Presentation on theme: "Lehman Brothers 2007 High-Yield Bond Conference March 27, 2007."— Presentation transcript:
Lehman Brothers 2007 High-Yield Bond Conference March 27, 2007
Forward-Looking Statements 2 Our remarks that follow, including answers to your questions and these slides, include statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. 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 for the year ended December 31, 2006.
Company & Financial Review Bruce Rounds Chief Financial Officer
4 Investment Considerations Strong and Experienced Management Team Market Leader with Significant Installed Base Most Comprehensive and Innovative Product Offering Leading North American & European Brands High Barriers to Entry Extensive and Loyal Distribution Network Stable Industry with Significant Replacement Sales Growing Revenue and Increasing Cash Flows
5 The Company nAlliance is the leading commercial laundry equipment manufacturer in North America 12/31/06 Net Sales and Adjusted EBITDA of $366.1 million and $63.2 million, respectively Leading brand recognition in North America (“N.A.”) and Europe 39% N.A. market share #1 in stand-alone N.A. commercial laundry equipment sales Only manufacturer to offer full-line of products Products sold through #1 or #2 distributors / route operators in over 80% of N.A. markets Expanded global reach with European acquisition nAlliance continues to deliver stable and predictable cash flows Approximately $13 million of net debt reduction in 2006
6 Recent Developments – CLD Acquisition nAlliance Laundry Systems purchased the Commercial Laundry Division (“CLD”) from Laundry Systems Group (“LSG”) on July 14, 2006 Acquisition strategically enhances geographic scope, expands product offering and provides control of soft-mount technology nTotal acquisition price, net of cash acquired, of $87.0 million (1) includes transaction and consolidation costs. nCLD stand-alone 2005 revenue and EBITDA of approximately $100.6 million (2) and $10.4 million (2), respectively nAlliance financed the acquisition with a combination of debt and equity in order to maintain existing leverage levels $60.0 million add-on to the existing Term Loan Facility, along with a $5.0 million increase to the Revolving Credit Facility to maintain adequate liquidity —Maturity and amortization schedules will remain the same as existing $23.5 million in equity from Ontario Teachers Pension Plan and management (3) $3.5 million in cash from operations 1. Includes $5.0 million for the consolidation of CLD’s US operations into our existing US operations. 2. Exchange rate of $1.30 to €1.00. 3. Includes existing management of Alliance and CLD.
7 Leading North American and European Brands nLargest installed base in North America nBuilding brand equity for nearly a century nValue Added Services Parts sales Service support Financing Laundromat Design
Multi-Unit Housing $127 million (1) Apartments n Condominiums nUniversities nMilitary Installations nLoad capacity: up to 18 lbs. Laundromats $277 million (1) nSelf-service wash and dry facilities nApprox. 35,000 locations nLoad capacity: up to 80 lbs. On-Premise $128 million (1) Hotels n Hospitals Sports Facilities n Prisons nLoad capacity: up to 200 lbs. Alliance Market Share #1 North American Stand Alone Commercial Laundry Market (1) 8 1. Management estimate ________________________
9 2006 Market Share (1) 1. Management estimates. Market Leadership Leader in North America with greater than 2.0x market share of nearest competitor
10 Stable Industry nIndustry CAGR of 3.3% from 2001 – 2006 nIndustry sales were modestly affected by the recession in 2001 and 2002 Source: Management estimates. ($ in millions ) ________________________
11 Offer Superior Products and Services Develop and Strengthen Key Customer Relationships Continue to Improve Manufacturing Operations Pursuing Strategic Business Opportunities Core Growth Strategies Continue introductions of innovative products and features with industry-leading performance Added soft mount product design proficiency to our Engineering portfolio Provide exceptional value-added services such as technical training, financing and store design Expanded distribution network and international coverage with CLD acquisition Relationships with key customers all exceed ten years Ongoing enhancements in product quality and design Consolidating North American manufacturing operations to leverage efficiencies in procurement, logistics, and product development and quality Targeting acquisitions and strategic opportunities that: Expand access to international markets Increase product differentiation to support Alliance’s multi-brand strategy Expand sourcing initiatives – both ways
12 Comprehensive and Innovative Product Offering nIndustry leading product lines Innovator in sophisticated electronic controls nInnovative product offerings 45 lb stacked tumbler dryer Soft-mount technology proficiency nOnly manufacturer to provide full product line n80 engineers, designers, and technicians nR&D spending of $35 million since 2002
13 Extensive and Loyal Distribution Network n600+ Global Distributors, Importers, and Route Operators 100 Route Operators (Multi-Housing) Laundromat 150 Distributors On-Premise Laundry 200 Distributors International (U.S. & European Operations) 210 Distributors Alliance
14 Marianna Consolidation nOctober 12, 2005 committed a plan to close and consolidate Marianna design and manufacturing operations into Ripon, WI nCompletion Q3 2006 nCash costs - $9.4 million nEstimated annual cost savings in excess of - $4.0 million Ripon WI Before After Ripon WI Marianna Consolidation >$4.0 million savings Marianna FL
15 U.S. CLD Consolidation nWith the CLD Acquisition, committed to a plan to close and consolidate all of CLD’s U.S. operations into Ripon, WI nEstimated completion for consolidation – Q1 2007 nEstimated cash costs - $5.0 million $1.8 million spent in 2006 nEstimated annual cost savings in excess of - $4.0 million nSubstantially complete as of January 31, 2007 Ripon WI Before After Ripon WI CLD Consolidation >$4.0 million savings Panama City, FL (Product Line) Panama City, FL (Product Line) Portland, TN Fort Mill, SC Louisville, KY
nSenior management average over 18 years of experience in the commercial laundry and appliance industries Senior management is a significant equity holder Retained substantially all of CLD’s European management team nManagement team has consistently improved operations and executed numerous strategic initiatives Consolidation of manufacturing sites and design centers Continued innovative product development Developing alliances with key customers Manufacturing cost reductions and quality improvement programs Successful integration of strategic acquisitions Strong and Experienced Management Team CEO, President Controller 16
2006 Revenue Mix – Continuing to Diversify 20052006 Revenue$317.3$366.1 Adj. EBITDA (1) 60.4 63.2 % Margin19.0% 17.9% North American CLE Sales by Channel By Segment 17 (1) 2006 includes CLD operations from July 14, 2006 through December 31, 2006 and excludes $5.6 million of deemed EBITDA for period not owned..
Historical Revenue Commercial Laundry Revenues Are Growing nOver 75% of equipment sales are replacement nCAGR of 6.2% from 2001 – 2006 18 $317.3 $254.0$255.2 $267.6 $281.0 $366.1
Consistent Adjusted EBITDA Historical Adjusted EBITDA 19 ($ in millions) (1)2006 includes CLD operations from July 14, 2006 through December 31, 2006 and excludes $5.6 million of deemed EBITDA for period not owned. (2)Re-entered lower margin U.S. consumer laundry business in October 2004.. (1) (2)
20 Historical Financials Historical Financials & EBITDA Reconciliation ___________________________ Source: 10Q filings. 1. Reflects the difference between GAAP basis revenues and cash basis revenues related to Company’s off-balance sheet equipment finance program. 2. Include executive retention costs, seller transaction costs incurred with business sale, consolidation costs, loss on foreign exchange hedge, loss on early extinguishment of debt, and costs of a new asset backed facility. 3. Includes non-cash incentive compensation expense, non-cash write-off of inventory step-up, and non-cash impairment of trademark and customer agreement. 4. 2006 includes $5.6 million which has been deemed to constitute adjusted EBITDA for CLD prior to acquisition on July 14, 2006.
21 Quarterly Operating Summary Alliance 2006 Quarterly Financials ___________________________ Source: 10Q filings. 1. Reflects the difference between GAAP basis revenues and cash basis revenues related to Company’s off-balance sheet equipment finance program. 2. Include executive retention costs, seller transaction costs incurred with business sale, consolidation costs, loss on foreign exchange hedge, loss on early extinguishment of debt, and costs of a new asset backed facility. 3. Includes non-cash incentive compensation expense, non-cash write-off of inventory step-up and non-cash impairment of trademark and customer agreement. 4. Includes $2.8 million increase for Q1 and Q2, which amount has been deemed to constitute the quarterly adjusted EBITDA for CLD.
Balance Sheet Summary Alliance 2006 Financial Position Summary nApproximately $13 million of net debt reduction during 2006 after considering $60 million of new term debt n2006 Year End Leverage of 5.42x 22 (1)Total Consolidated Debt as defined in our Senior Credit facility which includes unrestricted cash from European operations up to $3.0 million. (2)2006 includes $5.6 million which has been deemed to constitute adjusted EBITDA for CLD prior to acquisition..
23 Investment Considerations Strong and Experienced Management Team Market Leader with Significant Installed Base Most Comprehensive and Innovative Product Offering Leading Global Brands High Barriers to Entry Extensive and Loyal Distribution Network Stable Industry with Significant Replacement Sales Growing Revenue and Increasing Cash Flows