Exhibit 99.1
Alliance Laundry Holdings LLC Reports 1st Quarter 2010 Earnings
RIPON, Wis.--(BUSINESS WIRE)--May 10, 2010--Alliance Laundry Holdings LLC announced today results for the three months ended March 31, 2010.
Net revenues for the quarter ended March 31, 2010 decreased $3.7 million, or 3.8%, to $92.7 million from $96.4 million for the quarter ended March 31, 2009. Our net income for the quarter ended March 31, 2010 increased $2.2 million to $4.5 million from $2.3 million for the quarter ended March 31, 2009. Adjusted EBITDA (see “About Non-GAAP Financial Measures” below) for the quarter ended March 31, 2010 was $17.0 million as compared to $13.5 million for the quarter ended March 31, 2009.
The overall net revenue decrease of $3.7 million was primarily attributable to a decrease in United States and Canada revenues of $6.1 million, a decrease in Europe revenues of $0.9 million and a decrease in Asia revenues of $0.4 million, partially offset by increases in Middle East & Africa revenues of $2.6 million and Latin America revenues of $1.1 million.
The overall net income increase of $2.2 million for the quarter ended March 31, 2010 was primarily attributable to improved gross profit of $3.7 million, lower securitization and other costs of $0.3 million and lower interest expense of $0.2 million, partially offset by higher selling, general and administrative expense of $0.8 million and higher provision for income taxes of $1.1 million.
In announcing the Company’s results, CEO Thomas F. L’Esperance said, “Although the market demand for commercial laundry products remained challenging in North America and Europe, our top and bottom line performance for the quarter were in line with our expectations. Consistent with last quarter, we are seeing pockets of strengthening demand in emerging markets and signs that point toward further stabilization and gradual improvement in the second half of 2010 and in 2011.”
L’Esperance concluded, “We expect a strong earnings performance for 2010 and will intensify our effort on new product development to position the business for growth as we emerge from this downturn. Our core strategies have not changed; we will continue to focus on our customer one initiative and will continue to grow our presence outside of the U.S. and Canada.”
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 Senior Credit Facility are tied to ratios based on these measures. “EBITDA” represents net income before interest expense, income tax provision and depreciation and amortization, and “Adjusted EBITDA” (as defined under the Senior Credit Facility) is EBITDA as further adjusted to exclude, among other things, certain non-recurring expenses and other non-recurring non-cash charges. 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. Our Senior Credit Facility requires us to satisfy specified financial ratios and tests, including a maximum of total debt to Adjusted EBITDA and a minimum Adjusted EBITDA to cash interest expense. To the extent that we fail to maintain either of these ratios within the limits set forth in the Senior Credit Facility, our ability to access amounts available under our Revolving Credit Facility would be limited, our liquidity would be adversely affected and our obligations under the Senior Credit Facility could be accelerated. In addition, any such acceleration would constitute an event of default under the indenture governing the Senior Subordinated Notes (the “Notes Indenture”), and such an event of default under the Notes Indenture could lead to an acceleration of our obligations under the Senior Subordinated Notes. A reconciliation of EBITDA and Adjusted EBITDA with the most directly comparable GAAP measure is included below for the three months ended March 31, 2010 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 LLC (www.comlaundry.com), a leading designer, manufacturer and marketer in North America 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® we produce a full line of commercial washing machines and dryers with load capacities from 12 to 200 pounds. We have been a leader in the North American stand-alone commercial laundry equipment industry for more than ten years. With the addition of our European Operations and Alliance Laundry’s export sales to Europe, we believe that we are also a leader in the European stand-alone commercial laundry equipment industry.
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: 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 fluctuation 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 facilities; the availability of borrowings under our Revolving Credit Facility; 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 Reports on Form 10-K.
Financial information for Alliance Laundry Holdings LLC appears on the next five pages for the three months ended March 31, 2010.
| ALLIANCE LAUNDRY HOLDINGS LLC | |||||||||
AND ALLIANCE LAUNDRY SYSTEMS LLC | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| (unaudited) | |||||||||
| (in thousands) | |||||||||
| March 31, | December 31, | ||||||||
| 2010 | 2009 | ||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 26,176 | $ | 24,615 | |||||
| Restricted cash - for securitization investors | 17,958 | - | |||||||
| Accounts receivable, net | 21,697 | 21,323 | |||||||
| Inventories, net | 47,402 | 47,085 | |||||||
| Retained beneficial interests in accounts receivable | - | 26,367 | |||||||
| Accounts receivable - restricted for securitization investors | 58,955 | - | |||||||
| Loans receivable - restricted for securitization investors | 40,127 | - | |||||||
| Deferred income tax asset, net | 11,496 | 11,373 | |||||||
| Prepaid expenses and other assets | 4,188 | 4,014 | |||||||
| Total current assets | 227,999 | 134,777 | |||||||
| Loans receivable, net | 2,963 | 2,730 | |||||||
| Property, plant and equipment, net | 60,284 | 62,532 | |||||||
| Goodwill | 181,654 | 183,310 | |||||||
| Retained beneficial interests in financial assets | - | 46,793 | |||||||
| Loans receivable, net - restricted for securitization investors | 222,856 | - | |||||||
| Deferred income tax asset | 3,722 | - | |||||||
| Debt issuance costs, net | 3,891 | 4,353 | |||||||
| Intangible assets, net | 136,391 | 137,678 | |||||||
| Total assets | $ | 839,760 | $ | 572,173 | |||||
| Liabilities and Member(s)' Equity | |||||||||
| Current liabilities: | |||||||||
| Current portion of long-term debt and capital lease obligations | $ | 336 | $ | 835 | |||||
| Revolving credit facility | - | - | |||||||
| Accounts payable | 34,567 | 34,351 | |||||||
| Asset backed borrowings - owed to securitization investors | 71,157 | - | |||||||
| Other current liabilities | 28,721 | 32,590 | |||||||
| Total current liabilities | 134,781 | 67,776 | |||||||
| Long-term debt and capital lease obligations | 277,775 | 280,413 | |||||||
| Asset backed borrowings - owed to securitization investors | 194,718 | - | |||||||
| Deferred income tax liability, net | 10,464 | 9,057 | |||||||
| Other long-term liabilities | 22,981 | 22,139 | |||||||
| Total liabilities | 640,719 | 379,385 | |||||||
| Commitments and contingencies | |||||||||
| Member(s)' equity | 199,041 | 192,788 | |||||||
| Total liabilities and member(s)' equity | $ | 839,760 | $ | 572,173 | |||||
| ALLIANCE LAUNDRY HOLDINGS LLC | |||||||
AND ALLIANCE LAUNDRY SYSTEMS LLC | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
| (unaudited) | |||||||
| (in thousands) | |||||||
| Three Months Ended | |||||||
| March 31, | March 31, | ||||||
| 2010 | 2009 | ||||||
| Net revenues: | |||||||
| Equipment and service parts | $ | 91,375 | $ | 93,341 | |||
| Equipment financing, net | 1,305 | 3,024 | |||||
| Net revenues | 92,680 | 96,365 | |||||
| Cost of sales | 66,019 | 73,347 | |||||
| Gross profit | 26,661 | 23,018 | |||||
| Selling, general and administrative expense | 14,027 | 13,232 | |||||
| Securitization and other costs, net | - | 347 | |||||
| Total operating expenses | 14,027 | 13,579 | |||||
| Operating income | 12,634 | 9,439 | |||||
| Interest expense | 5,694 | 5,883 | |||||
| Income before taxes | 6,940 | 3,556 | |||||
| Provision for income taxes | 2,417 | 1,278 | |||||
| Net income | $ | 4,523 | $ | 2,278 | |||
| ALLIANCE LAUNDRY HOLDINGS LLC | |||||||||
| AND ALLIANCE LAUNDRY SYSTEMS LLC | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (unaudited) | |||||||||
| (in thousands) | |||||||||
| Three Months Ended | |||||||||
| March 31, | March 31, | ||||||||
| 2010 | 2009 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 4,523 | $ | 2,278 | |||||
| Adjustments to reconcile net income to net cash | |||||||||
| provided by operating activities: | |||||||||
| Depreciation and amortization | 4,317 | 4,311 | |||||||
| Non-cash interest expense (income) | 23 | (592 | ) | ||||||
| Non-cash (gain) loss on commodity & foreign exchange contracts, net | 205 | (238 | ) | ||||||
| Non-cash executive unit compensation | 567 | 420 | |||||||
| Non-cash income from loan forgiveness | (13 | ) | - | ||||||
| Deferred income taxes | 1,573 | 642 | |||||||
| Loss on sale of fixed assets | 10 | - | |||||||
| Other, net | - | 43 | |||||||
| Changes in assets and liabilities: | |||||||||
| Accounts and notes receivable | (911 | ) | (902 | ) | |||||
| Accounts receivable - restricted for securitization investors | 8,498 | - | |||||||
| Inventories | (1,005 | ) | 1,206 | ||||||
| Retained beneficial interest | - | 1,641 | |||||||
| Loans receivable, net - restricted for securitization investors | (2,457 | ) | - | ||||||
| Other assets | (424 | ) | 148 | ||||||
| Accounts payable | 684 | (4,117 | ) | ||||||
| Other liabilities | (2,988 | ) | (3,611 | ) | |||||
| Net cash provided by operating activities | 12,602 | 1,229 | |||||||
| Cash flows from investing activities: | |||||||||
| Capital expenditures | (1,525 | ) | (855 | ) | |||||
| Restricted cash - for securitization investors | 737 | - | |||||||
| Net cash used in investing activities | (788 | ) | (855 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Principal payments on long-term debt | (3,000 | ) | (20,000 | ) | |||||
| Change in other long-term debt, net | (139 | ) | (139 | ) | |||||
| Net decrease in asset backed borrowings related to securitized accounts receivable | (5,859 | ) | - | ||||||
| Net decrease in asset backed borrowings related to securitized loans receivable | (1,222 | ) | - | ||||||
| Member contributions | - | 14,500 | |||||||
| Net cash used in financing activities | (10,220 | ) | (5,639 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | (33 | ) | (349 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 1,561 | (5,614 | ) | ||||||
| Cash and cash equivalents at beginning of period | 24,615 | 14,314 | |||||||
| Cash and cash equivalents at end of period | $ | 26,176 | $ | 8,700 | |||||
| Supplemental disclosure of cash flow information: | |||||||||
| Cash paid for interest | $ | 8,288 | $ | 9,277 | |||||
| Cash paid for income taxes | $ | 149 | $ | 57 | |||||
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, 2010 and March 31, 2009. (Dollars in Thousands):
| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2010 | 2009 | |||||||
| Net income | $ | 4,523 | $ | 2,278 | ||||
| Provision for income taxes | 2,417 | 1,278 | ||||||
| Interest expense | 5,694 | 5,883 | ||||||
| Depreciation and amortization (a) | 4,317 | 4,311 | ||||||
| Non-cash interest income included in amortization above | (479 | ) | (464 | ) | ||||
| EBITDA | 16,472 | 13,286 | ||||||
| Finance program adjustments (b) | - | (301 | ) | |||||
Securitization interest - permitted receivables financing (c) | (291 | ) | - | |||||
| Other non-recurring charges (d) | - | 304 | ||||||
| Other non-cash charges (e) | 772 | 225 | ||||||
| Adjusted EBITDA | 16,953 | 13,514 | ||||||
| Interest expense | (5,694 | ) | (5,883 | ) | ||||
| Non-cash interest income included in amortization above | 479 | 464 | ||||||
| Other non-cash interest | 23 | (592 | ) | |||||
| Finance program adjustments (b) | - | 301 | ||||||
| Other non-recurring charges (d) | - | (304 | ) | |||||
| Cash taxes paid and payable | (556 | ) | (636 | ) | ||||
| Changes in assets and liabilities | 1,397 | (5,635 | ) | |||||
| Net cash provided by operating activities | $ | 12,602 | $ | 1,229 | ||||
(a) Depreciation and amortization amounts include amortization of deferred financing costs included in interest expense.
(b) We currently operate a commercial equipment finance program in which newly originated equipment loans are sold to a special-purpose bankruptcy remote entity. In accordance with accounting guidance effective through December 31, 2009, we were required to record gains/losses on the sale of these equipment based promissory loans. In calculating Adjusted EBITDA, management determined the cash impact of net interest income on these loans. The finance program adjustments were the difference between GAAP basis revenues and cash basis revenues. In addition, we recognized mark-to-market adjustments for our retained beneficial interests in financial assets which are considered finance program adjustments in the Credit Agreement. In accordance with current accounting guidance, we consolidated ALERT 2009A in our financial statements effective January 1, 2010. The finance program adjustments, which represented the difference between GAAP basis revenues and cash basis revenues, are not relevant subsequent to December 31, 2009 due to consolidation of the trust.
(c) Securitization Interest – permitted receivables financing represents interest expense on trade receivables sold to ALERT 2009A. This activity was consolidated in our financial statements effective January 1, 2010 as part of the new accounting guidance described above. Beginning with the first quarter of 2010, this expense, which is charged to the Interest expense line of our Condensed Consolidated Statements of Income, is deducted in calculating Adjusted EBITDA.
(d) Other non-recurring charges are described as follows:
- Other non-recurring charges of $0.3 million for the quarter ended March 31, 2009 consist of legal costs related to the Lehman bankruptcy, which is included in the securitization, impairment and other costs line of our consolidated Statements of Income. There were no similar expenses for the quarter ended March 31, 2010.
(e) Other non-cash charges are described as follows:
- Other non-cash charges for the quarter ended March 31, 2010 relate to $0.6 million of non-cash expense for management incentive stock options, which is included in the selling, general and administrative expense line of our consolidated Statements of Income and $0.2 million of non-cash mark to market losses relating to commodity and foreign exchange hedge agreements, which are included in the cost of sales line of our consolidated Statements of Income.
- Other non-cash charges for the quarter ended March 31, 2009 relate to $0.4 million of non-cash expense for management incentive stock options, which is included in the selling, general and administrative expense line of our consolidated Statements of Income and $0.2 million of non-cash mark to market gains relating to commodity and foreign exchange hedge agreements, which are included in the cost of sales line of our consolidated Statements of Income.
CONTACT:
Alliance Laundry Holdings LLC
Bruce P. Rounds, Vice President CFO
920-748-1634