Alliance Laundry Holdings Inc.

11/13/2025 | Press release | Distributed by Public on 11/13/2025 09:50

Quarterly Report for Quarter Ending September 30, 2025 (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 for the year ended December 31, 2024 filed with the SEC in our IPO Prospectus. 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 September 30, 2025 as Compared to the Three Months Ended September 30, 2024
Consolidated Results of Operations
The following table sets forth our consolidated results of operations for the quarter ended September 30, 2025 (in thousands):
Three Months Ended September 30,
2025 2024 $ Change % Change
Net revenues:
Equipment, service parts and other $ 424,993 $ 371,980 $ 53,013 14 %
Equipment financing 12,613 12,315 298 2 %
Net revenues 437,606 384,295 53,311 14 %
Costs and expenses:
Cost of sales 265,844 230,098 35,746 16 %
Cost of sales - related parties 1,950 1,649 301 18 %
Equipment financing expenses 7,859 9,587 (1,728) (18) %
Gross profit 161,953 142,961 18,992 13 %
Selling, general, and administrative expenses 76,386 70,942 5,444 8 %
Selling, general, and administrative expenses - related parties 75 75 - - %
Total operating expenses 76,461 71,017 5,444 8 %
Operating income 85,492 71,944 13,548 19 %
Interest expense, net 36,952 42,339 (5,387) (13) %
Other expenses, net 5,606 37,340 (31,734) (85) %
Income/(loss) before taxes 42,934 (7,735) 50,669 655 %
Provision/(benefit) for income taxes 10,038 (1,413) 11,451 810 %
Net income/(loss) $ 32,896 $ (6,322) $ 39,218 620 %
Net revenues
Net revenues for the three months ended September 30, 2025 increased $53.3 million, or 13.9%, to $437.6 million from $384.3 million for the three months ended September 30, 2024. Equipment revenue increased $49.3 million, or 15.4%, year over year, primarily driven by volume growth and modest price increases. Service parts revenue increased $3.5 million, or 8.6%, year over year primarily driven by volume growth. Other revenues increased $0.1 million, or 1.3%, primarily due to increased field service revenue. Equipment financing revenue increased $0.3 million, or 2.4% year over year driven by growth of 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 September 30, 2025 increased $19.0 million, or 13.3%, to $162.0 million from $143.0 million for the three months ended September 30, 2024. Gross profit as a percentage of net revenues was 37.0% for the three months ended September 30, 2025 as compared to 37.2% for the three months ended September 30, 2024. The decrease in gross profit as a percentage of revenue was primarily driven by customer and product mix and tariff costs, which were partially offset by absorption and efficiency gains achieved through higher production volumes.
Selling, general, and administrative expenses
Selling, general, and administrative expenses for the three months ended September 30, 2025 increased $5.4 million to $76.5 million from $71.0 million for the three months ended September 30, 2024. Selling, general, and administrative expenses as a percentage of net revenues was 17.5% for the three months ended September 30, 2025 as compared to 18.5% for the three months ended September 30, 2024. Included within Selling, general, and administrative expenses is $11.0 million and $11.2 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 September 30, 2025 and 2024, respectively. The increase in Selling, general and administrative expenses is primarily due to investment in physical and digital product development, increased Information Technology expense to support systems and security, acquisition of distributors, public company support costs and selling expenses and bonus accruals driven by higher sales volume and profitability.
Interest expense, net
Interest expense, net for the three months ended September 30, 2025 decreased $5.4 million to $37.0 million from $42.3 million for the three months ended September 30, 2024. The decrease in interest expense was primarily attributable to a lower interest rate on the Term Loan following refinancing activities in February 2025 and August 2025, as discussed in Note 12 - Debt.
Other expenses, net.
Other expenses, net for the three months ended September 30, 2025 was $5.6 million compared to income of $37.3 million for the three months ended September 30, 2024. Other expenses, net for the three months ended September 30, 2025 included $3.2 million foreign exchange losses on intercompany loans, net where the lender or borrower's functional currency differs from the loan denomination currency and $2.4 million of debt issuance costs. Other expenses, net for the three months ended September 30, 2024 included $33.0 million of debt issuance costs and $4.4 million foreign exchange gains on intercompany loans, net.
Provision/(benefit) for income taxes
The effective income tax rate was a 23.4% provision for the three months ended September 30, 2025 as compared to a 18.3% benefit for the three months ended September 30, 2024. The increase is primarily due to the limitation of the deductibility of officer compensation under IRC Section 162(m) in 2025.
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 16 - 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 September 30, 2025:
Three Months Ended September 30,
(in thousands, except for percentages) 2025 2024 $ Change % Change
North America
Net revenues $ 330,742 $ 289,242 $ 41,500 14 %
Adjusted EBITDA $ 95,449 $ 84,233 $ 11,216 13 %
Adjusted EBITDA Margin 28.9 % 29.1 %
International
Net revenues $ 106,864 $ 95,053 $ 11,811 12 %
Adjusted EBITDA $ 25,650 $ 23,447 $ 2,203 9 %
Adjusted EBITDA Margin 24.0 % 24.7 %
North America
Revenue in North America increased $41.5 million or 14.3% to $330.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Equipment revenue increased $38.5 million, or 16.2%, mainly driven by strong demand across all end markets, with particularly strong performance in the Vended (an increase of 18.7%) and Commercial In-Home (an increase of 16.0%) end markets. Service parts revenue increased $2.7 million, or 8.7%, primarily driven by volume growth and modest price increases. Other revenues and Equipment financing revenue remained relatively flat year over year.
Adjusted EBITDA increased $11.2 million or 13.3% to $95.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 and Adjusted EBITDA Margin remained relatively flat at 28.9% for the three months ended September 30, 2025 compared to 29.1% for the three months ended September 30, 2024.
International
Revenue increased $11.8 million or 12.4% to $106.9 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Equipment revenue increased $10.8 million, or 13.1%, primarily due to strong performance in Europe (an increase of 19.5%) and in Asia Pacific (an increase of 11.7%) where the expanding Vended end markets are driving growth. Service parts revenue increased $0.9 million, or 8.2%, primarily driven by volume growth.
Adjusted EBITDA increased $2.2 million or 9.4% to $25.7 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024 and Adjusted EBITDA Margin decreased to 24.0% for the three months ended September 30, 2025 from 24.7% for the three months ended September 30, 2024. This reduction was primarily driven by customer and product mix in addition to timing of costs in the quarter, partially offset by lower operating expenses in the quarter.
Nine Months Ended September 30, 2025 as Compared to the Nine Months Ended September 30, 2024
Consolidated Results of Operations
The following table sets forth our consolidated results of operations for the nine months ended September 30, 2025 (in thousands):
Nine Months Ended September 30,
2025 2024 $ change % change
Net revenues:
Equipment, service parts and other $ 1,237,465 $ 1,076,640 $ 160,825 15 %
Equipment financing 36,898 36,664 234 1 %
Net revenues 1,274,363 1,113,304 161,059 14 %
Costs and expenses:
Cost of sales 764,100 669,973 94,127 14 %
Cost of sales - related parties 5,032 4,644 388 8 %
Equipment financing expenses 24,068 25,997 (1,929) (7) %
Gross profit 481,163 412,690 68,473 17 %
Selling, general, and administrative expenses 227,113 195,766 31,347 16 %
Selling, general, and administrative expenses - related parties 225 225 - - %
Total operating expenses 227,338 195,991 31,347 16 %
Operating income 253,825 216,699 37,126 17 %
Interest expense, net 121,240 100,770 20,470 20 %
Other expenses, net
26,514 37,110 (10,596) (29) %
Income before taxes 106,071 78,819 27,252 35 %
Provision for income taxes 24,912 17,564 7,348 42 %
Net income $ 81,159 $ 61,255 $ 19,904 32 %
Net revenues
Net revenues for the nine months ended September 30, 2025 increased $161.1 million, or 14.5%, to $1,274.4 million from $1,113.3 million for the nine months ended September 30, 2024.
Equipment revenue increased $148.8 million, or 16.1%, versus the prior year, as both reportable segments delivered double-digit growth driven by volume growth and modest price increases. Service parts revenue increased $10.6 million, or 8.9%, year over year primarily driven by volume growth. Other revenues increased $1.4 million, or 4.4%, primarily due to increased field service revenue. Equipment financing revenue increased $0.2 million, or 0.6% year over year driven by an increase in interest income due to growth of the loan base, partially offset by a decrease in variable loan rates tied to the prime rate.
Gross profit
Gross profit for the nine months ended September 30, 2025 increased $68.5 million, or 16.6%, to $481.2 million from $412.7 million for the nine months ended September 30, 2024. Gross profit as a percentage of net revenues was 37.8% for the nine months ended September 30, 2025 as compared to 37.1% for the nine months ended September 30, 2024. The increase in gross profit as a percentage of revenue was primarily driven by our continued focus on manufacturing and procurement excellence where cost reduction initiatives delivered approximately $9.0 million in savings, higher production volumes and modest price increases.
Selling, general, and administrative expenses
Selling, general, and administrative expenses for the nine months ended September 30, 2025 increased $31.3 million to $227.3 million from $196.0 million for the nine months ended September 30, 2024. Selling, general, and administrative expenses as a percentage of net revenues was 17.8% for the nine months ended September 30, 2025 as compared to 17.6% for the nine months ended September 30, 2024. Included within Selling, general, and administrative expenses is $33.3 million and $33.6 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 nine months ended September 30, 2025 and 2024, respectively. The increase in Selling, general and administrative expenses is primarily due to investment in physical and digital product development, increased Information Technology expenses to support systems and security, acquisition of distributors, public company support costs, additional headcount, and selling expenses and bonus accruals driven by higher sales volume and profitability.
Interest expense, net
Interest expense, net for the nine months ended September 30, 2025 increased $20.5 million to $121.2 million from $100.8 million for the nine months ended September 30, 2024. The increase in interest expense was primarily attributable to the higher debt balance following the August 2024 refinancing, as discussed in Note 12 - Debt.
Other expenses, net
Other expenses, net for the nine months ended September 30, 2025 was $26.5 million compared to $37.1 million for the nine months ended September 30, 2024. Other expenses, net for the nine months ended September 30, 2025 included $23.0 million foreign exchange losses on intercompany loans, net where the lender or borrower's functional currency differs from the loan denomination currency and $3.5 million of debt issuance costs. Other expenses, net for the nine months ended September 30, 2024 included $33.0 million of debt issuance costs and $4.1 million foreign exchange losses on intercompany loans, net.
Provision for income taxes
The effective income tax rate was 23.5% for the nine months ended September 30, 2025 as compared to 22.3% for the nine months ended September 30, 2024. The effective tax rate for the nine months ended September 30, 2025 was impacted by IRC Section 162(m) as a result of stock-based compensation from officer exercises.
Segment Results
The following table presents the Company's segment results for the nine months ended September 30, 2025:

Nine Months Ended September 30,
(in thousands, except for percentages) 2025 2024 $ change % change
North America
Net revenues $ 952,156 $ 819,078 $ 133,078 16 %
Adjusted EBITDA $ 273,027 $ 240,530 $ 32,497 14 %
Adjusted EBITDA Margin 28.7 % 29.4 %
International
Net revenues $ 322,207 $ 294,226 $ 27,981 10 %
Adjusted EBITDA $ 91,344 $ 79,768 $ 11,576 15 %
Adjusted EBITDA Margin 28.3 % 27.1 %
North America
Revenue in North America increased $133.1 million or 16% to $952.2 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Equipment revenue increased $122.9 million, or 18.4%, mainly driven by strong demand across all end markets, with particularly strong performance in the Vended (an increase of 11.4%) and Commercial In-Home (an increase of 33.2%) end markets. Service parts revenue increased $8.5 million, or 9.7%, primarily driven by volume growth and modest price increases. Other revenues increased $1.3 million, or 5.0%, primarily due to field service revenues. Equipment financing revenue remained relatively flat, having increased $0.4 million, or 1.1%.
Adjusted EBITDA increased $32.5 million or 13.5% to $273.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 and Adjusted EBITDA Margin decreased to 28.7% for the nine months ended September 30, 2025 from 29.4% for the nine months ended September 30, 2024. This decrease was primarily driven by product mix and investment in product development and other operational projects to drive future growth, partially offset by benefit of higher volumes and operational cost reduction initiatives.
International
Revenue increased $28.0 million or 9.5% to $322.2 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Equipment revenue increased $25.9 million, or 10.1%, primarily due to strong performance in Europe (an increase of 17.8%) and in Asia Pacific (an increase of 13.6%) where the expanding Vended end markets are driving growth. Service parts revenue increased $2.2 million, or 6.7%, primarily driven by volume growth.
Adjusted EBITDA increased $11.6 million or 14.5% to $91.3 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 and Adjusted EBITDA Margin increased to 28.3% for the nine months ended September 30, 2025 from 27.1% for the nine months ended September 30, 2024. This increase was primarily driven by gross margin expansion due to higher volumes and cost reduction initiatives in addition to operating expense cost controls.
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 2025 will be approximately $48.0 million. We have invested $29.8 million of cash into capital expenditures during the nine months ended September 30, 2025.
Cash Flows Information
The following table presents a summary of our cash flow activity for the periods set forth below (in thousands):
Nine Months Ended September 30,
2025 2024
Net cash provided by operating activities $ 116,790 $ 67,331
Net cash used in investing activities (54,310) (55,605)
Net cash used in financing activities (91,622) (69,515)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 921 (2,232)
Decrease in cash, cash equivalents, and restricted cash $ (28,221) $ (60,021)
Operating Activities
Cash provided by operating activities for the nine months ended September 30, 2025 of $116.8 millionwas primarily derived from net income adjusted for non-cash provisions, partially offset by a $73.8 millionincrease in working capital. The primary contributors to the change in working capital were a $56.2 million increase in accounts and equipment financing receivables held for securitization investors, an increase of $15.1 million in inventories, a decreaseof $5.9 million in other liabilities, an increase of $3.8 millionin accounts and equipment financing receivables, partially offset by an decrease of $10.0 millionin accounts payable.
Cash provided by operating activities for the nine months ended September 30, 2024of $67.3 million was primarily derived from net income adjusted for non-cash provisions and a $74.9 millionincrease in working capital. The primary contributors to the change in working capital were a $35.4 millionincrease in accounts and equipment financing receivables held for securitization investors, a $31.5 million decrease in other liabilities, a $16.3 million increasein inventories,and a $2.5 million increase in Other assets , partially offset by a $6.1 million increase in accounts payable, a $4.8 million decrease in accounts and equipment financing receivables.
Investing Activities
Cash used in investing activities of $54.3 millionfor the nine months ended September 30, 2025 was primarily the result of $29.8 million of capital expenditures, $13.6 million related to the acquisition of a distributor in the United States and $11.3 million net outflowrelated to originationsof new equipment financing receivables exceeding collections.
Cash used in investing activities of $55.6 million for the nine months ended September 30, 2024 was primarily the result of $23.6 million related to capital expenditures, $22.2 million related to
acquisitions of distributors in the United States and $9.9 million net outflowrelated to originationsof new equipment financing receivables exceeding collections.
Financing Activities
Cash used in financing activities of $91.6 millionfor the nine months ended September 30, 2025 was primarily comprised of $135.0 millionin voluntary prepayments on the Term loan partially offset by a $47.2 millionnet increase in asset backed borrowings owed to securitization investors.
Cash used in financing activities of $69.5 million for the nine months ended September 30, 2024 was primarily comprised of $1,268.0 million in payments on long-term borrowings, $900.0 million for dividends and return of capital paid to common stockholders and $5.6 millionnet payments on revolving line of credit borrowings. This use of cash was funded by $2,064.6 million in proceeds from long-term borrowings and $42.9 million related to an increase in asset backed borrowings owed to securitization investors.
Debt
As of September 30, 2025, there was $1,940.0 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 September 30, 2025, the interest rate for the Term Loan is 6.39%.
The net proceeds from our initial public offering along with cash on-hand were used to repay $525.0 million of our indebtedness outstanding under the Term Loan on October 17, 2025. The repayment was 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 September 30, 2025, we did not have any off-balance sheet arrangements, as defined in Regulation S-K promulgated by the SEC.
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