Alliance Laundry Holdings Inc.

05/12/2026 | Press release | Distributed by Public on 05/12/2026 08:07

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management's discussion and analysis ("MD&A") should be read in conjunction with the information included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025. The discussions in this MD&A contain forward-looking statements that involve risks and uncertainties. This discussion includes disclosures that are shown in rounded amounts. The related percentage disclosures are calculated on unrounded amounts. As such, certain totals, subtotals, and percentages may not reconcile.
OVERVIEW
We are the world's largest designer and manufacturer of commercial laundry systems, serving a diverse and resilient range of global end markets. We believe we engineer and produce the highest quality and one of the most reliable commercial laundry systems in the industry. We leverage our pure play focus on the commercial laundry industry and over 100 years of engineering excellence to drive innovation and design our equipment to deliver outstanding performance in the most demanding applications. We believe the need for clean laundry is universal and growing, and our premium machines meet this fundamental human need, all day, every day.
We produce a full line of commercial washers and dryers with load capacities up to 400 pounds as well as presses and finishing equipment under the well-known brand names of Speed Queen, UniMac, Huebsch, IPSO and Primus. Our products are sold to three core end markets, including:
(i) On-Premise laundries: Businesses or institutions that process large volumes of laundry in support of their core business, including healthcare facilities, fire stations and hotels;
(ii) Vended businesses: Laundromats and communal laundry operators, that operate commercial systems for end users who pay for use; and
(iii) Commercial In-Home: Residential consumers who pay a premium to have the reliability and effectiveness of commercial systems in their homes.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2026 as Compared to the Three Months Ended March 31, 2025
Consolidated Results of Operations
The following table sets forth our consolidated results of operations for the quarter ended March 31, 2026 (in thousands):
Three Months Ended March 31,
2026 2025 $ Change % Change
Net revenues:
Equipment, service parts and other $ 414,706 $ 377,718 $ 36,988 10 %
Equipment financing 12,181 11,855 326 3 %
Net revenues 426,887 389,573 37,314 10 %
Costs and expenses:
Cost of sales 259,463 235,546 23,917 10 %
Cost of sales - related parties 1,670 1,447 223 15 %
Equipment financing expenses 8,565 7,559 1,006 13 %
Gross profit 157,189 145,021 12,168 8 %
Selling, general, and administrative expenses 73,328 70,463 2,865 4 %
Selling, general, and administrative expenses - related parties 55 75 (20) (27) %
Total operating expenses 73,383 70,538 2,845 4 %
Operating income 83,806 74,483 9,323 13 %
Interest expense, net 17,888 44,912 (27,024) (60) %
Other (income)/expenses, net (6,470) 7,121 13,591 191 %
Income before taxes 72,388 22,450 49,938 222 %
Provision for income taxes 15,472 5,221 10,251 196 %
Net income $ 56,916 $ 17,229 $ 39,687 230 %
Net revenues
Net revenues for the three months ended March 31, 2026 increased $37.3 million, or 9.6%, to $426.9 million from $389.6 million for the three months ended March 31, 2025. The increase in net revenues reflects a combination of volume growth, which contributed approximately one-third of the increase, price increases, and an approximately 1% favorable impact from foreign exchange. Equipment revenue increased $35.6 million, or 11.0%, year over year, primarily driven by volume growth and price increases. Service parts revenue increased $1.9 million, or 4.5%, year over year primarily driven by price increases. Equipment financing revenue increased $0.3 million, or 2.7% year over year driven by growth in loan base, partially offset by a decrease in variable loan rates tied to the prime rate.
Gross profit
Gross profit for the three months ended March 31, 2026 increased $12.2 million, or 8.4%, to $157.2 million from $145.0 million for the three months ended March 31, 2025. Gross profit, as a percentage of net revenues, remained relatively flat at 36.8% for the three months ended March 31, 2026 as compared to 37.2% for the three months ended March 31, 2025. A year over year increase in
tariffs of approximately $3.4 million negatively impacted gross margin for three months ended March 31, 2026. Tariffs were partially offset by price increases and cost reduction initiatives.
Selling, general, and administrative expenses
Selling, general, and administrative expenses for the three months ended March 31, 2026 increased $2.8 million to $73.4 million from $70.5 million for the three months ended March 31, 2025. Selling, general, and administrative expenses as a percentage of net revenues was 17.2% for the three months ended March 31, 2026 as compared to 18.1% for the three months ended March 31, 2025. Included within Selling, general, and administrative expenses is $9.7 million and $11.1 million of non-cash depreciation and amortization related to the fair value step-up of assets recorded under purchase accounting from a prior business combination for the three months ended March 31, 2026 and 2025, respectively. The increase in Selling, general and administrative expenses is primarily due to higher selling and promotional expenses driven by higher sales volume and increased administrative costs related to public company support costs, partially offset by a favorable impact from foreign exchange movements.
Interest expense, net
Interest expense, net for the three months ended March 31, 2026 decreased $27.0 million to $17.9 million from $44.9 million for the three months ended March 31, 2025. The decrease in interest expense was primarily attributable to a lower debt balance resulting from Term Loan voluntary prepayments, as discussed in Note 11 - Debt, and a lower interest rate on the Term Loan following refinancing activities in February 2025 and August 2025.
Other (income)/expenses, net
Other (income)/expenses, net for the three months ended March 31, 2026 was $6.5 million of income compared to $7.1 million of expenses for the three months ended March 31, 2025. Other income for the three months ended March 31, 2026 included $6.5 million of foreign exchange gains on intercompany loans where the lender or borrower's functional currency differs from the loan denomination currency. Other expenses for the three months ended March 31, 2025 included $1.1 million of debt issuance costs and $6.1 million foreign exchange losses on intercompany loans, net.
Provision for income taxes
The effective income tax rate was a 21.4% provision for the three months ended March 31, 2026 as compared to a 23.3% provision for the three months ended March 31, 2025. The decrease is primarily due to the benefit of deductibility for exercises of stock options, partially offset by limitations of deductibility of officer compensation subsequent to the IPO.
Segment Results
Our business is organized into two reportable segments, North America and International. The Company uses Segment Net revenues, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin as its measures of performance. The Company allocates certain costs including manufacturing variances, customer support expenses and selling and general expenses which are incurred in our global operations to the reportable segments in determining Segment Adjusted EBITDA.
Segment Adjusted EBITDA is a performance metric utilized by the Company's Chief Operating Decision Maker to allocate resources on a segment basis. We define Segment Adjusted EBITDA as, on a segment basis, net income excluding interest income/expense, income taxes, depreciation and amortization. Segment Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments' operating performance, such as refinancing and debt related costs, share-based compensation, strategic transaction costs, foreign exchange on intercompany loans and other non-recurring items which management believes are not indicative of the Company's ongoing operating performance. Segment Adjusted EBITDA is a measure of operating performance of our reportable segments and may not be comparable to similar measures reported by other companies. See Note 15 - Segment Information to our interim condensed consolidated financial statements included in this Quarterly Report.
The following table presents the Company's segment results for the three months ended March 31, 2026:
Three Months Ended March 31,
(in thousands, except for percentages) 2026 2025 $ Change % Change
North America
Net revenues $ 319,819 $ 292,319 $ 27,500 9.4 %
Adjusted EBITDA $ 86,928 $ 80,776 $ 6,152 7.6 %
Adjusted EBITDA Margin 27.2 % 27.6 %
International
Net revenues $ 107,068 $ 97,254 $ 9,814 10.1 %
Adjusted EBITDA $ 32,558 $ 28,800 $ 3,758 13.0 %
Adjusted EBITDA Margin 30.4 % 29.6 %
North America
Revenue in North America increased $27.5 million or 9.4% to $319.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Equipment revenue increased $27.2 million, or 11.3%, mainly driven by strong demand across all end markets, with particularly strong performance in the Commercial In-Home end market (an increase of 23%). Service parts revenue increased $0.2 million, or 0.5%, primarily driven by price increases. Other revenues and Equipment financing revenue remained relatively flat year over year.
Adjusted EBITDA increased $6.2 million or 7.6% to $86.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 and Adjusted EBITDA Margin decreased slightly to 27.2% for the three months ended March 31, 2026 compared to 27.6% for the three months ended March 31, 2025. As noted above, a year-over-year increase in tariffs of
approximately $3.4 million negatively impacted adjusted EBITDA margin for three months ended March 31, 2026. These costs were offset by modest price increases and cost reduction initiatives.
International
Revenue increased $9.8 million or 10.1% to $107.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Equipment revenue increased $8.4 million, or 9.9%, primarily due to strong performance in Europe (an increase of 21%) and in Middle East and Africa (an increase of 10%) where the expanding Vended end markets are driving growth. Service parts revenue increased $1.8 million, or 16.1%, primarily driven by volume growth.
Adjusted EBITDA increased $3.8 million or 13.0% to $32.6 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 and Adjusted EBITDA Margin increased to 30.4% for the three months ended March 31, 2026 from 29.6% for the three months ended March 31, 2025. This increase was primarily driven by customer and product mix and favorable foreign exchange.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are cash on hand, cash flows generated from operations, and potential borrowings under our revolving credit facilities. We believe that our sources of liquidity will be adequate to meet our anticipated requirements for ongoing operations, capital expenditures, working capital, interest payments, scheduled principal payments, and other debt repayments over the next twelve months while remaining in compliance with the covenants of our debt agreements. We expect that capital expenditures in 2026 will be approximately $60.0 million. We have invested $5.2 million of cash into capital expenditures during the three months ended March 31, 2026.
Cash Flows Information
The following table presents a summary of our cash flow activity for the periods set forth below (in thousands):
Three Months Ended March 31,
2026 2025
Net cash provided by operating activities $ 79,869 $ 45,426
Net cash used in investing activities (6,417) (11,336)
Net cash (used in)/provided by financing activities (70,794) 8,131
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 1 505
Increase in cash, cash equivalents, and restricted cash $ 2,659 $ 42,726
Operating Activities
Cash provided by operating activities for the three months ended March 31, 2026 of $79.9 million was primarily derived from net income adjusted for non-cash provisions and a $7.6 million decrease in working capital. The primary contributors to the change in working capital were a $27.4 million increase in accounts payable, a $7.7 million decrease in other assets and a $4.0 million increase in other liabilities, partially offset by an $18.8 million increase in accounts and equipment financing receivables held for securitization investors and a $14.0 million increase in inventories.
Cash provided by operating activities for the three months ended March 31, 2025 of $45.4 million was primarily derived from net income adjusted for non-cash provisions, partially offset by a $5.1 million increase in working capital. The primary contributors to the change in working capital were a $26.9 million increase in accounts and equipment financing receivables held for securitization investors and a $12.3 million increase in inventories, partially offset by a $21.3 million increase in accounts payable, a $6.8 million increase in other liabilities and a $5.3 million decrease in accounts and equipment financing receivables.
Investing Activities
Cash used in investing activities of $6.4 million for the three months ended March 31, 2026 was primarily the result of $5.2 million of capital expenditures, $3.2 million related to the acquisitions of distributors in the United States, partially offset by a $1.9 million net inflow related to collections of new equipment financing receivables exceeding originations.
Cash used in investing activities of $11.3 million for the three months ended March 31, 2025 was primarily the result of $8.5 million related to capital expenditures, $2.0 million related to
acquisitions of distributors in the United States and a $1.0 million net outflow related to originations of new equipment financing receivables exceeding collections.
Financing Activities
Cash used in financing activities of $70.8 million for the three months ended March 31, 2026 was primarily comprised of $65.0 million in voluntary prepayments on the Term Loan, $7.6 million for taxes paid related to net share settlement of stock options, partially offset by a $1.7 million net increase in asset backed borrowings owed to securitization investors.
Cash provided by financing activities of $8.1 million for the three months ended March 31, 2025, was primarily comprised of $10.0 million net increase in asset backed borrowings owed to securitization investors, partially offset by $1.9 million for taxes paid related to net share settlement of stock options.
Debt
As of March 31, 2026, there was $1,300.0 million outstanding under the Term Loan and $250.0 million of unused capacity on the revolving facility. The Term Loan bears interest of SOFR plus a margin of 2.25%. As of March 31, 2026, the interest rate for the Term Loan is 5.92%.
During the three months ended March 31, 2026, the Company made $65.0 million of voluntary prepayments on the Term Loan. Previously, during 2025, the Company made total voluntary prepayments on the Term Loan of $710.0 million, consisting of a $525.0 million prepayment on October 17, 2025, funded with net proceeds from the Company's initial public offering and cash on hand, and $185.0 million of other voluntary prepayments made during the year. The repayments were first applied to and eliminated the future required quarterly installment principal repayments. As such, the remaining balance of the Term Loan is due at maturity on August 19, 2031, with exception for any Excess Cash Flow payment required under the Credit Agreement.
Off-Balance Sheet Arrangements
As of March 31, 2026, we did not have any off-balance sheet arrangements, as defined in Regulation S-K promulgated by the SEC.
Alliance Laundry Holdings Inc. published this content on May 12, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 12, 2026 at 14:08 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]