Exhibit 99.1
Alliance Laundry Holdings LLC Reports 1st Quarter 2004 Earnings
RIPON, Wis.--(BUSINESS WIRE)--May 7, 2004--Alliance Laundry Holdings LLC
announced today results for the quarter ended March 31, 2004.
Net revenues for the quarter ended March 31, 2004 increased $5.2 million,
or 8.5%, to $66.3 million compared to $61.1 million for the quarter ended March
31, 2003. Net income for the first quarter of 2004 increased $3.0 million to
$4.2 million as compared to $1.2 million for the same period in 2003. Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA)(a) for the first
quarter of 2004 was $13.5 million compared with EBITDA of $11.2 million for the
first quarter of 2003.
The overall net revenue increase of $5.2 million was primarily attributable
to higher commercial laundry revenue of $5.0 million and service parts revenue
of $0.2 million. The increase in net income of $3.0 million for the first
quarter of 2004 was primarily attributable to higher gross profit of $3.7 and
lower interest expense of $0.6 million partially offset by higher sales and
marketing expenses of $0.4 million and $0.7 million of costs incurred in the
first quarter of 2004 related to a proposed initial public offering of Income
Deposit Securities.
In announcing the Company's results today, Chairman and CEO Thomas F.
L'Esperance said, "We are extremely pleased with our year over year top line
revenue growth of 8.5% for the first quarter of 2004. Leading the way for the
quarter was higher international equipment revenue of $2.7 million and higher
North American equipment revenue of $1.3 million."
"During the first quarter of 2004 we have paid down $5.1 million on
long-term debt. We will continue to focus on strong top line performance in 2004
to help offset higher 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), we also
disclose EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization), which is a non-GAAP measure. We believe that EBITDA is useful as
a means to evaluate our ability to service existing debt, to sustain potential
future increases in debt and to satisfy capital requirements. EBITDA, adjusted
for certain non-cash items and as defined in our Senior Credit Facility, is also
used to determine our compliance with key financial covenants under our Senior
Credit Facility, which among other things, impacts the amount of indebtedness we
are permitted to incur. Our use of EBITDA, however, should not be considered an
alternative to measures of operating performance as determined in accordance
with GAAP, including net income as a measure of our operating results and cash
flows as a measure of our liquidity. 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 "continue" and "strong" 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, 2003.
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 three months ended March 31, 2004.
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
March 31, December 31,
-------------------------
2004 2003
------------ ------------
Assets
Current assets:
Cash $9,230 $7,937
Accounts receivable, net 7,549 9,157
Inventories, net 32,333 26,215
Beneficial interests in securitized
accounts receivable 16,221 16,789
Prepaid expenses and other 1,659 898
------------ ------------
Total current assets 66,992 60,996
Notes receivable, net 6,411 8,161
Property, plant and equipment, net 32,654 34,035
Goodwill, net 55,414 55,414
Beneficial interests in securitized
financial assets 22,691 22,676
Debt issuance costs, net 7,154 7,636
Other assets 1,926 1,721
------------ ------------
Total assets $193,242 $190,639
============ ============
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $12,156 $11,270
Revolving credit facility - -
Accounts payable 9,821 11,279
Other current liabilities 22,618 20,428
------------ ------------
Total current liabilities 44,595 42,977
Long-term debt:
Senior credit facility 140,091 145,975
Senior subordinated notes 110,000 110,000
Junior subordinated note 25,189 24,171
Other long-term debt 720 783
Other long-term liabilities 7,335 6,491
Mandatorily redeemable preferred interests 6,000 -
------------ ------------
Total liabilities 333,930 330,397
Commitments and contingencies
Mandatorily redeemable preferred interests - 6,000
Members' deficit (140,688) (145,758)
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Total liabilities and members' deficit $193,242 $190,639
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ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands)
Three Months Ended
-------------------------
March 31, March 31,
2004 2003
------------ ------------
Net revenues:
Commercial laundry $56,308 $51,329
Service parts 9,972 9,780
------------ ------------
66,280 61,109
Cost of sales 45,521 44,022
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Gross profit 20,759 17,087
Selling, general and administrative expense 8,619 8,217
Offering related expenses 728 -
------------ ------------
Total operating expense 9,347 8,217
------------ ------------
Operating income 11,412 8,870
Interest expense 7,110 7,685
Other income (expense), net (34) -
------------ ------------
Income before taxes 4,268 1,185
Provision for income taxes 49 -
------------ ------------
Net income $4,219 $1,185
============ ============
SELECTED FINANCIAL DATA
(unaudited)
(in thousands)
Three Months Ended
-------------------------
March 31, March 31,
2004 2003
------------ ------------
Cash flow data:
Net cash provided by (used in) operating
activities $7,052 $(503)
Net cash used in investing activities (698) (1,134)
Net cash used in financing activities (5,061) (3,027)
Other data:
EBITDA(1) $13,482 $11,166
Capital expenditures 698 1,134
Reconciliation: EBITDA
Net income (2) $4,219 $1,185
Provision for income taxes 49 -
------------ ------------
Income before income taxes 4,268 1,185
Adjustments:
Interest expense 7,110 7,685
Depreciation and amortization 2,587 2,807
Non-cash interest expense included in
amortization above (483) (511)
------------ ------------
EBITDA(1) $13,482 $11,166
============ ============
(1) "EBITDA", as presented, represents income before taxes plus
depreciation, amortization and interest expense.
(2) Subsequent to the consummation of the Recapitalization, we are not
a federal income tax paying entity.
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the Three Months Ended March 31, 2004
OVERVIEW
We believe we are the leading designer, manufacturer and marketer of
stand-alone commercial laundry equipment in North America and that we are
similarly a leader worldwide. Under the well-known brand names of Speed
Queen(R), UniMac(R), Huebsch(R), and Ajax(R), we produce a full line of
commercial washing machines and dryers with load capacities from 16 to 250
pounds as well as presses and finishing equipment. Our 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, 2004 represent the consolidated financial position and results of operations
of Alliance Laundry Holdings LLC, including its wholly-owned direct and indirect
subsidiaries, Alliance Laundry Systems LLC and Alliance Laundry Corporation.
This report should be read in conjunction with the audited financial
statements presented in our Annual Report on Form 10-K (file no. 333-56857-02)
filed with the Securities and Exchange Commission, effective March 8, 2004,
which includes our audited financial statements as of and for the years ended
December 31, 2003 and 2002.
RESULTS OF OPERATIONS
The following table provides our historical net revenues for the periods
indicated:
Quarter Ended
-------------------------
March 31, March 31,
2004 2003
-------------------------
(Dollars in millions)
Net revenues:
Commercial laundry $56.3 $51.3
Service parts 10.0 9.8
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$66.3 $61.1
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The following table provides certain condensed historical financial
data expressed as a percentage of net revenues for each of the periods
indicated:
Quarter Ended
-------------------------
March 31, March 31,
2004 2003
-------------------------
Net revenues 100.0% 100.0%
Cost of sales 68.7% 72.0%
Gross profit 31.3% 28.0%
Selling, general and administrative expense 13.0% 13.4%
Offering related expenses 1.1% -
Operating income 17.2% 14.5%
Net income 6.4% 1.9%
Three Months Ended March 31, 2004 Compared to Three Months Ended March 31,
2003
Net revenues. Net revenues for the quarter ended March 31, 2004 increased
$5.2 million, or 8.5%, to $66.3 million from $61.1 million for the quarter ended
March 31, 2003. This increase was primarily attributable to higher commercial
laundry revenue of $5.0 million and service parts revenue of $0.2 million. The
increase in commercial laundry revenue was due primarily to higher international
revenue of $2.7 million, higher North American equipment revenue of $1.3 million
and higher earnings from our off-balance sheet equipment financing program of
$1.0 million. Revenue for North America was higher for on-premise laundries and
lower for coin-operated laundry customers. Revenue for international customers
was higher in Asia and Europe.
Gross profit. Gross profit for the quarter ended March 31, 2004 increased
$3.7 million, or 21.5%, to $20.8 million from $17.1 million for the quarter
ended March 31, 2003. This increase was primarily attributable to the higher
earnings from our off-balance sheet equipment financing program of $1.0 million,
lower depreciation expense of $0.2 million, margins associated with the higher
sales volume, and a price increase, which were partially offset by nickel and
chrome surcharges of $0.7 million related to stainless steel purchases and
unfavorable exchange rates related to foreign purchases. Gross profit as a
percentage of net revenues increased to 31.3% for the quarter ended March 31,
2004 from 28.0% for the quarter ended March 31, 2003.
Selling, general and administrative expense. Selling, general and
administrative expenses for the quarter ended March 31, 2004 increased $0.4
million, or 4.9%, to $8.6 million from $8.2 million for the quarter ended March
31, 2003. The increase in selling, general and administrative expenses was
primarily due to higher sales and marketing expenses of $0.4 million. Selling,
general and administrative expenses as a percentage of net revenues decreased to
13.0% for the quarter ended March 31, 2004 as compared to 13.4% for the quarter
ended March 31, 2003.
Offering related expense. Offering related expense for the quarter ended
March 31, 2004 was $0.7 million, with no similar expense in 2003. Offering
related expense as a percentage of net revenues was 1.1% for the quarter ended
March 31, 2004.
Operating income. As a result of the foregoing, operating income for the
quarter ended March 31, 2004 increased $2.5 million, or 28.7%, to $11.4 million
from $8.9 million for the quarter ended March 31, 2003. Operating income as a
percentage of net revenues increased to 17.2% for the quarter ended March 31,
2004 from 14.5% for the quarter ended March 31, 2003.
Interest expense. Interest expense for the quarter ended March 31, 2004
decreased $0.6 million, or 7.5%, to $7.1 million from $7.7 million for the
quarter ended March 31, 2003. Lower cash interest expense resulting from a
reduction in total debt outstanding was partially offset by higher cash interest
expense related to the Junior Subordinated Note. Interest expense in 2004
includes an unfavorable non-cash adjustment of $0.4 million to reflect changes
in the fair values of an interest rate swap agreement. Interest expense in 2003
includes an unfavorable non-cash adjustment of $0.7 million to reflect changes
in the fair values of a similar interest rate swap agreement.
Net income. As a result of the foregoing, net income for the quarter ended
March 31, 2004 increased $3.0 million to net income of $4.2 million as compared
to a net income of $1.2 million for the quarter ended March 31, 2003. Net income
as a percentage of net revenues increased to 6.4% for the quarter ended March
31, 2004 from 1.9% for the quarter ended March 31, 2003.
CONTACT: Alliance Laundry Holdings LLC
Bruce P. Rounds, 920-748-1634