Exhibit 99.1
Alliance Laundry Holdings LLC Reports 2nd Qtr 2004 Earnings
RIPON, Wis.--(BUSINESS WIRE)--Aug. 4, 2004--Alliance Laundry
Holdings LLC announced today results for the quarter and six months
ended June 30, 2004.
Net revenues for the quarter ended June 30, 2004 increased $2.4
million, or 3.3%, to $73.4 million from $71.0 million for the quarter
ended June 30, 2003. Net income for the quarter ended June 30, 2004
increased $2.2 million to net income of $6.2 million as compared to
net income of $4.0 million for the quarter ended June 30, 2003.
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")(a) for the second quarter of 2004 decreased $0.6 million to
$13.5 million as compared to EBITDA of $14.1 million for the second
quarter of 2003.
The overall revenue increase for the second quarter of $2.4
million was primarily due to higher commercial laundry revenue of $1.8
million and service parts revenue of $0.6 million. The increase in net
income for the second quarter of $2.2 million was primarily due to
higher gross profit of $0.3 million, lower interest expense of $2.4
million and lower other expenses of $0.8 million, partially offset by
higher operating expenses of $1.4 million. The decrease in EBITDA of
$0.6 million for the second quarter of 2004 was primarily due to
higher selling, general and administrative expenses of $0.9 million
and $0.5 million of costs incurred in the second quarter related to a
proposed offering of Income Deposit Securities partially offset by
lower other expense of $0.8 million. The increase in selling, general
and administrative expenses was primarily due to $0.7 million of
non-cash incentive compensation recorded in the second quarter.
Net revenues for the six months ended June 30, 2004 increased $7.5
million, or 5.7%, to $139.6 million from $132.1 million for the six
months ended June 30, 2003. Net income for the six months ended June
30, 2004 was $10.4 million as compared to net income of $5.2 million
for the six months ended June 30, 2003. EBITDA for the six months
ended June 30, 2004 was $27.0 million as compared to EBITDA of $25.2
million for the six months ended June 30, 2003.
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 3.3% for the second quarter of 2004. North
American equipment revenue continues to be slightly ahead of last year
with a very strong international performance for the second quarter."
"During the second quarter of 2004 we have paid down $7.1 million
on long-term debt. We will continue to focus on strong top line growth
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. EBITDA is not a
measure of operating income, operating performance or liquidity under
GAAP. We include EBITDA because we understand it is used by some
investors to determine a company's historical ability to service
indebtedness and fund ongoing capital expenditures, and because
certain covenants in our borrowing agreements are tied to similar
measures. Nevertheless, this measure should not be considered in
isolation or as a substitute for operating income (as determined in
accordance with GAAP) as an indicator of our operating performance, or
of cash flows from operating activities (as determined in accordance
with GAAP), or as a measure of 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 "continues," "expects," "anticipates," "intends," "plans,"
"should," and "believes" 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 four pages, followed by management's discussion and analysis
of financial condition and results of operations for the quarter and
six months ended June 30, 2004.
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
June 30, December 31,
-------------------------
2004 2003
------------ ------------
Assets
Current assets:
Cash $10,550 $7,937
Accounts receivable, net 7,917 9,157
Inventories, net 26,733 26,215
Beneficial interests in securitized
accounts receivable 18,753 16,789
Prepaid expenses and other 1,498 898
------------ ------------
Total current assets 65,451 60,996
Notes receivable, net 6,334 8,161
Property, plant and equipment, net 31,575 34,035
Goodwill, net 55,414 55,414
Beneficial interests in securitized
financial assets 20,148 22,676
Debt issuance costs, net 6,676 7,636
Other assets 3,951 1,721
------------ ------------
Total assets $189,549 $190,639
============ ============
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $12,822 $11,270
Revolving credit facility - -
Accounts payable 11,313 11,279
Other current liabilities 18,893 20,428
------------ ------------
Total current liabilities 43,028 42,977
Long-term debt:
Senior credit facility 132,428 145,975
Senior subordinated notes 110,000 110,000
Junior subordinated note 26,326 24,171
Other long-term debt 657 783
Other long-term liabilities 6,922 6,491
Mandatorily redeemable preferred interests 6,000 -
------------ ------------
Total liabilities 325,361 330,397
Commitments and contingencies
Mandatorily redeemable preferred interests - 6,000
Members' deficit (135,812) (145,758)
------------ ------------
Total liabilities and members' deficit $189,549 $190,639
============ ============
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands)
Three Months Ended Six Months Ended
---------------------------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Net revenues:
Commercial laundry $63,910 $62,142 $120,218 $113,471
Service parts 9,460 8,859 19,432 18,639
--------- --------- --------- ---------
73,370 71,001 139,650 132,110
Cost of sales 52,239 50,212 97,760 94,234
--------- --------- --------- ---------
Gross profit 21,131 20,789 41,890 37,876
Selling, general and
administrative expense 9,107 8,182 17,726 16,399
Offering related expenses 540 - 1,268 -
--------- --------- --------- ---------
Total operating expense 9,647 8,182 18,994 16,399
--------- --------- --------- ---------
Operating income 11,484 12,607 22,896 21,477
Interest expense 5,260 7,720 12,370 15,405
Other expense, net 18 797 52 797
--------- --------- --------- ---------
Income before taxes 6,206 4,090 10,474 5,275
Provision for income taxes 5 43 54 43
--------- --------- --------- ---------
Net income $6,201 $4,047 $10,420 $5,232
========= ========= ========= =========
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six Months Ended
-------------------
June 30, June 30,
2004 2003
--------- ---------
Cash flows from operating activities:
Net income $10,420 $5,232
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,118 5,557
Non-cash interest 1,797 3,612
Non-cash incentive unit compensation 670 -
(Gain) loss on sale of property, plant and
equipment 52 (9)
Changes in assets and liabilities:
Accounts receivable 1,240 (4,248)
Inventories (518) (278)
Other assets (1,316) (2,697)
Accounts payable 34 (2,405)
Other liabilities (746) 54
--------- ---------
Net cash provided by operating activities 16,751 4,818
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (1,647) (2,351)
Proceeds on disposal of property, plant and
equipment 5 36
--------- ---------
Net cash used in investing activities (1,642) (2,315)
--------- ---------
Cash flows from financing activities:
Repayment of management note - 32
Principal payments on long-term debt (12,121) (10,118)
Cash paid for capitalized offering related costs (375) -
Net increase in revolving line of credit
borrowings - 5,000
--------- ---------
Net cash used in financing activities (12,496) (5,086)
--------- ---------
Increase (decrease) in cash 2,613 (2,583)
Cash at beginning of period 7,937 7,339
--------- ---------
Cash at end of period $10,550 $4,756
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $11,494 $10,932
ALLIANCE LAUNDRY HOLDINGS LLC
SELECTED FINANCIAL DATA
(in thousands)
Three Months Ended Six Months Ended
------------------ -----------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
-------- -------- -------- --------
Cash flow data:
Net cash provided by operating
activities $9,699 $5,321 $16,751 $4,818
Net cash used in investing
activities (944) (1,181) (1,642) (2,315)
Net cash used in financing
activities (7,435) (2,059) (12,496) (5,086)
Other data:
EBITDA(1) $13,520 $14,050 $27,002 $25,216
Capital expenditures 949 1,217 1,647 2,351
Reconciliation: EBITDA
Net income(2) $6,201 $4,047 $10,420 $5,232
Provision for income taxes 5 43 54 43
-------- -------- -------- --------
Income before income taxes 6,206 4,090 10,474 5,275
Adjustments:
Interest expense 5,260 7,720 12,370 15,405
Depreciation and amortization 2,531 2,750 5,118 5,557
Non-cash interest expense
included in amortization above (477) (510) (960) (1,021)
-------- -------- -------- --------
EBITDA(1) $13,520 $14,050 $27,002 $25,216
======== ======== ======== ========
(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 tax paying entity.
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Quarter and Six Months Ended June 30,
2004.
OVERVIEW
We believe we are 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(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
June 30, 2004 present the consolidated financial position and results
of operations of Alliance Laundry Holdings LLC, including our
wholly-owned direct and indirect subsidiaries, Alliance Laundry
Systems LLC and Alliance Laundry Corporation.
This discussion and analysis should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and
Results of Operations set forth in our Annual Report on Form 10-K
(file no. 333-56857) filed with the Securities and Exchange
Commission, which includes our audited financial position and
operating results as of and for the year ended December 31, 2003.
RESULTS OF OPERATIONS
Quarter Ended June 30, 2004 Compared to the Quarter Ended June 30,
2003.
The following table sets forth our historical net revenues for the
periods indicated:
Quarter Ended
----------------------------
June 30, 2004 June 30, 2003
------------- -------------
(Dollars in millions)
Net revenues:
Commercial laundry $63.9 $62.1
Service parts 9.5 8.9
------------- -------------
$73.4 $71.0
============= =============
The following table sets forth certain condensed historical
financial data for us expressed as a percentage of net revenues for
each of the periods indicated:
Quarter Ended
---------------------------
June 30, 2004 June 30, 2003
------------- -------------
Net revenues 100.0% 100.0%
Cost of sales 71.2% 70.7%
Gross profit 28.8% 29.3%
Selling, general and administrative expense 12.4% 11.5%
Offering related expenses 0.7% -
Operating income 15.7% 17.8%
Net income 8.5% 5.7%
Net revenues. Net revenues for the quarter ended June 30, 2004
increased $2.4 million, or 3.3%, to $73.4 million from $71.0 million
for the quarter ended June 30, 2003. This increase was primarily
attributable to higher commercial laundry revenue of $1.8 million and
service parts revenue of $0.6 million. The increase in commercial
laundry revenue was due primarily to higher North American equipment
revenue of $0.3 million and higher international revenue of $2.1
million, which were partially offset by lower earnings from our
equipment financing program of $0.6 million. Revenue for North America
was higher to coin-operated laundry customers and on-premise laundry
and lower to multi-housing laundry customers. Revenue for
international was higher to customers in Asia, Europe, the Middle East
and Africa.
Gross profit. Gross profit for the quarter ended June 30, 2004
increased $0.3 million, or 1.6%, to $21.1 million from $20.8 million
for the quarter ended June 30, 2003. 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 the lower earnings from our equipment financing program and
nickel and chrome surcharges of $1.2 million related to stainless
steel purchases. Gross profit as a percentage of net revenues
decreased to 28.8% for the quarter ended June 30, 2004 from 29.3% for
the quarter ended June 30, 2003 primarily as a result of the lower
earnings from our equipment financing program.
Selling, general and administrative expense. Selling, general and
administrative expenses for the quarter ended June 30, 2004 increased
$0.9 million, or 11.3%, to $9.1 million from $8.2 million for the
quarter ended June 30, 2003. The increase in selling, general and
administrative expenses was primarily due to non-cash incentive
compensation of $0.7 million in 2004, higher sales and marketing
expenses of $0.5 million and higher independent development costs of
$0.2 million, which were partially offset by lower pension costs of
$0.5 million. Selling, general and administrative expenses as a
percentage of net revenues increased to 12.4% for the quarter ended
June 30, 2004 from 11.5% for the quarter ended June 30, 2003.
Offering related expense. Offering related expense for the quarter
ended June 30, 2004 was $0.5 million, with no similar expense in 2003.
Offering related expense as a percentage of net revenues was 0.7% for
the quarter ended June 30, 2004.
Operating income. As a result of the foregoing, operating income
for the quarter ended June 30, 2004 decreased $1.1 million, or 8.9%,
to $11.5 million from $12.6 million for the quarter ended June 30,
2003. Operating income as a percentage of net revenues decreased to
15.7% for the quarter ended June 30, 2004 from 17.8% for the quarter
ended June 30, 2003.
Interest expense. Interest expense for the quarter ended June 30,
2004 decreased $2.4 million, or 31.9%, to $5.3 million from $7.7
million for the quarter ended June 30, 2003. Interest expense in 2004
includes a favorable non-cash adjustment of $1.5 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. Cash interest expense was lower as a
result of reductions in total debt outstanding, but was partially
offset by higher interest expense related to the Junior Subordinated
Notes.
Net income. As a result of the foregoing, net income for the
quarter ended June 30, 2004 increased $2.2 million to net income of
$6.2 million as compared to net income of $4.0 million for the quarter
ended June 30, 2003. Net income as a percentage of net revenues
increased to 8.5% for the quarter ended June 30, 2004 from 5.7% for
the quarter ended June 30, 2003.
Six Months Ended June 30, 2004 Compared to the Six Months Ended
June 30, 2003.
The following table sets forth our historical net revenues for the
periods indicated:
Six Months Ended
----------------------------
June 30, 2004 June 30, 2003
------------- -------------
(Dollars in millions)
Net revenues:
Commercial laundry $120.2 $113.5
Service parts 19.4 18.6
------------- -------------
$139.6 $132.1
============= =============
The following table sets forth certain condensed historical
financial data for us expressed as a percentage of net revenues for
each of the periods indicated:
Six Months Ended
---------------------------
June 30, 2004 June 30, 2003
------------- -------------
Net revenues 100.0% 100.0%
Cost of sales 70.0% 71.3%
Gross profit 30.0% 28.7%
Selling, general and administrative expense 12.7% 12.4%
Offering related expenses 0.9% -
Operating income 16.4% 16.3%
Net income 7.5% 4.0%
Net revenues. Net revenues for the six months ended June 30, 2004
increased $7.5 million, or 5.7%, to $139.6 million from $132.1 million
for the six months ended June 30, 2003. This increase was primarily
attributable to higher commercial laundry revenue of $6.7 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 $1.6 million, higher international revenue of
$4.8 million, and higher earnings from our equipment financing program
of $0.4 million. The increase in North American equipment revenues was
primarily due to higher revenues from on-premise laundry and
coin-operated laundry customers, which were partially offset by lower
revenues from multi-housing laundry customers. Revenue for
international was higher to customers in Asia, the Middle East, Africa
and Europe.
Gross profit. Gross profit for the six months ended June 30, 2004
increased $4.0 million, or 10.6%, to $41.9 million from $37.9 million
for the six months ended June 30, 2003. This increase was primarily
attributable to the margins associated with the higher sales volume, a
price increase, the higher earnings from our equipment financing
program and lower depreciation expense, which were partially offset by
nickel and chrome surcharges of $1.9 million related to stainless
steel purchases. Gross profit as a percentage of net revenues
increased to 30.0% for the six months ended June 30, 2004 from 28.7%
for the six months ended June 30, 2003.
Selling, general and administrative expense. Selling, general and
administrative expenses for the six months ended June 30, 2004
increased $1.3 million, or 8.1%, to $17.7 million from $16.4 million
for the six months ended June 30, 2003. The increase in selling,
general and administrative expenses was primarily due to non-cash
incentive unit compensation of $0.7 million in 2004, higher sales and
marketing expenses of $0.9 million and higher independent development
costs of $0.3 million, which were partially offset by lower pension
expense of $0.5 million. Selling, general and administrative expenses
as a percentage of net revenues increased to 12.7% for the six months
ended June 30, 2004 from 12.4% for the six months ended June 30, 2003.
Offering related expense. Offering related expense for the six
months ended June 30, 2004 was $1.3 million, with no similar expense
in 2003. Offering related expense as a percentage of net revenues was
0.9% for the six months ended June 30, 2004.
Operating income. As a result of the foregoing, operating income
for the six months ended June 30, 2004 increased $1.4 million, or
6.6%, to $22.9 million from $21.5 million for the six months ended
June 30, 2003. Operating income as a percentage of net revenues
increased to 16.4% for the six months ended June 30, 2004 from 16.3%
for the six months ended June 30, 2003.
Interest expense. Interest expense for the six months ended June
30, 2004 decreased $3.0 million, or 19.7%, to $12.4 million from $15.4
million for the six months ended June 30, 2003. Interest expense in
2004 includes a favorable non-cash adjustment of $1.1 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 $1.5 million to reflect changes in the fair values of a similar
interest rate swap agreement. Cash interest expense was lower as a
result of reductions in total debt outstanding, but was partially
offset by higher interest expense related to the Junior Subordinated
Notes.
Net income. As a result of the foregoing, net income for the six
months ended June 30, 2004 increased $5.2 million to net income of
$10.4 million as compared to net income of $5.2 million for the six
months ended June 30, 2003. Net income as a percentage of net revenues
increased to 7.5% for the six months ended June 30, 2004 from 4.0% for
the six months ended June 30, 2003.
CONTACT: Alliance Laundry Holdings LLC
Bruce P. Rounds, 920-748-1634