RIPON, Wis.--(BUSINESS WIRE)--Alliance Laundry Holdings LLC announced today results for the year ended December 31, 2014.
Net revenues for the full year 2014 increased $169.7 million, or 30.5%, to $726.3 million from $556.6 million for the full year 2013. Excluding the impact of the Primus Laundry Equipment Group acquisition, net revenues increased 12.1% for 2014. Our net income for 2014 decreased $3.6 million to $29.6 million from $33.2 million for 2013. Adjusted EBITDA (see “About Non-GAAP Financial Measures” below) for 2014 increased $58.0 million to $164.3 million from $106.3 million for 2013. Excluding the impact of the Primus Laundry Equipment Group acquisition, Adjusted EBITDA for 2014 increased $18.1 million, or 17.1% to $124.4 million.
The 2014 increase in net revenues of $169.7 million was attributable to increases in United States & Canada revenues of $65.9 million, Europe revenues of $65.0 million, Asia revenues of $19.2 million, Middle East & Africa revenues of $12.0 million and Latin America revenues of $7.6 million. These increases represent percentage growth by segment for United States & Canada revenues of 16.4%, Europe revenues of 107.9%, Asia revenues of 37.3%, Middle East & Africa revenues of 51.6% and Latin America revenues of 37.3%.
The net income decrease of $3.6 million was mostly attributable to higher selling, general and administrative expenses of $35.5 million, higher restructuring and other costs of $21.0 million, higher interest expense of $7.5 million and higher provision for income tax of $1.9 million, partially offset by higher gross profit of $61.9 million.
“2014 was an extraordinary year for Alliance. It is our fifth consecutive year of record revenues with a compound annual growth rate of 13.1% since 2009,” said President & CEO Michael D. Schoeb. “In early 2014 we announced a transformational event with the acquisition of the Primus Laundry Equipment Group which contributed significantly to 2014 revenues and Adjusted EBITDA. This acquisition provided our distribution partners with added product breadth and significantly expanded our international footprint giving Alliance unrivaled scale in the commercial laundry industry.”
Schoeb concluded, “We look forward to another year of solid growth and expanded profitability in 2015, tempered somewhat by currency and select international market headwinds. Over the last twelve months we have made significant progress with the integration of the Primus Group and are delighted to have their distribution and employees be a part of our growing company. As a result of the speed and execution of the integration and other operational initiatives, we have increased confidence that we will exceed our 2015 profitability goals that were communicated with the acquisition in early 2014.
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 Amended 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 Amended 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 Amended First Lien Credit Agreement, if the aggregate outstanding amount of all revolving credit loans and letters of credit obligations are in excess of 20% of the lenders’ current revolving credit commitments, we are required to perform a Total Leverage Ratio test, as defined therein. To the extent that we fail to maintain this ratio within the limits set forth in the Amended First Lien Credit Agreement, our ability to access amounts available under the Amended December 2012 Revolving Credit Facility would be limited, our liquidity would be adversely affected and our obligations under the Amended 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, 2014 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® Primus® and Deli®, Alliance produces a full line of commercial washing machines and dryers with load capacities from 12 to 400 pounds. Certain of our commercial products are also sold in the consumer laundry marketplace. Alliance Laundry’s worldwide employment was 2,730 at the end of 2014. With 2014 net revenues of $726.3 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: unfavorable economic conditions in markets in which we operate; the ability to successfully implement operating strategies and manage trends affecting the business, liquidity, financial condition and results of operations of the Company; continued sales to key customers; risks related to our asset backed securitization facility; possible fluctuations in the cost of raw materials and components; possible loss of suppliers; the impact of competition; potential adverse effects of energy efficiency or water usage standards; risks related to our international operations; possible fluctuations in currency exchange rates; costs and other difficulties related to acquisitions; dependence on key personnel; labor relations; obligations under our pension plan; potential liability for environmental, health and safety matters; potential future legal proceedings and litigation; product liability expenses; product warranty claims; our ability to protect our intellectual property rights; risks related to cybersecurity attacks; the impact of substantial leverage and debt service on us; the ability to borrow funds under the Amended December 2012 Credit Facilities; possible fluctuations in interest rates 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, 2014.
Financial information for Alliance Laundry Holdings LLC appears on the next five pages for the years ended December 31, 2014 and 2013.
| ALLIANCE LAUNDRY HOLDINGS LLC | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (in thousands) | ||||||
| December 31, | December 31, | |||||
| Assets | 2014 | 2013 | ||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 48,115 | $ | 60,849 | ||
| Restricted cash | 394 | 89 | ||||
| Restricted cash - for securitization investors | 22,531 | 17,087 | ||||
|
Accounts receivable (net of allowance for doubtful accounts of $3,807 and $2,247 at December 31, 2014 and 2013, respectively) |
41,563 | 18,166 | ||||
| Inventories, net | 65,821 | 41,644 | ||||
| Accounts receivable - restricted for securitization investors | 100,818 | 86,674 | ||||
| Loans receivable, net - restricted for securitization investors | 49,010 | 45,910 | ||||
| Deferred income tax asset, net | 16,097 | 11,306 | ||||
| Prepaid expenses and other current assets | 3,520 | 3,269 | ||||
| Total current assets | 347,869 | 284,994 | ||||
| Loans receivable, net | 13,153 | 11,151 | ||||
| Property, plant and equipment, net | 123,591 | 81,235 | ||||
| Goodwill | 278,434 | 182,174 | ||||
| Loans receivable, net - restricted for securitization investors | 220,007 | 206,849 | ||||
| Deferred income tax asset, net | 50 | 704 | ||||
| Debt issuance costs, net | 15,814 | 17,450 | ||||
| Intangible assets, net | 237,283 | 125,596 | ||||
| Other long-term assets | 1,667 | 311 | ||||
| Total assets | $ | 1,237,868 | $ | 910,464 | ||
| Liabilities and Member(s)' Equity | ||||||
| Current liabilities: | ||||||
| Current portion of long-term debt | $ | 34 | $ | - | ||
| Revolving credit facility | - | - | ||||
| Accounts payable | 82,962 | 59,005 | ||||
| Asset backed borrowings - owed to securitization investors | 107,548 | 100,023 | ||||
| Other current liabilities | 62,648 | 40,069 | ||||
| Total current liabilities | 253,192 | 199,097 | ||||
| Long-term debt, net | 656,419 | 442,746 | ||||
| Asset backed borrowings - owed to securitization investors | 209,435 | 196,694 | ||||
| Deferred income tax liability, net | 80,713 | 40,092 | ||||
| Other long-term liabilities | 35,234 | 20,128 | ||||
| Total liabilities | 1,234,993 | 898,757 | ||||
| Commitments and contingencies | ||||||
| Member(s)' equity | 2,875 | 11,707 | ||||
| Total liabilities and member(s)' equity | $ | 1,237,868 | $ | 910,464 | ||
| ALLIANCE LAUNDRY HOLDINGS LLC | |||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) | |||||||||||
| (in thousands) | |||||||||||
| Year Ended December 31, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Net revenues: | |||||||||||
| Equipment and service parts | $ | 717,391 | $ | 548,565 | $ | 496,987 | |||||
| Equipment financing, net | 8,877 | 8,042 | 8,529 | ||||||||
| Net revenues | 726,268 | 556,607 | 505,516 | ||||||||
| Cost of sales | 496,028 | 388,294 | 358,772 | ||||||||
| Gross profit | 230,240 | 168,313 | 146,744 | ||||||||
| Selling, general and administrative expenses | 115,776 | 80,312 | 83,744 | ||||||||
| Restructuring and other costs | 23,582 | 2,568 | 3,099 | ||||||||
| Total operating expenses | 139,358 | 82,880 | 86,843 | ||||||||
| Operating income | 90,882 | 85,433 | 59,901 | ||||||||
| Interest expense | 42,177 | 34,662 | 19,057 | ||||||||
| Other (income)/expenses, net | 1,489 | 1,871 | 10,399 | ||||||||
| Income before taxes | 47,216 | 48,900 | 30,445 | ||||||||
| Provision for income taxes | 17,576 | 15,653 | 14,016 | ||||||||
| Net income | $ | 29,640 | $ | 33,247 | $ | 16,429 | |||||
| Comprehensive income/(loss): | |||||||||||
| Net income | $ | 29,640 | $ | 33,247 | $ | 16,429 | |||||
| Foreign currency translation adjustment, net | (37,265 | ) | 2,453 | 786 | |||||||
| Change in pension liability and other benefits, net | (6,033 | ) | 5,749 | (1,808 | ) | ||||||
| Comprehensive income/(loss) | $ | (13,658 | ) | $ | 41,449 | $ | 15,407 | ||||
| ALLIANCE LAUNDRY HOLDINGS LLC | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (in thousands) | ||||||||||||
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 29,640 | $ | 33,247 | $ | 16,429 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 23,520 | 13,889 | 12,940 | |||||||||
| Amortization of debt issuance costs | 6,568 | 5,705 | 3,534 | |||||||||
| Amortization of original issue discount | 508 | 517 | 138 | |||||||||
| Non-cash interest (income)/expense | 564 | (496 | ) | 366 | ||||||||
| Non-cash loss/(gain) on commodity & foreign exchange contracts, net | 938 | 29 | (1,699 | ) | ||||||||
| Non-cash foreign exchange loss/(gain), net | 1,416 | - | - | |||||||||
| Non-cash executive unit compensation | 9,249 | 4,024 | 20,537 | |||||||||
| Non-cash trademark impairment | 340 | - | - | |||||||||
| Non-cash charge for pension and post-retirement benefit plans | 115 | 1,109 | 1,406 | |||||||||
| Non-cash charge for write-off of debt issue costs | - | 577 | 8,186 | |||||||||
| Non-cash charge for write-off of original issue discount on long-term borrowings | - | 178 | 2,213 | |||||||||
| Non-cash acquisition related inventory expense | 3,249 | - | - | |||||||||
| (Gain)/loss on sale of property, plant and equipment | (706 | ) | 108 | (66 | ) | |||||||
| Deferred income taxes | 5,746 | 8,068 | 11,195 | |||||||||
| Other, net | (287 | ) | (64 | ) | (174 | ) | ||||||
| Changes in assets and liabilities, net of the effects of the acquisition: | ||||||||||||
| Accounts and loans receivable, net | (7,262 | ) | (3,957 | ) | (331 | ) | ||||||
| Accounts receivable - restricted for securitization investors | (14,144 | ) | (7,359 | ) | (2,463 | ) | ||||||
| Inventories, net | (10,684 | ) | (2,937 | ) | 3,404 | |||||||
| Loans receivable, net - restricted for securitization investors | (16,258 | ) | (2,492 | ) | (2,085 | ) | ||||||
| Other assets | (257 | ) | 1,012 | (68 | ) | |||||||
| Accounts payable | 17,759 | 7,861 | (1,359 | ) | ||||||||
| Other liabilities | 13,499 | 5,920 | (3,276 | ) | ||||||||
| Net cash provided by operating activities | 63,513 | 64,939 | 68,827 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures | (44,678 | ) | (24,903 | ) | (14,872 | ) | ||||||
| Restricted cash | 17 | 15 | (104 | ) | ||||||||
| Restricted cash - for securitization investors | (5,444 | ) | 5,025 | (4,519 | ) | |||||||
| Acquisition of businesses, net of cash acquired | (254,737 | ) | - | - | ||||||||
| Proceeds on disposition of assets | 810 | 10 | 132 | |||||||||
| Net cash used by investing activities | (304,032 | ) | (19,853 | ) | (19,363 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from revolving line of credit borrowings | 14,000 | - | - | |||||||||
| Payments on revolving line of credit borrowings | (14,000 | ) | - | - | ||||||||
| Proceeds from long-term borrowings | 234,723 | 20,000 | 757,025 | |||||||||
| Payments on long-term borrowings | (22,000 | ) | (60,000 | ) | (518,000 | ) | ||||||
| Proceeds from forgivable loans | 900 | 2,000 | - | |||||||||
| Cash paid for debt establishment and amendment fees | (4,933 | ) | (11,532 | ) | (14,757 | ) | ||||||
| Net increase/(decrease) in asset backed borrowings owed to securitization investors | 20,266 | 30,121 | 4,424 | |||||||||
| Member contributions | 2,824 | 1,657 | 24,036 | |||||||||
| Member distributions | (521 | ) | (31 | ) | (306,546 | ) | ||||||
| Net cash provided/(used) by financing activities | 231,259 | (17,785 | ) | (53,818 | ) | |||||||
| Effect of exchange rate changes on cash and cash equivalents | (3,474 | ) | 311 | (27 | ) | |||||||
| (Decrease)/Increase in cash and cash equivalents | (12,734 | ) | 27,612 | (4,381 | ) | |||||||
| Cash and cash equivalents at beginning of period | 60,849 | 33,237 | 37,618 | |||||||||
| Cash and cash equivalents at end of period | $ | 48,115 | $ | 60,849 | $ | 33,237 | ||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid for interest on long-term debt and capital lease obligations | $ | 31,181 | $ | 23,924 | $ | 16,574 | ||||||
| Cash paid for interest - for securitized investors | $ | 6,637 | $ | 6,218 | $ | 6,101 | ||||||
| Cash paid for income taxes | $ | 11,927 | $ | 5,244 | $ | 3,848 | ||||||
| Supplemental disclosure of investing and financing non-cash activities: | ||||||||||||
| Capital expenditures included in accounts payable | $ | 4,885 | $ | 7,890 | $ | 5,620 | ||||||
| Assumption of acquisition related debt | $ | 68,253 | $ | - | $ | - | ||||||
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, 2014 and 2013 (Dollars in Thousands):
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | |||||||||||
|
Net income |
$ | 29,640 | $ | 33,247 | ||||||||
| Provision for income taxes | 17,576 | 15,653 | ||||||||||
| Interest expense | 42,177 | 34,662 | ||||||||||
| Depreciation and amortization | 23,520 | 13,889 | ||||||||||
| EBITDA (a) | 112,913 | 97,451 | ||||||||||
| EBITDA - Primus pre-acquisition (a) | 4,255 | - | ||||||||||
| Securitization interest - permitted receivables financing (b) | (935 | ) | (846 | ) | ||||||||
| Other non-recurring charges (c) | 24,384 | 5,579 | ||||||||||
| Other non-cash charges (d) | 15,192 | 4,086 | ||||||||||
| Acquisition driven synergies (e) | 8,498 | - | ||||||||||
| Adjusted EBITDA | 164,307 | 106,270 | ||||||||||
| Interest expense | (42,177 | ) | (34,662 | ) | ||||||||
| Amortization of debt issuance costs | 6,568 | 5,705 | ||||||||||
| Amortization of original issue discount | 508 | 517 | ||||||||||
| Other non-cash interest | 564 | (496 | ) | |||||||||
| EBITDA - Primus pre-acquisition (a) | (4,255 | ) | - | |||||||||
| Securitization interest - permitted receivables financing (b) | 935 | 846 | ||||||||||
| Other non-recurring charges (c) | (24,384 | ) | (5,579 | ) | ||||||||
| Acquisition driven synergies (e) | (8,498 | ) | - | |||||||||
| Non-cash loss on early extinguishment of debt | - | 755 | ||||||||||
| Cash taxes paid and payable | (11,830 | ) | (7,585 | ) | ||||||||
| Other (income)/expense | (878 | ) | 1,120 | |||||||||
| Changes in assets and liabilities | (17,347 | ) | (1,952 | ) | ||||||||
| Net cash provided by operating activities | $ | 63,513 | $ | 64,939 | ||||||||
| (a) | EBITDA includes the consolidated results including the operations of Primus from the acquisition date thru December 31, 2014. EBITDA - Primus pre-acquisition represents the historical pre-acquisition results of Primus, which are added in calculating Adjusted EBITDA and in calculating Total Leverage Ratio as defined in the Amended December 2012 Credit Facilities. | |
| (b) | Securitization interest - permitted receivables financing represents interest expense on trade receivables sold to ALERT 2009A and ALERT 2013A. This expense, which is charged to the Interest expense line of our Consolidated Statements of Comprehensive Income/(Loss), is deducted in calculating Adjusted EBITDA as defined in the Amended December 2012 Credit Facilities. | |
| (c) | Other non-recurring charges are described as follows: | |
- Other non-recurring charges of $24.4 million in 2014 consist of $12.1 million of costs associated with the closure of the Wevelgem, Belgium production facility, $4.9 million of Primus integration-related costs, and $6.3 million of professional fees and expenses related to acquisition and entity organization costs, which are included in the Restructuring and other costs line of the Consolidated Statements of Comprehensive Income/(Loss), as well as $1.8 million of charges for expected excess and obsolete inventory related to the European restructuring, which are included within the Cost of sales line of the Consolidated Statements of Comprehensive Income/(Loss). These amounts are partially offset by a non-recurring asset disposal gain of $0.6 million which is included in the Selling, general and administrative expenses line of our Consolidated Statements of Comprehensive Income/(Loss).
- Other non-recurring charges of $5.6 million in 2013 consist of $2.4 million of professional fees and expenses related to potential acquisitions and entity organization costs, which are included in the Restructuring and other costs line of the Consolidated Statements of Comprehensive Income/(Loss), $1.9 million of early extinguishment of debt expense, which is included in the Other (income)/expenses, net line of our Consolidated Statements of Comprehensive Income/(Loss) and $1.2 million related to a one-time bonus related to a union contract extension, which is included in the Cost of sales line of the Consolidated Statements of Comprehensive Income/(Loss).
| (d) | Other non-cash charges are described as follows: | |
- Other non-cash charges of $15.2 million in 2014 consist of $8.2 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/(Loss); $3.2 million of expense related to the inventory step-up to fair market value recorded at the Primus Acquisition closing date, $1.0 million of non-cash management incentive compensation expense and $0.9 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 Comprehensive Income/(Loss); $1.4 million of non-cash foreign exchange losses related to intercompany loans which are included in the Other (income)/expenses, net line of the Consolidated Statements of Comprehensive Income/(Loss); and $0.3 million of non-cash trademark impairment costs which are included in the Restructuring and other costs line of the Consolidated Statements of Comprehensive Income/(Loss).
- Other non-cash charges of $4.1 million in 2013 consist of $3.6 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/(Loss); $0.4 million of non-cash management incentive compensation expense, and less than $0.1 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 Comprehensive Income/(Loss).
| (e) | Acquisition driven synergies represent the net cost savings projected by the Company to be realized as the result of actions taken or to be taken prior to twelve months after the consummation of the Primus Acquisition, which are added in calculating Adjusted EBITDA and Total Leverage Ratio under the Amended December 2012 Credit Facilities. Such cost savings are allowable provided that the aggregate amount added back may not exceed 10% of adjusted EBITDA in any four-fiscal quarter period (calculated before giving effect to any such add-back). |
