Exhibit 99.1
Alliance Laundry Holdings LLC Reports 3rd Quarter 2006 Earnings
RIPON, Wis.--(BUSINESS WIRE)--Nov. 14, 2006--Alliance Laundry Holdings LLC
announced today results for the three and nine months ended September 30, 2006.
Net revenues for the quarter ended September 30, 2006 increased $16.7
million, or 21.4%, to $95.1 million from $78.4 million for the quarter ended
September 30, 2005. Our net loss for the quarter ended September 30, 2006 was
$4.0 million as compared to a net income of $3.4 million for the quarter ended
September 30, 2005. Adjusted EBITDA (see "About Non-GAAP Financial Measures"
below) for the quarter ended September 30, 2006 increased $1.0 million to $15.1
million from $14.1 million for the quarter ended September 30, 2005.
The overall net revenue increase of $16.7 million was attributable to
higher commercial laundry revenues of $4.3 million, higher consumer laundry
revenue of $1.6 million, higher service parts revenue of $2.2 million and CLD
Acquisition related sales of $16.7 million from the European operations
partially offset by $8.1 million of worldwide sales eliminations. Our net loss
for the quarter ended September 30, 2006 included $2.5 million of costs related
to the Marianna closure and transfer of production lines from our Marianna,
Florida plant to our Ripon, Wisconsin plant; and another $2.7 million of
non-cash costs associated with the inventory step-up to fair market value for
inventories acquired as a result of the acquisition of Laundry System Group NV's
Commercial Laundry Division ("CLD"), with no similar costs in the third quarter
of 2005.
Net revenues for the nine months ended September 30, 2006 increased $19.6
million, or 8.4%, to $253.5 million from $233.9 million for the nine months
ended September 30, 2005. Our net loss for the nine months ended September 30,
2006 was $6.4 million as compared to a net loss of $30.7 million for the nine
months ended September 30, 2005. Adjusted EBITDA (see "About Non-GAAP Financial
Measures" below) for the nine months ended September 30, 2006 increased $1.3
million to $44.6 million from $43.3 million for the nine months ended September
30, 2005.
In announcing the Company's results, CEO and President Thomas F.
L'Esperance said, "We are pleased to report yet another solid quarter. Our
project work this year and this past quarter has been going extremely well. The
Marianna transition to Ripon for washer-extractor production is essentially
complete. The consolidation of acquired U.S. operations also is going well with
completion scheduled for early 2007. Additionally, the tooling for the IPH
washer-extractors product line will be transferred to Ripon from an LSG facility
next spring. This tooling transfer will complete all U.S. acquisition related
projects. The Belgium operation required no project work and is performing
well."
About 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 and Adjusted EBITDA, which are non-GAAP measures. We have
presented EBITDA and Adjusted EBITDA because certain covenants in our Senior
Credit Facility are tied to ratios based on these measures. "EBITDA" represents
net income (loss) before interest expense, income tax (provision) benefit and
depreciation and amortization, and "Adjusted EBITDA" (as defined under the
Senior Credit Facility) is EBITDA as further adjusted to exclude, among other
things, certain non-recurring expenses and other non-recurring non-cash charges.
EBITDA and Adjusted EBITDA do not represent, and should not be considered, an
alternative to net income or cash flow from operations, as determined by GAAP,
and our calculations thereof may not be comparable to similarly entitled
measures reported by other companies. Our Senior Credit Facility requires us to
satisfy specified financial ratios and tests, including a maximum of total debt
to Adjusted EBITDA and a minimum Adjusted EBITDA to cash interest expense. To
the extent that we fail to maintain either of these ratios within the limits set
forth in the Senior Credit Facility, our ability to access amounts available
under our Revolving Credit Facility would be limited, our liquidity would be
adversely affected and our obligations under the Senior Credit Facility could be
accelerated. In addition, any such acceleration would constitute an event of
default under the indenture governing the Senior Subordinated Notes (the "Notes
Indenture"), and such an event of default under the Notes Indenture could lead
to an acceleration of our obligations under the Senior Subordinated Notes. A
reconciliation of EBITDA and Adjusted EBITDA with the most directly comparable
GAAP measure is included below for the three and nine months ended September 30,
2006 along with the components of EBITDA and Adjusted EBITDA.
About Alliance Laundry Holdings LLC
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), IPSO(R) and
Cissell(R).
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, 2005.
Financial information for Alliance Laundry Holdings LLC appears on the next
seven pages for the three and nine months ended September 30, 2006.
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
September 30, December 31,
2006 2005
------------- -------------
Assets
Current assets:
Cash $7,198 $5,075
Accounts receivable, net 26,823 9,056
Inventories, net 59,125 29,050
Beneficial interests in securitized
accounts receivable 24,532 22,327
Deferred income tax asset, net 2,265 433
Prepaid expenses and other 4,924 2,139
------------- -------------
Total current assets 124,867 68,080
Notes receivable, net 3,760 6,131
Property, plant and equipment, net 73,492 66,869
Goodwill 176,537 139,903
Beneficial interests in securitized
financial assets 17,467 16,939
Deferred income tax asset, net 8,432 8,932
Debt issuance costs, net 10,852 11,172
Intangible assets, net 157,745 145,433
------------- -------------
Total assets $573,152 $463,459
============= =============
Liabilities and Member(s) Equity
Current liabilities:
Current portion of long-term debt and
capital lease obligations $479 $-
Revolving credit facility 6,000 -
Accounts payable 22,237 7,866
Deferred income tax liability, net 580 -
Other current liabilities 32,868 26,500
------------- -------------
Total current liabilities 62,164 34,366
Long-term debt:
Senior credit facility 228,000 177,000
Senior subordinated notes 149,406 149,336
Other long-term debt and capital lease
obligations 2,240 -
Deferred income tax liability, net 7,466 -
Other long-term liabilities 12,951 8,924
------------- -------------
Total liabilities 462,227 369,626
Commitments and contingencies
Member(s) equity 110,925 93,833
------------- -------------
Total liabilities and member(s) equity $573,152 $463,459
============= =============
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
Three Months Ended
---------------------
Nine January January 1,
Months 28, 2005 2005
Ended through through
September September September September January
30, 2006 30, 2005 30, 2006 30, 2005 27, 2005
---------- ---------- ---------- ---------- -----------
Successor Successor Successor Successor Predecessor
Net revenues $95,130 $78,352 $253,540 $213,260 $20,683
Cost of sales 74,257 55,956 194,002 164,374 15,585
---------- ---------- ---------- ---------- -----------
Gross profit 20,873 22,396 59,538 48,886 5,098
---------- ---------- ---------- ---------- -----------
Selling,
general and
administrative
expense 13,010 9,815 37,496 26,673 3,829
Securitization,
impairment and
other costs 1,647 40 5,571 8,055 -
Transaction
costs
associated
with sale of
business - - - - 18,790
---------- ---------- ---------- ---------- -----------
Total operating
expenses 14,657 9,855 43,067 34,728 22,619
---------- ---------- ---------- ---------- -----------
Operating
income
(loss) 6,216 12,541 16,471 14,158 (17,521)
Interest
expense 9,591 6,138 22,833 17,439 995
Loss from early
extinguishment
of debt - - - - 9,867
Other expense,
net 120 - 480 - -
---------- ---------- ---------- ---------- -----------
(Loss)
income
before
taxes (3,495) 6,403 (6,842) (3,281) (28,383)
Provision
(benefit) for
income taxes 532 3,026 (480) (995) 9
---------- ---------- ---------- ---------- -----------
Net (loss)
income $(4,027) $3,377 $(6,362) $(2,286) $(28,392)
========== ========== ========== ========== ===========
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months January 28, January 1,
Ended 2005 through 2005 through
September 30, September 30, January 27,
2006 2005 2005
-------------- -------------- -------------
Successor Successor Predecessor
Cash flows from operating
activities:
Net loss $(6,362) $(2,286) $(28,392)
Adjustments to
reconcile net loss to
net cash provided by
(used in) operating
activities:
Depreciation and
amortization 16,422 14,743 526
Non-cash interest
(income) expense (213) (680) 351
Non-cash executive
unit compensation 1,873 - 1,089
Non-cash trademark
impairment 1,400 - -
Non-cash debt
financing write-off - - 5,751
Non-cash inventory
expense 2,713 6,246 -
Deferred income
taxes (480) (1,042) -
Loss on sale of
property, plant and
equipment 175 48 -
Changes in assets
and liabilities:
Accounts
receivable 5,594 (3,423) (556)
Inventories (12,307) (20) (1,833)
Other assets (3,284) 1,918 101
Accounts payable (385) (23,119) 19,076
Other liabilities (2,144) 1,688 (2,732)
-------------- -------------- -------------
Net cash provided by
(used in) operating
activities 3,002 (5,927) (6,619)
-------------- -------------- -------------
Cash flows used in
investing activities:
Additions to property,
plant and equipment (4,046) (3,168) (188)
Acquisition of
businesses, net of
cash acquired (78,057) - -
Proceeds on disposition
of assets 1,233 2 -
-------------- -------------- -------------
Net cash used in
investing
activities (80,870) (3,166) (188)
-------------- -------------- -------------
Cash flows provided by
(used in) financing
activities:
Principal payments on
long-term debt (9,047) (13,000) 1
Net increase in
revolving line of
credit borrowings 6,000 - -
Proceeds from
promissory notes 1,000 - -
Proceeds from senior
term loan 60,000 200,000 -
Proceeds from senior
subordinated notes - 149,250 -
Repayment of long-term
debt - (275,920) -
Issuance of common
stock 23,493 117,000 -
Repurchase of common
stock (30) - -
Distribution to old
unitholders - (154,658) -
Debt financing costs (1,334) (13,230) -
Cash paid for
capitalized offering
related costs - (1,364) -
Net proceeds -
management note - - (71)
-------------- -------------- -------------
Net cash provided by
(used in) financing
activities 80,082 8,078 (70)
-------------- -------------- -------------
-------------- -------------- -------------
Effect of exchange rate
changes on cash and cash
equivalents (91) - -
-------------- -------------- -------------
Increase (decrease) in
cash 2,123 (1,015) (6,877)
Cash at beginning of
period 5,075 4,594 11,471
-------------- -------------- -------------
Cash at end of period $7,198 $3,579 $4,594
============== ============== =============
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA, and
reconciliation of Adjusted EBITDA to Net Cash Provided by (Used in)
Operating Activities for the Three and Nine Months Ended September 30,
2006 (Dollars in Thousands):
Three Months Three Months
Ended Ended
September 30, September 30,
2006 2005
--------------- ---------------
Successor Successor
Net (loss) income $(4,027) $3,377
Provision for income taxes 532 3,026
Interest expense 9,591 6,138
Depreciation and amortization (a) 5,177 4,378
Non-cash interest income included in
amortization above (732) (579)
--------------- ---------------
EBITDA 10,541 16,340
Finance program adjustments (b) (1,150) (2,615)
Other non-recurring charges (c) 2,815 330
Other non-cash charges (d) 2,777 -
Other expense (e) 120 -
--------------- ---------------
Adjusted EBITDA 15,103 14,055
Interest expense (9,591) (6,138)
Non-cash interest income included in
amortization above 732 579
Other non-cash interest 594 (717)
Finance program adjustments (b) 1,150 2,615
Other non-recurring charges (c) (2,815) (330)
Loss on sale of property, plant and
equipment 44 45
Other expense (120) (7)
Changes in assets and liabilities (1,199) (208)
--------------- ---------------
Net cash provided by operating
activities $3,898 $9,894
=============== ===============
(a) Depreciation and amortization amounts include amortization of deferred
financing costs included in interest expense.
(b) We currently operate an off-balance sheet commercial equipment finance
program in which newly originated equipment loans are sold to qualified
special-purpose bankruptcy remote entities. In accordance with GAAP, we are
required to record gains/losses on the sale of these equipment based promissory
notes. In calculating Adjusted EBITDA, management determines the cash impact of
net interest income on these notes. The finance program adjustments are the
difference between GAAP basis revenues (as prescribed by SFAS No. 125/140) and
cash basis revenues.
(c) Other non-recurring charges are described as follows:
-- Other non-recurring charges for the quarter ended September 30, 2006
relate to $1.6 million of costs associated with the closure of the
Marianna, Florida production facility which are included in the
securitization, impairment and other costs line of our Consolidated
Statements Of Operations, $0.9 million of costs related to the
transfer of the Marianna, Florida product lines to Ripon, Wisconsin
which are included in the selling, general and administrative expense
line of our Consolidated Statements Of Operations and a periodic
accrual of $0.3 million under a one time retention bonus agreement
entered into with certain management employees concurrent with the
Acquisition, which is included in the selling, general and
administrative expense line of our Consolidated Statements Of
Operations. Under the retention bonus agreements, the executives are
entitled to receive special retention bonus awards upon the second
anniversary of the closing date of the Acquisition, subject generally
to their continued employment with Alliance Laundry through such date.
(d) Other non-cash charges are described as follows:
-- Other non-cash charges for the quarter ended September 30, 2006 are
comprised of $2.7 million of costs associated with the inventory
step-up to fair market value recorded at the CLD Acquisition date,
which are included in the cost of sales line of our Consolidated
Statements Of Operations and $0.1 million of non-cash incentive
compensation expense related to management incentive stock options,
which is included in the selling, general and administrative expense
line of our Consolidated Statements Of Operations.
(e) Other expense is described as follows:
-- Other expense for the quarter ended September 30, 2006 consists of
$0.1 million of mark to market losses for two foreign exchange hedge
agreements entered to control the foreign exchange risk associated
with the initial acquisition price of CLD, which is included in the
other expense line of our Consolidated Statements Of Operations.
Nine Months January 28, January 1, Nine Months
Ended 2005 through 2005 through Ended
September 30, September 30, January 27, September 30,
2006 2005 2005 2005
------------- ------------- ------------ -------------
Successor Successor Predecessor Combined
Net loss $(6,362) $(2,286) $(28,392) $(30,678)
(Benefit)
provision for
income taxes (480) (995) 9 (986)
Interest
expense 22,833 17,439 995 18,434
Depreciation
and
amortization
(a) 16,422 14,743 526 15,269
Non-cash
interest
income
included in
amortization
above (1,654) (1,490) - (1,490)
------------- ------------- ------------ -------------
EBITDA 30,759 27,411 (26,862) 549
Finance program
adjustments
(b) (306) (2,195) 31 (2,164)
Other non-
recurring
charges (c) 7,687 8,828 28,657 37,485
Other non-cash
charges (d) 5,986 6,246 1,089 7,335
Other expense
(e) 480 - - -
Management fees
paid to
affiliates of
Bain - - 83 83
------------- ------------- ------------ -------------
Adjusted EBITDA 44,606 40,290 2,998 43,288
Interest
expense (22,833) (17,439) (995) (18,434)
Non-cash
interest
income
included in
amortization
above 1,654 1,490 - 1,490
Other non-cash
interest (214) (680) 351 (329)
Finance program
adjustments
(b) 306 2,195 (31) 2,164
Other non-
recurring
charges (c) (7,687) (8,828) (28,657) (37,485)
Non-cash debt
financing
write-off - - 5,751 5,751
Loss on sale of
property,
plant and
equipment 175 48 - 48
Other expense (479) (47) (92) (139)
Changes in
assets and
liabilities (12,526) (22,956) 14,056 (8,900)
------------- ------------- ------------ -------------
Net cash
provided by
(used in)
operating
activities $3,002 $(5,927) $(6,619) $(12,546)
============= ============= ============ =============
(a) Depreciation and amortization amounts include amortization of deferred
financing costs included in interest expense.
(b) We currently operate an off-balance sheet commercial equipment finance
program in which newly originated equipment loans are sold to qualified
special-purpose bankruptcy remote entities. In accordance with GAAP, we are
required to record gains/losses on the sale of these equipment based promissory
notes. In calculating Adjusted EBITDA, management determines the cash impact of
net interest income on these notes. The finance program adjustments are the
difference between GAAP basis revenues (as prescribed by SFAS No. 125/140) and
cash basis revenues.
(c) Other non-recurring charges are described as follows:
-- Other non-recurring charges for the period from January 1, 2005
through January 27, 2005 relate to seller transaction costs of $18.8
million incurred as part of the Acquisition which are included in the
transaction costs associated with the sale of business line of our
Consolidated Statements Of Operations for such predecessor period, and
a loss on the early extinguishment of debt of $9.9 million which is
included in the loss from early extinguishment of debt line of our
Consolidated Statements Of Operations.
-- Other non-recurring charges for the period from January 28, 2005
through September 30, 2005 relate to $8.0 million of transaction costs
incurred in establishing a new asset backed facility for the sale of
equipment notes and trade receivables, which is included in the
securitization, impairment and other costs line of our Consolidated
Statements Of Operations, and a periodic accrual of $0.8 million under
the one time retention bonus agreement entered into with certain
management employees, which is included in the selling, general and
administrative expense line of our Consolidated Statements Of
Operations.
-- Other non-recurring charges for the nine months ended September 30,
2006 consist of $2.6 million of costs related to the transfer of the
Marianna, Florida product lines to Ripon, Wisconsin which are included
in the selling, general and administrative expense line of our
Consolidated Statements Of Operations, $4.2 million of costs
associated with the closure of the Marianna, Florida production
facility which are included in the securitization, impairment and
other costs line of our Consolidated Statements Of Operations and a
periodic accrual of $0.9 million under the one time retention bonus
agreement with certain management employees referred to above.
(d) Other non-cash charges are described as follows:
-- Non-cash charges for the period from January 1, 2005 through January
27, 2005 of $1.1 million relate to non-cash incentive compensation
expense resulting from the acceleration of vesting for incentive units
at the date of the Acquisition, which are included in the selling,
general and administrative expense line of our Consolidated Statements
Of Operations for such predecessor period.
-- Non-cash charges for the period from January 28, 2005 through
September 30, 2005 relate to $6.2 million of cost associated with the
inventory step-up to fair market value recorded at the Acquisition
date, which are included in the cost of sales line of our Consolidated
Statements Of Operations.
-- Non-cash charges for the nine month period ended September 30, 2006
are comprised of $2.7 million of costs associated with the inventory
step-up to fair market value recorded at the CLD Acquisition date,
which are included in the cost of sales line of our Consolidated
Statements Of Operations and $1.9 million of non-cash incentive
compensation expense related to management incentive stock options
which is included in the selling, general and administrative expense
line of our Consolidated Statements Of Operations and a $1.4 million
non-cash impairment charge related to the Ajax trademark, driven by
the Company's decision to discontinue sales of AJAX(R) products. The
Ajax impairment is included in the securitization, impairment and
other costs line of our Consolidated Statements Of Operations.
(e) Other expense is described as follows:
-- Other expense for the nine months ended September 30, 2006 consists of
$0.5 million of mark to market losses for two foreign exchange hedge
agreements entered to control the foreign exchange risk associated
with the initial acquisition price of CLD, which is included in the
other expense line of our Consolidated Statements Of Operations.
CONTACT: Alliance Laundry Holdings LLC
Bruce P. Rounds, CFO, 920-748-1634