Exhibit 99.1
Alliance Laundry Holdings LLC Reports 2004 Sales and Earnings
RIPON, Wis.--(BUSINESS WIRE)--March 21, 2005--Alliance Laundry Holdings LLC
announced today results for the year ended December 31, 2004.
Net revenues for the full year 2004 increased $13.4 million, or 5.1%, to
$281.0 million compared to $267.6 million for the full year 2003. Net income for
2004 decreased $4.1 million to $11.8 million as compared to $15.9 million for
the same period in 2003. Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA)(a) for 2004 was $45.1 million compared with EBITDA of
$53.1 million for 2003.
The overall net revenue increase for the year of $13.4 million was
primarily attributable to higher commercial laundry revenue of $8.6 million,
higher service parts revenue of $1.3 million and higher consumer laundry revenue
of $3.6 million. Net income for 2004 included $5.6 million of non-cash
compensation expense related to incentive units issued to our executives in 1998
and 2003; and $4.8 million of expense related to an abandoned public offering of
Income Deposit Securities. Net income for 2003 included $0.8 million of costs
associated with the settlement of a lawsuit against a former subsidiary in
Argentina.
On January 27, 2005, ALH Holding Inc., an entity formed by Teachers'
Private Capital, the private equity arm of Ontario Teachers' Pension Plan Board
("OTPP"), acquired 100% of the outstanding equity interests in Alliance Laundry
Holdings LLC ("Alliance") pursuant to a unit purchase agreement for aggregate
consideration of $450.0 million. The management of Alliance continues to hold a
significant investment in the Company.
In announcing the Company's results today, CEO and President Thomas F.
L'Esperance said, "We are extremely pleased with our top line revenue growth of
5.1% for the twelve months ended December 31, 2004. Leading the way for the year
was higher international equipment revenue of $7.3 million and higher consumer
laundry revenue of $3.6 million resulting from our re-entry into the U.S. home
laundry market."
"We have completed the purchase by OTPP of Alliance. Alliance's management
is enthusiastic about the opportunities this partnership presents as we work
together to execute our Company's growth objectives," said L'Esperance.
Alliance Laundry Holdings LLC is the parent company of Alliance Laundry
Systems LLC (www.comlaundry.com), a leading North American manufacturer of
commercial laundry products and provider of services for laundromats,
multi-housing laundries, on-premise laundries and drycleaners. Alliance 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 the
well known brand names Speed Queen(R), UniMac(R), Huebsch(R) and Ajax(R).
(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. Based on our industry and debt
financing experience, we believe that EBITDA is customarily used to provide
useful information regarding a Company's ability to service existing debt, to
sustain potential future increases in debt and to satisfy capital requirements.
EBITDA, adjusted for certain non-recurring and non-cash items and as defined in
the New Senior Credit Facility and the indenture governing the 2005 Senior
Subordinated Notes (the "2005 Notes Indenture"), is also used to determine our
compliance with key financial covenants under the New Senior Credit Facility and
the 2005 Notes Indenture, 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 generally accepted accounting principles, including net
income, as a measure of our operating results, and cash flows, as a measure of
our liquidity. Because EBITDA is not calculated identically by all companies,
the presentation herein may not be comparable to other similarly titled measures
of other companies. 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. 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; 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 the Company's most recent Annual Report on Form 10-K for the year
ended December 31, 2004.
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 years ended December 31, 2004 and
2003.
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
---------------------
2004 2003
--------- ---------
Assets
Current assets:
Cash $11,471 $7,937
Accounts receivable (net of allowance for
doubtful accounts of $123 and $257 at
December 31, 2004 and 2003, respectively) 5,611 9,157
Inventories, net 26,761 26,215
Beneficial interests in securitized accounts
receivable 19,479 16,789
Prepaid expenses and other 1,088 898
--------- ---------
Total current assets 64,410 60,996
Notes receivable, net 6,742 8,161
Property, plant and equipment, net 30,481 34,035
Goodwill 55,414 55,414
Beneficial interests in securitized financial
assets 19,379 22,676
Debt issuance costs, net 5,751 7,636
Other assets 1,839 1,721
--------- ---------
Total assets $184,016 $190,639
========= =========
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $12,036 $11,270
Revolving credit facility - -
Accounts payable 11,618 11,279
Other current liabilities 24,718 20,428
--------- ---------
Total current liabilities 48,372 42,977
Long-term debt:
Senior credit facility 118,218 145,975
Senior subordinated notes 110,000 110,000
Junior subordinated note 28,776 24,171
Other long-term debt 529 783
Other long-term liabilities 7,218 6,491
Mandatorily redeemable preferred units 6,000 -
--------- ---------
Total liabilities 319,113 330,397
Commitments and contingencies
Mandatorily redeemable preferred equity - 6,000
Members' deficit (135,097) (145,758)
--------- ---------
Total liabilities and members' deficit $184,016 $190,639
========= =========
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
Years Ended December 31,
-------------------------------
2004 2003 2002
--------- --------- ---------
Net revenues:
Commercial and consumer laundry $242,811 $230,663 $219,653
Service parts 38,176 36,944 35,524
--------- --------- ---------
280,987 267,607 255,177
Cost of sales 199,010 188,979 179,047
--------- --------- ---------
Gross profit 81,977 78,628 76,130
--------- --------- ---------
Selling, general and administrative
expense 39,837 33,566 30,098
Securitization and other costs - - 10,920
--------- --------- ---------
Total operating expenses 39,837 33,566 41,018
--------- --------- ---------
Operating income 42,140 45,062 35,112
Interest expense 25,439 28,258 28,341
Loss from early extinguishment of
debt - - 2,004
Costs related to abandoned public
offerings 4,823 - 3,409
Other income (expense), net (42) (830) 33
--------- --------- ---------
Income before taxes 11,836 15,974 1,391
Provision for income taxes 71 55 56
--------- --------- ---------
Net income $11,765 $15,919 $1,335
========= ========= =========
ALLIANCE LAUNDRY HOLDINGS LLC
SELECTED FINANCIAL DATA
(in thousands)
Years Ended December 31,
-------------------------------
2004 2003 2002
--------- --------- --------
Cash flow data:
Net cash provided by operating
activities $34,880 $30,393 $22,775
Net cash used in investing activities (4,101) (3,590) (2,563)
Net cash used in financing activities (27,245) (26,205) (18,532)
Other data:
EBITDA(1) $45,085 $53,101 $40,518
Capital expenditures 4,166 3,600 2,652
Reconciliation: EBITDA
Net income $11,765 $15,919 $1,335
Provision for income taxes 71 55 56
--------- --------- --------
Income before income taxes 11,836 15,974 1,391
Adjustments:
Interest expense 25,439 28,258 28,341
Depreciation and amortization(2) 9,695 10,886 13,293
Non-cash interest expense included
in amortization above (1,885) (2,017) (2,507)
--------- --------- --------
EBITDA(1) $45,085 $53,101 $40,518
========= ========= ========
(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 Years Ended December 31, 2004 and 2003
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,
UniMac, Huebsch, and Ajax, 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 North American stand-alone commercial laundry equipment industry's
revenues are primarily driven by population growth and the replacement cycle of
laundry equipment. With economic conditions having limited effect on the
frequency of use, and therefore the useful life of laundry equipment, industry
revenues have been relatively stable over time. Similarly, with a majority of
our revenues generated by recurring sales of replacement equipment and service
parts, we have experienced stable revenues even during economic slowdowns.
Sales of stand-alone commercial laundry equipment are the single most
important driver of our revenues. In 2004, our net revenues from the sale of
commercial laundry equipment were approximately $239.2 million, which comprised
over 85% of our total net revenues. The other main component of our revenues is
the sale of high margin service parts. We offer immediate response service
whereby many of our parts are available on a 24-hour turnaround for emergency
repair parts orders. In 2004, our net revenues from the sale of service parts
were approximately $38.2 million, almost 14% of our total net revenues.
We estimate that our overall market share is approximately 38% in 2004. We
have achieved steady revenues by building an extensive and loyal distribution
network for our products, establishing a significant installed base of units and
developing and offering a full innovative product line. As a result of our large
installed base, a significant majority of our revenue is attributable to
replacement sales of equipment and service parts.
We believe that continued population expansion in North America will
continue to drive steady demand for garment and textile laundering by all
customer groups that purchase commercial laundry equipment. We anticipate growth
in demand for commercial laundry equipment in international markets as well,
especially in developing countries where laundry processing has historically
been far less sophisticated than in North America. In addition, customers are
increasingly trading up to equipment with enhanced functionality, thereby
raising average selling prices. Customers are also moving towards equipment with
increased water and energy efficiency as the result of government and consumer
pressure and a focus on operating costs.
Recent Developments. On January 27, 2005, ALH Holding Inc. ("ALH"), an
entity formed by Teachers' Private Capital, the private equity arm of Ontario
Teachers' Pension Plan Board, or OTPP, acquired 100% of the outstanding equity
interests in Alliance Holdings for aggregate consideration of approximately
$450.0 million. In connection with such acquisition, the members of our senior
management acquired approximately $7.4 million of newly issued shares of common
stock of ALH, and our other management employees acquired approximately $2.2
million of newly issued shares of ALH common stock in exchange for equity
interests in Alliance Holdings and cash pursuant to a management share offering.
A portion of the aggregate acquisition consideration was used to repay our then
existing indebtedness, redeem our then outstanding preferred equity interests
and pay certain fees and expenses payable in connection with the consummation of
the acquisition and the financing transactions described below, and the balance
was paid to Alliance Holdings' former equity holders. We refer to the
acquisition of Alliance Holdings and the related management investments in ALH
as the "Acquisition." The Acquisition was financed with approximately $350.0
million of debt financing described below, the management equity, approximately
$107.4 million of new equity capital from OTPP and available cash.
As a result of the Acquisition, all of the outstanding equity interests of
Alliance Laundry are owned by Alliance Holdings, all of the equity interests of
Alliance Holdings are owned by ALH and approximately 91.8% of the capital stock
of ALH is owned by OTPP. The remaining capital stock of ALH is held by
management.
In connection with the closing of the Acquisition, we consummated the
following financing transactions, (the "Financing Transactions" which we refer
to, together with the Acquisition, as the "Transactions"):
-- the closing of the issuance of $150.0 million of 8 1/2% senior
subordinated notes due January 15, 2013, which we refer to as the
"2005 Senior Subordinated Notes". The proceeds from the 2005 Senior
Subordinated Notes offering were $149.3 million;
-- the closing of Alliance Laundry's new $250.0 million senior secured
credit facility, which we refer to as the "New Senior Credit
Facility," consisting of a six-year $50.0 million revolving credit
facility and a seven-year $200.0 million term loan facility; and
-- the settlement of the tender offer and consent solicitation, or the
tender offer, initiated by us on January 4, 2005 for the $110.0
million aggregate principal amount of our then outstanding 1998 Senior
Subordinated Notes. The tender offer expired at 5:00 PM New York City
time on February 2, 2005, and approximately 5.10% of the total
principal amount of the 1998 Senior Subordinated Notes remained
outstanding after the consummation of the tender offer. We redeemed
the remaining 1998 Senior Subordinated Notes in accordance with the
indenture governing such notes on March 7, 2005.
The financial statements as of and for the years ended December 31, 2004
and 2003 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 18, 2005,
which includes our audited financial statements as of and for the years ended
December 31, 2004 and 2003.
RESULTS OF OPERATIONS
The following table provides our historical net revenues for the periods
indicated:
Years Ended December 31,
----------------------------
2004 2003 2002
------- ------- -------
(dollars in millions)
Commercial and consumer laundry $242.8 $230.7 $219.7
Service parts 38.2 36.9 35.5
------- ------- -------
$281.0 $267.6 $255.2
======= ======= =======
The following table provides certain condensed historical financial data
expressed as a percentage of net revenues for each of the periods indicated:
Years Ended December 31,
-------------------------
2004 2003 2002
------- ------- ------
Net revenues 100.0% 100.0% 100.0%
Cost of sales 70.8% 70.6% 70.2%
Gross profit 29.2% 29.4% 29.8%
Selling, general and administrative expense 14.2% 12.6% 11.7%
Securitization and other costs 0.0% 0.0% 4.3%
Operating income 15.0% 16.8% 13.8%
Net income 4.2% 5.9% 0.5%
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
Net Revenues. Net revenues for the year ended December 31, 2004 increased
$13.4 million, or 5.1%, to $281.0 million from $267.6 million for the year ended
December 31, 2003. This increase was primarily attributable to higher commercial
laundry revenue of $8.6 million, higher service parts revenue of $1.3 million
and higher consumer laundry revenue of $3.6 million. The increase in commercial
laundry revenue was due primarily to higher international revenue of $7.3
million and higher North American equipment revenue of $1.5 million, which were
partly offset by lower earnings from our off-balance sheet equipment financing
program of $0.2 million. Revenue from international customers was higher in the
Middle East, Africa, Asia and Europe and was driven by favorable selling prices
resulting from the weaker United States dollar. The increase in consumer laundry
resulted from our re-entry into this marketplace, following the expiration of a
non-compete agreement in late 2004. The increase in North American equipment
revenue was primarily due to higher revenue from on-premise laundries and
drycleaners, partially offset by lower revenue from multi-housing laundries and
laundromats.
Gross Profit. Gross profit for the year ended December 31, 2004 increased
$3.4 million, or 4.3%, to $82.0 million from $78.6 million for the year ended
December 31, 2003. This increase was primarily attributable to margins
associated with higher product sales volume, a price increase and lower
depreciation expense of $1.1 million, which were partially offset by steel cost
increases, higher nickel and chrome surcharges of $4.8 million related to
stainless steel purchases and higher employee medical expenses of $1.1 million.
Gross profit was not affected to the full extent of recent steel market
conditions as we have steel purchase agreements in place. When these agreements
expire in early 2005, we will be subject to prevailing steel prices at that
time. As a result of the recent escalation in the cost of steel and the negative
impact from nickel and chrome surcharges related to stainless steel purchases,
we published a price increase, effective on December 1, 2004, which is expected
to offset anticipated steel cost increases. Gross profit as a percentage of net
revenues decreased to 29.2% for the year ended December 31, 2004 from 29.4% for
the year ended December 31, 2003, primarily as a result of the increases in
steel related components and medical expense increases.
Selling, General and Administrative Expense. Selling, general and
administrative expenses for the year ended December 31, 2004 increased $6.2
million, or 18.7%, to $39.8 million from $33.6 million for the year ended
December 31, 2003. The increase in selling, general and administrative expenses
was primarily due to recognition of $5.6 million of non-cash compensation
expense related to incentive units issued to our executives in 1998 and 2003,
higher sales and marketing expenses of $1.2 million and higher independent
development costs of $0.4 million, which were partially offset by lower pension
expense of $1.0 million. Selling, general and administrative expenses as a
percentage of net revenues increased to 14.2% for the year ended December 31,
2004 from 12.6% for the year ended December 31, 2003.
Operating Income. As a result of the aforementioned, operating income for
the year ended December 31, 2004 decreased $3.0 million, or 6.5%, to $42.1
million from $45.1 million for the year ended December 31, 2003. Operating
income as a percentage of net revenues decreased to 15.0% for the year ended
December 31, 2004 from 16.8% for the year ended December 31, 2003.
Interest Expense. Interest expense for the year ended December 31, 2004
decreased $2.9 million, or 10.0%, to $25.4 million from $28.3 million for the
year ended December 31, 2003. Interest expense in 2004 includes a favorable
non-cash adjustment of $0.2 million to reflect changes in the fair values of an
interest rate swap agreement. Interest expense in 2003 included an unfavorable
non-cash adjustment of $1.4 million to reflect changes in the fair values of an
interest rate swap agreement. Interest expense was also lower in 2004 as a
result of lower interest rates and a reduction in total debt outstanding of
$45.0 million, or 14.3% since December of 2002.
Costs Related to Abandoned Public Offerings. Costs related to abandoned
public offerings for the year ended December 31, 2004 were $4.8 million with no
similar costs in the prior year. During 2004, we pursued an initial public
offering of Income Deposit Securities for which we incurred offering related
expenses and for which we capitalized debt and offering related costs totaling
$4.8 million. As a result of abandoning the Income Deposit Securities offering,
we have written off all related capitalized costs in 2004.
Other Income (Expense), Net. Other expense for the year ended December 31,
2004 was less than $0.1 million as compared to other expense of $0.8 million for
the year ended December 31, 2003. The 2003 other expense is comprised of costs
associated with the settlement of a lawsuit against a former subsidiary in
Argentina.
Net Income. As a result of the aforementioned, net income for the year
ended December 31, 2004 decreased $4.1 million to $11.8 million as compared to
$15.9 million for the year ended December 31, 2003. Net income as a percentage
of net revenues decreased to 4.2% for the year ended December 31, 2004 from 5.9%
for the year ended December 31, 2003.
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
Net Revenues. Net revenues for the year ended December 31, 2003 increased
$12.4 million, or 4.9%, to $267.6 million from $255.2 million for the year ended
December 31, 2002. This increase was primarily attributable to higher commercial
laundry revenue of $11.0 million and higher service parts revenue of $1.4
million. The increase in commercial laundry revenue was due primarily to higher
North American equipment revenue of $7.1 million, and international revenue of
$4.7 million, which was partly offset by lower earnings from our off-balance
sheet equipment financing program of $0.8 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 drycleaners
and on-premise laundries. Revenue from international customers was higher in
Europe and Asia.
Gross Profit. Gross profit for the year ended December 31, 2003 increased
$2.5 million, or 3.3%, to $78.6 million from $76.1 million for the year ended
December 31, 2002. This increase was primarily attributable to margins
associated with the higher sales volume, a price increase and lower depreciation
expense, which were partially offset by unfavorable exchange rates related to
foreign purchases, unfavorable product mix related to sales to drycleaning
customers and lower earnings from our off-balance sheet equipment financing
program. Gross profit as a percentage of net revenues decreased to 29.4% for the
year ended December 31, 2003 from 29.8% for the year ended December 31, 2002.
Selling, General and Administrative Expense. Selling, general and
administrative expenses for the year ended December 31, 2003 increased $3.5
million, or 11.5%, to $33.6 million from $30.1 million for the year ended
December 31, 2002. The increase in selling, general and administrative expenses
was primarily due to higher pension expense of $1.5 million, and higher sales
and marketing expenses of $1.2 million. Selling, general and administrative
expenses as a percentage of net revenues increased to 12.6% for the year ended
December 31, 2003 from 11.7% for the year ended December 31, 2002.
Securitization and Other Costs. We did not incur any securitization and
other costs for the year ended December 31, 2003. Securitization and other costs
for the year ended December 31, 2002 were $10.9 million. The 2002 costs were due
to transaction fees associated with a new asset backed facility. Securitization
and other costs as a percentage of net revenues were 4.3% for the year ended
December 31, 2002.
Operating Income. As a result of the aforementioned, operating income for
the year ended December 31, 2003 increased $10.0 million, or 28.3%, to $45.1
million from $35.1 million for the year ended December 31, 2002. Operating
income as a percentage of net revenues increased to 16.8% for the year ended
December 31, 2003 from 13.8% for the year ended December 31, 2002.
Interest Expense. Interest expense for the year ended December 31, 2003 of
$28.3 million was unchanged as compared to interest expense for the year ended
December 31, 2002. Lower cash interest expense resulting from a reduction in
total debt outstanding was offset by higher cash interest expense related to the
junior subordinated promissory notes. Interest expense in 2003 includes an
unfavorable non-cash adjustment of $1.4 million to reflect changes in the fair
values of an interest rate swap agreement. Interest expense in 2002 includes an
unfavorable non-cash adjustment of $1.8 million to reflect changes in the fair
values of a similar interest rate swap agreement.
Other Income (Expense), Net. Other expense for the year ended December 31,
2003 was $0.8 million as compared to other income of less than $0.1 million for
the year ended December 31, 2002. The 2003 other expense is comprised of costs
associated with the settlement of a lawsuit against a former subsidiary in
Argentina.
Net Income. As a result of the aforementioned, net income for the year
ended December 31, 2003 increased $14.6 million to $15.9 million as compared to
$1.3 million for the year ended December 31, 2002. Net income as a percentage of
net revenues increased to 5.9% for the year ended December 31, 2003 from 0.5%
for the year ended December 31, 2002.
CONTACT: Alliance Laundry Holdings LLC
Bruce P. Rounds, 920-748-1634