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