Exhibit 99.1
News Release
Contact:
Bruce P. Rounds, CFO
920-748-1634
ALLIANCE LAUNDRY HOLDINGS LLC REPORTS 1st QUARTER EARNINGS
Ripon, WI (May 8, 2003) -- Alliance Laundry Holdings LLC announced today results
for the quarter ended March 31, 2003.
Net revenues for the quarter ended March 31, 2003 increased $1.4 million, or
2.2%, to $61.2 million from $59.8 million for the quarter ended March 31, 2002.
Net income for the first quarter of 2003 decreased $2.5 million to $1.2 million
as compared to net income of $3.7 million for the first quarter of 2002.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")(1) for
the first quarter of 2003 decreased $1.9 million to $11.2 million as compared to
EBITDA of $13.1 million for the first quarter of 2002.
The overall revenue increase of $1.4 million was primarily due to higher
commercial laundry revenue of $0.4 million and higher service parts revenue of
$1.0 million. The decrease in net income for the first quarter of 2003 resulted
from higher selling, general and administrative expense of $1.2 million and
higher interest expense of $1.3 million. The decrease in EBITDA of $1.9 million
for the first quarter of 2003 was largely due to the higher selling, general and
administrative expense and lower earnings from the Company's equipment financing
program of $0.7 million.
In announcing the Company's results today, Chairman and CEO Thomas F.
L'Esperance said, "In sprite of the challenging economic environment, net
revenues grew at a rate of 2.2% in the first quarter of 2003 and earnings were
in line with our expectations. We planned for the higher SG&A expenses for the
quarter and implemented our price increase program in April to offset for higher
operating costs such as pension, insurance and health care. At this point, we
remain confident in our ability to achieve our goals for 2003."
"We will continue to de-lever and focus on marketplace execution, asset
management and aggressive cost control," said L'Esperance.
Alliance Laundry Holdings LLC, headquartered in Ripon, Wisconsin, is a leading
manufacturer of commercial laundry products and provider of services for
laundromats, multi-housing laundries, on-premise laundries and drycleaners
worldwide. The Company offers a full line of washers and dryers for light
commercial use as well as large frontloading washers, heavy duty tumbler dryers,
and presses and finishing equipment for heavy commercial use. The Company's
products are sold under four well known brand names: Speed Queen, UniMac,
Huebsch and Ajax.
(1)Non-GAAP Financial Measures
In addition to disclosing financial results that are determined in accordance
with generally accepted accounting principles (GAAP), the Company also discloses
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization), which
is a non-GAAP measure. Management believes that providing this additional
information is useful to investors regarding the Company's ability to meet debt
service, capital expenditures and working capital requirements and to better
assess and understand operating performance. The Company does not intend for the
information to be considered in isolation or as a substitute for GAAP measures.
Other companies may define EBITDA differently. A reconciliation of EBITDA to net
income is provided under the heading Selected Financial Data of this press
release.
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, including, without limitation, statements
that include the words "planned" and "expect" or similar expressions and
statements relating to growth or performance objectives. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements of the Company to differ
materially from those expressed or implied by such forward-looking statements.
Although the Company believes that its plans, intentions and expectations
reflected in such forward-looking statements are based on reasonable
assumptions, it 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 the 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 the
Company's products abroad; market acceptance of new and enhanced versions of the
Company's products; the impact of substantial leverage and debt service on the
Company and other risks listed from time to time in the Company's reports,
including, but not limited to the Company's most recent Annual Report on Form
10-K for the year ended December 31, 2002.
###
Financial information for Alliance Laundry Holdings LLC appears on the next
three pages, followed by management's discussion and analysis of financial
condition and results of operations for the quarter ended March 31, 2003.
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
-------------- ---------------
2003 2002
-------------- ---------------
(unaudited)
Assets
Current
assets:
Cash $2,675 $7,339
Cash-restricted 841 99
Accounts receivable, net 9,938 5,834
Inventories, net 27,013 25,697
Beneficial interests in securitized accounts receivable 17,945 19,864
Prepaid expenses and other 3,259 2,954
-------------- ---------------
Total current assets 61,671 61,787
Notes receivable, net 9,107 11,166
Property, plant and equipment, net 38,011 39,096
Goodwill, net 55,414 55,414
Beneficial interests in securitized financial assets 22,806 21,483
Debt issuance costs, net 9,142 9,654
Other assets 1,642 1,010
-------------- ---------------
Total assets $197,793 $199,610
============== ===============
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $9,835 $9,971
Revolving credit facility 2,000 -
Accounts payable 10,047 13,797
Other current liabilities 22,736 21,638
-------------- ---------------
Total current liabilities 44,618 45,406
Long-term
debt:
Senior credit facility 168,404 173,266
Senior subordinated notes 110,000 110,000
Junior subordinated note 21,158 20,312
Other long-term debt 967 1,028
Deferred income taxes - -
Other long-term liabilities 11,045 10,338
-------------- ---------------
Total liabilities 356,192 360,350
Mandatorily redeemable preferred equity 6,000 6,000
Members' deficit (164,399) (166,740)
-------------- ---------------
Total liabilities and members' deficit $197,793 $199,610
============== ===============
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
Three Months Ended
----------------------------
March 31, March 31,
2003 2002
------------- -------------
(unaudited)
Net revenues:
Commercial laundry $51,381 $51,040
Service parts 9,780 8,808
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61,161 59,848
Cost of sales 44,074 42,793
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Gross profit 17,087 17,055
Selling, general and administrative expense 8,217 6,986
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Total operating expense 8,217 6,986
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Operating income 8,870 10,069
Interest expense 7,685 6,359
Other income, net - 25
------------- -------------
Net income $1,185 $3,735
============= =============
ALLIANCE LAUNDRY HOLDINGS LLC
SELECTED FINANCIAL DATA
(in thousands)
Three Months Ended
----------------------
March 31, March 31,
2003 2002
----------- ----------
Other Operating Data: (Unaudited)
EBITDA(1) 11,166 13,081
EBITDA before infrequently occurring and plant relocation costs 11,166 13,124
Depreciation and amortization(2) 2,807 3,624
Non-cash interest expense included in amortization above(2) 511 637
Infrequently occurring costs - -
Plant relocation costs included in administrative expense - 43
Capital Expenditures 1,134 517
EBITDA is reconciled to net income as follows:
Net income 1,185 3,735
add: Interest expense 7,685 6,359
add: Depreciation and amortization 2,807 3,624
less: Non-cash interest expense included in amortization above 511 637
----------- ----------
EBITDA 11,166 13,081
add: Infrequently occurring items - -
add: Plant relocation costs included in administrative expense - 43
----------- ----------
EBITDA before infrequently occurring and plant relocation costs 11,166 13,124
=========== ==========
(1) "EBITDA", as presented, represents income before taxes plus depreciation,
amortization and interest expense.
(2) Depreciation and amortization amounts include amortization of deferred
financing costs included in interest expense.
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the Three Months Ended March 31, 2003
OVERVIEW
The Company believes it is the leading designer, manufacturer and
marketer of stand-alone commercial laundry equipment in North America and a
leader worldwide. Under the well-known brand names of Speed Queen, UniMac,
Huebsch and Ajax, the Company produces a full line of commercial washing
machines and dryers with load capacities from 16 to 250 pounds as well as
presses and finishing equipment. The Company's commercial products are sold to
four distinct customer groups: (i) laundromats; (ii) multi-housing laundries,
consisting primarily of common laundry facilities in apartment buildings,
universities and military installations; (iii) on-premise laundries, consisting
primarily of in-house laundry facilities of hotels, hospitals, nursing homes and
prisons; and (iv) drycleaners.
The unaudited financial statements as of and for the quarter ended
March 31, 2003 present the consolidated financial position and results of
operations of Alliance Laundry Holdings LLC (the "Company"), including its
wholly-owned direct and indirect subsidiaries, Alliance Laundry Systems LLC and
Alliance Laundry Corporation.
This discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto included in this report and in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations set forth in the Company's Annual Report on Form 10-K
(file no. 333-56857) filed with the Securities and Exchange Commission, which
includes the audited financial position and operating results of the Company as
of and for the year ended December 31, 2002.
RESULTS OF OPERATIONS
The following table sets forth the Company's historical net revenues for the
periods indicated:
Quarter Ended
-----------------------------
March 31, 2003 March 31, 2002
-----------------------------
(Dollars in millions)
Net revenues:
Commercial laundry $51.4 $51.0
Service parts 9.8 8.8
------------- ---------------
$61.2 $59.8
============= ===============
The following table sets forth certain condensed historical financial data for
the Company expressed as a percentage of net revenues for each of the periods
indicated:
Quarter Ended
--------------------------------
March 31, 2003 March 31, 2002
-------------- -----------------
Net revenues 100.0% 100.0%
Cost of sales 72.1% 71.5%
Gross profit 27.9% 28.5%
Selling, general and administrative expense 13.4% 11.7%
Operating income 14.5% 16.8%
Net income 1.9% 6.2%
Net revenues. Net revenues for the quarter ended March 31, 2003
increased $1.4 million, or 2.2%, to $61.2 million from $59.8 million for the
quarter ended March 31, 2002. This increase was primarily attributable to higher
commercial laundry revenue of $0.4 million and higher service parts revenue of
$1.0 million. The increase in commercial laundry revenue was due primarily to
higher North American equipment revenue of $0.9 million and higher international
revenue of $0.2 million, partially offset by lower earnings from the Company's
off-balance sheet equipment financing program of $0.7 million. The increase in
North American equipment revenue was primarily due to higher revenue from
laundromats and multi-housing laundries, partially offset by lower revenue from
on-premise laundries. The increase in service parts revenue was due to gaining
back additional service part sales due to more competitive pricing practices.
Gross profit. Gross profit for the quarter ended March 31, 2003 and
March 31, 2002 was $17.1 million. Favorable manufacturing efficiencies and a
recent price increase were offset by the lower earnings from the Company's
off-balance sheet equipment financing program. Gross profit as a percentage of
net revenues decreased to 27.9% for the quarter ended March 31, 2003 from 28.5%
for the quarter ended March 31, 2002. This 0.6% decrease was primarily
attributable to the factors discussed above.
Selling, general and administrative expense. Selling, general and
administrative expenses for the quarter ended March 31, 2003 increased $1.2
million, or 17.6%, to $8.2 million from $7.0 million for the quarter ended March
31, 2002. The increase in selling, general and administrative expenses was
primarily due to higher pension and fringe benefit costs of $0.5 million, higher
sales and marketing expenses of $0.3 million and higher independent development
expenses of $0.2 million. Selling, general and administrative expenses as a
percentage of net revenues increased to 13.4% for the quarter ended March 31,
2003 from 11.7% for the quarter ended March 31, 2002.
Operating income. As a result of the foregoing, operating income for
the quarter ended March 31, 2003 decreased $1.2 million, or 11.9%, to $8.9
million from $10.1 million for the quarter ended March 31, 2002. Operating
income as a percentage of net revenues decreased to 14.5% for the quarter ended
March 31, 2003 from 16.8% for the quarter ended March 31, 2002.
Interest expense. Interest expense for the quarter ended March 31,
2003 increased $1.3 million, or 20.9%, to $7.7 million from $6.4 million for the
quarter ended March 31, 2002. Interest expense in 2003 includes an unfavorable
non-cash adjustment of $0.7 million related to a new interest rate swap
agreement entered into in the fourth quarter of 2002. Interest expense in 2003
was also higher due to higher interest rates associated with the new swap
agreement and higher letter of credit rates within the Company's new Senior
Credit Facility.
Net income. As a result of the foregoing, net income for the quarter
ended March 31, 2003 decreased $2.5 million to net income of $1.2 million as
compared to net income of $3.7 million for the quarter ended March 31, 2002. Net
income as a percentage of net revenues decreased to 1.9% for the quarter ended
March 31, 2003 from 6.2% for the quarter ended March 31, 2002.