Alliance Laundry Holdings Inc.

Good morning, and welcome to the Alliance Laundry third quarter 2025 earnings conference call. With us today are Mike Shaib, Chief Executive Officer, Dean Nolden, Chief Financial Officer, and Bob Calver, Vice President of Investor Relations. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star two on your telephone keypad. We ask that you please ask one question and one follow-up, then return to the queue. With that, it is my pleasure to turn the program over to Mr. Calver, Vice President of Investor Relations. Mr. Calver, please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Alliance Laundry Systems' third quarter 2025 earnings call. I'm joined today by Mike Shade, CEO, and Dean Nolden, CFO. Along with today's call, you can find our earnings press release and earnings presentation on our website at ir.alliancelaundry.com. A replay of this call will also be made available on our website. As a reminder, today's earning release, presentation, and statements made during this call include forward-looking statements under federal securities law. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission, including in the risk factors section of the prospectus from our initial public offering dated October 9, 2025. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Additionally, during today's call, we will discuss certain non-GAAP financial measures outlined in further detail at the beginning of our earnings presentation. We believe that these measures are important indicators of our operations as they exclude items that may not be indicative of our results from ongoing business operations. A reconciliation of these measures to the most directly comparable GAAP measure can be found in our earnings release, in our 8K file with the SEC, and in the appendix to the slide presentation. Non-GAAP financial measures should be considered in addition to and not as a substitute for GAAP measures. I'll now turn the call over to Mike.

Hey, thanks, Bob, and thank you all for joining. It's a pleasure to speak with you today on the company's first earnings call as a publicly traded company. Before I begin, I'd like to express my thanks and appreciation to the Alliance team, our end customers and distribution partners, as well as our advisors and the investors who made this milestone possible. I'd also like to thank the research analysts who spent time getting to know our business, our culture, our products, and our team. We look forward to continued dialogue. And we're excited about the future as we continue to expand our business, deliver what we believe are the highest quality machines and services available in the industry, and create long-term value for our shareholders. For this first call as a public company, I will start with an overview of Alliance, the markets we serve, and our differentiated strategy. We will then dive into results. So starting with slide four, There are four things I believe you should consider for any investment, and this is my core message on today's call. So question number one, is the industry vibrant, growing, and attractive? Our record of close to double-digit growth over the last decade would suggest it is, as laundry is not a fad or a fashion, but it is essential to everyday life. Additionally, the industry has a unique characteristic of providing downside protection in difficult times. This is what we saw during COVID where laundromats were deemed essential by governments almost worldwide and stayed open versus most retail locations, which were shuttered, and many that closed for good. The world is increasingly volatile, and every time there's a dip in the economy or bad news on the TV, those of us on the executive team look at each other and say, thank God for laundering. That protection is combined with growth we see in both emerging markets where the vended end market is in its early days, as well as in mature markets where aging products need constant replacement, and in the renewal happening in laundromats where many of the old, tired inventory is being replaced by clean, safe, and friendly stores. According to market research in the U.S. alone, there are over 20,000 of these retail locations and is estimated to be a $6 billion market, serving a central need in communities across the country. The next question is industry structure. What are the market leaders, or excuse me, who are the market leaders, and do they have a sustainable advantage? Our scale versus the competitive set and our financial profile give us the ability to invest at a higher level and simply do what others cannot afford to do. So I believe our advantage is both clear and sustainable. And the next question is, do you have a team that can execute with consistency and take advantage of the gift that we have been provided to be a market leader in an incredible industry? Our long-term history of compelling performance through economic cycles would suggest we've got a very capable team. And the final question is, are there systemic tailwinds that provide an opportunity for the company to continue to put points on the board and grow profitably? For us, we see these tailwinds as being in their early innings, and they are integral to our go-forward strategy, which I will touch on shortly. So it's against this backdrop. Alliance is at the center of a resilient, essential industry defined by steady replacement demand, consistent aftermarket needs, and stable growth across all macro cycles. On slide five, we are the number one pure play commercial laundry manufacturer in the world, more than twice the size of our next largest competitor. We are a true global business, serving customers in 150 countries, and we hold roughly 40% market share in North America. Our strong market leadership and financial results are built on a compelling value proposition for commercial laundry customers who are incredibly sophisticated and focus on total cost of ownership, or TCO. Our offering is defined by a relentless focus on quality, reliability, and durability, an industry-leading distribution network, comprehensive wraparound services, and a commitment to excellence. Every day is laundry day, and it is essential for modern life as we know it today. Our large install base means people around the world interact with our products millions of times a day. Our products get used hard every day in demanding applications, are mechanical in nature, so they have a finite life with a steady replacement-driven and predictable demand. We produce and deliver product via five prominent brands, including our Speed Queen brand, which was recognized by Consumer Reports as the most reliable appliance brand in the U.S. for six consecutive years. We have a strong financial profile with a revenue category of about 10% from 2010 to 2024, a best-in-class adjusted EBITDA margin above 25%, and strong free cash flows. Throughout our history as a private company, we have invested in our business to support durable growth. which significantly strengthened operations, enhanced capacity, drove our innovation pipeline, and created long-term potential. Alliance operates in a broad, diversified set of end markets, geographies, and product categories, which helps us drive execution and deliver long-term growth. In terms of revenue mix, about three-quarters of our sales come from North America, where we have balance across our three end markets. Now, switching briefly to slide six, you will see the primary end markets we serve. And on premise, we deliver best-in-class systems for hundreds of mission-critical applications that require tailored products, expertise, and an extensive, highly trained field service organization. This includes healthcare, hospitality, and veterinary clinics, as well as bespoke systems for industrial and commercial customers. If you are running one of these businesses, and your laundry equipment goes down, it is not a good day. So think about managing a hotel with several hundred rooms that require thousands of pounds of fresh, clean linens every day. Normally, there is little redundancy of equipment in on-premise laundry rooms. So if a unit fails, you do not have a sellable room, and you do not have a business. That example can be taken across all these verticals. In our vended end market, applications take payment of some type, which is increasingly digital in nature. We equip both retail store laundromats worldwide, as well as communal laundry systems for apartments, condominiums, dormitories, and other multi-housing facilities. Finally, our commercial in-home end market brings differentiated commercial quality washers and dryers into residential settings, offering the same durability long life and performance trusted by our commercial customers. Consumers around the world are increasingly frustrated by competitive offerings, which are built for initial cost versus low total cost of ownership. On slide seven, we illustrate our long history of performance through all economic cycles. Looking all the way back to 2006, Alliance has generated a steady cadence of growth as we've continued to scale our business, serve more customers across more markets, and expand our capabilities and customer offerings. We look forward to building on the strong momentum and driving consistent growth long into the future as we execute on our strategy. Now on slide eight, to touch briefly on additional investments highlights, which are both attractive and meaningful. First, as a pure play who only does laundry, We understand what our customers demand, and that is a compelling value based on low total cost of ownership. Price is always important. But what we hear most often is, please, do not cheapen the product. Do not cut corners. And do not sacrifice quality. Customers know it's a smart decision to buy a better product that lasts longer, is more reliable, and cleans extremely well. We have a proven ability to create the highest quality products by leveraging our engineering expertise and rigorous testing and quality controls that ensure long lasting durability and reliability. We have on that scale that is very difficult to replicate in this highly specialized and fragmented industry. Our premier aftermarket services and comprehensive wraparound capabilities are extremely important. to support long-lived assets, and they provide us opportunities to win more market share. We also benefit from a robust global manufacturing and engineering footprint, a diversified go-to-market strategy, and a well-established reputation of innovation and commercial laundry expertise. These attributes aren't just individual advantages. They are highly complementary and allow Alliance to generate significant recurring revenue streams, protect margin, and create long-term value for our shareholders. On slide nine, we are advancing a clear growth strategy focused on driving long-term sustainable performance. We start with our core strength, producing high-quality, reliable commercial laundry systems that drive repeat business and market share gains. When you provide strong value, Price is a byproduct, and it is embedded in our go-to-market strategy. In on-premise laundry, we're serving a stable, heavily replacement-driven market while delivering leading TCO across many, many niche applications. Alliance has also established a leading position supporting the evolution of laundromats. Laundromat demand is driven by both existing store owners retooling their stores and with more efficient and technologically sophisticated products, as well as new investors attracted to the fundamentals of the industry. It is recession-resistant. It is an essential need. It has low labor requirements, as it is primarily self-serviced by customers, and lows shrink, particularly as payment systems become more digital. Our products and services help commercially-focused operators succeed, backed by our wraparound services and digital platform. Digital and IoT-connected equipment is a requirement for multi-site and multi-state operators. In North America, we're meeting rising demand for commercial quality products in the home, maintaining attractive margins, and delivering the reliability customers expect from professional-grade equipment. Internationally, we see significant vended market opportunities in underpenetrated regions, leveraging our first mover advantage to play a pivotal role in market development. Alliance is also committed to staying at the forefront of innovation to continue introducing industry-leading features that accelerate replacement cycles and increase digital penetration to drive recurring revenue. And as the only manufacturer in the industry with footprints in Asia, the US, and Europe, our local-for-local manufacturing strategy helps to insulate us significantly from tariffs as most of what we source, manufacture, and sell stays in the respective region. We remain disciplined on operational improvements, including cost-down initiatives, where we are extremely careful as well as plant and supply chain optimization. We are confident in our ability to successfully execute these strategic priorities and strengthen our market position. And I'd also like, on slide 10, to share some recent business highlights. As I mentioned, innovation is core to Allianz's DNA and a key long-term growth driver. We recently attended the Clean Show Conference, North America's largest exposition in our industry, and exhibited new technologies. We launched the 55-pound stack tumbler, the industry's largest, which allows for faster dry times and, we believe, increased revenue. We also launched ScanPayWash, a cashless payment technology for laundromats that does not require an app download. This is a first for the industry and has been extremely well received. We also began shipping our StaxX product, a good example of our local for local manufacturing and product development strategy as it was developed in Thailand for customers in that region. StaxX was built for high throughput in the limited square footage available in small retail locations, and it offers full commercial-grade washing and drying power in a space-efficient, vertically stacked configuration. On the operational side, we acquired Metropolitan Laundry Machinery Sales in New York, deepening our coverage in a dense, high-opportunity urban market and further enhancing our aftermarket and service capabilities. In October, we deployed over $500 million in IPO proceeds. to pay down debt following our listing, resulting in an IPO-adjusted net leverage ratio of roughly 3.1 times at quarter end. Dean will discuss our successful efforts in further strengthening our balance sheet and financial flexibility shortly. We look forward to building on the strong momentum we've achieved as we continue to focus on disciplined execution of our strategy. Dean will now go through our consolidated end segment performance.