Investor Presentation

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1 Investor Presentation AUGUST 28, Albany International Corp. All rights reserved.

2 Non-GAAP Items and Forward-Looking Statements This presentation contains certain items, such as earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, and net debt, that could be considered non-gaap financial measures under SEC rules. We think such items provide useful information to investors regarding the Company s operational performance. This presentation also may contain statements, estimates, or projections that constitute forward-looking statements as defined under U.S. federal securities laws. Forwardlooking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company s historical experience and our present expectations or projections. We disclaim any obligation to update any information in this presentation to reflect any changes or developments after the date on the cover page. Certain additional disclosures regarding our use of these non-gaap items and forwardlooking statements are set forth in the Appendix to this presentation and in our SEC filings, including our most recent annual and quarterly reports. Our use of such items in this presentation is subject to those additional disclosures, which we urge you to read. 2

3 Albany International Corp. PAPER MACHINE CLOTHING NYSE: AIN $745M 2014 REVENUE 2 BUSINESSES AEROSPACE COMPOSITES 19 PLANTS 10 COUNTRIES 4,000 EMPLOYEES 3

4 Key Metrics Adjusted EBITDA* ($ million) $160 $120 Net Sales ($ million) $80 $40 $135.4 $144.8 $75.0 $74.3 $14.0 $60.3 AEC BR725 charge $1,000 $800 $757.4 $745.3 $ YTD Q YTD Q $600 $400 $200 $ YTD Q $373.8 $353.6 YTD Q $400 $300 $200 $100 $319.7 $129.0 $304.5 Debt ($ million) $81.8 $272.8 $93.8 $302.6 $ * Non-GAAP measures. See slides 34 and 35 for definition, reconciliation and other information. $0 Dec Dec Dec Jun Total Debt Net Debt

5 Two businesses... Net Sales ($ million) MACHINE CLOTHING YTD Q YTD Q PAPER AND OTHER PROCESS INDUSTRIES GLOBAL MARKET LEADER MATURE NO GROWTH, BUT STRONG CASH GENERATION MC $674.7 $655.0 $336.9 $309.1 AEC Total $757.4 $745.3 $373.8 $353.6 Adjusted EBITDA* ($ million) ALBANY ENGINEERED COMPOSITES YTD Q YTD Q AEROSPACE UNIQUE TECHNOLOGY EMERGING NEGATIVE CASH FLOW, BUT INTENSE GROWTH POTENTIAL MC $185.8 $182.4 $95.7 $97.1 AEC (5.5) 1.1 (1.2) (16.7) Corporate expenses and Other (44.9) (38.7) (19.5) (20.1) Total $135.4 $144.8 $75.0 $60.3 Total excluding $14m AEC BR725 charge $ * Non-GAAP measures. See slides 34 and 35 for definition, reconciliation and other information.

6 ... one core Advanced textiles Materials processing Cash 6

7 AIN Investment Proposition A SMALL CAP THAT OFFERS: THE LONG-TERM CASH GENERATION OF A VALUE STOCK $400 $300 $200 $100 $0 $319.7 $129.0 $304.5 $81.8 $272.8 $93.0 $302.6 $120.2 Dec Dec Dec Jun Total Debt Debt ($ million) Net Debt and THE LONG-TERM REVENUE POTENTIAL OF A GROWTH STOCK $ Million $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 LEAP Revenue Potential

8 AIN Investment Proposition A SMALL CAP THAT OFFERS: THE LONG-TERM CASH GENERATION OF A VALUE STOCK and THE LONG-TERM REVENUE POTENTIAL OF A GROWTH STOCK $400 $300 $200 $100 $ Million $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 $319.7 $129.0 $304.5 TOTAL CAPITAL REQUIREMENTS: $0 $81.8 $272.8 $93.0 $302.6 $120.2 Dec Dec Dec Jun Total Debt Debt ($ million) Net Debt ~$70M/YEAR ON AVERAGE LEAP Revenue Potential

9 Machine Clothing CONSUMABLE HIGH VALUE-ADDED HIGH SWITCHING COSTS LOW THREAT OF PRODUCT SUBSTITUTES 9

10 Paper Machine Clothing FORMING PRESSING DRYING 10 Consumable Product # Fabrics Average Life Forming Days Pressing Days Drying Months Belts Months PROCESS BELTS Shoe Press Belt, Transbelt

11 Paper Production, Global Million Tons World Demand % CH Operating Rate North America Production %CH Western Europe Production %CH China Production %CH Other Far East (x Japan) Production %CH Latin America Production %CH RISI, Inc. All Rights Reserved.

12 Changes in Production, Printing & Writing Newsprint Tissue Packaging Total Thousand tons Thousand tons Thousand tons Thousand tons Thousand tons % 2014 production North America -2,003-1, , % West Europe -2,693-1, ,641-2, % China 1, ,176 4,850 8, % Other Asia (ex. Jap) 1, ,469 6, % Latin/So America ,695 3, % Total Change -1,421-3,753 5,513 16,338 16, RISI, Inc. All Rights Reserved. 12

13 Albany Machine Clothing MARKET LEADER WITH APPROXIMATELY 30% GLOBAL SHARE, COMPARED TO 15% ESTIMATED SHARE FOR NEXT LARGEST COMPETITOR Broadest product line, geographic reach Overexposed in growth grades, regions High and growing share with leading paper makers, every region Deepest talent Technology leader, rich R&D pipeline All Other Competitors Global PMC Market Share Albany, approx. 30% Next Largest Competitor, est. 15% WELL POSITIONED FOR SUSTAINED LONG-TERM CASH GENERATION High-quality, low-cost production in growth markets Substantially lower fixed costs in mature markets Continued strength in new product development and field services. FLAT PER ANNUM EBITDA POTENTIAL 13

14 Albany Engineered Composites Vision Objective Strategy BECOME A LEADING TIER 2 SUPPLIER OF HIGHLY ENGINEERED COMPOSITE COMPONENTS TO THE AEROSPACE INDUSTRY Complex shapes +/or high loads +/or high temps NEW CORE BUSINESS (~$300M+) BY EARLY NEXT DECADE LEVERAGE PROPRIETARY TECHNOLOGY INTO SOLE SOURCE POSITIONS ON CRITICAL GROWTH PLATFORMS ORGANIC GROWTH 14

15 Conventional Laminated Composites SHEETS OF FIBER PRE-IMPREGNATED WITH RESIN ( PREPREG ) CUT ON MACHINE INTO PLIES PLIES ARE INDIVIDUALLY LAYERED ONTO A TOOL ( LAY-UP ) LAY-UP IS VACUUM-BAGGED TO TOOL AND PUT INTO AUTOCLAVE TO CURE 15

16 3-D Woven RTM Composites THOUSANDS OF INDIVIDUALLY CONTROLLED FIBERS, WOVEN IN THREE DIMENSIONS INTO A NEAR NET-SHAPE PREFORM, WHICH IS TRIMMED AND FORMED, AND INTO WHICH RESIN IS INJECTED AND THEN CURED IN A NET-SHAPED TOOL. 16

17 3-D Woven RTM Composites THE WEIGHT-SAVINGS OF CONVENTIONAL COMPOSITES PLUS GREATER IMPACT RESISTANCE MORE COMPLEX SHAPES NO DELAMINATION USE OF HIGH-TEMP FIBERS 17

18 3-D Weaving 18

19 Proprietary Capabilities Manufacturing Process Woven Structures Manufacturing Equipment Software 3D Weaving Contour, Steered Weaving 3D Woven RTM, Resin Infusion Fiber Insertion 3D, 2D/3D hybrid, T Forms, 3D spiraled cones, Pi preforms, etc. Loom designs Loom operating systems Loom take-up, harness configuration, etc Thru thickness fiber insertion CAD/CAM CAE 19

20 LEAP Fan Module COMPOSITE PARTS: Fan Blades Fan Case DISPLACED METALS: Hollow core titanium (for blades) Aluminum with containment fabric (for case) VALUE ADDED: Lower weight: 1000 lbs. per plane Damage tolerance (e.g., bird strikes, blade outs) No delamination risk AEC CONTENT: ~ $100,000 per engine CFM 20

21 AEC LEAP Potential Revenue $ Million $180 $160 $140 $120 $100 $80 $60 $40 $20 $

22 AEC Growth Strategy Revenue LEAP LEAP enhancements Other Engines Airframe Automotive Other Engines Other Safran Airframe Diversification beyond automotive 22 Time

23 Albany Safran Composites NEW ENTITY WITHIN AEC 90% Albany, 10% Safran EXCLUSIVE SUPPLIER OF 3D WOVEN COMPOSITES TO ALL SAFRAN APPLICATIONS LEAP and enhancements Other engines: open rotor, business jets, turboprop Landing systems Nacelles and Thrust Reversers INITIAL VALUATION AT $280M Safran option to buy Albany share, only if performance default or sale of AI/AEC to Safran competitor Value grows with LEAP production; at full production, valuation based on ASC EBITDA x

24 AEC Growth Strategy ASC Revenue LEAP LEAP enhancements Other Engines Airframe Automotive Other Engines Other Safran Airframe Diversification beyond automotive 24 Time

25 AIN Investment Proposition A SMALL CAP THAT OFFERS: THE LONG-TERM CASH GENERATION OF A VALUE STOCK $400 $300 $200 $100 $0 $319.7 $ Million $129.0 $304.5 $81.8 $272.8 $93.0 $302.6 $120.2 Dec Dec Dec Jun Total Debt Debt ($ million) Net Debt and THE LONG-TERM REVENUE POTENTIAL OF A GROWTH STOCK $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 LEAP Revenue Potential

26 Appendix

27 AEC Operations LEAP Plant 1 Rochester Rochester Building 1 300,000 ft 2 130,000 ft 2 Rochester 200,000 ft 2 Building 2 $90.3M 2014 revenue $15M R&D (17% of 2014 sales) includes $4M of customer-funded R&D 600 employees LEAP Plant 2 Commercy 300,000 ft 2 Boerne 135,000 ft 2 27 LEAP Plant 2

28 AEC Programs Largest Current Programs LEAP FAN MODULE DEVELOPMENT F-35 LIFTFAN COMPONENTS SECONDARY ENGINE COMPONENTS, NUMEROUS: OGVs, spinners, splitters, acoustic liners, etc. Rolls-Royce, Pratt & Whitney, Honeywell, GE AIR CRUISERS (ZODIAC) pack boards, door closures Current Development Programs with Greatest Revenue Potential LEAP 1 FAN MODULE LEAP ENHANCEMENTS Fan Module Low Pressure Turbine OTHER ENGINES GE 9X FAN CASE OPEN ROTOR AIRFRAME COMPONENTS AUTOMOTIVE COMPONENTS 28

29 LEAP: Next-Gen Engine for Single-Aisle Aircraft* CFM56 JV between GE and Snecma Boeing 737, Airbus A320 Over 18,500 engines produced 500 operators worldwide ~70% market share 15% reduced fuel burn vs. CFM56-7 Selected by Airbus (shared with Pratt) Boeing (exclusive) COMAC (exclusive) EIS: Market (per Boeing) 70% of all aircraft next 20 years ~2200 engines per year *Source: CFM International CFM CFM LEAP 29

30 Current Airframe Opportunities Stringers & clips Frames Control surfaces Window frames Ribs Floor beams FUSELAGE Door frames Spars WING & EMPENNAGE 30

31 The Safran-Albany Partnership 14 YEARS OF JOINT EFFORT Joint R&D General Collaboration Agreement Mutual exclusivity on engines to 2025 Long-term Supply Agreement Life of LEAP program Co-located in Rochester and Commercy Albany Safran Composites AEC subsidiary dedicated to Safran Mutual exclusivity for all Safran applications 10% Safran ownership Rights to AEC IP R&T agreement Fail-safe provisions

32 AIN Consolidated Capital Structure ($ millions) Dec. 31, 2014 Jun. 30, 2015 Ratios: - Debt to Total Invested Capital 34.7% 38.1% - Debt to Total Market Capital 18.4% 19.2% Data: Total Debt Shareholder's Equity (Book) Total Invested Capital Closing Stock Price at Period End Outstanding Shares at Period End Market Value of Equity 1, ,273.6 Total Market Equity plus Debt 1, ,576.2 Less: Cash Enterprise Value 1, ,

33 AIN Consolidated Financial Capacity As of 6/30/15: Matures Rate $400m Revolving Credit June 2020 L+ 138 bps $198m UNdrawn 25 bps $100m Prudential Notes $50m Oct % $50m Oct $182m Total Available Cash 33

34 Non-GAAP Reconciliation Total Adjusted EBITDA* and Net Debt $ millions Total Company YTD Q YTD Q Net income $17.7 $41.7 $21.9 $10.1 Interest expense, net Income tax expense/ (benefit) Depreciation and amortization Restructuring Currency revaluation (gain)/ loss 5.6 (10.4) (1.3) (3.1) $ millions Notes and loans payable Current maturities of long-term debt Long-term debt Dec Dec Dec Jun $0.6 $0.6 $0.7 $ Total debt Gain on insurance recovery - (1.1) (1.0) - Cash Building and investment sale (gain)/ loss (3.8) - - (0.9) Net debt $129.0 $81.8 $93.0 $120.2 Pension settlement charges Income attributable to noncontrolling interest in ASC (0.1) (0.2) - (0.1) Adjusted EBITDA $135.4 $144.8 $75.0 $60.3 AEC BR725 charge $14.0 Adjusted EBITDA excluding AEC BR725 charge $ * From continuing operations

35 Non-GAAP Reconciliation Segment-Adjusted EBITDA* Machine Clothing AEC Corporate expenses and Other $ millions YTD Q YTD Q YTD Q YTD Q YTD Q YTD Q Net income $114.4 $136.5 $70.0 $69.0 $(14.4) $(10.5) $(7.0) $(22.4) $(82.3) $(84.2) $(41.1) $(36.5) Interest expense, net Income tax expense/ (benefit) Depreciation and amortization Restructuring Currency revaluation (gain)/ loss Gain on insurance recovery Building and investment sale (gain)/ loss Pension settlement charges Income attributable to noncontrolling interest in ASC 0.3 (4.0) 0.5 (2.5) (0.1) 5.4 (6.4) (1.9) (0.6) (1.1) (1.0) (3.8) - - (0.9) (0.1) (0.2) (0.1) (0.1) Adjusted EBITDA $185.8 $182.4 $95.7 $97.1 $(5.5) $1.1 $(1.2) $(16.7) $(44.9) $(38.7) $(19.5) $(20.1) 35 * From continuing operations