Thank you for standing by. My name is Rochelle, and I'll be your operator today. At this time, I would like to welcome everyone to the Q3 2025 Albany International Corp. Earnings Conference Call. [Operator Instructions] I will now turn the conference call over to Joseph Gaug. Please go ahead.

Thank you, Rochelle, and good morning, everyone. Welcome to Albany International's Third Quarter 2025 Earnings Conference Call. As a reminder to those listening on the call, please refer to our press release issued last night detailing our quarterly financial results. Contained in the text of that release is a notice regarding our forward-looking statements and the use of certain non-GAAP financial measures and their reconciliation to GAAP. For the purposes of this conference call, those same statements apply to our verbal remarks this morning. Today, we will make statements that are forward-looking and contain a number of risks and uncertainties, which could cause actual results to differ from those expressed or implied. For a full disclosure of these risks and uncertainties, please refer to both our earnings release of November 5, 2025, as well as our SEC filings, including our 10-K. Now I will turn the call over to Gunnar Kleveland, our President and CEO, who will provide opening remarks. Gunnar?

Thank you, Joe. Good morning, and welcome, everyone. Thank you for joining our third quarter earnings call. On today's call, I'd like to begin with a recap of some important developments that we have announced, followed by a high-level review of our go-forward strategy and conclude with an update by segment on our end markets and business developments. I will then turn the call over to Will to take you through the numbers. On October 28, we announced a strategic review of our structures assembly business at our Amelia Earhart Drive facility in Salt Lake City, which could include the sale of the site. Together with our Board, we have determined this is in the best interest of stakeholders for 2 primary reasons. First, structures assemblies do not align with our long-term strategic priority to focus on 3D woven technology and engineered components, where we have a distinct competitive advantage through proprietary technology. Second, typically, this type of work is characterized by large long-term contracts with complex supply chains, higher risk, and lower margins. As a result of these 2 factors, because they do not align with our strategic goals, we have decided to explore options for our structure assembly work. Alongside these decisions, we've also taken a loss reserve and the program adjustment to recognize a full expected loss on the CH-53K program of $147 million over the next 8 years. This follows a period of significant effort by our team taking decisive action over the past year to address program challenges, including upgrading the leadership, bringing in people with experience in planning, procuring, and executing structural assemblies and addressing material availability. Despite these efforts, we now recognize that without changes to the contract, there is no path to profitability on the program as originally bid. In addition to…

Thank you, Gunnar, and good morning, everyone. Before reviewing our third quarter results, I'd like to offer a few brief observations since arriving at Albany. It's clear to me that this is a company built on a strong foundation, one defined by technical excellence, customer trust and a disciplined approach to execution. In my early discussions across the organization, I've seen firsthand the depth of our expertise and the consistency of our performance-driven culture. Our technology portfolio is differentiated and deeply embedded with customers in markets where reliability and precision matters most. That creates a durable competitive advantage and position us well for sustainable growth. Equally important, our teams bring a high level of professionalism and accountability. There is a shared understanding of what it means to deliver for our customers and our shareholders. As I step into my role, my focus is on reinforcing that foundation and partnering with Gunnar as we sharpen our portfolio, drive operational discipline, and allocate capital in ways to strengthen long-term value creation. While I'm still early in my tenure, I have strong confidence in the capability of our people, the quality of our assets and the opportunities ahead of us. Turning to our financials for the quarter. We have taken important steps to refine our business to create an even stronger foundation for profitable growth going forward. The strategic decision to restructure our exit business lines that are not contributing to our bottom line will enable our team to focus on profitable growth that is in line with our core strength. This led to some significant charges in the quarter. So let me provide some color on the third quarter financial results. Third quarter revenue was $261.4 million compared to $298.4 million in the prior year period. The decline reflects a $46 million…

[Operator Instructions] Your first question comes from the line of Peter Arment with Baird.

Gunnar, maybe just to start, if you could just take us through kind of how you evaluated the ability to kind of move on from the CH-53K. I remember you upgrading the leadership there and thought that might be enough to kind of reset things and turn things around. Maybe if you could just take us -- give us a little more color on the program.

Yes, Peter. Thanks. What we saw last fall was a need to upgrade the leadership, but also to upgrade our ability to plan, procure and execute on a program like the CH-53K, which is really a departure for what we do at all of our other facilities. The effort to do that was significant, and that's what we've talked about for several quarters. And we have been able to deliver to our customer. It's been a recovery all along. And by this summer, what we saw was that we had alignment of material. We had people that were trained well, and we had a good planning for how we were going to go and execute. And as we did that and with Will coming in, we took a hard look at what this program would be and look like for the next 8 years. And remember, we're only 6% into this program. But as we looked at it and the learning curve with all the material available with the people in station and us working each of the monuments that we have there, we saw that there was no way for us to make it a profitable program the way it was bid. And so we decided to take the charge. I think the -- and I've talked about this program now, for every quarter, the last 4 quarters and how different it is from what we're doing. So the decision then became, is this too much of a distraction for us to really grow the business the way we want to grow the business, and we made a decision to take a strategic look up and to include selling the site.

Got it. Okay. That's helpful. Maybe just to switch to something more positive on that. Can you talk about some of the opportunities, I guess, on the 3D side, what you consider core technology, where you're seeing opportunities to win? I know you've talked about hypersonics in the past and defense. Are you seeing more opportunities because of Golden Dome or other things? Maybe you could just give us some more color there.

Yes. I think there's a lot -- or there is a lot of activity due to the Golden Dome. We have inbounds from all of the OEMs, and we have a capability that they are interested in. We are able to make a near net shape carbon-carbon part for our customers at a very attractive price point. And we have made the investments over the last 3 years to industrialize it. We also have shown that we can industrialize 3D woven by making 220,000 blades for the LEAP program, which right now, I think the whole industry is looking for how can we accelerate missile production. And we stand very, very ready to be able to do that. So yes, lots of inbounds, a lot of activity, probably one of the areas over the next 3 to 5 years that will have the highest growth for us. We're also seeing more interest in our 3D woven titanium replacement. We'll be announcing more about that as we go through next year, but we have opportunity both at the -- with AAM as well as defense programs and longer-term commercial programs.

Your next question comes from the line of Jordan Lyonnais with Bank of America.

I guess for the prior 2026 targets that were put out there, does anything there change after doing this strategic review outside of the CH-53K? Are you taking the review process there looking at the other programs that we should think about?

As we look at 2026, we are a more focused company focused around our technology. The programs that we have today are solid, good return programs that we will continue to have. We are addressing, as we have shown, the programs that are not meeting our expectations on profitability. And as we look at new programs, we've set up the guardrails, and I've talked about this before, the guardrails around how we set up a contract and what the expectation is from a contract, and that's the business we're going after. So that's what you should expect, Jordan.

[Operator Instructions] Your final question comes from the line of Sam Struhsaker with Truist Securities.

So I guess looking at Machine Clothing, it seems to me that, if I'm looking at this correctly, margins have kind of actually trended down a little bit in that business over the last couple of years. But I know you guys mentioned sort of some footprint rationalization acting as a bit of a margin tailwind in this quarter. And then I guess I was just kind of hoping you could give some more detail on kind of how to think about the trajectory for that business margin-wise going forward, kind of looking at the weakening aspects in Asia combined with what you guys are doing in terms of margin expansion initiatives internally.

Yes. Thank you. We -- on Machine Clothing, the impact that you're seeing is primarily from Asia. But remember also that we did select to exit parts of the business, Heimbach that we bought that were not profitable. So that was around $15 million worth of top line. And then we had one business in Asia that exaggerated the impact that we've had in Asia around $8 million that went bankrupt. That was also Heimbach. And so those 2 together with all the headwind that we've seen accelerating through the third quarter due to overproduction in China is the impact on the top line, and that has affected our bottom line because it is a -- it has a good return, obviously, the programs that we have in Asia as well. So going forward, we are continuing to rationalize our footprint to get the cost where we want it and be as efficient as we can in the Americas, in Europe and in Asia. And that activity has -- there's been significant activity. I've talked about it in the other calls. That is going to improve our cost position and our margins as the market comes back in Asia because I believe it is a correction due to overproduction and then they'll build up. When that happens, I can't predict right now. And clearly, the global trade has an impact here. So we'll watch and see what happens there as well.

Great. And then, Gunnar, if I could squeeze in another one. Just curious, as the LEAP program kind of continues to ramp, I don't know if you guys could give any details on kind of how you're seeing pull rates for that program. And also if there's going to be any sort of kind of improved absorption and margins as that program continues to increase in scale.

Yes. It is a significant ramp-up over 2026 and 2027 based on the input that we're getting from Safran and GE. We will be -- in the last call, I said we have -- we're at the inventory level that we need to be at, and we're managing that as Safran is pulling parts from our inventory. That's how the contract is constructed. Remember, though, that this is also a cost-plus contract. So our margins are going to be steady as we go through this. And we will follow the ramp-up of our customers. But it is significant going into 2026 and their projections for '27 is another significant ramp-up. So this program will be solid and provide nice returns for us.

That ends our Q&A session. I will now turn the call back over to Gunnar Kleveland for closing remarks. Please go ahead.

Thank you, everyone, for joining us on the call today. We appreciate your continued interest in Albany International. Thank you all and have a good day.

Gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.