Albany International (AIN) Q4 2018 Earnings Conference Call Transcript

Albany International (AIN 1.21%)
Q4 2018 Earnings Conference Call
Feb. 12, 2019 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants
  
  See all our earnings call transcripts.

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the fourth-quarter earnings call of Albany International. [Operator instructions] At the request of Albany International, this conference call on Tuesday, February 12, 2019, will be webcast and recorded. I would now like to turn the conference call over to Chief Financial Officer and Treasurer John Cozzolino, for introductory comments.

Please go ahead.

John Cozzolino -- Chief Financial Officer and Treasurer

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, those 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 Olivier Jarrault, our chief executive officer, who will provide some opening remarks. Olivier?

Olivier Jarrault -- Chief Executive Officer

Thank you, John. Good morning. Welcome, everyone, and thank you for joining our fourth-quarter earnings call. We will follow today a similar format of past calls.

I will begin with an overview of the quarter then John will take you through our financial results in more detail, after which, I will provide an update to our outlook and we will then take your questions. Q4 2018 was, once again, a very good quarter for Albany International as strong performance continued across both businesses. Total company net sales increased 11% or 15%, excluding the impact of ASC 606 and currency translation effects. Compared to Q4 2017, net income and adjusted EBITDA, both increased sharply.

Net income increased to $17 million while adjusted EBITDA grew to $58 million, due to higher sales and productivity improvements in both MC and AEC. MC sales in the fourth quarter, excluding the impact of ASC 606 and currency translation effects, increased 4% compared to Q4 2017. Globally, MC sales grew in both the packaging and publication grades with particular strength in North America. MC gross margin in Q4 increased to 48.6%, compared to 45% in Q4 2017, primarily due to higher sales and improved plant utilization.

Operating income and adjusted EBITDA both increased significantly, compared to Q4 2017 with adjusted EBITDA improving to $51 million in the quarter. For the full year, MC net sales, excluding the impact of ASC 606 and currency translation effects, increased 3% compared to 2017 with increases in all major paper grades. The increase in net sales reflects our continued leadership in product innovation, our superior customer service levels and our commitment to outstanding application engineering. Operating income and adjusted EBITDA both increased sharply, compared to 2017 with adjusted EBITDA growing to $212 million, reflecting strong process productivity improvements and the impact of our continuous focus on cost-reduction initiatives.

Q4 was another quarter of strong improving performance for AEC with significant growth in sales, operating income and adjusted EBITDA compared to Q4 2017. Net sales, excluding the impact of ASC 606 and currency translation effects, increased 34% while profitability continued to improve compared to Q4 2017. The increase in sales in Q4 was substantially driven by the LEAP program. Sales of fan cases, fan blades and spacers for LEAP engines, which represented about 44% of AEC Q4 2018 sales, grew 31% compared to Q4 2017, reflecting AEC's continued execution related to the unprecedented steep ramp-up of this jet engine program.

Higher sales of Boeing 787 fuselage frames, as well as F-35 and CH-53K components also contributed to the growth in sales. Combined sales for these three programs grew 43% compared to Q4 2017. AEC operating income continued to improve as it grew to $6.7 million in Q4, compared to $0.6 million in Q4 2017. Adjusted EBITDA also continued to improve in the quarter as it increased to $18.1 million or 17.9% of net sales, compared to $10.8 million or 14.1% of net sales in Q4 2017.

The increase in both operating income and adjusted EBITDA reflects not only higher sales volume, but also productivity improvements resulting from the deployment of a disciplined, standardized operational system across our AEC plants, as well as the favorable impact of our continuous improvement program. The AEC team is improving quality and on-time delivery to our customers despite increasing demand and record shipment levels. For the full-year 2018, AEC net sales, excluding the impact of ASC 606 and currency translation effects, increased 36% compared to 2017, exceeding the upper end of the 20% to 30% range we discussed in past quarters. Sales related to the LEAP program were the largest driver of this increase, along with growth in sales of Boeing 787 fuselage frames and F-35 and CH-53K components.

AEC's profitability also saw strong improvement in 2018 with sharp increases in operating income and adjusted EBITDA. Adjusted EBITDA in 2018 grew to $63 million or 17.1% of net sales. In R&D, our new product development activities, which focus on existing derivative and new technologies and our process improvement projects, which aim to optimize our operational performance across AEC, continued in Q4 to build upon the progress of prior quarters. Our continued execution on our major existing contracts, as well as on anticipated new contract wins provides the potential for AEC to reach annual sales of $500 million to $550 million in 2020.

As I have stated in previous quarters, the potential for AEC beyond 2020 will be based not only on executing on the continued ramp-up of existing programs on which we are already well established, but also on increasing share or acquiring first-time content on ramping programs while at the same time winning new contracts on future commercial and defense airframe and engine platforms. Now let's go back to John for more details on the quarter. John?

John Cozzolino -- Chief Financial Officer and Treasurer

Thank you, Olivier. I'd like to refer you to our Q4 financial performance slides. Starting with Slide 3, net sales by segment. Total company net sales in Q4 increased 11%, compared to Q4 2017 and 14.5% excluding both currency and ASC 606 effects.

In Q4, excluding currency and ASC 606, MC net sales were up 4.5% and AEC net sales increased 34.3% compared to Q4 last year. For the full-year 2018, excluding currency and ASC 606 effects, total company net sales increased 13.6%, compared to 2017 with MC sales up 3.3% and AEC sales up 35.9%. As discussed in the press release, in Q4, the company discovered implementation issues related to the adoption of ASC 606. The issues were related to the MC segment only and caused an immaterial overstatement in revenue and income previously reported in the first nine months of 2018.

The issues have been corrected and previously reported amounts for 2018 will be revised in our 2019 quarterly filings. We have also incorporated the revised amounts into each of these slides. In addition, Slide 9 provides the revised numbers for Q1 through Q3 2018 for certain financial statement line items and adjusted EBITDA. Turning to Slide 4, total company gross profit margin is 34.9% in Q4, compared to 34.2% in Q4 2017.

AEC gross profit margin in Q4 was 14.5%, compared to 13.1% in Q4 last year. MC gross profit margin in Q4 stayed strong at 48.6%, compared to 45% in Q4 last year. For the full year, MC gross profit margin improved to 48.6% in 2018, compared to 47.5% in 2017 and AEC improved to 14.2%. Slides 5 and 6 show net income and adjusted EBITDA by segment for the quarter and the full year.

Adjusted EBITDA for the total company in Q4 2018 was $57.7 million, compared to $43.4 million in Q4 2017. For the full year of 2018, adjusted EBITDA for the total company increased to $228.9 million, compared to $169.4 million last year. MC finished the year strong with adjusted EBITDA of $51.2 million, bringing the full-year total to $212.1 million. Both results were significant improvements over last year.

AEC adjusted EBITDA in Q4 was $18.1 million and $63.3 million for the year. AEC adjusted EBITDA as a percentage of net sales in 2018 improved to 17.1%. Moving on to Slide 7, earnings per share. Net income attributable to the company in Q4 was $0.55 per share, compared to $0.18 per share in Q4 of last year.

Excluding adjustments for restructuring, tax items, currency revaluation and the net impact of a pension settlement charge and a curtailment gain, net income attributable to the company was $0.74 per share in Q4, compared to $0.44 per share last year. On a full-year basis, net income attributable to the company, excluding adjustments, was $2.82 per share in 2018, compared to $1.67 per share last year. Slide 8 shows our total debt and net debt. Cash flows were very good in Q4, which included the impact of improved working capital during the quarter.

As a result, total debt decreased just over $5 million to a balance of $525 million at the end of the year while cash balances increased about $37 million to a total of $198 million. The combined effect of the decrease in total debt, along with the increase in cash, resulted in a decrease to net debt of $42.5 million in Q4 to a balance of $327.2 million. The improvement in net debt in Q4 was more than enough to offset the year-to-date Q3 increase as net debt for the year dropped $5.3 million. Payments for all capital expenditures in Q4 2018 were about $22 million.

We expect capital expenditures to continue to be in the range of $20 million to $25 million per quarter throughout 2019 as the company continues to invest in equipment to support multiple ramp-ups in AEC. Now I would like to turn it back over to Olivier for some additional comments before we go to Q&A.

Olivier Jarrault -- Chief Executive Officer

Thanks, John. Now let's turn to our outlook. Looking at 2019, the MC business is well-positioned to maintain relatively stable sales with adjusted EBITDA, once again, higher than the historical range of $180 million to $195 million. Assuming no significant changes in global economic conditions or currency rates, we expect 2019 adjusted EBITDA to be between $195 million and $205 million.

In 2019, we expect AEC to continue to substantially grow sales with further incremental improvement in profitability compared to 2018. Full-year 2019 net sales are expected to grow in the range of 20% to 25%, driven by higher sales of fan blades, fan cases and spacers for the LEAP program and components for the CH-53K, F-35 and Boeing 787 programs, as well as by our advanced technologies development work in support of next-gen engine programs. Adjusted EBITDA as a percentage of net sales should show some incremental improvement compared to 2018, keeping AEC on track toward our goal of 18% to 20% adjusted EBITDA as a percentage of net sales in 2020. Overall, Q4 was another very good quarter for the company, completing a year of outstanding financial performance in both businesses.

MC net sales, operating income and adjusted EBITDA all increased in Q4 and for the full year compared to 2017 with adjusted EBITDA well ahead of the upper end of the historical range of $180 million to $195 million. MC is well-positioned for relatively stable sales in 2019 and with the potential for adjusted EBITDA in 2019 between $195 million and $205 million. AEC had another strong quarter with growth in net sales, operating income and adjusted EBITDA, completing a very successful year. AEC is expected to continue to grow substantially in 2019 with additional incremental improvement in profitability compared to the 2018.

With that, let's go to the line for any questions. Operator? 

Questions and Answers:

Operator

[Operator instructions] Our first question will come from the line of John Franzreb with Sidoti & Company.

John Franzreb -- Sidoti and Company -- Analyst

I'd like to start with your guidance on AEC by 2020, the $500 million to $550 million. I guess, compared to the fall you've taken at the bottom end of your range by about $25 million, could you talk about why you did that, if some programs moving forward faster than may be originally expected six months ago?

Olivier Jarrault -- Chief Executive Officer

Yes, sure. Our growth in 2020 is primarily driven, of course, to our ability to execute, right, on the ramp-up programs on which we're very well-positioned, right, LEAP, of course, the CH-53K, the Boeing 787 frames, as well as the F-35 components. So what we did is a very disciplined windfall, a very disciplined process, really understanding or reassessing as accurately as we can in fact content that we have by platform, looking at the growth, right, expansion in '19, '20 and '21. And we came back to those numbers primarily, right, increasing about $25 million based on those measured platforms.

We also took into account some very specific advanced technology development work in support of some very specific next-gen jet engine program that we are working on, I can't give that much detail on it, but lots of activity going on the R&D side of our business. And all that made us feel pretty positive about a minimum of $500 million or increasing about $25 million versus our last target. So $500 million to $550 million, so the $550 million the upper side of the range would depend on how many new wins we could increase the share gains, we could negotiate between -- throughout '19 on either existing programs or other platform, existing platforms, ramping up, right? So we feel pretty comfortable, if you will, with that, John.

John Franzreb -- Sidoti and Company -- Analyst

And talking about new wins, Olivier, would you expect something to be announced some time in calendar 2019 in regards to new wins?

Olivier Jarrault -- Chief Executive Officer

We are working on a lot of different potential wins not only, I would say, on the engine side, but also on the airframe side, both commercial and defense applications. We have recently -- actually, we recently brought at AEC a new Vice President of Global Sales and we are in the process of implementing our strategy worldwide. We obviously only focus on the U.S. market, but we want to expand our activities globally in Europe as well, not only within the engine commercial and utility, but also airframe, but also equipment market.

And we will be announcing any potential wins, right, throughout 2019 as soon as it happens. Yes.

John Franzreb -- Sidoti and Company -- Analyst

OK. Switching over to Machine Clothing. You had a great quarter of EBITDA last year. You're still projecting very strong EBITDA in this year, but it is slightly down.

Is that a function of your expectations that revenues might be off? Or is it increased commodity costs that may have to flow through the P&L. Just why we think it'd be down in any sense year over year?

Olivier Jarrault -- Chief Executive Officer

Yes. That's a good question. I mean, our 2018 was, as you said, record, right, record earnings, right, year for us. And we are -- we think that the business, I mean,, MC business is very well-positioned in '19 to, again, right, to again, give very good financial performance, right? But I think to answer your question, it's good to maybe look at what really happened in '18 and how we see the market going, I mean, early '19, right? So we have, in '18, we have had that you noted strong sales.

I talked about improvement in utilization. We had, as you know, pretty favorable set of, how could I say, favorable currencies environment, especially in the Mexican pesos and the Brazilian money, and we had a fairly stable and favorable macroeconomic condition, right? We saw, if you look back at what we talked about end of Q3 and again in this quarter, we saw some increases in our publications rights, PMC sales, especially in the second half of '18 across North America, Europe, Asia Pacific driven by some specific orders, especially North America. We don't know if those orders will repeat or not, right, in '19. In addition, we saw, in '18, which I noted, right, at the end of the third quarter, we saw an increase in our tissue-grade PMC sales, especially in North America but also in Europe and Asia Pacific related to several specific new missions start-up.

Once again, if we're going to see them in the same level in '19, we still don't know yet, right. So as we enter in '19, if I look at the overall macroeconomic data, right, we know that overall growth ended around 3.7% in '18 estimated to continue in '19, but definitely I think at the slower pace than '18. However, there are significant, how could I say, uncertainty. There is no secret that the Chinese economy is slowing down in '19.

It slowed down in '18 already. We have the ongoing trade negotiations between China and the U.S. We have the undefined nature of Brexit. We have all those political uncertainties in several countries in Europe, such as France with the gilet jaunes, Germany with the Chancellor and so on.

Only South America is actually improving. So those issues may have an impact on the global economic growth and MC in 2019. However, it's very important for me to note that we continue, however, to believe that during the next five years, the paper and paperboard production will continue to increase as recently published by RISI at about 1% to 1.5% per year, right, about 1.4 actually percent impact backward. So now if I look strictly at the PMC market, if you will, going into '19, right, when we share with you my view, right, on the overview on the PMC market globally.

So the U.S. PMC market, which is our largest market, seems to be more or less stable due to packaging and tissues grade consumption increases offsetting, more or less, declines in publication grade consumption, especially in newsprint. Switching to Canada, the Canadian PMC market will continue to shrink. We think that mainly due to continued publication grade consumption declines, especially, once again, in newsprint.

We switch to Brazil, the PMC market will be essentially flat, we believe, due to favorable economic conditions, but with a slowdown of export of pulp grade to China. If you look at Europe, the European PMC market will continue to drop as a result of growth in the packaging grade consumption with machines conversions from printing and writing to packaging machines that, however, as I already mentioned last quarter consume less PMC than publication machines. And then if you switch to Asia Pacific, the Southeast Asia PMC market will be more or less stable with the China PMC market, we know that, it will keep on shrinking as a result of lower Chinese production of packaging grades due to environmental issues and what we are hearing about ongoing restrictions on imported recycled fiber. So when you look at all that, if you put that into consideration, we think that the MC business is well-positioned to relatively keep the same level of sales and deliver good financial performance ahead of the range of $180 million to $195 million, at $195 million, $205 million as a result, I would say, of the combined effects of volume, maybe a little bit of labor inflation or material inflation, and as I just noted, some product mix, right? So we will, one thing for sure, that we'll deliver good performance, we will continue, a very important point for us from a strategy standpoint, we will continue our technical and service levels focused on packaging and tissue grades as we are clearly in the leadership position while, of course, continuing to manage a decrease in publication grades.

Our product innovation and technology leadership and our focus on providing superior value to our customers, talking about cost-effective solutions, I'm talking about top-service levels in terms of on-time delivery, in terms of lead time. I'm talking about our quality levels will be the best to resist against market pressure and will enable us to maintain our global leader position in the market, right. That's our view for '19.

Operator

Our next question will come from the line of Christian Herbosa with NOBLE Capital Markets. Your line is open.

Christian Herbosa -- NOBLE Capital Markets -- Analyst

Hi. Thanks for taking my call and congrats on a great quarter.

Olivier Jarrault -- Chief Executive Officer

Good morning, Chris. Nice to have you on the call.

Christian Herbosa -- NOBLE Capital Markets -- Analyst

Thank you. So it looks like in Q4, the AEC segment was already close to achieving the low end of your 2020 adjusted EBITDA margin target range of 18% to 20%. So my question is do you think that the AEC segment has the potential to improve beyond that range?

Olivier Jarrault -- Chief Executive Officer

Well, listen, we have to look at the performance of this year versus performance of last year. Last year, I believe, we did, in '17, once you exclude a couple of -- unfavorability of a couple of contracts when it was unfortunately on us. We did roughly on an adjusted basis about $13 million of EBITDA, right, or 11%. We had a good, I would say, good operational improvement, as you noted, for the full-year '18, $63 million, roughly, of EBITDA and 17.1% of EBITDA margin.

That puts us -- I would say that positions the business properly, I believe, to now go from a $63 million to a roughly, say, $100 million, right, of EBITDA in 2020. I think it's a very healthy goal. Usually, the 18% to 20%, right, of the $500 million to $550 million range in volume. So I stick on that goal.

Once again, $30 million last year, $62 million this year. Let's keep on continuing to ramp up to execute on this multiple ramp-ups to keep on deploying across all our AEC plants a disciplined operational management system and you have seen that it's starting already to pay off. We have brought in actually in the past five or six months a very experienced new aerospace leadership team, especially on the AEC side, right, to manage that unprecedented steep ramp-up of the LEAP, brand-new leader on the operational front, brand-new finance leader, brand-new quality leader, brand-new LEAN manufacturing. So we are really bringing a lot of aerospace, if you will, global aerospace experience at AEC and I feel comfortable about that $100 million EBITDA target, it's a very healthy goal for '20.

Christian Herbosa -- NOBLE Capital Markets -- Analyst

OK, great. And then so I'm interested in hearing a little bit more about the new product development activities in R&D for the AEC segment. Are there any particularly attractive opportunities are you able to tell us about?

Olivier Jarrault -- Chief Executive Officer

Well, there are a lot of work as I was mentioning and I cannot really publicly, right, talk about, give you more details. There's a lot of work, if you will, a lot of advanced technology development work that is going on in support of some very, how could I say, some -- the combination, all right, of next-generation jet engine platforms that we've been very much involved with and that we'll be more and more involved with. It does include, if you will, tweaking, improving our existing technologies, which I call derivative technologies, especially on the 3-D woven RTM, resin transfer molding, technology. We're looking at other also -- other very, very interesting, as you know, potential applications both on the commercial and the military side, on the airframe side.

So it's all very exciting, but I cannot give that many details yet until we come out with contract and so on. A lot of very exciting work that really will fuel our growth in -- organic growth in '20 and past '20.

Christian Herbosa -- NOBLE Capital Markets -- Analyst

OK, great. I'll stay tuned then. And then so the last one for me is on the LEAP engine program, it contributed about 44% to AEC sales in Q4. So do you expect the LEAP program percentage of revenue to expand from there in 2019?

Olivier Jarrault -- Chief Executive Officer

Well, the LEAP, if you look at the LEAP, the rights announced publicly by CFM, right? We're going in '19 with 1,800-plus, right, engines versus 1,118 engines delivered by CFM in 2018. That's to be compared with 459, right, in 2017. Then we'll go -- CFM is talking about a goal above 2,000, right. We don't know yet the number, right, for 2020.

So we'll keep on seeing, right, that increase, right, in LEAP component sales in '19 and '20. And the percentage, right, could stay around that range, in the 40% to 45% range. I mean, that should be the same. Know that we have had a very interesting, right, goal on the CH-53K also and on the combined fuselage frame 53K and F-35 above 40% and you're going to start seeing continued ramp-up also on those three platforms as the Boeing 787, which was 14 aircraft launch in June of '19 and as the F-35 and the CH-53K, right, keep on expanding.

That'd be right.

Christian Herbosa -- NOBLE Capital Markets -- Analyst

OK. Great. Thank you. That's all for me.

Thanks for your time.

Operator

And our next question will come from the line of Pete Skibitski with Alembic Global. Go ahead.

Peter Skibitski -- Alembic Global -- Analyst

Hey, good morning, guys. Maybe a couple of financial questions to start. On the full-year free cash flow results, I think in terms of conversion, it's about 0.6 times free cash to net income. And I'm wondering if you guys have a target for free cash flow conversion? Should we think that working capital will be a use of funds each year just because of kind of where you're at in the supply chain and kind of the nature of your receivables and contract assets performance.

Can you give us some color on that?

John Cozzolino -- Chief Financial Officer and Treasurer

Yes. So Pete, this is John. I'll start with that. So right now, when you look at the free cash, we are still in the mode of fairly high CAPEX.

We talked about that's probably one of the bigger factors in the cash flow at $20 million to $25 million a quarter with a good chunk of that going toward AEC. The real key here will be when that starts to drop off hopefully after 2019 as we have those programs ramped up. At that point, the free cash flow generation will grow significantly. Now the other part of that is the working capital.

We do also continue to invest in working capital to support those ramps. A lot has been done to really improve the efficiency of that and we'll continue to keep looking at that. But once we reach the whole ramp on these programs, working capital should level off and that should also help the free cash flow. So that's really where we are right now going forward.

Olivier Jarrault -- Chief Executive Officer

Yes. I think that with what we had been doing, what you're starting to see in Q4, right, I mean, we had right now a cash flow, right, of $42 million, right, in Q4. We dropped down our total net debt to $327 million. It's a very nice improvement for the full year, right, and we have $5 million in cash, right, in cash flow.

And we are, as John was saying, we are putting a lot of focus in the past now two quarters on the AEC side to really manage much more efficiently, I would say, our working capital. A lot of focus on inventory. A lot, I would say, a lot of daily focus from my side directly in receivables on the aerospace side and on inventory and more and more focused throughout 2019 since we really want to ensure that the AEC business focuses not only on EBITDA growth, on ramping up, right, on ramping up the volume as I just talked about and delivering a step improvement in EBITDA margin toward the EBITDA, but also to start focusing on generating some free cash flow, right. That's where really my goal is, right? And so we have done I think a very nice improvement in Q3, Q4 and I think that will definitely keep on happening in '19 and '20, right? OK.

Peter Skibitski -- Alembic Global -- Analyst

Great. I appreciate the color. Just to follow up on the CAPEX side, do you think that in maybe the midterm or the long term, as a percentage of revenue, maybe CAPEX could come down to kind of the mid-single-digit level kind of when this ramp is over? And also, how will the potential launch of the 797 or NMA, how will that impact the outlook for CAPEX?

Olivier Jarrault -- Chief Executive Officer

I think to answer your question, I think that we view the -- once we have brought in the equipment to support the growth of the CH-53K, the F-35, we have to keep on bringing equipment this year for the GE9X. Don't forget that we are, right, that we're producing the fan cases, right, of the GE9X, the 777X entered in service four aircraft in 2019. But we keep on receiving equipment, we're going to have to think also, as you just mentioned, about the potential, right, UHBR, the NMA which could play both on the engine and also on the airframe side. I think about in a range of $60 million a year, right, I think it's a fair number to keep in mind, right? I mean, the $60 million, right? For the total company, right, for the total company, OK.

Peter Skibitski -- Alembic Global -- Analyst

Yes. That's very helpful. Last one for me, and I appreciate all the color. This Airbus Emirates news about -- talking about the A380, how are you guys thinking about that? Is it too early for you to comment on it? Or just wondering what the potential financial impact could be to you if the rate on the A380 isn't coming down?

Olivier Jarrault -- Chief Executive Officer

Well, I'm not worried at all about the A380. It's not -- I mean, for some of us who are doing pretty well in the aerospace industry, it's not a very big news, right? We knew it would come one day or another, right? So we have a very marginal, right, content on the A380. So very, very marginal from our Salt Lake City business. So I mean, for us, it has absolutely no impact.

Actually, I look forward to an increase, I would say, at the Airbus, an increase, right, of the A350 because we have some potential -- maybe some potential business to play there, right, from our Salt Lake City business, right. So an increasing A350 or an increase in the rental of the A330 would be actually quite good news for us, right? So actually, I'm rather pleased with the news, right? OK.

Peter Skibitski -- Alembic Global -- Analyst

So I am very active. I am rather pleased with the weather news. I got it. I got it.

Very helpful. Thank you, guys.

Olivier Jarrault -- Chief Executive Officer

OK. You're very welcome. Nice to talk to you.

Operator

[Operator instructions] We'll go next to the line of Mitchell Grivec with Thai Capital. Go ahead.

Unknown Analyst

Good morning.

Olivier Jarrault -- Chief Executive Officer

Good morning. Nice to have you.

Unknown Analyst

Thank you. So you talked about a lot of -- so you called and talked about the possibility of new wins in the future. Just based on the pipeline, can you give us a range of what that -- those new wins could equate to as far as dollar size?

Olivier Jarrault -- Chief Executive Officer

Well, first of all, you have to think about which horizon, right, where you're thinking about, right? I mean actually I think, if you, I guess, your question is more related to 2020, right?

Unknown Analyst

And beyond, yes.

Olivier Jarrault -- Chief Executive Officer

Yes. In 2020, I would say that depending on the timing, right, of those anticipated new share gains or new first-time content acquisition on existing platforms that are ramping up today. I think, if everything was to materialize on time the probability, right, that we took in our calculation, that would give us roughly -- that will bring us to the upper side of my range, right, of $550 million, it's about $25 million, right, either side, right, toward the $550 million. That's what I view as of today, right?

Unknown Analyst

OK. All right. Thank you.

Operator

We do have a follow-up question from the line of John Franzreb with Sidoti & Company. Go ahead please.

John Franzreb -- Sidoti and Company -- Analyst

Maybe to ask a previous question a different way. The target margin for AEC has been that range for a while. Olivier, when you were at Alcoa, you were known for improving productivity at existing operations. You've been there a year now.

My question is do you think that the AEC business is operating at optimal productivity? Or is there margin improvement opportunity based on your view of how the business is performing right now versus maybe a couple of years from now?

Olivier Jarrault -- Chief Executive Officer

Listen, I mean, there are always productivity improvement to be achieved, right? And I think, listen, how could I summarize it, I feel much more comfortable today about the $100 million EBITDA target in '20 than I was a year ago when I saw the business operating at $30 million EBITDA, right, and 11% EBITDA margin, right? So I think you'll agree with me that all the system that we have deployed, all the metrics and all our operating system that we have put in place drew right double, right, acquisition volume as well. But executing on the ramp-up plus putting the productivity programs in place helped us going to $63 million, right? So that's about 17.1%. If I look at my past experience, right, of EBITDA margin experience -- of improvement across aerospace businesses, I think that targeting a point to a point and a half, right, of EBITDA improvement is a good range, right. It's a good -- that's what I've been doing the past 10, 15 years across casting businesses, forging businesses, fastening and so on.

So with '17 at 1.5% to about 3 points max, right. That's why I'm pretty comfortable about the delivering, right, in the 18% to 20% range, right? And then from there, we'll continue growing, right, in the out-years.

John Franzreb -- Sidoti and Company -- Analyst

OK. Fair enough. I'll give it a shot. Thank you.

Operator

We have no further questions in queue at this time. You may proceed.

Olivier Jarrault -- Chief Executive Officer

Well, again, thank you all for joining the call. We appreciate your time today and your continued interest in Albany International. I would like also to congratulate my Albany team on a strong finish to 2018. Thank you.

Operator

[Operator signoff]

Duration: 51 minutes

Call Participants:

John Cozzolino -- Chief Financial Officer and Treasurer

Olivier Jarrault -- Chief Executive Officer

John Franzreb -- Sidoti and Company -- Analyst

Christian Herbosa -- NOBLE Capital Markets -- Analyst

Peter Skibitski -- Alembic Global -- Analyst

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