EXHIBIT 99.1
Alliance Laundry Holdings LLC Reports 2nd Quarter Earnings
RIPON, Wis.--(BUSINESS WIRE)--Aug. 7, 2003--Alliance Laundry
Holdings LLC announced today results for the quarter and six months
ended June 30, 2003.
Net revenues for the quarter ended June 30, 2003 increased $3.0
million, or 4.5%, to $71.1 million from $68.1 million for the quarter
ended June 30, 2002. Net income for the quarter ended June 30, 2003
decreased $1.3 million to net income of $4.0 million as compared to a
net income of $5.3 million for the quarter ended June 30, 2002.
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")(a) for the second quarter of 2003 decreased $0.6 million to
$14.1 million as compared to EBITDA of $14.7 million for the second
quarter of 2002.
The overall revenue increase for the second quarter of $3.0
million was primarily due to higher commercial laundry revenue of $3.2
million, which was partially offset by lower service parts revenue of
$0.2 million. The decrease in net income for the second quarter of
$1.3 million was primarily due to higher selling, general and
administrative expense of $0.4 million and higher interest expense of
$1.1 million. Interest expense in the second quarter includes an
unfavorable non-cash adjustment of $1.0 million to reflect changes in
the fair value of an interest rate swap agreement which was entered
into in the fourth quarter of 2002. The decrease in EBITDA of $0.6
million for the second quarter of 2003 was largely due to higher
selling, general and administrative expenses for the quarter. The
increase in selling, general and administrative expenses was primarily
due to higher pension and fringe benefit costs of $0.4 million.
Net revenues for the six months ended June 30, 2003 increased $4.4
million, or 3.4%, to $132.3 million from $127.9 million for the six
months ended June 30, 2002. Net income for the six months ended June
30, 2003 was $5.2 million as compared to a net income of $9.0 million
for the six months ended June 30, 2002. Earnings Before Interest,
Taxes, Depreciation and Amortization ("EBITDA")(a) for the six months
ended June 30, 2003 was $25.2 million as compared to EBITDA of $27.8
million for the six months ended June 30, 2002.
In announcing the Company's results today, Chairman and CEO Thomas
F. L'Esperance said, "We are extremely pleased with our year over year
net revenue growth of 4.5% for the second quarter of 2003. North
American equipment revenue continues to be slightly ahead of last year
with a very strong international performance for the second quarter."
"We will continue to focus on free cash flow, with an emphasis on
working capital management and improved net revenue growth to help
offset higher pension, medical and material costs," 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.
(a) 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 "continues" and "improved" 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 two pages, followed by management's discussion and analysis
of financial condition and results of operations for the quarter and
six months ended June 30, 2003.
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
------------ ------------
2003 2002
------------ ------------
Assets (unaudited)
Current assets:
Cash $4,756 $7,339
Cash-restricted - 99
Accounts receivable, net 10,082 5,834
Inventories, net 25,975 25,697
Beneficial interests in securitized
accounts receivable 20,461 19,864
Prepaid expenses and other 3,004 2,954
------------ ------------
Total current assets 64,278 61,787
Notes receivable, net 10,696 11,166
Property, plant and equipment, net 37,021 39,096
Goodwill, net 55,414 55,414
Beneficial interests in securitized financial
assets 23,604 21,483
Debt issuance costs, net 8,633 9,654
Other assets 1,654 1,010
------------ ------------
Total assets $201,300 $199,610
============ ============
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $9,695 $9,971
Revolving credit facility 5,000 -
Accounts payable 11,392 13,797
Other current liabilities 21,792 21,638
------------ ------------
Total current liabilities 47,879 45,406
Long-term debt:
Senior credit facility 163,546 173,266
Senior subordinated notes 110,000 110,000
Junior subordinated note 22,113 20,312
Other long-term debt 906 1,028
Other long-term liabilities 11,160 10,338
------------ ------------
Total liabilities 355,604 360,350
Mandatorily redeemable preferred equity 6,000 6,000
Members' deficit (160,304) (166,740)
------------ ------------
Total liabilities and members' deficit $201,300 $199,610
============ ============
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
(unaudited) (unaudited)
Net revenues:
Commercial laundry $62,273 $59,023 $113,654 $110,063
Service parts 8,859 9,047 18,639 17,855
--------- --------- --------- ---------
71,132 68,070 132,293 127,918
Cost of sales 50,343 48,028 94,417 90,821
--------- --------- --------- ---------
Gross profit 20,789 20,042 37,876 37,097
Selling, general and
administrative expense 8,182 7,763 16,399 14,749
Securitization and other
costs - - - -
--------- --------- --------- ---------
Total operating expense 8,182 7,763 16,399 14,749
--------- --------- --------- ---------
Operating income 12,607 12,279 21,477 22,348
Interest expense 7,720 6,565 15,405 12,924
Loss from early
extinguishment of debt - - - -
Abandoned Canadian public
offering costs - 430 - 430
Other income (expense), net (797) 8 (797) 33
--------- --------- --------- ---------
Income before taxes 4,090 5,292 5,275 9,027
Provision for income taxes 43 36 43 36
--------- --------- --------- ---------
Net income $4,047 $5,256 $5,232 $8,991
========= ========= ========= =========
ALLIANCE LAUNDRY HOLDINGS LLC
SELECTED FINANCIAL DATA
(in thousands)
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Other Operating Data: (Unaudited) (Unaudited)
EBITDA (1) $14,050 $14,714 $25,216 $27,795
EBITDA before infrequently
occurring and plant
relocation costs 14,856 15,233 26,022 28,357
Depreciation and
amortization (2) 2,750 3,532 5,557 7,156
Non-cash interest expense
included in amortization
above (2) 510 675 1,021 1,312
Infrequently occurring
costs (3) 806 430 806 430
Plant relocation costs
included in administrative
expense - 89 - 132
Capital Expenditures 1,217 665 2,351 1,182
EBITDA is reconciled to net
income as follows:
Income (loss) before taxes $4,090 $5,292 $5,275 $9,027
add: Interest expense 7,720 6,565 15,405 12,924
add: Depreciation and
amortization 2,750 3,532 5,557 7,156
less: Non-cash interest
expense included in
amortization above 510 675 1,021 1,312
--------- --------- --------- ---------
EBITDA $14,050 $14,714 $25,216 $27,795
add: Infrequently occurring
items (3) 806 430 806 430
add: Plant relocation costs
included in administrative
expense - 89 - 132
--------- --------- --------- ---------
EBITDA before infrequently
occurring and plant
relocation costs $14,856 $15,233 $26,022 $28,357
========= ========= ========= =========
(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.
(3) 2003 includes the ALSA lawsuit settlement while 2002 relates to
costs associated with an abandoned Canadian public offering.
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Quarter and Six Months Ended June 30,
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 June 30, 2003 and for the
periods ended June 30, 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
Quarter Ended June 30, 2003 Compared to the Quarter Ended June 30,
2002.
The following table sets forth the Company's historical net revenues
for the periods indicated:
Quarter Ended
-------------------------------
June 30, 2003 June 30, 2002
--------------- ---------------
(Dollars in millions)
Net revenues:
Commercial laundry $62.2 $59.0
Service parts 8.9 9.1
--------------- ---------------
$71.1 $68.1
=============== ===============
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
-------------------------------
June 30, 2003 June 30, 2002
--------------- ---------------
Net revenues 100.0% 100.0%
Cost of sales 70.8% 70.6%
Gross profit 29.2% 29.4%
Selling, general and administrative
expense 11.5% 11.4%
Operating income 17.7% 18.0%
Net income 5.7% 7.7%
Net revenues. Net revenues for the quarter ended June 30, 2003
increased $3.0 million, or 4.5%, to $71.1 million from $68.1 million
for the quarter ended June 30, 2002. This increase was primarily
attributable to higher commercial laundry revenue of $3.2 million
which was partially offset by lower service parts revenue of $0.2
million. The increase in commercial laundry revenue was due primarily
to higher North American equipment revenue of $2.1 million and higher
international revenue of $1.0 million. Revenue for North America was
higher to coin-operated laundry and multi-housing laundry customers.
Revenue for international was higher to customers in Europe and Asia.
Gross profit. Gross profit for the quarter ended June 30, 2003
increased $0.8 million, or 3.7%, to $20.8 million from $20.0 million
for the quarter ended June 30, 2002. This increase was primarily
attributable to margins associated with the higher sales volume, lower
depreciation expense and a recent price increase, which were partially
offset by unfavorable exchange rates related to foreign purchases of
manufacturing components, unfavorable product mix related to sales to
drycleaning customers and higher medical and utility costs. Gross
profit as a percentage of net revenues decreased to 29.2% for the
quarter ended June 30, 2003 from 29.4% for the quarter ended June 30,
2002. This 0.2% decrease was primarily attributable to the customer
mix and medical and utility costs discussed above.
Selling, general and administrative expense. Selling, general and
administrative expenses for the quarter ended June 30, 2003 increased
$0.4 million, or 5.4%, to $8.2 million from $7.8 million for the
quarter ended June 30, 2002. The increase in selling, general and
administrative expenses was primarily due to higher pension and fringe
benefit costs of $0.4 million. Selling, general and administrative
expenses as a percentage of net revenues increased to 11.5% for the
quarter ended June 30, 2003 from 11.4% for the quarter ended June 30,
2002.
Operating income. As a result of the foregoing, operating income
for the quarter ended June 30, 2003 increased $0.3 million, or 2.7%,
to $12.6 million from $12.3 million for the quarter ended June 30,
2002. Operating income as a percentage of net revenues decreased to
17.7% for the quarter ended June 30, 2003 from 18.0% for the quarter
ended June 30, 2002.
Interest expense. Interest expense for the quarter ended June 30,
2003 increased $1.1 million, or 17.6%, to $7.7 million from $6.6
million for the quarter ended June 30, 2002. Interest expense in 2003
includes an unfavorable non-cash adjustment of $1.0 million to reflect
changes in the fair values of an interest rate swap agreement which
was entered into in the fourth quarter of 2002.
Other income (expense), net. Other expense for the quarter ended
June 30, 2003 was $0.8 million. The 2003 costs were associated with
the settlement of a lawsuit against a former subsidiary of the Company
in Argentina.
Net income. As a result of the foregoing, net income for the
quarter ended June 30, 2003 decreased $1.3 million to net income of
$4.0 million as compared to a net income of $5.3 million for the
quarter ended June 30, 2002. Net income as a percentage of net
revenues decreased to 5.7% for the quarter ended June 30, 2003 from
7.7% for the quarter ended June 30, 2002.
Six Months Ended June 30, 2003 Compared to the Six Months Ended
June 30, 2002.
The following table sets forth the Company's historical net revenues
for the periods indicated:
Six Months Ended
-------------------------------
June 30, 2003 June 30, 2002
--------------- ---------------
(Dollars in millions)
Net revenues:
Commercial laundry $113.7 $110.1
Service parts 18.6 17.8
--------------- ---------------
$132.3 $127.9
=============== ===============
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:
Six Months Ended
-------------------------------
June 30, 2003 June 30, 2002
--------------- ---------------
Net revenues 100.0% 100.0%
Cost of sales 71.4% 71.0%
Gross profit 28.6% 29.0%
Selling, general and administrative
expense 12.4% 11.5%
Operating income 16.2% 17.5%
Net income 4.0% 7.0%
Net revenues. Net revenues for the six months ended June 30, 2003
increased $4.4 million, or 3.4%, to $132.3 million from $127.9 million
for the six months ended June 30, 2002. This increase was primarily
attributable to higher commercial laundry revenue of $3.6 million and
higher service parts revenue of $0.8 million. The increase in
commercial laundry revenue was due primarily to higher North American
equipment revenue of $2.9 million and higher international revenue of
$1.2 million, partially offset by lower earnings from the Company's
off-balance sheet equipment financing program of $0.5 million. The
increase in North American equipment revenues was primarily due to
higher revenues from coin-operated laundry and multi-housing laundry
customers partially offset by lower revenues from on-premise
laundries. Revenue for international was higher to customers in Europe
and Asia.
Gross profit. Gross profit for the six months ended June 30, 2003
increased $0.8 million, or 2.1%, to $37.9 million from $37.1 million
for the six months ended June 30, 2002. This increase was primarily
attributable to margins associated with the higher sales volume, lower
depreciation expense and a recent price increase, which were partially
offset by unfavorable exchange rates related to foreign purchases of
manufacturing components, unfavorable product mix related to sales to
drycleaning customers and higher medical costs. Gross profit as a
percentage of net revenues decreased to 28.6% for the six months ended
June 30, 2003 from 29.0% for the six months ended June 30, 2002.
Selling, general and administrative expense. Selling, general and
administrative expenses for the six months ended June 30, 2003
increased $1.7 million, or 11.2%, to $16.4 million from $14.7 million
for the six months ended June 30, 2002. The increase in selling,
general and administrative expenses was primarily due to higher
pension expense of $0.7 million, higher sales and marketing expenses
of $0.4 million and higher costs related to the Company's information
systems of $0.2 million. Selling, general and administrative expenses
as a percentage of net revenues increased to 12.4% for the six months
ended June 30, 2003 from 11.5% for the six months ended June 30, 2002.
Operating income. As a result of the foregoing, operating income
for the six months ended June 30, 2003 decreased $0.8 million, or
3.9%, to $21.5 million from $22.3 million for the six months ended
June 30, 2002. Operating income as a percentage of net revenues
decreased to 16.2% for the six months ended June 30, 2003 from 17.5%
for the six months ended June 30, 2002.
Interest expense. Interest expense for the six months ended June
30, 2003 increased $2.5 million, or 19.2%, to $15.4 million from $12.9
million for the six months ended June 30, 2002. Interest expense in
2003 included an unfavorable non-cash adjustment of $1.8 million to
reflect changes in the fair values of an interest rate swap agreement.
Interest expense in 2003 was also higher due to higher interest rates
associated with the swap agreement and higher letter of credit rates
within the Company's new Senior Credit Facility.
Abandoned Canadian public offering costs. In the second quarter of
2002 the Company wrote-off costs incurred while pursuing an initial
public offering through a Canadian Income Trust. Due to market
conditions, management determined that such a public offering would
not be advantageous to the Company at that time. There were no similar
costs in 2003.
Other income (expense), net. Other expense for the six months
ended June 30, 2003 was $0.8 million. The 2003 costs were associated
with the settlement of a lawsuit against a former subsidiary of the
Company in Argentina.
Net income. As a result of the foregoing, net income for the six
months ended June 30, 2003 decreased $3.8 million to net income of
$5.2 million as compared to a net income of $9.0 million for the six
months ended June 30, 2002. Net income as a percentage of net revenues
decreased to 4.0% for the six months ended June 30, 2003 from 7.0% for
the six months ended June 30, 2002.
CONTACT: Alliance Laundry Holdings LLC
Bruce P. Rounds, 920-748-1634