inventory to assure continuous availability of our products. In addition to supplying paper, paperboard, and tissue companies, the MC segment is a leading supplier to the nonwovens (which includes the manufacture of products such as diapers, personal care, and household wipes), building products, and tannery and textile industries. These non-paper industries have a wide range of customers, with markets that vary from industrial applications to consumer use products. The AEC segment primarily serves customers in the commercial and defense aerospace market through both engine and airframe applications. AEC's working capital levels rose steadily in the last several years in line with the segment's growth. In the MC segment, the Chinese New Year, summer months, and the end of the year are often periods of lower production for some of our customers, which, in the past contributed to seasonal variation in sales and orders. In recent years, shorter order cycles and lower inventory levels throughout the supply chain have become a more significant factor in quarterly sales. The impact of these combined factors on any quarter can be difficult to predict, and can make quarterly comparisons less meaningful than annual comparisons. While seasonality is generally not a significant factor in the Albany Engineered Composites segment, the commercial terms of the supply agreement governing the LEAP program resulted in fourth quarter sales volatility in recent years. ### Cash Flow Summary *(in thousands)* | For the years ended December 31, | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Net income | **$(56,959)** | $88,055 | $111,610 | | Depreciation and amortization | **87,914** | 89,294 | 76,733 | | Changes in working capital(a) | **10,861** | 54,321 | (44,214) | | Changes in long-term liabilities, deferred taxes and other credits | **(45,865)** | (23,033) | (11,829) | | Contract loss provision | **139,665** | — | — | | Other operating items | **16,858** | 9,804 | 15,756 | | Net cash provided by operating activities | **152,474** | 218,441 | 148,056 | | Net cash used in investing activities | **(68,262)** | (80,180) | (217,899) | | Net cash used in financing activities | **(96,051)** | (183,832) | (52,641) | | Effect of exchange rate changes on cash flows | **8,906** | (12,566) | 4,128 | | Increase/(decrease) in cash and cash equivalents | **(2,933)** | (58,137) | (118,356) | | Cash and cash equivalents at beginning of year | **115,283** | 173,420 | 291,776 | | Cash and cash equivalents at end of year | **$112,350** | $115,283 | $173,420 | (a) Includes Accounts receivable, Contract assets, Inventories, Accounts payable and Accrued liabilities. Net cash provided by operating activities during 2025 was $152.5 million, compared to $218.4 million in 2024. The decrease was primarily driven by slower working capital turns at both segments much of which is driven by higher levels of year-end shipments at AEC, as well as lower net income adjusted for non-cash items. Net cash used in investing activities included capital expenditures totaling $71.5 million and $81.2 million during 2025 and 2024, respectively, which include investments in new aerospace programs and productivity enhancements in our MC segment. In addition to lower capital expenditures, the decrease from 2024 is due, in part, to proceeds from the sale of Arcari in April 2025. Net cash used in financing activities was $96.1 million during 2025 as compared to $183.8 million during 2024. The change in cash used in finance activities is a result of increased borrowings and a decrease in principal debt payments versus prior year, partially offset by increased share repurchases. ### Liquidity and Capital Structure We finance our business activities primarily with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below. Our subsidiaries outside of the United States may also maintain working capital lines with local banks. Under our $800 million unsecured credit agreement, $455.7 million of borrowings were outstanding as of December 31, 2025. 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. As of December 31, 2025, we had cash and cash equivalents of $112.4 million and availability under our Credit Agreement of $344.3 million, for a total liquidity of approximately $456.7 million. For more information on the revolving credit agreement, see Note 17, *Financial Instruments,* of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. As of December 31, 2025, $91.6 million of our total cash and cash equivalents was held by non-U.S. subsidiaries. The Company has targeted for repatriation $122.2 million of current year and prior year earnings of the Company’s foreign operations. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were approximately $132.1 million, 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. We have also returned cash to shareholders through dividends and share repurchases. We paid dividends of $32.5 million and $32.5 million during 2025 and 2024, respectively. In total, the Company repurchased 2,841,036 shares in 2025 for a total cost of $187.9 million. On February 21, 2025, the Company's Board of Directors authorized the Company to repurchase shares up to $250 million, which replaces a prior authorization put in place in 2021. The Company has $76.7 million remaining under this authorization for future share repurchases. 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 $12 million. There were no material changes in the Company’s off-balance sheet arrangements during 2025. #### Other Sources/Uses of Capital We have contractual commitments to repay debt, make payments under leases, contribute to our pension and postretirement plans, and settle obligations related to agreements to purchase goods and services, income taxes, compensation plans, and as applicable, interest rate swaps. We estimate these contractual commitments amount to approximately $595.2 million as of December 31, 2025, of which we expect to pay $41.7 million within the next year. Interest payments on debt are expected to be approximately $17.6 million in 2026, $17.6 million in 2027, and $11.1 million in 2028, and principal payments on debt of $330.7 million are not due until 2028. For more information on the revolving credit agreement, see Note 17, *Financial Instruments*, for payments related to leases see Note 20, *Leases*, and for payments related to pension and postretirement plans see Note 4, *Pension, Postretirement, and Other Benefit Plans*, as included in the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Payments for these commitments are not representative of all our future cash requirements, which will vary based on future needs. ### Critical Accounting Policies For the discussion of our accounting policies, see Note 1, *Accounting Policies*, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make assumptions and estimates that directly affect the amounts reported in the Consolidated Financial Statements. Each of these assumptions is subject to uncertainties and changes in those assumptions or judgments which can affect our results of operations. In addition to the accounting policies stated in Note 1, *Accounting Policies,* of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, the financial statement amounts and disclosures are significantly influenced by market factors, judgments and estimates as described below. ### Revenue Recognition Contracts with customers in the MC segment have various terms that can affect the point in time when revenue is recognized. The contractual terms are closely monitored in order to ensure revenue is recognized in the proper period. Products and services provided under long-term contracts represent a significant portion of net revenues in the AEC segment. AEC’s largest source of revenue is derived from the LEAP contract under a cost-plus-fee agreement. The fee may vary within a narrow range based on our success in achieving certain cost targets. Revenue is recognized over time as costs are incurred. Under this contract, there is judgment involved in determining applicable contract costs and the amount of revenue to be recognized. We also have fixed price long-term contracts, for which revenue is generally recognized over time using an input method as the measure of progress. This 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. AEC has long-term aerospace contracts under which there are two phases: a phase during which the production part is designed and tested, and a phase of supplying production parts. During the design and testing phases, we perform pre-production or nonrecurring engineering services, which are normally considered a fulfillment activity, rather than a performance obligation. Fulfillment activities that create resources that will be used in satisfying performance obligations in the future, and are expected to be recovered, are capitalized in Other assets. The capitalized costs are amortized into cost of goods sold over the period which the asset is expected to contribute to future cash flows, including anticipated renewal periods. Accumulated capitalized costs are written-off when those costs are determined to be unrecoverable. 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 loss provisions include contract options that are probable of exercise, excluding any profitable options that might be expected to follow. Contract losses are determined considering all direct and indirect contract costs, exclusive of any selling, general or administrative costs, which are treated as period expenses. We are required to limit our estimate of contract values to the period of the legally enforceable contract. While certain contracts are expected to be profitable over the course of the program life when including expected renewals, our estimate of contract revenues and costs is limited to the estimated value of enforceable rights and obligations, excluding anticipated renewals. In some cases, the contract period may result in a loss contract provision at the inception of the contract. ### Pension and Postretirement Liabilities We sponsor several pension and postretirement benefit plans. Our liabilities under these defined benefit plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, health care cost inflation rate and the long-term rate of return on plan assets. We review our actuarial assumptions on an annual basis and make modifications to the assumptions when appropriate. #### Discount Rate Selection We select a discount rate for purposes of measuring obligations under defined benefit plans by matching cash flows separately for each plan to the yields on high-quality zero-coupon bonds. We use the RATE: Link 60-90 model (the "RATE Link"). We believe the projected cash flows used to determine RATE Link provide a good approximation of the timing and amounts of our defined benefit payments under our plans and no adjustments to RATE Link has been made. Measurement of our postretirement benefit obligations requires the use of several assumptions about factors that will affect the amount and timing of future benefit payments. The assumed health care cost trend rates are the most critical estimates for measurement of the postretirement benefit obligation. Changes in the health care cost trend rates have a significant effect on the amounts reported for the health care benefit obligation. #### Long-term Rate of Return on Plan Assets Assumption Our expected long-term rate of return on plan assets is derived from our asset allocation strategies and anticipated future long-term performance of individual asset classes. Our analysis gives consideration to recent plan performance and historical returns; however, the assumptions are primarily based on long-term, prospective rates of return. The weighted average long-term rate of return on plan assets for our defined benefit pension plans is 4.82% for 2025. Based on information provided by actuaries and other relevant sources, the Company believes that the assumptions used to estimate expenses, assets and liabilities of pensions and postretirement benefits are reasonable; however, changes in these assumptions could impact the Company’s financial position, results of operations or cash flows. ### Income Taxes We evaluate the realizability of deferred tax assets by assessing available positive and negative evidence, including the expected reversal of existing temporary differences and projections of future taxable income. If, based on the weight of available evidence, we believe that it is more likely than not some portion of the deferred tax asset will not be realized, a valuation allowance is established. The amount of a valuation allowance is based upon management’s best estimate of deferred tax assets that are not expected to be realized. Tax positions taken or expected to be taken in a tax return are recognized when it is more-likely-than-not, based on technical merits, to be sustained upon examination by taxing authorities. The amount of tax benefit recognized is measured as the largest amount of benefit that has a greater than 50% likely of being realized upon ultimate settlement, including resolution of any administrative appeals or litigation process, where applicable. These evaluations involve a high degree of uncertainty because they require us to make material assumptions about future events that are inherently difficult to predict. Key judgments include projections of future taxable income across multiple tax jurisdictions, interpretations of continually evolving tax laws and regulations, expectations regarding audit outcomes, and assessments of the timing and reversals of temporary differences. Changes in these assumptions or in actual outcomes could materially affect the amount of deferred tax assets we are able to realize, the valuation allowance recorded, and the recognition and measurement of uncertain tax positions ### Business Combinations As we enter into business combinations, we perform acquisition accounting requirements including the following: - Identifying the acquirer, - Determining the acquisition date, - Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and - Recognizing and measuring goodwill, as applicable. We complete valuation procedures and record the resulting fair value of the acquired assets and assumed liabilities in accordance with the acquisition method under ASC 805, Business Combinations. The acquisition methodology requires management to make assumptions and apply judgment to determine the fair value of assets acquired and liabilities assumed. If estimates or assumptions used to complete the enterprise valuation and estimates of the fair value of the acquired assets and assumed liabilities significantly differ from assumptions made, the resulting difference could materially affect the fair value of net assets. In determining the fair value of the tangible assets, including property, plant and equipment, we consider the cost-approach and the market approach, which estimates the cost to replace the asset, less accrued depreciation resulting from physical deterioration, functional obsolescence and external obsolescence. In the determination of the fair value of the identified intangible assets, we use cash flow models following the income approach, specifically, a relief from royalty method methodology. Inputs include estimated revenue growth rates, gross margins, operating expenses, and estimated attrition, royalty and discount rates. Goodwill is recorded as the difference in the fair value of the acquired assets and assumed liabilities and the purchase price, as applicable. ### Goodwill and Intangible assets Goodwill is not amortized, but is tested for impairment at least annually. Estimating the fair value of reporting units requires the use of estimates and significant judgments, including but not limited to revenue growth rates, operating margins, discount rates, and future market conditions. It is possible that these judgments and estimates could change in future periods. Impairment assessments inherently involve management judgments regarding a number of assumptions such as those described. Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of our recorded goodwill, differences in assumptions could have a material effect on the estimated fair value of one or more of our reporting units and could result in a goodwill impairment charge in a future period. The determination of the fair value of intangible assets acquired in a business acquisition is subject to many estimates and assumptions. Among such estimates and assumptions are royalties, discount rate and useful life. We review amortizable intangible asset groups for impairment whenever events and changes in circumstances indicate that the related carrying amounts may not be recoverable. ### Recent Accounting Pronouncements See *"Recent Accounting Pronouncements"* in Note 1, *Accounting Policies*, of the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. ## Market risk As filed, 3,001 characters. We are exposed to changes in both foreign currency exchange rates and interest rates. From time to time, the Company enters into derivative agreements to manage these risks. The market risk is potential losses arising from adverse changes in these rates as discussed below. ### Foreign Currency Exchange Rate Risk We have manufacturing plants and sales transactions worldwide and, therefore, are subject to foreign currency risk. Our operational results can be materially impacted depending on the volatility and magnitude of foreign rate changes. This risk is composed of both potential losses from the translation of foreign currency financial statements and the remeasurement of foreign currency transactions. To manage this risk, we periodically enter into forward exchange contracts to provide an economic hedge against future cash flows. The total net assets of non-U.S. operations and long-term intercompany loans denominated in nonfunctional currencies subject to potential loss amount to approximately $602.4 million. The potential loss in fair value resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to $60.2 million. Furthermore, related to foreign currency transactions, we have exposure to various nonfunctional currency balances totaling $214.9 million. This amount includes, on an absolute basis, exposures to assets and liabilities held in currencies other than our local entities' functional currency. On a net basis, we had $137.9 million of foreign currency assets as of December 31, 2025. As currency rates change, these nonfunctional currency balances are revalued, and the corresponding adjustment is recorded in the income statement. A hypothetical change of 10% in currency rates could result in an adjustment to the income statement of approximately $13.8 million. Actual results may differ. ### Interest Rate Risk We are exposed to interest rate fluctuations with respect to our variable rate debt, depending on general economic conditions. On December 31, 2025, we had the following variable rate debt: *(in thousands, except interest rates)* | Long-term debt: Credit agreement borrowings outstanding (net of fixed rate portion, due in 2028): | | | --- | ---: | | USD borrowings (end of period all-in interest rate of 5.48%) | $225,000 | | EUR borrowings (end of period all-in interest rate of 3.56%) | 52,831 | | Foreign bank debt | — | | **Total** | $277,831 | Assuming borrowings were outstanding for an entire year, an increase of one percentage point in weighted average interest rates would increase interest expense by $2.8 million. To manage interest rate risk, we may periodically enter into interest rate swap agreements to effectively fix the interest rates on variable rate debt to a specific rate for a period of time. (See Note 18, *Fair-Value Measurements*, of the Notes to the Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). ## Controls and procedures As filed, 4,422 characters. ### Evaluation of Disclosure Controls and Procedures The Company, with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) as of December 31, 2025. Such disclosure controls and procedures are designed to ensure that information required to be disclosed in reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on and as of the date of this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of such date. ### Management’s Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control system is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, and oversight of the Board of Directors, conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 using the criteria set forth by the 2013 Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control – Integrated Framework. Based on management’s assessment, we have concluded that our internal control over financial reporting was effective at December 31, 2025. Our independent registered accounting firm has issued a report on the effectiveness of our internal control over financial reporting which is included under Item 8. ### Changes in Internal Control over Financial Reporting Management of the Company has evaluated the changes in the Company's internal controls over financial reporting during 2025. There were no changes in our internal control over financial reporting during our fourth fiscal quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. #### Index | | | | | --- | --- | --- | | /s/ Gunnar Kleveland | /s/ Willard C. Station | /s/ Sean Valashinas | | Gunnar Kleveland | Willard C. Station | Sean Valashinas | | President and Chief Executive Officer and Director | Executive Vice President and Chief Financial Officer | Vice President - Controller and Chief Accounting Officer | | (Principal Executive Officer) | (Principal Financial Officer) | (Principal Accounting Officer) | Filed Feb 27, 2026. Source: SEC EDGAR, the filing index for accession 0001628280-26-012906. Last ingested by Listed: Oct 29, 2026, 14:30 ET. No prices; not investment advice.