Nov 4, 2014
Executives
John B. Cozzolino - Chief Financial Officer and Treasurer Joseph G.
Morone - President and Chief Executive Officer
Analysts
Jason Ursaner - CJS Securities John Franzreb - Sidoti & Company Steve Levenson - Stifel Nicolaus J.B. Groh - D.A.
Davidson & Company Rick Dortell - Unidentified Analyst
Operator
Ladies and gentlemen, thank you for standing-by. Welcome to the Third Quarter Earnings Call of Albany International.
At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session; instructions will be given at that time.
At the request of Albany International, this conference call on Tuesday, November 4, 2014, will be webcast and recorded. I would now like to turn the conference over to Chief Financial Officer and Treasurer, John Cozzolino for introductory comments.
Please go ahead.
John B. Cozzolino
Thank you, operator and good morning everyone. As a reminder for those listening on the call, please refer to our detailed press release issued last night regarding our quarterly financial results, with particular reference to the Safe Harbor notice contained in the text of the release about our forward-looking statements and the use of certain non-GAAP financial measures and associated reconciliation of GAAP.
And for purposes of this conference call, the same statements also apply to our verbal remarks this morning. And for a full discussion, please refer to that earnings release, as well as our SEC filings, including our 10-K.
Now, I will turn the call over to Joe Morone, our Chief Executive Officer, who'll provide some opening remarks. Joe?
Joseph G. Morone
Thanks, John. Good morning everyone welcome to our Q3 2014 earnings call.
As usual, I'll open with a summary of the quarter, and then John will review the results in more detail. I'll follow with a quick overview of our outlook and then we'll go to your questions.
Although adjusted EBITDA improved by 5% compared to the year ago and AEC performed well on all fronts. Our performance in Q3 2014 did not meet our expectations because of soft sales in Machine Clothing.
However, we do not see the soft Q3 as an indication of any sort of structural change in Machine Clothing and we expect good year-over-year performance in Q4 for both Machine Clothing and AEC. For the most part Machine Clothing performed as we had expected, sale and margins reflected normal Q3 seasonality and Europe and Asia were once again stable.
The short fall came in the Americas. As we have discussed on numerous occasions, we are underexposed to the publication grades in North America.
Our long-term model of steady cash flow assumes that we'll get enough growth in South America and in the packaging and tissue grades in North America to offset what we all realize as an inevitable structural erosion in the North American market for the publication grades. In Q3, that North American publication markets suffered larger than normal year-over-year decline.
Meanwhile, in the growth segments that we count on to offset the declines in the publication market, North American packaging and tissue grew inline with our expectations, but South America did not. It was hurt by the weakening Brazilian economy and even though our competitive position remained very strong, our sales in South America dropped more than 10% on a year-over-year basis.
It was the combination of a decline in one of our key growth markets at the same time that we were hit with a larger than normal decline in one of our shrinking markets that accounted for the Q3 weakness. Several of other Q3 developments in Machine Clothing we have mentioned.
First, we reached a successful conclusion of contract negotiations with Europe's two largest papermakers. Despite strong price pressures, we were able to hold our position with no significant impact on revenue, thanks to the recognition by our customers of our superior performance and technology.
Second, despite the soft sales, gross margins improved and adjusted EBITDA held steady compared to Q3 2013. And third, orders were strong in the quarter and ahead of orders for the comparable period last year, shipment activity at the end of the quarter was also strong.
As for AEC is performed well financially in operations and in R&D. Adjusted EBITDA which includes rapidly growing R&D spending improved to breakeven compared to a loss of $1.6 million last year.
The LEAP engine test program is proceeding well. LEAP orders have now climbed to over 7,700 engines and we continue to make steady progress in preparing for the ramp up that begins in the second half of 2016.
Our operations Boerne, Texas also performed well. And we are encouraged by progress in R&D as we expand our engagement with existing and potential new customers on possible applications for both aircraft engines and airframes.
Also based on positive results from market research, designed studies, simulation and testing, we have decided to accelerate our efforts to break into the high end of the automotive industry and have begun to significantly expand this R&D activity. So that's a quick summary of what we saw for Q3, I will now to turn to John, who will review the quarter in a bit more detail.
John B. Cozzolino
Thank you, Joe. I would like to refer you to our Q3 financial performance slides.
Starting with Slide 3, net sales by segment; total year-over-year net sales in Q3 decreased 1.3% excluding the effect of currency rate changes. On the same basis, MC net sales declined 2.5%, while AEC net sales increased 8.3%.
The decrease in MC sales was mostly due to lower sales in the Americas, as Joe discussed, while the increase in AEC reflects growth in the LEAP and Joint Strike Fighter LiftFan programs. Total company gross margin percent as shown on Slide 4 increased to 38.2% in Q3, compared to 37.1% in Q3 of last year.
MC gross margin improved to 41.9% in the quarter compared to 41.6% in the same period last year, despite the lower year-over-year sales. On a year-to-date basis, MC gross margin of 43.1% for the first nine months of 2014 is comparable to the 43.2% gross margin in the same period of 2013.
As discussed in the past, MC gross margins is typically lower in Q3 compare to the first half of the year due to seasonally slowdowns. Moving on to earnings per share on Slide 5, we reported net income attributable to the company in Q3 of $0.37 per share compared to $0.15 per share in the third quarter last year.
Foreign currency revaluation gains and losses resulting primarily from the revaluation of non-functional currency, cash balances, accounts receivable and intercompany loans have significant impact on a year-over-year comparison as Q3 EPS includes income of $0.08 per share for revaluation, compared to a loss of $0.06 per share in Q3 2013. Other EPS effects in one or both periods related to discontinued operations, restructuring, tax adjustments, and an insurance recovery gain are noted on the slide.
Excluding the effect of the adjustments, EPS this quarter would be $0.31 per share compared to $0.24 per share last year. Slide 6 provides adjusted EBITDA details for Q3 2014 and 2013.
Adjusted EBITDA in Q3 2014 increased to $33.5 million compared to $31.9 million in Q3 last year. MC adjusted EBITDA and corporate expenses were essentially flat in the quarter compared to last year, while AEC adjusted EBITDA improved principally due to the improved profitability of our Boerne, Texas operation.
Year-to-date total company adjusted EBITDA improved to $108.5 million compared to $101.8 million for the first nine months of 2013. Slide 7 shows our change in total debt and net debt.
During Q3, total debt declined marginally to $284 million. Net debt total debt less cash increased $10 million to $88 million, as cash was negatively impacted by about $7 million due to changes in foreign currency rates as compared to the end of Q2.
Finally, as discussed in the release, certain participants of the US pension plan were notified of a limited-time lump sum opportunity. Lump sum payments from pension plan assets are expected to occur before the end of the year.
Depending on the number of participants that elect to take the lump sum payment, we expect to record a non-cash settlement charge of about $5 to $10 million in Q4. Now, I would like to turn it back to Joe for some additional comments before we go to Q&A.
Joseph G. Morone
Thanks, John. So, turning to our outlook, we expect a strong Q4.
In Machine Clothing the strong Q3 orders, strong shipment activity at the end of the quarter, better margins in Q3 than last year and a healthier packaging market in North America than last year all suggest that even with a weakened Brazilian market we expect Q4 MC sales to be comparable to Q4 2013 sales and Q4 MC adjusted EBITDA to outperform Q4 2013 adjusted EBITDA. We continue to expect full year Machine Clothing adjusted EBITDA to be comparable to last year.
And we continue to view global economic conditions as our primary risk factor in this business. Our outlook for AEC is for a strong fourth quarter, as our second LEAP plant located in Commercy, France, begins to come online.
We continue to expect full year AEC sales to be roughly 10% ahead of full year 2013 sales. So in sum, even though adjusted EBITDA improved by 5% compared to a year ago and AEC performed well, Q3 fell short of our expectations due to the soft sales in the Americas Machine Clothing.
In Q4, we expect both businesses to outperform Q4 2013 and we continue to expect full year Machine Clothing adjusted EBITDA to be comparable to last year and full year AEC sales to be roughly 10% ahead of full year 2013 sales. And with that, let's go to your questions.
Operator?
Operator
Thank you. (Operator Instructions) And first from the line of Jason Ursaner [CJS Securities].
Please go ahead.
Jason Ursaner - CJS Securities
Good morning.
Joseph G. Morone
Good morning, Jason.
Jason Ursaner - CJS Securities
Just for the MC segment, you know, a lot of the questions I have are pretty similar to the previous couple of quarters. The stability in Europe, it seems like a very good thing that the region continues to hold its own just considering, you know, some of the other various potential outcomes.
So just two things there. One, how does the overall capacity picture look to you Joe and then second the two major contract negotiations that you know, were successfully completed.
What does anything does that do to change the outlook for you in Europe?
Joseph G. Morone
You know, I think the short answer is, while there are changes at the margin. The overcapacity – the structural overcapacity in our industry in Europe is unchanged.
So there is you know, there is some capacity at the margin going out. But it’s not to go out at a pretty rapid rate given the, the state of the European economy and the overcapacity in the paper industry.
So I'd say basically no change. We've been trying to suggest for the last couple of – last year at least, that even though there wasn’t any structural improvement that for the moment we felt while there is always price pressure because of that structure that, the real short term risk factor in Europe is macroeconomic and we're still there.
The successful conclusion of those big contract negotiations, we enforce that, and we've got – we've got even though [ph] lot of price pressure, but we were able to hold our position. And I think the – if for the short term our outlook in Europe continues to be driven by what's going on with the European economy for the long-term and right now not much is coming out with the European economy.
For the long-term, we're still in the same place as we've always been. We need enough growth in the growth markets of Asia to offset what we think is inevitable, steady, structural decline in the paper industry in Europe.
So no, so I'd say no change and the stability, plus the outcome of these contract negotiations reinforces there.
Jason Ursaner - CJS Securities
Okay. The largest producers there though and they seem to be managing pretty well just given that there is some less overcapacity.
Is it, I guess, when you look at their performance, is it possible to, you know, if some capacity comes out over time that really isn’t going to impact your business so from this point very much?
Joseph G. Morone
Yes. UPN [ph] store are the two big producers that we're talking about Stora Enso and they have been aggressively taking out cost, which I think more than anything helps to account for their improved performance.
The fundamentals remain the same as with every developed market, the publication grades are will inevitably erode and the companies that have bigger – that have more assets invested in most publication grades are the ones that are going to have to struggle with matching demands, market demand to their capacity over time and that hasn’t changed.
Jason Ursaner - CJS Securities
Okay. And on the other side, in Asia the stability there you know, not such a great thing.
Where do you need to see growth return there, is it local demand, is it stronger exports, you know, and how close do you see that market becoming imbalance with the capacity that’s been put in?
Joseph G. Morone
I think the – its – demand and capacity aren’t that far off. The issue is we need domestic growth there.
And that’s why we keep saying that really this – the way we have structured this business we really set up to follow the business cycle and over the course of a normal business cycle, we should outperform on the upside and under perform on the down side. But over the course to the business cycle we should be flat, and that means those growth sectors in North America and South America are offsetting publication and growth in Asia are offsetting declines in Europe.
What's been interesting over the past years, a stage in the – in the business cycle where we should be seeing better than normal growth in the economies, we're seeing very weak growth in Europe and Asia and down South America. So that’s why we keep saying our number one risk factor is macroeconomics and you tell us when the domestic economy, the domestic G&P in China starts picking up and we'll then be able to tell you when our sales will start picking up in Asia.
They are very tightly tied, they are even more tightly tied then they used to be because order cycles in our business have gotten so short that…
Jason Ursaner - CJS Securities
Right.
Joseph G. Morone
You really and the economic activity, macroeconomics of a quarter will dictate how well we do in that quarter, doesn’t or more – would no longer a leading indicator or a lagging indicator.
Jason Ursaner - CJS Securities
Right. And that was actually just my last question.
The order cycle shortening, just overall visibility for you, you know, it does seem a lot shorter than it used to be. When you're looking at Q4, other then the pick up you saw at the end of the past quarter, is there anything else kind of driving the outlook for a strong conclusion to the year, based on what you're seeing in inventory or capacity, just given that it does have some seasonal variance on…
Joseph G. Morone
Right. Well, in general, we – we're able to see out six to eight weeks.
Jason Ursaner - CJS Securities
Okay.
Joseph G. Morone
We're able to look into at least the first half for December now.
Jason Ursaner - CJS Securities
Okay. It sounds good.
I'll jump back in the queue. Thanks, Joe.
Joseph G. Morone
Thanks, Jason.
Operator
And next well to John Franzreb [Sidoti & Company]. Please go ahead.
John Franzreb - Sidoti & Company
Good morning, guys.
Joseph G. Morone
Hey, John.
John Franzreb - Sidoti & Company
Joe, actually I wanted to – the last things you said in your prepared remarks. Could you actually see the AEC you expect to be up 10% year-over-year, was that on a quarter basis or on a full year basis?
Joseph G. Morone
Full year basis.
John Franzreb - Sidoti & Company
So, you're looking that as substantial step-up in revenue in Q4, what's driving that?
Joseph G. Morone
Well, so yes, that’s – your interpretation is correct and what's driving it is our second plant has now come online and…
John Franzreb - Sidoti & Company
Right.
Joseph G. Morone
There was a lot of inventory that was building up there and that’s going to all – that should, that was never a guarantee, but that should flow through in Q4. So we will get a bump that will catch us up to what we originally expected for the full year.
John Franzreb - Sidoti & Company
Okay. And is that sustainable kind of a run rate going forward…
Joseph G. Morone
Yes. I think the way to think about it is though, if you take the full year and average it out, you'll get our run rate.
John Franzreb - Sidoti & Company
Okay, okay. All right.
And then the pricing of the new contracts, you said there was an aggressive pricing environment. So on an apples-to-apples basis, should we be thinking of a lower gross margin profile for PMC over the near term?
Joseph G. Morone
I don’t think so. I mean, if – I think if we're in the range, we're been in with, I think we said 43% year-to-date, I think that’s – that’s the range we should stay in.
In order to stay in that range we just need to keep beating inflation year-over-year, that’s the primary task for us.
John Franzreb - Sidoti & Company
Okay. All right.
You mentioned also a step-up in R&D spend to address potential high end automotive applications. When has that step-up commenced and how hard do you think R&D will get in the coming year?
Joseph G. Morone
I think if you look at the Q3 run rate that might be a little high going forward to next year, or maybe at about that level.
John Franzreb - Sidoti & Company
Okay. And one last question and John this one is for you.
I am sure you're going to love it. But I would love you to actually walk through the impact on the euro on the P&L changes, especially since it seem to have a pronounced impact on the SG&A line in the quarter and that be helpful if you to kind of review that you know, in the public domain?
John B. Cozzolino
Yes. So, as I certainly reviewing the slides, we basically had a $0.14 swing when you compared Q3 last year to Q3 this year due to revaluation.
So what we're talking about here for our company it’s mostly related to our non-US entities and its mostly related to our euro based entities. And those entities have balance sheet items.
So I talked about cash and trade accounts receivable and intercompany loans, they have balance sheet items that are non-euro based. So it’s the revaluation of those assets and the liabilities back to the euro that creates the revaluation.
Now the easiest kind of marker to look at is what happens to the euro versus the dollar compared from June 30 to September 30. So remember we're revaluing at a point in time and it basically drive to 8% against the dollar.
Now, revaluation is going to be the euro against the dollar and other currencies. But that’s a significant drop for any currency, but particularly for us having euro based entities.
So the close to $4 million of total revaluation gains that we recorded through out the income statement was basically due to that weakness in the euro as of the end of September and its related to the translation of those non-functional currency assets and liabilities.
John Franzreb - Sidoti & Company
Okay. So, as we look forward for modeling purposes, do we kind of hold the status quo here and hold our breath?
Or what do we do?
John B. Cozzolino
Well, I think the one point that I should add, is one of the reasons that we started calling this number out years ago, few years ago, whether it was big or small because for us these type exposures don’t really have much of an economic impact on us. So in our view we think to get a better understanding of the operations for each quarter, its at least good for other one to say, I mean – and we either add them or subtract them when we look at our adjusted EBITDA.
When you model going forward, I can just tell you what were we doing, we look at it as really, its not very useful to model it, you know, you assume every euro right now that’s under 125, it certainly could go lower. But you know, there is so much speculation as to what directions some of these currencies can go and I don’t really see at as good exercise to try to make a guess whether it’s going to up or down.
So typically for modeling you just hold, you just assume revaluation is not going to be part of the results.
John Franzreb - Sidoti & Company
Okay.
John B. Cozzolino
It could have an economic effect John, then we would treat this differently. But its not really I mean…
John Franzreb - Sidoti & Company
No, I just wanted to get it out there guys concerning how much to your moves and how much it impacts everything. But I just want – I wanted John to get some talking.
John B. Cozzolino
Thanks, John. This is really the final reason we do adjusted EBITDA as because the swings could be – every once in a while that was bigger they were this quarter and they just…
John Franzreb - Sidoti & Company
Right.
John B. Cozzolino
It’s towards economically how we…
John Franzreb - Sidoti & Company
Right, right. Okay, guys.
Thanks, I am going to get back in the queue and let somebody else…
John B. Cozzolino
Thank you.
Operator
Our next question is from Steve Levenson [Stifel Nicolaus]. Please go ahead.
Steve Levenson - Stifel Nicolaus
Good morning, Joe and John.
Joseph G. Morone
Hi, Steve.
Steve Levenson - Stifel Nicolaus
Can you tell us a little bit about, a little bit more about the auto applications and forgive me just high end auto mean expensive cars or expensive applications on the kind of cars most of us drive?
Joseph G. Morone
All right. Well, I don’t know what kind of car you drive, there is nothing to characterize.
We're talking about the very high performance and the Lamborghini's and McLaren's [ph] and that sort of thing as an entry point to break into the industry. We – as I think I've mentioned, we built a composite, 3D-woven composite side impacting and we – just a very rough one, you know, wasn’t optimized it anyway.
We then tested it, we tested it crashworthiness if you will and its weight against an actual metallic side impacting. And what we have learned through the testing, through stimulation and analysis as well, is that the 3D-woven composite side impacting which hasn’t been optimized absorbs almost as much energy with a lot less weight.
So it’s almost as crash resistant even in this very early state. And it’s a lot – and it’s much lighter.
So, at the same time, we were engaged with a partner in the automotive industry looking at potential applications and you know we have concluded it is worth going the next step in a serious way. And the next step is we will now try to make, we will now make some generic sample parts and with those generic sample parts we will approach some of the OEMs at the high end and see if we can – see if we can get some business.
Now, it really is first wave of breaking into this market and we'll see over the next couple of years if we can land a contract or two they wouldn’t be huge contracts but they would be – or they would open the door for us to this industry, that’s what we're trying to do.
Steve Levenson - Stifel Nicolaus
And presumably if there was a less expensive material to work with that performed the same it would open the market to high volume vehicles as opposed to the high…
Joseph G. Morone
Yes. I mean, the ideal – if you really want to look at the optimal scenario, it would be that we wind up with a couple of applications that are really relatively small volume, high end and are just demonstrating the capability of the technology and then it becomes a matter how fast we penetrate with the entirely a function of how far we can get price down.
Steve Levenson - Stifel Nicolaus
Okay. Thanks.
And in term of developing those parts, does that help you in anyway for the light weighting efforts in the airframes, so do you somewhere sort of thought [ph] that can be used in those applications?
Joseph G. Morone
Yes, that’s rally interesting question and it turns out that the technology development we'll be doing, the generic technology work that we're doing to advance our efforts in automotive directly apply to our efforts to advance our capability on that side. So in that sense there is upside to this, but there is not really that much down side, the R&D will certainly be generically applicable.
Steve Levenson - Stifel Nicolaus
Okay. Thanks.
Next I was going to ask about ceramic, and if you can give us an update on the testing of the Tailcon [ph] and what other opportunities there might be in ceramic's going forward and of course composites carbon fiber based composites to replace metallic parts in jet engines?
Joseph G. Morone
Well, you may have read the Boeing's test and its clean program of those ceramic matrix composite nozzles have gone very well from our performance point of view. They had a flight test that went well.
And so this is a technology that looks – a technology platform really that looks promising. We're well positioned on it and its one of these cases where we're waiting for the right platform to come along.
Your know that Boeing has been somewhat conservative after the 787 on rushing out new technology on to the platform that it is pushing. So as of now, we don’t see any evidence that it’s going to be on the next major platform, which will be the 777x.
So this is looking like an important technology or next, next [awaited] – some time next decade trying to with the real opportunity to be the next major platforms that Boeing decides to launch. We are seeing some earlier applications that would be a lot smaller and more esoteric that have more to do with military and space and we can’t really get into that.
On the engine, as you, as Safran has made clear they are actively engaged in working on ceramic matrix composite for the low pressure turbine. They displayed a low pressure turbine blade made out of ceramic matrix composite at the Paris air show last year and that’s a high risk high pay off activity that continues as far as we know.
Steve Levenson - Stifel Nicolaus
Okay. Anything to do with replacing metal rings in the engine case with ceramics?
I know one of your – one of the companies that you partnered with has filed a patent covering some of those products?
Joseph G. Morone
Well, I am not familiar with specifically what you are talking about, we are working with Safran on a number of applications, potential applications for where carbon fiber will replace metallic on future engines for sure.
Steve Levenson - Stifel Nicolaus
Kudos. Thanks very much.
Operator
Our next question is from J.B. Groh of D.A.
Davidson & Company. Please go ahead.
J.B. Groh - D.A. Davidson & Company
All right. Thanks guys for taking my question.
Joseph G. Morone
Hey, JB.
J.B. Groh - D.A. Davidson & Company
How are you doing? I know you’re not giving any 2015 guidance.
But sort of how would we actually expect the AEC ramp, second half weighted there. I mean, is this going to ramp up with the lead production?
Joseph G. Morone
Yes. 2015 is – yes it is kind of a bridge year, because the ramp, the entry into service of the LEAP 1A, the air bus version is the second half of 2016, the entry into service of the Boeing the 1B is first half of 2017.
So the ramp doesn’t begin in earnest until initially the second half of 2016. So, 2015 and early 2016 is all about, you know, all of the remaining milestones associated with cost, find everything and getting the yield where it is and doing precaution runs and to locking down any final modifications to design that might pop up.
But it’s not going to be – so it’s going to be a lot of activity, but it’s not going to show up as much of anything on the top line.
J.B. Groh - D.A. Davidson & Company
Okay. So that will be 2016, early 2016 kind of thing…
Joseph G. Morone
That’s a middle to second half of 2016 will be when the thing starts. And…
J.B. Groh - D.A. Davidson & Company
With almost current with the entry into service?
Joseph G. Morone
Yes. So, you know, I think if you take, we haven’t really started talking about next year.
But first approximation, if you take the run rate, the annual run rate that you see this year by the – after Q4 and assume that that’s more or less give or take what you'll see next year.
J.B. Groh - D.A. Davidson & Company
Okay. And then could you talk a little bit you mentioned I think some of the legacy businesses in terms of margins.
But could you – is there way to disaggregate what was LEAP related and what was your legacy business in AEC?
Joseph G. Morone
I would rather not do that. I think the closest we could come to answering that question is there is, rapidly growing business like this as you know there is – we'd been building up a lot of the fix cost that become platform -- organizational platform that we grow a lot.
So incremental revenue from here should be dropping through at a pretty good clip, whatever the – whatever that business is there is going to be, margin should grow with incremental revenue.
J.B. Groh - D.A. Davidson & Company
Okay. That’s fair.
Thanks for your input guys.
Joseph G. Morone
Thank you, JB.
Operator
(Operator Instructions) And we'll go to line of Rick Dortell [ph] Please go ahead.
Unidentified Analyst
Good morning, guys. Actually both Steve and JB answered or asked my question.
So I am all set thank you.
Joseph G. Morone
Okay. Rick.
Operator
And we'll go to John Franzreb [Sidoti & Company]. Please go ahead.
John Franzreb - Sidoti & Company
Yes. Just one question on the capital spending plans going forward.
Could you just update us on how much you expect to spend this year and what the initial expectations are in 2015?
Joseph G. Morone
Well, we're still – we're not come yet, coming off our guidance of 60 to 70 a year on average. If that changes it will be because significant opportunity popped before the spending on LEAP started to wind down in 18/19.
So…
John Franzreb - Sidoti & Company
As far as before we start seeing the LEAP spending wind down is 18?
Joseph G. Morone
Yes.
John Franzreb - Sidoti & Company
Okay.
Joseph G. Morone
Yes. So, I think if the guidance changes that’s basically good news, but as of now you should count on 60, continue to count on 60 to 70 on average.
John Franzreb - Sidoti & Company
Okay. That’s fine.
And just on the revenue step function when LEAP starts to role in the second half of 2016. What kind of magnitude should we be thinking about on a top line basis?
Joseph G. Morone
Well, if you assume a hundred thousand for ship set and 1700 engines by 2019 and so $170 million of revenue by 2019 and we're running now at about half of – we're running now about half our total revenue. So you know, if you go from 45 or 50 to a 190 and just basically draw a straight line from the back end of 2016 to 2019 you get a pretty good slope, pretty good...
John Franzreb - Sidoti & Company
Okay. Thank you very much.
Thanks, Joe.
Operator
And with that no further questions in queue.
Joseph G. Morone
Well, thank you everyone for participating on the call and as always we'll look forward to seeing you in between now and our next call and talking to you more about what's going on with the company. Thank you and talk to you next time.
Operator
Ladies and gentlemen, a replay of this conference call will be available at the Albany International website beginning at approximately noon Eastern Time today. That does conclude your conference for today.
Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.