Alliance Laundry Q3 Earnings Call Highlights

Key Points

• Alliance Laundry raised its 2026 adjusted EBITDA growth outlook to approximately 10%, the high end of its prior range, while maintaining its 6%–7% revenue growth forecast. Third-quarter revenue rose 5% to $461 million and adjusted EBITDA increased 14% to $127 million.
• Margins improved, with adjusted EBITDA margin up 217 basis points to 27.5%; North America led growth, posting an 8% revenue increase and a 21% rise in adjusted EBITDA. Management expects steel and freight inflation to pressure fourth-quarter profitability and has communicated price increases for early 2027.
• Operating cash flow rose to $84 million, and the company repaid $45 million of debt and repurchased $75 million of shares during the quarter. Net leverage fell to 2.25 times, with year-end leverage expected to be about 2.1 times; management said deleveraging remains its top priority.

Alliance Laundry NYSE: ALH raised its full-year adjusted earnings growth outlook after reporting higher third-quarter revenue and margins, though executives warned that steel and freight costs will continue to pressure profitability in the fourth quarter.

Revenue rose 5% from a year earlier to $461 million, with volume and mix accounting for half of the increase and pricing contributing the rest, Chief Financial Officer Dean Nolden said. Adjusted EBITDA increased 14% to $127 million, helped by operating efficiencies and a $5 million tariff refund.

The commercial laundry equipment company now expects approximately 10% adjusted EBITDA growth for 2026, the high end of its previous 8% to 10% range. It maintained its forecast for revenue growth of 6% to 7%.

Margins Expand Despite Cost Pressures

Gross profit increased 12% to $182 million, while gross margin rose about 240 basis points to 39.4%. Excluding the tariff refund, gross margin expanded by 130 basis points, Nolden said.

Adjusted EBITDA margin improved 217 basis points to 27.5%. Without the refund, adjusted EBITDA grew approximately 10% from the prior-year quarter.

Adjusted net income rose 57% to $76 million, and adjusted earnings per share increased 36% to $0.38. Nolden said lower interest expense, down roughly $20 million from a year earlier, contributed to the result. Net income under generally accepted accounting principles rose 98% to $65 million.

Chief Executive Officer Mike Schoeb said pricing actions taken late last year helped offset inflation, while the company’s local manufacturing footprint provided advantages including shorter freight routes and reduced exposure to tariffs.

North America Leads Growth

North America revenue increased 8% to $356 million, led by commercial in-home and on-premise laundry equipment. Adjusted EBITDA rose 21% to $115 million, and the segment’s adjusted EBITDA margin increased more than 300 basis points to 32.4%.

In the vended business, which includes laundromats and multi-housing customers, results reflected the timing of new store projects and longer permitting and construction lead times, Nolden said. Customers also continued to replace equipment with larger-capacity machines.

Schoeb characterized the project delays as a timing issue rather than a change in underlying demand. He said some parts of the market had experienced temporary weakness associated with immigration enforcement raids, but that the effect tended to subside after the raids ended.

International revenue slipped 1% to $105 million because of foreign currency translation, while adjusted EBITDA rose to $27 million. The segment’s adjusted EBITDA margin increased to 25.3% from 24% a year earlier.

Nolden said Latin America posted solid growth, while Asia-Pacific revenue was lower in the quarter because of project timing following earlier strength. Europe was steady, and the Middle East and Africa region improved, supported by hospitality and markets not directly affected by the Middle East conflict.

Fourth-Quarter Inflation and 2027 Pricing

Management expects inflation, including higher steel costs, to weigh on fourth-quarter profitability relative to both the prior year and recent quarters. Nolden said high steel demand could force the company to purchase some supply at spot prices rather than contracted rates.

The company has communicated price increases for early 2027. Schoeb said those increases had generally been well accepted, though he declined to quantify their expected effect. Nolden said Alliance had received all tariff refunds it had applied for and was owed through the third quarter, and did not expect a refund benefit in the fourth quarter.

Asked about productivity, Schoeb pointed to factory technology, automation and supplier and product-design work as opportunities to reduce costs. Nolden said the company also expects to leverage infrastructure and administrative costs as revenue grows.

Debt and Capital Allocation

Operating cash flow rose to $84 million from $66 million a year earlier. Alliance paid down $45 million of debt during the quarter, bringing year-to-date debt repayment to $160 million, and repurchased $75 million of shares.

Net debt stood at $1.07 billion at September 30, with net leverage of 2.25 times, down from approximately 2.4 times in the second quarter. The company expects year-end net leverage of approximately 2.1 times, reflecting the share repurchase.

Nolden said the buyback was made in conjunction with a follow-on offering in which the company’s sponsors reduced their ownership. Deleveraging remains the top priority, he said, although future buybacks, investment and further debt reduction are possible. He added that the board had not approved an open-market share repurchase plan.

About Alliance Laundry (NYSE:ALH)

Alliance Laundry Holdings, Inc. designs, manufactures and sells commercial laundry equipment. Its products include washers, dryers and related laundry systems for laundromats and customers in sectors such as hospitality, healthcare, multifamily housing and other institutional markets. The company serves customers worldwide through brands including Speed Queen, UniMac, Huebsch, Primus and IPSO. Its offerings include equipment for self-service and on-premises laundry operations, along with related parts and services.

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