EX-99.1 2 a5548142ex991.txt EXHIBIT 99.1 Exhibit 99.1 Alliance Laundry Holdings LLC Reports 3rd Quarter 2007 Earnings RIPON, Wis.--(BUSINESS WIRE)--Nov. 15, 2007--Alliance Laundry Holdings LLC announced today results for the three and nine months ended September 30, 2007. Net revenues for the quarter ended September 30, 2007 increased $18.3 million, or 19.2%, to $113.4 million from $95.1 million for the quarter ended September 30, 2006. Our net income for the quarter ended September 30, 2007 was $1.2 million as compared to a net loss of $4.0 million for the quarter ended September 30, 2006. Adjusted EBITDA (see "About Non-GAAP Financial Measures" below) for the quarter ended September 30, 2007 increased $1.3 million to $16.4 million from $15.1 million for the quarter ended September 30, 2006. The overall net revenue increase of $18.3 million was attributable to higher commercial laundry revenues of $14.4 million, higher consumer laundry revenue of $0.3 million, higher service parts revenue of $0.5 million, higher CLD Acquisition related sales of $1.9 million from European operations and lower worldwide sales eliminations of $1.2 million. Net revenues for the nine months ended September 30, 2007 increased $73.4 million, or 28.9%, to $326.9 million from $253.5 million for the nine months ended September 30, 2006. Our net income for the nine months ended September 30, 2007 was $5.4 million as compared to a net loss of $7.3 million for the nine months ended September 30, 2006. Adjusted EBITDA (see "About Non-GAAP Financial Measures" below) for the twelve month period ended September 30, 2007 was $66.8 million. In announcing the Company's results, CEO Thomas F. L'Esperance said, "We are extremely pleased with our top line performance for the quarter and nine months. Although results have been adversely affected by significantly higher material costs, our third quarter earnings reflected significant improvement from increased sales in our base business revenue for North America and continued strong performance for international sales and CLD Europe." L'Esperance concluded, "Based on progress to date, we anticipate that our operational strategies and modest improvements in material costs in the U.S. will position us for a strong finish in 2007." 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, 2007 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 designer, manufacturer and marketer in North America of commercial laundry equipment used in laundromats, multi-housing laundries and on-premise laundries. Under the well-known brand names of Speed Queen(R), UniMac(R), Huebsch(R), IPSO(R), and Cissell(R), we produce a full line of commercial washing machines and dryers with load capacities from 12 to 200 pounds. We have been a leader in the North American stand-alone commercial laundry equipment industry for more than ten years. With the addition of our European operations and Alliance Laundry's export sales to Europe, we believe that we are also a leader in the European stand-alone commercial laundry equipment industry. 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/A for the year ended December 31, 2006. Financial information for Alliance Laundry Holdings LLC for the three and nine months ended September 30, 2007. ALLIANCE LAUNDRY HOLDINGS LLC CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands) December 31, September 30, 2006 2007 (Restated) ------------- ------------- Assets Current assets: Cash and cash equivalents $ 10,613 $ 11,221 Accounts receivable, net 26,737 24,523 Inventories, net 61,400 51,915 Beneficial interests in securitized accounts receivable 28,579 28,641 Deferred income tax asset, net 2,729 3,202 Prepaid expenses and other 3,187 4,804 ------------- ------------- Total current assets 133,245 124,306 Notes receivable, net 3,528 4,018 Property, plant and equipment, net 71,924 73,789 Goodwill 183,078 180,269 Beneficial interests in securitized financial assets 20,138 18,055 Deferred income tax asset, net 10,677 10,677 Debt issuance costs, net 8,703 10,318 Intangible assets, net 148,857 152,890 ------------- ------------- Total assets $ 580,150 $ 574,322 ============= ============= Liabilities and Member(s)' Equity Current liabilities: Current portion of long-term debt and capital lease obligations $ 230 $ 526 Revolving credit facility - - Accounts payable 34,802 27,636 Deferred income tax liability, net - 216 Other current liabilities 34,710 37,085 ------------- ------------- Total current liabilities 69,742 65,463 Long-term debt and capital lease obligations: Senior credit facility 215,000 224,000 Senior subordinated notes 149,500 149,430 Other long-term debt and capital lease obligations 2,140 2,159 Deferred income tax liability, net 6,502 6,137 Other long-term liabilities 10,693 10,742 ------------- ------------- Total liabilities 453,577 457,931 Commitments and contingencies Member(s)' equity 126,573 116,391 ------------- ------------- Total liabilities and member(s)' equity $ 580,150 $ 574,322 ============= ============= ALLIANCE LAUNDRY HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands) Three Months Ended Nine Months Ended ------------------- --------------------- September 30, September September September 2006 30, 30, 30, 2007 2006 2007 (Restated) --------- --------- --------- ----------- Net revenues: Equipment and service parts $111,396 $92,529 $320,856 $ 248,738 Equipment financing, net 1,981 2,601 6,013 4,802 --------- --------- --------- ----------- Net revenues 113,377 95,130 326,869 253,540 Cost of sales 86,479 74,257 244,380 196,162 --------- --------- --------- ----------- Gross profit 26,898 20,873 82,489 57,378 --------- --------- --------- ----------- Selling, general and administrative expense 15,728 13,010 47,761 36,837 Securitization, impairment and other costs 32 1,647 782 5,571 --------- --------- --------- ----------- Total operating expenses 15,760 14,657 48,543 42,408 --------- --------- --------- ----------- Operating income 11,138 6,216 33,946 14,970 Interest expense 9,410 9,591 25,871 22,833 Other expense, net - 120 - 480 --------- --------- --------- ----------- Income (loss) before taxes 1,728 (3,495) 8,075 (8,343) Provision (benefit) for income taxes 523 532 2,631 (1,050) --------- --------- --------- ----------- Net income (loss) $ 1,205 $(4,027) $ 5,444 $ (7,293) ========= ========= ========= =========== ALLIANCE LAUNDRY HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Nine Months Ended ---------------------------- September 30, September 30, 2006 2007 (Restated) ------------- ------------- Cash flows from operating activities: Net income (loss) $ 5,444 $ (7,293) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 14,222 16,420 Non-cash interest expense 719 316 Non-cash executive unit compensation 2,706 1,215 Non-cash trademark impairment - 1,400 Non-cash inventory expense - 2,726 Deferred income taxes 160 (1,584) Loss on sale of property, plant and equipment 70 175 Changes in assets and liabilities: Accounts receivable (1,912) 5,383 Inventories (8,875) (13,722) Other assets (228) (3,768) Accounts payable 6,561 3,126 Other liabilities (5,657) (2,076) ------------- ------------- Net cash provided by operating activities 13,210 2,318 ------------- ------------- Cash flows used in investing activities: Additions to property, plant and equipment (5,931) (4,046) Acquisition of businesses, net of cash acquired - (77,933) Proceeds on disposition of assets 1,178 1,129 ------------- ------------- Net cash used in investing activities (4,753) (80,850) ------------- ------------- Cash flows (used in) provided by financing activities: Principal payments on long-term debt (9,428) (8,023) Net increase in revolving line of credit borrowings - 6,000 Proceeds from senior term loan - 60,000 Issuance of common stock - 23,493 Repurchase of common stock - (30) Debt financing costs - (1,334) ------------- ------------- Net cash (used in) provided by financing activities (9,428) 80,106 ------------- ------------- Effect of exchange rate changes on cash and cash equivalents 363 549 ------------- ------------- (Decrease) increase in cash and cash equivalents (608) 2,123 Cash and cash equivalents at beginning of period 11,221 5,075 ------------- ------------- Cash and cash equivalents at end of period $ 10,613 $ 7,198 ============= ============= Supplemental disclosure of cash flow information: Cash paid for interest $ 25,488 $ 23,878 Cash paid for income taxes 1,442 79 Reconciliation of Net income (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, 2007 (Dollars in Thousands): Three Months Three Months Ended Ended September 30, September 30, 2006 2007 (Restated) ------------- ------------- Net income (loss) $ 1,205 $ (4,027) Provision for income taxes 523 532 Interest expense 9,410 9,591 Depreciation and amortization (a) 4,851 5,177 Non-cash interest income included in amortization above (544) (732) ------------- ------------- EBITDA 15,445 10,541 Finance program adjustments (b) (595) (1,150) Other non-recurring charges (c) 668 2,815 Other non-cash charges (d) 902 2,777 Other expense (e) - 120 ------------- ------------- Adjusted EBITDA 16,420 15,103 Interest expense (9,410) (9,591) Non-cash interest income included in amortization above 544 732 Other non-cash interest 377 843 Finance program adjustments (b) 595 1,150 Other non-recurring charges (c) (668) (2,815) Deferred taxes (636) (534) Loss on sale of property, plant and equipment 50 44 Other expense - (109) Changes in assets and liabilities (6,629) (1,609) ------------- ------------- Net cash provided by operating activities $ 643 $ 3,214 ============= ============= (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, 2007 consist of $0.6 million of investigatory and audit costs related to the restatements which are included in the selling, general and administrative expense line of our condensed consolidated statements of operations and $0.1million 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 condensed consolidated statements of operations. -- Other non-recurring charges for the quarter ended September 30, 2006 relate to a periodic accrual of $0.3 million under a one time retention bonus agreement with certain management employees, $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 condensed consolidated statements of operations and $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 condensed consolidated statements of operations. (d) Other non-cash charges are described as follows: -- Other non-cash charges for the quarter ended September 30, 2007 consist of $0.9 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 condensed consolidated statements of operations. -- 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 condensed 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 condensed consolidated statements of operations. (e) Other expense is described as follows: -- Other expense for the nine months ended September 30, 2006 relates to $0.1 million of a mark to market loss related to two foreign exchange hedge agreements. The agreements were entered to control the foreign exchange risk associated with the initial acquisition price of CLD. The foreign exchange hedges are included in the other expense, net line of our condensed consolidated statements of operations. Nine Months Ended ---------------------------- September 30, September 30, 2006 2007 (Restated) ------------- ------------- Net income (loss) $ 5,444 $ (7,293) Provision (benefit) for income taxes 2,631 (1,050) Interest expense 25,871 22,833 Depreciation and amortization (a) 14,222 16,422 Non-cash interest income included in amortization above (1,615) (1,654) ------------- ------------- EBITDA 46,553 29,258 Finance program adjustments (b) (1,494) (306) Other non-recurring charges (c) 2,136 7,687 Other non-cash charges (d) 2,706 5,328 Other expense (e) - 480 ------------- ------------- Adjusted EBITDA 49,901 42,447 Interest expense (25,871) (22,833) Non-cash interest income included in amortization above 1,615 1,654 Other non-cash interest 719 316 Finance program adjustments (b) 1,494 306 Other non-recurring charges (c) (2,136) (7,687) Deferred taxes (2,471) (535) Loss on sale of property, plant and equipment 70 175 Other expense - (468) Changes in assets and liabilities (10,111) (11,057) ------------- ------------- Net cash provided by operating activities $ 13,210 $ 2,318 ============= ============= (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 nine months ended September 30, 2007 relate to a periodic accrual of $0.1 million under the one time retention bonus agreement with certain management employees, $0.1 million of costs related to the transfer of the Marianna, Florida product lines to Ripon, Wisconsin, $1.2 million of investigatory and audit costs related to the restatements which are included in the selling, general and administrative expense line of our condensed consolidated statements of operations and $0.7 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 condensed consolidated statements of operations. -- Other non-recurring charges for the nine months ended September 30, 2006 relate to a periodic accrual of $0.9 million under a one time retention bonus agreement with certain management employees, $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 condensed consolidated statements of operations and $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 condensed consolidated statements of operations. (d) Other non-cash charges are described as follows: -- Other non-cash charges for the nine months ended September 30, 2007 relate to $2.7 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 condensed consolidated statements of operations. -- Other non-cash charges for the nine months ended September 30, 2006 relate to $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 condensed consolidated statements of operations, $1.2 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 condensed 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 condensed consolidated statements of operations. (e) Other expense is described as follows: -- Other expense for the nine months ended September 30, 2006 relates to $0.5 million of a mark to market loss related to two foreign exchange hedge agreements. The agreements were entered to control the foreign exchange risk associated with the initial acquisition price of CLD. The foreign exchange hedges are included in the other expense, net line of our condensed consolidated statements of operations. CONTACT: Alliance Laundry Holdings LLC Bruce P. Rounds, CFO 920-748-1634