RIPON, Wis.--(BUSINESS WIRE)--Alliance Laundry Holdings LLC announced today results for the year ended December 31, 2012.
Net revenues for the full year 2012 increased $47.5 million, or 10.4%, to $505.5 million from $458.0 million for the full year 2011. Our net income for 2012 decreased $7.0 million to $16.4 million from $23.4 million for 2011. Adjusted EBITDA (see “About Non-GAAP Financial Measures” below) for 2012 increased $10.5 million to $94.4 million from $83.9 million for 2011.
The 2012 increase in net revenues of $47.5 million was attributable to increases in United States & Canada revenues of $40.2 million, Latin America revenues of $4.9 million, Asia revenues of $6.8 million and Middle East & Africa revenues of $2.0 million. These increases represent percentage growth by segment for United States & Canada revenues of 12.7%, Latin America revenues of 31.4%, Asia revenues of 15.5% and Middle East & Africa revenues of 8.3%. These increases were offset by a decrease in Europe revenues of $6.4 million or 10.9%.
The overall net income decrease of $7.0 million was primarily attributable to higher selling, general and administrative expenses of $21.1 million, higher other costs of $1.5 million, a loss from early extinguishment of debt during 2012 of $10.4 million with no comparable costs during 2011 and higher provision for income taxes of $1.5 million. These increased expenses were partially offset by higher gross profit of $20.3 million and lower interest expense of $7.2 million. The $21.1 million of higher selling, general and administrative expenses includes $18.4 million of increased non-cash incentive compensation expense related to the Company’s stock option program.
“2012 was a tremendous year, with net revenues increasing 10.4% year-over-year.” said President & CEO Michael D. Schoeb. “In 2012, we achieved record revenues in all regions of the world with the exception of Europe where the economy continues to struggle. Our balanced strategy to aggressively pursue operational excellence while continuing to invest in innovative new products and grow our global footprint is paying off.”
Schoeb concluded, “As the global markets continue to recover, we will build on our record of consistent achievements and drive our strategy in 2013. With a talented, disciplined team focused on serving our customers, we look forward to what we believe will be another strong year. The steps we have taken to improve our competitive position over the last several years give us confidence, and we expect continued sales and profitability growth in 2013.”
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 December 2012 Credit Facilities are tied to a ratio based on these measures. “EBITDA” represents net income before interest expense, income tax provision, depreciation and amortization (including non-cash interest income). “Adjusted EBITDA”, as defined in our December 2012 Credit Facilities, is EBITDA as further adjusted to exclude, among other things, certain non-recurring expenses and other non-recurring non-cash charges which are further defined therein. 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.
Under the First Lien Credit Agreement, if the aggregate outstanding amount of the revolving credit loans and letter of credit obligations is in excess of 20% of the lenders’ current revolving credit commitments, we are required to satisfy a maximum Total Leverage Ratio, as defined therein. To the extent that we fail to maintain this ratio within the limits set forth in the First Lien Credit Agreement, our ability to access amounts available under the December 2012 Revolving Credit Facility would be limited, our liquidity would be adversely affected and our obligations under the December 2012 Credit Facilities could be accelerated. A reconciliation of EBITDA and Adjusted EBITDA with the most directly comparable GAAP measure is included below for the twelve months ended December 31, 2012 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, a leading designer, manufacturer and marketer of commercial laundry equipment used in laundromats, multi-housing laundries and on-premise laundries. Under the well-known brand names of Speed Queen®, UniMac®, Huebsch®, IPSO® and Cissell®, Alliance produces a full line of commercial washing machines and dryers with load capacities from 12 to 200 pounds. Alliance Laundry’s worldwide employment was 1,613 at the end of 2012. With 2012 net revenues of $505.5 million, Alliance Laundry is the world’s leading manufacturer of commercial laundry equipment. For more information, visit www.alliancelaundry.com.
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: the ability to borrow funds under the Senior Credit Facility; the ability to successfully implement operating strategies and trends affecting the business, liquidity, financial condition and results of operations of the Company; unfavorable economic conditions in the United States and other markets in which we operate; the 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 fluctuations 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 securitization facility including an inability to replace or a failure by the administrative agent and noteholders to extend the facility on advantageous terms or at all; 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 our Annual Report for the year ended December 31, 2012.
Financial information for Alliance Laundry Holdings LLC appears on the next five pages for the years ended December 31, 2012 and 2011.
| ALLIANCE LAUNDRY HOLDINGS LLC | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (in thousands) | |||||||
| December 31, | December 31, | ||||||
| 2012 | 2011 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 33,341 | $ | 37,618 | |||
| Restricted cash - for securitization investors | 22,112 | 17,593 | |||||
|
Accounts receivable (net of allowance for doubtful accounts of $1,659 and $1,384 at December 31, 2012 and 2011, respectively) |
14,595 | 16,838 | |||||
| Inventories, net | 38,378 | 41,632 | |||||
| Accounts receivable - restricted for securitization investors | 79,315 | 76,852 | |||||
| Loans receivable, net - restricted for securitization investors | 44,048 | 41,769 | |||||
| Deferred income tax asset, net | 10,035 | 11,515 | |||||
| Prepaid expenses and other current assets | 4,519 | 4,219 | |||||
| Total current assets | 246,343 | 248,036 | |||||
| Loans receivable, net | 10,555 | 7,680 | |||||
| Property, plant and equipment, net | 63,978 | 54,926 | |||||
| Goodwill | 180,954 | 180,516 | |||||
| Loans receivable, net - restricted for securitization investors | 206,219 | 206,413 | |||||
| Deferred income tax asset, net | 566 | 620 | |||||
| Debt issuance costs, net | 12,200 | 9,160 | |||||
| Intangible assets, net | 129,282 | 132,763 | |||||
| Total assets | $ | 850,097 | $ | 840,114 | |||
| Liabilities and Member(s)' Equity/(Deficit) | |||||||
| Current liabilities: | |||||||
|
Current portion of long-term debt |
$ | 3,750 | $ | - | |||
| Revolving credit facility | - | - | |||||
| Accounts payable | 48,433 | 46,295 | |||||
| Asset backed borrowings - owed to securitization investors | 81,626 | 79,028 | |||||
| Other current liabilities | 34,382 | 35,038 | |||||
| Total current liabilities | 168,191 | 160,361 | |||||
| Long-term debt | 478,300 | 240,674 | |||||
| Asset backed borrowings - owed to securitization investors | 184,970 | 183,144 | |||||
| Deferred income tax liability, net | 27,413 | 21,509 | |||||
| Other long-term liabilities | 22,927 | 30,498 | |||||
| Total liabilities | 881,801 | 636,186 | |||||
| Commitments and contingencies | |||||||
| Member(s)' equity/(deficit) | (31,704 | ) | 203,928 | ||||
| Total liabilities and member(s)' equity/(deficit) | $ | 850,097 | $ | 840,114 | |||
| ALLIANCE LAUNDRY HOLDINGS LLC | ||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
| (in thousands) | ||||||||||||
| Year Ended | ||||||||||||
| December 31, | December 31, | December 31, | ||||||||||
| 2012 | 2011 | 2010 | ||||||||||
| Net revenues: | ||||||||||||
| Equipment and service parts | $ | 496,987 | $ | 450,724 | $ | 420,504 | ||||||
| Equipment financing, net | 8,529 | 7,271 | 5,543 | |||||||||
| Net revenues | 505,516 | 457,995 | 426,047 | |||||||||
| Cost of sales | 358,118 | 330,887 | 302,461 | |||||||||
| Gross profit | 147,398 | 127,108 | 123,586 | |||||||||
| Selling, general and administrative expenses | 84,398 | 63,295 | 58,619 | |||||||||
| Other costs | 3,099 | 1,644 | - | |||||||||
| Total operating expenses | 87,497 | 64,939 | 58,619 | |||||||||
| Operating income | 59,901 | 62,169 | 64,967 | |||||||||
| Interest expense | 19,057 | 26,262 | 22,031 | |||||||||
| Loss from early extinguishment of debt | 10,399 | - | 7,712 | |||||||||
| Income before taxes | 30,445 | 35,907 | 35,224 | |||||||||
| Provision for income taxes | 14,016 | 12,552 | 12,623 | |||||||||
| Net income | $ | 16,429 | $ | 23,355 | $ | 22,601 | ||||||
| Comprehensive income: | ||||||||||||
| Net income | $ | 16,429 | $ | 23,355 | $ | 22,601 | ||||||
| Foreign currency translation adjustment, net | 786 | (1,813 | ) | (3,880 | ) | |||||||
| Change in pension liability and other benefits, net | (1,808 | ) | (5,668 | ) | 363 | |||||||
| Comprehensive income | $ | 15,407 | $ | 15,874 | $ | 19,084 | ||||||
|
|
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| ALLIANCE LAUNDRY HOLDINGS LLC | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (in thousands) | ||||||||||||
| Year Ended | ||||||||||||
| December 31, | December 31, | December 31, | ||||||||||
| 2012 | 2011 | 2010 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 16,429 | $ | 23,355 | $ | 22,601 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 16,474 | 18,639 | 17,439 | |||||||||
| Non-cash interest expense | 504 | 2,237 | 173 | |||||||||
| Non-cash (gain)/loss on commodity & foreign exchange contracts, net | (1,699 | ) | 3,072 | 89 | ||||||||
| Non-cash executive unit compensation | 20,537 | 2,526 | 2,539 | |||||||||
| Non-cash charge for pension and post-retirement benefit plans | 1,406 | 896 | 250 | |||||||||
| Non-cash charge for write-off of debt issue costs | 8,186 | - | 2,944 | |||||||||
| Non-cash charge for write-off of original issue discount on long-term borrowings | 2,213 | - | 218 | |||||||||
| Deferred income taxes | 11,195 | 10,072 | 9,801 | |||||||||
| Other, net | (108 | ) | 183 | 140 | ||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts and loans receivable, net | (306 | ) | 2,124 | (5,393 | ) | |||||||
| Accounts receivable - restricted for securitization investors | (2,463 | ) | (15,739 | ) | 6,340 | |||||||
| Inventories, net | 3,404 | (1,412 | ) | 5,732 | ||||||||
| Loans receivable, net - restricted for securitization investors | (2,085 | ) | 13,097 | (753 | ) | |||||||
| Other assets | (93 | ) | (400 | ) | (221 | ) | ||||||
| Accounts payable | 2,008 | 8,099 | 4,761 | |||||||||
| Other liabilities | (3,276 | ) | (4,585 | ) | (1,459 | ) | ||||||
| Net cash provided by operating activities | 72,326 | 62,164 | 65,201 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures | (18,239 | ) | (10,552 | ) | (9,766 | ) | ||||||
| Restricted cash - for securitization investors | (4,519 | ) | (65 | ) | 1,167 | |||||||
| Net cash used by investing activities | (22,758 | ) | (10,617 | ) | (8,599 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from long-term borrowings | 757,025 | - | 282,150 | |||||||||
| Payments on long-term borrowings | (518,000 | ) | (36,000 | ) | (287,000 | ) | ||||||
| Change in other long-term debt, net | - | (4 | ) | (502 | ) | |||||||
| Cash paid for debt establishment and amendment fees | (14,757 | ) | (4,556 | ) | (9,409 | ) | ||||||
| Net increase/(decrease) in asset backed borrowings related to securitized accounts receivable | 2,598 | 3,876 | (2,080 | ) | ||||||||
| Net increase/(decrease) in asset backed borrowings related to securitized loans receivable | 1,826 | (5,891 | ) | (6,689 | ) | |||||||
| Member contributions | 24,036 | - | - | |||||||||
| Member distributions | (306,546 | ) | (9,000 | ) | (19,828 | ) | ||||||
| Net cash used by financing activities | (53,818 | ) | (51,575 | ) | (43,358 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (27 | ) | (97 | ) | (116 | ) | ||||||
| (Decrease)/increase in cash and cash equivalents | (4,277 | ) | (125 | ) | 13,128 | |||||||
| Cash and cash equivalents at beginning of period | 37,618 | 37,743 | 24,615 | |||||||||
| Cash and cash equivalents at end of period | $ | 33,341 | $ | 37,618 | $ | 37,743 | ||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid for interest on long-term debt and capital lease obligations | $ | 16,574 | $ | 20,921 | $ | 20,469 | ||||||
| Cash paid for interest - for securitized investors | $ | 6,101 | $ | 7,588 | $ | 9,125 | ||||||
| Cash paid for income taxes | $ | 3,848 | $ | 2,335 | $ | 2,496 | ||||||
Reconciliation of Net income to EBITDA and Adjusted EBITDA, and reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities for the Twelve Months Ended December 31, 2012 and 2011 (Dollars in Thousands):
| Year Ended | |||||||||
| December 31, | December 31, | ||||||||
| 2012 | 2011 | ||||||||
| Net income | $ | 16,429 | $ | 23,355 | |||||
| Provision for income taxes | 14,016 | 12,552 | |||||||
| Interest expense | 19,057 | 26,262 | |||||||
| Depreciation and amortization (a) | 16,474 | 18,639 | |||||||
| Non-cash interest expense included in amortization above | (3,534 | ) | (3,198 | ) | |||||
| EBITDA | 62,442 | 77,610 | |||||||
| Securitization interest - permitted receivables financing (b) | (817 | ) | (985 | ) | |||||
| Other non-recurring charges (c) | 13,498 | 1,644 | |||||||
| Other non-cash charges (d) | 19,248 | 5,598 | |||||||
| Adjusted EBITDA | 94,371 | 83,867 | |||||||
| Interest expense | (19,057 | ) | (26,262 | ) | |||||
| Non-cash interest expense included in amortization above | 3,534 | 3,198 | |||||||
| Other non-cash interest | 504 | 2,237 | |||||||
| Securitization interest - permitted receivables financing (b) | 817 | 985 | |||||||
| Other non-recurring charges (c) | (13,498 | ) | (1,644 | ) | |||||
| Non-cash loss on early extinguishment of debt | 10,399 | - | |||||||
| Cash taxes paid and payable | (2,821 | ) | (2,480 | ) | |||||
| Other expense | 888 | 1,079 | |||||||
| Changes in assets and liabilities | (2,811 | ) | 1,184 | ||||||
| Net cash provided by operating activities | $ | 72,326 | $ | 62,164 | |||||
(a) Depreciation and amortization amounts include amortization of deferred financing costs included in interest expense.
(b) Securitization interest - permitted receivables financing represents interest expense on trade receivables sold to ALERT 2009A. This expense, which is charged to the Interest expense line of our Consolidated Statements of Comprehensive Income, is deducted in calculating Adjusted EBITDA.
(c) Other non-recurring charges are described as follows:
- Other non-recurring charges in 2012 are comprised of $10.4 million of expense resulting from the early extinguishment of the 2010 Senior Credit Facility and 2012 Senior Credit Facility which are included in the Loss from early extinguishment of debt line of our Consolidated Statements of Comprehensive Income for 2012. Also included are $2.7 million of legal and other professional fees and expenses related to a potential acquisition and $0.4 million of dividend related costs, which are included in the Other costs line of our Consolidated Statements of Comprehensive Income.
- Other non-recurring charges in 2011 are comprised entirely of severance, building closure and other costs related to the closure of the Nazareth, Belgium manufacturing facility which was closed in the third quarter of 2011. These charges are included in the Other costs line of our Consolidated Statements of Comprehensive Income.
(d) Other non-cash charges are described as follows:
- Other non-cash charges in 2012 are comprised of $20.5 million of non-cash management incentive compensation expense and $0.4 million of related employer paid payroll taxes, which are included in the Selling, general and administrative expenses line of our Consolidated Statements of Comprehensive Income. These expenses were partially offset by $1.7 million of non-cash mark-to-market gains relating to commodity and foreign exchange hedge agreements, which are included in the Cost of sales line of our Consolidated Statements of Comprehensive Income.
- Other non-cash charges in 2011 are comprised of $2.5 million of non-cash management incentive compensation expense, which is included in the Selling, general and administrative expenses line of our Consolidated Statements of Comprehensive Income, and $3.1 million of non-cash mark-to-market losses relating to commodity and foreign exchange hedge agreements, which are included in the Cost of sales line of our Consolidated Statements of Income.