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Reportable Segments and Revenue Recognition
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Reportable Segments and Revenue Recognition Reportable Segments and Revenue Recognition
In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments.
The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate.
We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.
The Albany Engineered Composites (“AEC”) segment, including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group (“Safran”) owns a 10 percent noncontrolling interest, provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. AEC’s largest program relates to CFM International’s LEAP engine. Under this program, AEC through ASC, is the exclusive supplier of advanced composite fan blades and cases under a long-term supply contract. AEC net sales to Safran were $81.6 million and $73.6 million in the first nine months of 2021 and 2020, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $103.4 million and $127.1 million as of
September 30, 2021 and December 31, 2020, respectively. Other significant programs by AEC include the F-35, Boeing 787, Sikorsky CH-53K and JASSM, as well as the fan case for the GE9X engine. In 2020, approximately 46 percent of AEC sales were related to U.S. government contracts or programs.
The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2021202020212020
Net sales
Machine Clothing
$154,171 $138,747 $462,298 $428,782 
Albany Engineered Composites78,271 73,252 227,024 244,971 
Consolidated total
$232,442 $211,999 $689,322 $673,753 
Operating income/(loss)
Machine Clothing
$55,467 $45,699 $161,731 $149,418 
Albany Engineered Composites2,917 6,828 13,019 22,749 
Corporate expenses
(13,898)(13,754)(38,479)(41,073)
Operating income$44,486 $38,773 $136,271 $131,094 
Reconciling items:
Interest income(654)(1,485)(1,584)(2,280)
Interest expense
4,388 3,727 13,105 12,322 
AMJP grant(5,832)— (5,832)— 
Other expense/(income), net2,753 (2,745)4,215 13,915 
Income before income taxes$43,831 $39,276 $126,367 $107,137 

There were no material changes to total assets of the reportable segments in the first nine months of 2021.
The table below presents restructuring costs by reportable segment:
Three months ended September 30,Nine months ended September 30,
(in thousands)2021202020212020
Machine Clothing$251 $384 $193 $1,414 
Albany Engineered Composites(81)358 (40)2,606 
Corporate expenses17 (32)77 169 
Total$187 $710 $230 $4,189 

Restructuring costs in the first nine months of 2021 were not significant. Restructuring liabilities at quarter-end were less than $1 million, related to termination and other costs, which are expected to be substantially paid within one year.

In 2020, AEC reduced its workforce at various locations, principally in the U.S., leading to restructuring charges of $2.6 million for the first nine months of 2020. Machine Clothing restructuring charges for the first nine months of 2020 were principally related to the plant closure of its MC production facility in Sélestat, France that was announced in 2017.

Products and services provided under long-term contracts represent a significant portion of sales in the Albany Engineered Composites segment and we account for these contracts using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors. Changes in the estimated profitability of long-term contracts increased operating income by $2.1 million and $2.4 million for the three and nine month periods
ended September 30, 2021, respectively. Adjustments in the estimated profitability of long-term contracts increased operating income by $3.5 million and $9.5 million for the three and nine month periods ended September 30, 2020, respectively.
We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes.
The following table disaggregates revenue for each product group by timing of revenue recognition:
Three months ended September 30, 2021
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$153,306 $865 $154,171 
Albany Engineered Composites
ASC
— 26,904 26,904 
Other AEC3,589 47,778 51,367 
Total Albany Engineered Composites
3,589 74,682 78,271 
                                         
Total revenue$156,895 $75,547 $232,442 
Nine months ended September 30, 2021
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$459,703 $2,595 $462,298 
Albany Engineered Composites
ASC— 80,158 80,158 
Other AEC11,901 134,965 146,866 
Total Albany Engineered Composites11,901 215,123 227,024 
Total revenue$471,604 $217,718 $689,322 

Three months ended September 30, 2020
(in thousands)
Point in Time Revenue
Recognition
Over Time Revenue
Recognition
Total
Machine Clothing$137,899 $848 $138,747 
Albany Engineered Composites
ASC
— 17,301 17,301 
Other AEC4,479 51,472 55,951 
Total Albany Engineered Composites
4,479 68,773 73,252 
Total revenue
$142,378 $69,621 $211,999 
Nine months ended September 30, 2020
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$426,238 $2,544 $428,782 
Albany Engineered Composites
ASC— 72,771 72,771 
Other AEC14,942 157,258 172,200 
Total Albany Engineered Composites14,942 230,029 244,971 
Total revenue$441,180 $232,573 $673,753 
The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing ("PMC") and engineered fabrics), and, for PMC, the geographical region to which the paper machine clothing was sold:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2021202020212020
Americas PMC$81,780 $70,663 $237,425 $225,565 
Eurasia PMC
53,277 50,923 164,320 150,220 
Engineered Fabrics19,114 17,161 60,553 52,997 
Total Machine Clothing Net sales
$154,171 $138,747 $462,298 $428,782 

Contracts in the MC segment are generally for periods of less than a year. Most contracts in the AEC segment are short duration firm-fixed-price orders representing performance obligations with an original maturity of less than one year. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $155 million and $81 million as of September 30, 2021 and 2020, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of September 30, 2021, we expect to recognize as revenue approximately $29 million during 2021, $66 million during 2022, $37 million during 2023, and the remainder during 2024.