Alliance Laundry Holdings LLC Reports 2013 First Quarter Earnings
Alliance Laundry Holdings LLC Reports 2013 First Quarter Earnings
Steady revenue growth and operational execution lead to record Adjusted EBITDA for the first quarter
RIPON, Wis.--(BUSINESS WIRE)-- Alliance Laundry Holdings LLC announced today results for the three months ended March 31, 2013.
Net revenues for the quarter ended March 31, 2013 increased $5.4 million, or 4.7%, to $122.6 million from $117.2 million for the quarter ended March 31, 2012. Our net income for the quarter ended March 31, 2013 decreased $0.8 million to $4.7 million from $5.5 million for the quarter ended March 31, 2012. Adjusted EBITDA (see "About Non-GAAP Financial Measures" below) for the quarter ended March 31, 2013 increased $3.9 million to $22.4 million from $18.5 million for the quarter ended March 31, 2012.
The net revenues increase of $5.4 million was attributable to increases in United States & Canada revenues of $3.7 million, Asia revenues of $1.7 million and Middle East & Africa revenues of $0.1 million, partially offset by lower Latin America revenues of $0.1 million. Europe revenues were unchanged.
The net income decrease of $0.8 million for the quarter ended March 31, 2013 was attributable to higher interest expense of $3.0 million, higher selling, general and administrative expenses of $1.6 million and $1.9 million of loss from early extinguishment of debt which were partly offset by improved gross profit of $4.7 million, lower other costs of $0.4 million and a lower provision for income taxes of $0.6 million.
In announcing the Company's results, CEO Michael D. Schoeb said, "We maintained our momentum during the first quarter with solid revenue growth and margin improvement through focused execution across all areas of the business despite less than favorable macroeconomic conditions. The core tenants of our strategy - superior products, exceptional value-added services, continued improvements in operational efficiencies and capitalizing on global growth opportunities - continue to differentiate us in the marketplace and solidify our position as a leader in the commercial laundry equipment market."
Schoeb concluded, "Execution against our strategic goals, with an intensified effort on new product development and improving operating efficiencies allowed us to achieve record adjusted EBITDA in the first quarter of 2013. As we continue with significant investments in products, value-added services and market development, we are confident in our capabilities to enhance our market positions across the globe."
About Non-GAAP Financial Measures
In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles (GAAP), we also disclose EBITDA and Adjusted EBITDA, which are non-GAAP measures. We have presented EBITDA and Adjusted EBITDA because certain covenants in our December 2012 Credit Facilities are tied to a ratio based on these measures. "EBITDA" represents net income before interest expense, income tax provision, depreciation and amortization (including non-cash interest income). "Adjusted EBITDA", as defined in our December 2012 Credit Facilities, is EBITDA as further adjusted to exclude, among other things, certain non-recurring expenses and other non-recurring non-cash charges which are further defined therein. EBITDA and Adjusted EBITDA do not represent, and should not be considered, an alternative to net income or cash flow from operations, as determined by GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies.
Under the First Lien Credit Agreement, if the aggregate outstanding amount of the revolving credit loans and letter of credit obligations is in excess of 20% of the lenders' current revolving credit commitments, we are required to satisfy a maximum Total Leverage Ratio, as defined therein. To the extent that we fail to maintain this ratio within the limits set forth in the First Lien Credit Agreement, our ability to access amounts available under the December 2012 Revolving Credit Facility would be limited, our liquidity would be adversely affected and our obligations under the December 2012 Credit Facilities could be accelerated. A reconciliation of EBITDA and Adjusted EBITDA with the most directly comparable GAAP measure is included below for the three months ended March 31, 2013 along with the components of EBITDA and Adjusted EBITDA.
About Alliance Laundry Holdings LLC
Alliance Laundry Holdings LLC is the parent company of Alliance Laundry Systems, a leading designer, manufacturer and marketer of commercial laundry equipment used in laundromats, multi-housing laundries and on-premise laundries. Under the well-known brand names of Speed Queen®, UniMac®, Huebsch®, IPSO® and Cissell®, Alliance produces a full line of commercial washing machines and dryers with load capacities from 12 to 200 pounds. Alliance Laundry's worldwide employment was 1,613 at the end of 2012. With 2012 net revenues of $505.5 million, Alliance Laundry is the world's leading manufacturer of commercial laundry equipment. For more information, visit www.alliancelaundry.com.
Safe Harbor for Forward-Looking Statements
With the exception of the reported actual results, this press release contains predictions, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of our business to differ materially from those expressed or implied by such forward-looking statements. Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that such plans, intentions, expectations, objectives or goals will be achieved. Important factors that could cause actual results to differ materially from those included in forward-looking statements include: the ability to borrow funds under the December 2012 Credit Facilities; the ability to successfully implement operating strategies and trends affecting the business, liquidity, financial condition and results of operations of the Company; unfavorable economic conditions in the United States and other markets in which we operate; the impact of competition; continued sales to key customers; possible fluctuations in the cost of raw materials and components; possible fluctuations in currency exchange rates, which affect the competitiveness of our products abroad; possible fluctuations in interest rates, which affects our earnings and cash flows; the impact of substantial leverage and debt service on us; possible loss of suppliers; risks related to our asset backed securitization facility, including an inability to replace or a failure by the administrative agent and noteholders to extend the facility on advantageous terms or at all; dependence on key personnel; labor relations; potential liability for environmental, health and safety matters; potential future legal proceedings and litigation and other risks listed from time to time in the Company's reports, including, but not limited to our Annual Report for the Year Ended December 31, 2012.
Financial information for Alliance Laundry Holdings LLC appears on the next five pages for the three months ended March 31, 2013.
ALLIANCE LAUNDRY HOLDINGS LLC | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(unaudited) | |||||||||||
(in thousands) | |||||||||||
March 31, | December 31, | ||||||||||
2013 | 2012 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 30,667 | $ | 33,341 | |||||||
Restricted cash - for securitization investors | 17,711 | 22,112 | |||||||||
Accounts receivable, net | 19,374 | 14,595 | |||||||||
Inventories, net | 40,528 | 38,378 | |||||||||
Accounts receivable - restricted for securitization investors | 77,851 | 79,315 | |||||||||
Loans receivable, net - restricted for securitization investors | 44,902 | 44,048 | |||||||||
Deferred income tax asset, net | 10,314 | 10,035 | |||||||||
Prepaid expenses and other assets | 4,236 | 4,519 | |||||||||
Total current assets | 245,583 | 246,343 | |||||||||
Loans receivable, net | 9,026 | 10,555 | |||||||||
Property, plant and equipment, net | 66,048 | 63,978 | |||||||||
Goodwill | 180,249 | 180,954 | |||||||||
Loans receivable, net - restricted for securitization investors | 206,966 | 206,219 | |||||||||
Deferred income tax asset, net | 565 | 566 | |||||||||
Debt issuance costs, net | 15,605 | 12,200 | |||||||||
Intangible assets, net | 128,168 | 129,282 | |||||||||
Total assets | $ | 852,210 | $ | 850,097 | |||||||
Liabilities and Member(s)' Equity/(Deficit) | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt | $ | 2,938 | $ | 3,750 | |||||||
Revolving credit facility | - | - | |||||||||
Accounts payable | 47,544 | 48,433 | |||||||||
Asset backed borrowings - owed to securitization investors | 82,725 | 81,626 | |||||||||
Other current liabilities | 33,217 | 34,382 | |||||||||
Total current liabilities | 166,424 | 168,191 | |||||||||
Long-term debt, net | 477,389 | 478,300 | |||||||||
Asset backed borrowings - owed to securitization investors | 184,686 | 184,970 | |||||||||
Deferred income tax liability, net | 29,965 | 27,413 | |||||||||
Other long-term liabilities | 21,887 | 22,927 | |||||||||
Total liabilities | 880,351 | 881,801 | |||||||||
Commitments and contingencies | |||||||||||
Member(s)' equity/(deficit) | (28,141 | ) | (31,704 | ) | |||||||
Total liabilities and member(s)' equity/(deficit) | $ | 852,210 | $ | 850,097 | |||||||
ALLIANCE LAUNDRY HOLDINGS LLC | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2013 | 2012 | |||||||
Net revenues: | ||||||||
Equipment and service parts | $ | 120,205 | $ | 114,627 | ||||
Equipment financing, net | 2,397 | 2,526 | ||||||
Net revenues | 122,602 | 117,153 | ||||||
Cost of sales | 86,457 | 85,661 | ||||||
Gross profit | 36,145 | 31,492 | ||||||
Selling, general and administrative expenses | 17,406 | 15,774 | ||||||
Other costs | 464 | 920 | ||||||
Total operating expenses | 17,870 | 16,694 | ||||||
Operating income | 18,275 | 14,798 | ||||||
Interest expense | 9,046 | 5,968 | ||||||
Loss from early extinguishment of debt | 1,871 | - | ||||||
Income before taxes | 7,358 | 8,830 | ||||||
Provision for income taxes | 2,686 | 3,326 | ||||||
Net income | $ | 4,672 | $ | 5,504 | ||||
Comprehensive income: | ||||||||
Net income | $ | 4,672 | $ | 5,504 | ||||
Foreign currency translation adjustment, net | (1,431 | ) | 1,457 | |||||
Change in pension liability and other benefits, net | 320 | 227 | ||||||
Comprehensive income | $ | 3,561 | $ | 7,188 | ||||
ALLIANCE LAUNDRY HOLDINGS LLC | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(unaudited) | ||||||||||
(in thousands) | ||||||||||
Three Months Ended | ||||||||||
March 31, | March 31, | |||||||||
2013 | 2012 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 4,672 | $ | 5,504 | ||||||
Adjustments to reconcile net income to net cash | ||||||||||
provided by operating activities: | ||||||||||
Depreciation and amortization | 4,458 | 4,232 | ||||||||
Non-cash interest expense | (55 | ) | 424 | |||||||
Non-cash loss/(gain) on commodity & foreign exchange contracts, net | 312 | (753 | ) | |||||||
Non-cash executive unit compensation | 195 | 284 | ||||||||
Non-cash charge for pension and post-retirement benefit plans | 306 | 375 | ||||||||
Non-cash charge for write-off of debt issue costs | 577 | - | ||||||||
Non-cash charge for write-off of original issue discount on long-term borrowings | 178 | - | ||||||||
Deferred income taxes | 2,179 | 2,809 | ||||||||
Other, net | (3 | ) | (38 | ) | ||||||
Changes in assets and liabilities: | ||||||||||
Accounts and loans receivable, net | (3,648 | ) | (2,117 | ) | ||||||
Accounts receivable - restricted for securitization investors | 1,464 | 1,221 | ||||||||
Inventories, net | (2,408 | ) | (336 | ) | ||||||
Loans receivable, net - restricted for securitization investors | (1,601 | ) | 1,484 | |||||||
Other assets | 272 | 96 | ||||||||
Accounts payable | (684 | ) | 1,247 | |||||||
Other liabilities | (2,147 | ) | (1,087 | ) | ||||||
Net cash provided by operating activities | 4,067 | 13,345 | ||||||||
Cash flows from investing activities: | ||||||||||
Capital expenditures | (4,702 | ) | (2,293 | ) | ||||||
Restricted cash - for securitization investors | 4,401 | (2,401 | ) | |||||||
Net cash used by investing activities | (301 | ) | (4,694 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from long-term borrowings | 20,000 | - | ||||||||
Payments of long-term borrowings | (22,000 | ) | - | |||||||
Deferred debt financing costs | (5,144 | ) | (292 | ) | ||||||
Net increase in asset backed borrowings owed to securitization investors | 815 | 3,443 | ||||||||
Member distributions | - | (342 | ) | |||||||
Net cash (used)/provided by financing activities | (6,329 | ) | 2,809 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (111 | ) | 122 | |||||||
(Decrease)/increase in cash and cash equivalents | (2,674 | ) | 11,582 | |||||||
Cash and cash equivalents at beginning of period | 33,341 | 37,618 | ||||||||
Cash and cash equivalents at end of period | $ | 30,667 | $ | 49,200 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||
Cash paid for interest on long-term debt | $ | 7,805 | $ | 4,677 | ||||||
Cash paid for interest - for securitized investors | $ | 1,452 | $ | 1,556 | ||||||
Cash paid for income taxes | $ | 263 | $ | 500 | ||||||
Reconciliation of Net income to EBITDA and Adjusted EBITDA, and reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities for the Three Months Ended March 31, 2013 and March 31, 2012. (Dollars in Thousands):
Three Months Ended | |||||||||
March 31, | March 31, | ||||||||
2013 | 2012 | ||||||||
Net income | |||||||||
