It's not an accident that we completed well over 100 Lean Kaizen improvement projects in 2020 despite the restraints of social distancing, working remote and following precautions for COVID-19.
In December, we recognized these accomplishments by our employees, and we're pleased to award all of our employees around the world, excluding the executive team, with a $1,000 bonus of gratitude.
Consider this: in the middle of a global pandemic recession, our MC segment expanded its adjusted EBITDA margin by 170 basis points in 2020.
And more impressive, since 2015, our MC segment has expanded its adjusted EBITDA margin by more than 500 basis points.
Through 2021, we're planning for slower production on some lines in AEC because of excess inventory in our facilities and inventory and the supply chain of our customers, particularly for components for the Boeing 737 MAX, the 787, and to a lesser degree the F-35.
To continue managing our costs, and because of the recent downward revision by Boeing for 787 demand, we just yesterday implemented a reduction in our Salt Lake City workforce where we produce 787 frames.
We're well positioned in both military and commercial markets with solid programs such as the CH-53K, the JASSM missile, the F-35 and LEAP.
For the fourth quarter, total company net sales were $226.9 million, a decrease of 12% compared to the $257.7 million delivered in the same quarter last year.
Adjusting for currency translation effects, net sales declined by 13.6% year-over-year in the quarter.
In Machine Clothing, also adjusting for currency translation effects, net sales were down 6.6% year-over-year, driven by declines across most major grades of product, partially offset by growth in engineered fabrics.
Once again, the most significant decline of over 21% on a constant currency basis was in publication grades, which represented about 17% of our MC sales in the quarter.
Engineered Composites net sales, again, after adjusting for currency translation effects, declined by 23.5% compared to last year, primarily caused by significant reductions in LEAP and Boeing 787 program revenue, partially offset by growth on the F-35 and CH-53K platforms.
During the quarter, the ASC LEAP program generated revenue of a little under $25 million compared to $48 million in the same quarter last year.
However, this quarter's ASC LEAP revenue was up significantly on a sequential basis, 48% higher than the third quarter, driven by the fact that all three of our ASC LEAP facilities were operational for the full fourth quarter.
Fourth quarter gross profit for the company was $91.3 million, a reduction of 5.5% from the comparable period last year.
The overall gross margin increased by 280 basis points from 37.5% to 40.3% of net sales.
Within the MC segment, gross margin improved from 50.2% to 50.9% of net sales, driven by favorable foreign currency exchange rates, increased efficiencies and product mix.
AEC gross margin improved from 19.6% to 21.7% of net sales, driven primarily by a favorable mix in program revenues, partially offset by a lower net favorable change in the profitability of long-term contracts.
While we did recognize a net favorable change in the estimated profitability of long-term contracts this quarter of about $500,000, this compares to a $3.3 million improvement recognized in the fourth quarter of 2019.
Fourth quarter selling, technical, general and research expenses increased from $51.3 million in the prior year quarter to $54.8 million in the current quarter and increased as a percentage of net sales from 19.9% to 24.1%.
The increase in the amount of the expense was driven primarily by higher incentive compensation expense and an increase in foreign currency revaluation losses from $1.4 million in Q4 of 2019 to $3.0 million this quarter.
I would like to note that the higher incentive compensation expense that we recorded in both the third and fourth quarters of 2020 included accruals at corporate totaling $3.9 million across both quarters combined for the special $1,000 employee bonus that Bill referenced.
Total operating income for the company was $35.0 million, down from $43.6 million in the prior year quarter.
Machine Clothing operating income decreased by $4.9 million, caused by lower gross profit, higher STG&R expense and higher restructuring expense, while AEC operating income fell by $2.1 million, caused by lower gross profit and higher STG&R expense, partially offset by lower restructuring expense.
Other income and expense in the quarter netted to about income of $490,000 compared to an expense of about $350,000 in the same period last year.
The income tax rate for this quarter was 13.5% compared to 24.8% in the prior year quarter.
As a result of a foreign currency revaluation gain at an entity where no tax provision is required, the tax rate associated with our adjusted earnings per share is somewhat higher at 17.8%.
That 17.8% tax rate is significantly lower than the tax rate for the full year.
In 2020 as a whole, our tax rate, excluding discrete items, was 28.4%, which compares to 28%, excluding discrete items, for 2019 as a whole.
The lower rate this quarter, due mainly to a true-up of earlier quarters' provisions, increased adjusted earnings per share by $0.12 this quarter.
Had we known the final full year rate earlier in the year, that $0.12 would have been recognized as additional adjusted earnings per share in those earlier quarters.
Net income attributable to the company for the quarter was 27.5% (sic) $27.5 million, a reduction of 5.5% from $29.1 million last year.
Earnings per share was $0.85 in this quarter compared to $0.90 last year.
After adjusting for the impact of foreign currency revaluation gains and losses, restructuring expenses, pension curtailment charges and expenses associated with the CirComp acquisition and integration, adjusted earnings per share was $0.89 this quarter compared to $0.97 last year.
Adjusted EBITDA fell 10.4% to $57.3 million for the most recent quarter compared to the same period last year.
Machine Clothing adjusted EBITDA was $50.9 million, or 35.3% of net sales this year, down from $52.8 million, or 35.1% of net sales, in the prior year quarter.
AEC adjusted EBITDA was $21.3 million, or 25.7% of net sales, down from last year's $24.2 million, or 22.6% of net sales.
Net debt declined by about $46 million during the fourth quarter.
As a result, our absolute leverage ratio declined from 0.89 at the end of Q3 to 0.74 at the end of Q4.
For the full year 2020, we delivered net sales of about $573 million, down 5% from about $601 million in 2019.
Orders in the fourth quarter of 2020 were up about 6% compared to the fourth quarter of 2019.
We are providing initial net sales guidance for the segment of $570 million to $590 million.
From a profitability perspective, Machine Clothing had a very strong year in 2020, delivering $216 million of adjusted EBITDA.
Overall, net favorable foreign exchange rates contributed over $6 million of adjusted EBITDA in 2020 compared to the prevailing foreign exchange rates in 2019.
For example, the Mexican peso had weakened from under 20 pesos per U.S. dollar in Q1 of 2020 to almost 25 pesos per dollar in Q2, but by the end of the year, the rate was back under 20 pesos.
While this helped the bottom line to the tune of about $6 million, this was not ideal from a business perspective, as we depend on strong customer relationships to develop insight into customer needs and to drive product development and support.
Third, we continue to see pressure on input costs, particularly right now with respect to logistics where sea, rail and air freight costs are all considerably higher than they were 12 months ago.
In the typical year, we see over $4 million of input cost pressure, and there is reason to believe that in 2021, this could be higher.
Notwithstanding these three pressures on profitability, we expect the Machine Clothing segment to deliver another strong year of profit performance and are providing initial adjusted EBITDA guidance for the segment of $195 million to $205 million.
Overall, revenue in the segment declined by about $125 million in 2020 compared to 2019, driven principally by lower sales on LEAP, 787 and other commercial programs, offset by growth in military programs.
On the ASC LEAP program, we expect to continue to produce components for the LEAP-1B variant, which powers the 737 MAX, at very low levels.
While the 737 MAX is now reentering service, there is considerable finished goods inventory in the channel at Boeing, at Safran and in our own facilities on which we have already recognized revenue as we recognize revenue at the time of production, not delivery.
In 2021, we currently expect to make components for fewer than 150 LEAP-1B engines, far below the 1,000-plus engine shipsets we would expect to deliver annually in the long term.
On LEAP-1A, there is a much lower level of finished goods inventory in the channel, and we expect to produce components for well over 500 engine shipsets in 2021.
Our next largest commercial program to produce frames for the Boeing 787 also has finished goods inventory destocking challenges.
In 2020, we had already seen some effect from Boeing's decision to reduce the 787 build rate, and our revenues from the program in 2020 were down over 20% from 2019.
However, as Boeing reduced the 787 build rate further, there has been an increased buildup of our finished goods in Boeing supply chain, resulting in drastic reductions in order quantities for delivery in 2021.
In addition, we expect our start-up of production of the 787 aft fuselage frames will now shift from late 2021 into mid- 2022 as it will take longer to consume the parts already in the supply chain that were produced by the previous supplier.
Overall, in 2021, we expect our revenues on the 787 frames program to be $30 million to $35 million lower than we recognized in 2020.
On the military side, we support the Lockheed Martin F-35 through several contracts for different parts, including wing skins, edge seals and engine components at both our Salt Lake City and Boerne locations.
F-35 has been and remains a very important platform for us.
In 2020, we recognized over $85 million of revenue on the platform overall, up more than 25% from what was recognized in 2019.
As a result, during 2020, there was a buildup of our finished goods in the F-35 supply chain; a situation that we expect will reverse itself in 2021.
We now expect our F-35 revenues in 2021 to be more than $15 million lower than we recognized in 2020.
We see similar patterns in several smaller commercial programs across the segment where the revenue on those programs in 2021 will be close to $15 million lower than recognized in 2020.
Overall for the Engineered Composites segment, we are providing initial guidance for net sales of $275 million to $295 million.
Turning to the Engineered Composites segment profitability, 2020 was a strong year with adjusted EBITDA margins of over 26%, largely enabled by three factors: one, strong operating performance in the period as evidenced by about $10 million in net favorable adjustment to long-term contract profitability; two, a sales mix benefit as the majority of the revenue declined from 2019 to 2020 was on the ASC LEAP program, which is a lower than average profit margin; and 3, despite the decline in revenue, there was limited loss of fixed cost absorption as the cost-plus nature of the ASC LEAP program allowed us to still recover all of the fixed costs of operating our three ASC facilities.
First, the lower revenue in 2021 at our non-ASC facilities, most notably our Salt Lake City operation where all of our 787 work and the bulk of our F-35 work is performed, will create upward pressure on plant overhead rates.
Second, in 2021, we will see a product mix hit as a roughly $40 million to $50 million revenue decline we expect this year is on fixed price programs, which have a higher than average profit margin.
In fact, it is not atypical for our fixed price programs to have EBITDA contribution margins in the 30% to 40% range.
As a result of the impact of those three factors in 2021, not only do we expect the top line reduction I discussed earlier, but we also expect the EBITDA margins for the segment to fall from the 26.1% level delivered in 2020 into the low 20s.
Therefore, we are providing initial 2021 guidance for Engineered Composites adjusted EBITDA of $55 million to $65 million.
At the total company level, we are providing initial 2021 guidance as follows: revenue of between $850 million and $890 million; effective income tax rate of 28% to 30%; depreciation and amortization of between $70 million and $75 million; capital expenditures in the range of $50 million to $60 million; GAAP and adjusted earnings per share of between $2.40 and $2.80; and adjusted EBITDA of between $195 million and $220 million.
While we are not providing explicit cash flow guidance for 2021, we do expect that the free cash flow we generate in 2021 will be well above the roughly $100 million generated in 2020.
I would also like to note that in 2021, we expect R&D expenses to be more than 25% higher than they were in 2020, reflecting the ongoing investments in both segments that Bill referenced earlier.

Summary:
For the fourth quarter, total company net sales were $226.9 million, a decrease of 12% compared to the $257.7 million delivered in the same quarter last year.
Earnings per share was $0.85 in this quarter compared to $0.90 last year.
After adjusting for the impact of foreign currency revaluation gains and losses, restructuring expenses, pension curtailment charges and expenses associated with the CirComp acquisition and integration, adjusted earnings per share was $0.89 this quarter compared to $0.97 last year.
As a result, our absolute leverage ratio declined from 0.89 at the end of Q3 to 0.74 at the end of Q4.
At the total company level, we are providing initial 2021 guidance as follows: revenue of between $850 million and $890 million; effective income tax rate of 28% to 30%; depreciation and amortization of between $70 million and $75 million; capital expenditures in the range of $50 million to $60 million; GAAP and adjusted earnings per share of between $2.40 and $2.80; and adjusted EBITDA of between $195 million and $220 million.