Alliance Laundry Holdings Inc. (NYSE:ALH) Q3 2025 Earnings Call Transcript

Alliance Laundry Holdings Inc. (NYSE:ALH) Q3 2025 Earnings Call Transcript November 17, 2025

Operator: Good morning, and welcome to the Alliance Laundry Third Quarter 2025 Earnings Conference Call. With us today are Mike Schoeb, Chief Executive Officer; Dean Nolden, Chief Financial Officer; and Bob Calver, Vice President of Investor Relations. [Operator Instructions] With that, it is my pleasure to turn the program over to Mr. Calver, Vice President of Investor Relations. Mr. Calver, please go ahead.

Robert Calver: Thank you, operator, and good morning, everyone. Welcome to Alliance Laundry Systems Third Quarter 2025 Earnings Call. I’m joined today by Mike Schoeb, 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 earnings release, presentation and statements made during this call include forward-looking statements under federal securities laws. 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 8-K filed 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.

Michael Schoeb: 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 advisers and the investors who made this milestone possible. I’d also like to thank the research analysts who spend 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 and 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 in our results. So starting with Slide 4, there are 4 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? In a record of close to double-digit growth over the last decade would suggest it is, as Laundry is not a fab or a fashion, but it is essential to everyday life. Additionally, the industry has a unique characteristic of providing downside protection in difficult times. But this is what we saw during COVID where laundromats were deemed essential by governments almost worldwide and stay 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 Laundry. 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 essential need in communities across the country. The next question is industry structure and 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 had 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 as 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 5, we are the #1 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 focused 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 installed 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 5 prominent brands, including our Speed Queen brand, which was recognized by Consumer Reports as the most reliable appliance brand in the U.S. for 6 consecutive years. We have a strong financial profile with a revenue CAGR 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 3/4 of our sales come from North America, where we have balance across our 3 end markets. Now switching briefly to Slide 6 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 health care, 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 room. So if a unit fails, you do not have a [indiscernible] of a 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 equipped 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 costs versus low total cost of ownership. On Slide 7, 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 8, to touch briefly on additional investment 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 unmatched 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 benefited 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 9, 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 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-service by customers and low 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 multisite and multistate 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 U.S. 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 Alliance’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 a 25-pound stack — or excuse me, 55-pound stack tumbler, the industry’s largest, which allows for faster dry times, and we believe increased revenue. We also launched Scan-Pay-Wash, a cashless payment technology for laundromats that does not require an app download.

This is the first for the industry and has been extremely well received. We also began shipping our Stax-X 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. Stax-X was built for high throughput and 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 3.1x at quarter end.

Dean will discuss our successful efforts and 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 and segment performance.

Dean Nolden: Thanks, Mike. Turning to Slide 11 and our financial performance. We provided our results for the 3 and 9 months ended September 30, 2025. I’ll touch on the results for both periods, but focus mostly most of my remarks on the third quarter financial performance. We delivered strong results on a consolidated basis. We drove revenue of $438 million, up 14% year-over-year and year-to-date revenue of $1.27 billion, also up 14%. Growth this quarter was driven by solid volume gains and modest low to mid-single-digit price increases implemented to offset higher input costs, which were primarily tariff related. Volume growth was broad-based across all of our end markets in both of our reportable segments of North America and international, supported by the strength of our brands, the durability of our value proposition and the product and geographical diversification of our business.

Year-to-date gross margin expanded by 70 basis points over last year, driven by higher volumes, manufacturing efficiencies and modest pricing actions. This performance reflects our core strategy of profitable growth, which is built on the superior total cost of ownership we offer to customers. Adjusted EBITDA was $111 million in Q3 and $330 million year-to-date, representing growth of 16% and 13%, respectively. For the quarter, adjusted EBITDA margin was 25.3%, up 40 basis points year-over-year and year-to-date margin was 25.9%, down modestly by 30 basis points due to investments we are making in products and systems as well as public company support costs. Net income for the quarter of $33 million was up from a loss of $6 million in the prior year.

Third quarter adjusted net income was $48 million, up 47% versus the prior year quarter and year-to-date adjusted net income was $136 million, an increase of 9%. These results reflect strong top and bottom line performance with profitability amplified by a significant reduction in interest expense. This reduction was driven by our successful debt repricing to SOFR plus 2.25%. We also strengthened our balance sheet through a voluntary debt repayment of $135 million made in the third quarter, and we are benefiting from lower variable interest rates year-to-date. Subsequent to the end of the third quarter, with an additional term loan paydown of $525 million post IPO. Our IPO adjusted net leverage came in at 3.1x. We now begin our life as a public company with a stronger balance sheet and we’ll continue to prioritize deleveraging to earnings growth and cash generation.

Turning to Slide 12. At the regional level, our North America business continued to deliver strong results, driven by favorable end market fundamentals as we leveraged our scale, strong market position and manufacturing strategies. North America revenue in Q3 was $331 million, an increase of 14%, with our performance driven by robust growth across all 3 end markets. Volume and modest price increases accounted for approximately 2/3 and 1/3 of this increase, respectively. Year-to-date revenue was $952 million, up 16% year-over-year. Q3 adjusted EBITDA in North America grew to $95 million or 13% year-over-year, and our adjusted EBITDA margin of 29% was flat versus prior year, with results driven by increased volume and realization of manufacturing efficiencies, offset by investments in future growth initiatives.

We experienced $3.5 million of tariff impact in the third quarter which was mostly offset by implemented pricing actions. Year-to-date adjusted EBITDA grew to $273 million or 14%. We continue to see strong demand from our vended customers in mature markets, coming from both our existing customer base through fleet refreshes as well as new entrants who are looking to access the attractive and resilient commercial laundry space. In the on-premise market, we also experienced strengthening demand, largely driven by the replacement cycle. We believe there are still significant opportunities ahead as new builds continue to come online and customers replace existing equipment with more efficient systems before their end of life. Finally, demand in our commercial in-home end market remained high as customers prioritize the durability, reliability and long life of our products.

Turning to Slide 13. Our international business also contributed meaningfully to overall results this quarter. International revenue was $107 million, an increase of 12% with growth balanced across mature and developing markets. Volume, modest pricing and favorable foreign exchange movements each accounted for approximately 1/3 of the increase. International revenue was $322 million year-to-date, up 10% compared to the same period last year. International adjusted EBITDA rose to $26 million or 9% year-over-year, reflecting strong top line momentum, partially offset by product and customer mix. International adjusted EBITDA margins declined modestly in Q3 compared to the prior year-end. Adjusted EBITDA was $91 million year-to-date, a 15% increase compared to the same period last year.

As you look across our international regions, our mature European markets and developing APAC and LATAM markets posted double-digit growth in the quarter. In Europe, our Speed Queen licensed store model continued to gain momentum and sales remained strong across our direct offices in France, Italy and Spain. APAC saw steady demand in Australia and New Zealand, along with our continued leadership in key markets like Thailand and expanding growth in newer markets like Indonesia, the Philippines and Vietnam. Latin America delivered improved results with robust growth in vended, more than offsetting a challenging prior year comparison in on-premise laundry. Our performance was underpinned by successfully completing major projects in Mexico, and proactive customer and portfolio optimization initiatives in Brazil.

In the Middle East and Africa, we are navigating changes in project time lines in our largest market of Saudi Arabia, while capturing new opportunities with early laundromat adoption in select African markets. The underlying fundamentals of our international business remains strong, and we view it as a key to our consolidated sustainable profitable growth going forward. Turning to Slide 14 and our balance sheet. We significantly strengthened our leverage profile, enhancing our ability to continue to drive long-term value creation. As you can see on this slide, we first reduced our leverage organically by approximately 3/4 of a turn through September 30. We then used proceeds from our IPO in October to further reduce our IPO adjusted leverage to 3.1x.

At the same time, we have favorably priced — we have a favorably priced term loan post our repricings described earlier, and we have additional opportunity to further tighten our interest rate spread on our term loan in the future by another 25 basis points, as a result of our significant deleveraging supported by one non-trading upgrades by both major rating agencies. We are on our way towards that goal. As in October, we received a 1-notch credit rating upgrade from S&P to B+ with a positive outlook and an outlook upgrade from Moody’s to positive, retaining for the time being, our B2 corporate rating. As a result of all these positive actions we’ve already taken, we will benefit from approximately $46 million in annualized interest savings at today’s debt levels and we have increased our flexibility through the elimination of any mandatory principal payment requirements through the remaining life of our term loan facility.

Turning to Slide 15. As we begin our next chapter as a public company, we will execute on a capital allocation strategy designed to maximize long-term shareholder value. Our primary focus will continue to be on deleveraging. With our strong free cash flow profile, we believe we will continue the trend of 0.5 turn to 1 full turn organic deleveraging per year. We will continue to invest in areas to improve our operations and products, launch new products, further expand our capacity and the value we provide to existing customers and ultimately win market share. We expect to continue these investments while maintaining our capital-efficient business model, with a focus on innovation and with CapEx spending targeting approximately 3% of net revenue.

We will maintain a very disciplined approach to M&A. Our strategy is based on selectively pursuing opportunities that supplement our strong organic growth with accretive and value-creating acquisitions that expand our platform and capabilities. And finally, we will maintain flexibility to return capital to shareholders in the future when appropriate through share repurchases in the near term and considering a dividend policy over the longer term. In summary, we’re very pleased with our financial performance in Q3 and the continued momentum in our business and our end markets. We currently intend to provide annual guidance beginning in 2026 when we report our Q4 results, but appreciate that you want to know how 2025 will end. We expect our Q4 growth versus prior year will moderate from year-to-date run rate to the mid-single-digit revenue growth, but 2025 will be an incredible year and mark our second consecutive year of low double-digit top and bottom line growth.

In addition, we expect to incur a onetime noncash charge of approximately $16 million in the fourth quarter related to divesting of stock compensation resulting from our IPO, which we intend to add back for purposes of our adjusted net income and adjusted EBITDA metrics. Now I’ll turn the call back to Mike.

Michael Schoeb: Thanks, Dean. And let me end where I started, commercial laundry is an incredible, vibrant and growing industry in which we have earned a privileged position as a clear market leader with significant structural advantages. We have long demonstrated an ability to deliver a best-in-class financial profile, strong margins and solid growth and there are systemic tailwinds that we believe will propel continued profitable growth. In closing, I’m incredibly proud of our employees around the world, their dedication and expertise make these results possible. I’d also like to thank our distributors, partners and new shareholders for your continued confidence and support. With that, let’s open the line for questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Andrew Obin with Bank of America.

Andrew Obin: Congratulations. Can we start — many of your competitors are importing their product into the U.S. How have they responded to the incremental sections to 232 tariffs? What’s the industry environment?

Michael Schoeb: Yes, Andrew, this is Mike. We have seen one small Asian competitor increase price. I think for the full year, they’ve taken 16.5%, something like that. Outside of that, we have actually not seen anything so far. Again, we expect that to happen. I think as we talked about really pushing into 2026, but so far, really no activity of note.

Andrew Obin: Interesting. And maybe you acquired a New York distributor in the quarter. Can you talk about the strategic and financial benefits from acquiring distributors?

Michael Schoeb: Yes. So Andrew, this is the 16th acquisition we’ve done. We’re vertically integrating in the United States. We are focused on more dense urban markets, not that we haven’t been opportunistic at times, but we’re really looking for markets that matter, management teams that we can back where we see opportunity for outsized growth. So we like it. It allows us to get much closer to the customer. And we will continue to do it. And we will be a partner when we see those opportunities and when that distributor principle is interested in speaking to us, we’re always there for them.

Operator: Our next question comes from Tomo Sano with JPMorgan.

Tomohiko Sano: Congratulations from my side as well. So you achieved double-digit growth on the revenue. And how are you managing supply chain challenges and inventory levels, especially given ongoing global disruptions? And have you seen any improvement or new risks in logistics or components sourcing?

Michael Schoeb: Yes. So I’ll say on the supply side, we’ve really seen nothing, Tomo, that is meaningful. There are always blips and always unexpected surprises, but nothing that we don’t carry enough inventory for or don’t have alternate sources of supply. So we feel really good about it. We see no signs that there’s going to be any change in that status. But we’re ready. And as you know, we’ve got a very, very capable sourcing team that’s out there.

Tomohiko Sano: Follow-up on digitalization and service revenues. What progress have you made in expanding digital solutions and service-based revenue, such as Laundry IQ and SaaS offerings? How do you see the contributions of these business evolving, please?

Michael Schoeb: Yes. So Tomo, we’re focused on the long term. So we do generate revenue. I would say it’s minimal at the moment. We’re more focused on the analytics, the information that comes back to us as we get these connected machines. As you know, we’ve got several hundred thousand that are out there. I can’t speak to our most recent launch of the Scan-Pay-Wash, already in the 90 days or so, it’s been out there, there have been over 90,000 transactions. So all of these things are additive. All of them are meaningful. All of them are putting us into a position of continued strength, but we are early days. And again, we’re more focused on the power and the information and the data that it allows us to capture to be able to get the true predictive analytics that really complement, again, that best-in-class product that’s out there in the field.

Operator: Our next question comes from Susan Maklari with Goldman Sachs.

Susan Maklari: My first question is talking a bit about the consumer. Can you give us some more color on what you’re seeing in the CIH segment of the business, especially given the headwinds and some of the slowdown that we’ve been hearing as it relates to housing and then just overall consumer activity within R&R and other elements of their spend?

Michael Schoeb: Yes. So Susan, I would say, one is we have a very, very unique product. It is a commercial true professional grade product. So one is, it’s a highly differentiated product, but also highly differentiated strategy where our go-to-market is through independent shops and demand is extraordinary. We see no change in that. And again, we’ve got — if you wanted to order a product today, you’d be waiting in order to get delivery. So no change in status on that.

Susan Maklari: Okay. That’s good to hear. And then maybe turning to the balance sheet. Can you talk about the path to further deleverage as well as any other priorities for uses of cash as it relates to perhaps shareholder returns and other strategic initiatives?

Dean Nolden: Yes, Susan. First, we’re very proud of what we’ve done year-to-date in terms of our deleveraging, as you’ve seen in our presentation in our prepared remarks, so significantly improved our balance sheet through the first 3 quarters and as a result of the IPO. Our main priority, as we’ve communicated we’ll continue to be deleveraging through our strong free cash flow through both EBITDA growth and cash generation. And because of that strong free cash flow profile, we have the flexibility to push on multiple levers of capital allocation to continue to invest in CapEx, R&D, new products and capacity and productivity. We’re not giving any forward guidance on what we intend to do further from a use of cash perspective. But given that cash flow profile, we have the flexibility to return capital to shareholders through potential share repurchases in the medium term and then to consider dividends over the long term.

Operator: Our next question comes from Mike Halloran with Baird.

Michael Halloran: Congrats on the launch. First question here. Maybe some thoughts on the trajectory into the fourth quarter. I know Dean comments were towards the mid-single-digit growth rate in the fourth quarter. That is a decel from earlier this year, not terribly surprising based on conversations before, but maybe help understand the dynamic for why the growth is tracking where it is and how we should think about sequential dynamics as we move to the fourth quarter?

Michael Schoeb: Yes. So Mike, remember, this is 2 years of consecutive double-digit growth. The industry grows around a 5% sort of CAGR. So it’s really just reverting to a more normalized growth rate, number one. And number two, it’s always about prior year comps. The fourth quarter is the strongest quarter of the year for us. So really a combination of that — those 2 items. But no change in demand, no change in customer sentiment, no change in anything that we see in the market. And as you know, we’re very, very active in the field, always sensing, always touching, always trying to understand the signals, and we see no change.

Michael Halloran: And then follow-up is just maybe a similar conversation on the margins with a particular emphasis on how the international margins track as we move into the fourth quarter? Moving pieces behind how the international margins track 1H to 3Q? And just kind of calibrating where those should be both in the fourth quarter and as we exit the year, what the appropriate baseline is?

Michael Schoeb: Yes. So maybe I’ll just touch on it and make sure that Dean, if I don’t cover it clearly. So in the quarter, obviously, we had customer mix. Obviously, larger customers have a little bit bigger discounts and then we had the launch of some new products, particularly the Stax-X where we wanted to field the early adoption of that product. So that’s sort of a temporary launch period. As you know, one of the characteristics about us that is unique is our margin parity between the U.S. and international markets is awfully close. So we don’t see any change in that. Again, sometimes there will be blips one way or the other, as you know, emerging markets can sometimes be a little more volatile. So we flashed to that in the Middle East. But again, no change, and we feel really good about it. And those factories in Thailand and in the Czech Republic, where the bulk of what they are selling are extremely well positioned from a cost perspective. So we see no change.

Dean Nolden: And Mike, I would just add on a longer-term view than just the quarter, you can see that year-to-date international revenue grew 10% and EBITDA grew 15%. And we enjoyed over 100 basis point improvement in adjusted EBITDA margin in international closing that parity gap with North America. So we’re very proud of the year-to-date results we’ve achieved in international.

Operator: Our next question comes from Chris Snyder with Morgan Stanley.

Christopher Snyder: I believe earlier you referenced that the competitors have yet to push incremental price on the back of 232, at least broadly speaking. Did you guys push incremental price in Q3? It seems like the price in the quarter was about 4%. So I’m just trying to figure out if there’s like a step-up in Q4 if you get the full realization of that?

Dean Nolden: Yes. We did — thank you, Chris. We did announce price increases in Q3. And there are some smaller ones that take place in Q4. So we’ve had various price increases as the year has progressed, so we will continue to see benefit from those on an annualized or full quarter run rate going forward. So our price increases were meant to offset our cost increases primarily related to tariffs. And so we’ll continue to see that benefit into Q4 and going forward.

Christopher Snyder: I appreciate that. And I guess to follow up, it feels like the guide is implying almost no volumes in Q4. It feels like price alone could maybe be mid-singles. So I guess, is there a conservatism in that? I understand it’s been a long period of really strong growth for you guys, but it does seem like a pretty sharp falloff in volumes. And I think maybe the bigger question is like what does that mean for volumes in ’26?

Dean Nolden: Good. We’re — Chris, thanks. We’re looking forward to giving you 2026 guidance when we release our Q4 results. So we’re very bullish on our industry, as Mike alluded to in his prepared remarks. And this return to a normalized run rate in Q4 is our current expectation, given where we sit in the quarter, middle of the quarter and our visibility to our customer demand and our factory production. I’ll turn it over to Mike.

Michael Schoeb: Yes. And look, I will say again, no change in signals. We are, by nature, somewhat conservative, right? We try to under promise and over deliver. I’m not setting expectations there at all. I’m just telling you that is our culture. But no change in signal, no change in demand. I’ll repeat what I said earlier, it’s a tough Q4 comp. The industry is still vibrant. It is growing. We do not see changes in terms of that. And as we give you guidance on ’26, we look forward to confirming that outlook.

Operator: Our next question comes from Ketan Mamtora with BMO Capital Markets.

Ketan Mamtora: Congratulations. Maybe to start with and not to put too fine a line on sort of Q4, but are there any sort of nuances that we should be mindful of between North America and international, as you think about sort of what happens in Q4?

Michael Schoeb: Not really. I mean it’s — I’m trying to think through your question because it’s a good one. But nothing significant that I can tell you, we, again, would expect to change. Again, emerging markets sometimes get lumpy. So that happens. We’ve seen a little bit of that in our Middle East Africa business, which is less than 3% of revenue. So sometimes that happens, but I — and it can vary from quarter-to-quarter, but the core the markets that really matter for us that are — and hopefully, I’m not offending any of our customers in these other regions. But given our revenue percentage, right, it’s really U.S., Europe and Asia for the most part. That’s how I’d answer that.

Ketan Mamtora: Got it. No, that’s helpful. And then maybe one for Dean. As you think about deleveraging, where do you think sort of you want to get to in terms of a kind of more normalized level?

Dean Nolden: Yes. Thanks for the question. And I think we’ll be prepared to discuss that as we give guidance in first quarter of next year for 2026 and beyond. But I would emphasize, I guess, in what we said that this business has a very strong free cash flows and deleveraging will continue to be our #1 priority, and you’ve seen that in our balance sheet through the end of September. And we’ve historically deleveraged a half to a full turn per year organically, and we will continue to do that. So while we continue to invest in the business for growth, new product productivity, et cetera. So we have multiple levers at our disposal, and we’ll continue to manage those and look forward to managing those to return value to our shareholders over the long term, but look forward to giving that guidance early next year.

Operator: Our next question comes from Kyle Menges with Citigroup.

Unknown Analyst: This is Randy on for Kyle. I guess just on the margin side, outside of volume and price, what are some of the other margin drivers we should be thinking about in 2026? I mean it’d be right to get some more color on the cost down and manufacturing efficiency initiatives that you guys have in place, and how we should be thinking about that contributing to margin going forward?

Michael Schoeb: Yes. So maybe I can start and then Dean, you can add a little more color. So mix — and if you — maybe I’ll refer you back to sort of Slide 9 when we talk about it, but mix is a really important part of our margin. And so the larger capacity product, right, more engineering content, less competitive pressure and just more value, frankly, that gets offered to the users of those larger products. So mix is a big part. That’s meaningful. On the cost down side, look, there’s always opportunity, but as we have stressed continually, quality is really the one thing that our customers care about. They talk to us about it all the time. So we do have cost down. There are opportunities. We’ve been pretty good at it. But we’re very methodical, very careful, very slow because you have dynamic engineering and a product that is bouncing around, particularly in terms of a washer and there are always unexpected things that happen.

You can’t always get it certainly on a computer-aided design certainly in our laboratories, which we have extensive ones across the world. So we do a lot of field testing. And again, we’re very, very cautious, but it’s there. It’s meaningful. We’ll continue to do it. Incremental volumes are meaningful in terms of the contribution that they get to us. And then there is a lot of opportunity in these factories to optimize efficiency and those teams are working on them very diligently day after day. And it’s a combination really of all those things.

Unknown Analyst: Got it. That’s helpful. And then just maybe a quick one on capital allocation. I mean, I know that your near-term priority is to you continue to deliver. But can you kind of frame what the M&A pipeline looks for you guys? It would be great to get some color on maybe the size of the acquisitions you’ve done in the past? And maybe some areas of your portfolio where you could continue to target, whether that might be more on the distribution side, the tax side or any other potential gaps you’d like to fill?

Michael Schoeb: Yes. So maybe I’ll start off. So you should think of us as very capable in terms of doing M&A. As we said, we’ve done 16 in the U.S. They are mainly smaller tuck-in businesses is part of the strategy, but it is not something that we need to have. So we’re capable of growing at quite attractive rates and quite attractive margins. When we see opportunity, we will enter conversations. We have some of those ongoing, I’m not in a position to comment on them. And then we’re always looking again on the manufacturing side, but there’s not really anything that would be close or anything that we would be overly excited about, and let me emphasize that we need at the moment to continue to grow as we have in the past.

Operator: And our final question comes from Damian Karas with UBS.

Damian Karas: Congratulations on the IPO and your third quarter results. I have a follow-up question on price. You talked about some additional actions that you are taking in the fourth quarter. How much pricing benefit that maybe didn’t flow through P&L this year, would you expect to carry over into 2026? And just kind of a hypothetical, if we were to see tariffs ease as a result of ongoing trade negotiations, would you expect that half of lower prices at all?

Michael Schoeb: Yes. Go ahead, Dean.

Dean Nolden: First, I would say, from a carryover perspective, again, I apologize, and we’re looking forward to giving guidance in the first quarter for 2026, but we had various price increases throughout the year, some in the second quarter, some in the third and then some in the fourth. So you will see some benefit next year from carryover pricing actions into next year from a price and profitability standpoint. So now I’ll turn it over to Mike.

Michael Schoeb: And then from a price give back, we don’t have a history of doing that. But we’re always, as I stated earlier, sensing, talking, seeing — and I think one of the strengths is — for us is we are very nimble. We are very quick. If we sense anything, you will see us act. But there’s not a history of doing that, and I wouldn’t expect that to change.

Damian Karas: Okay. That’s helpful. And you talked a little bit earlier about in North America, some of that strength in the market is new entrants emerging. Curious if you have a sense for what proportion of this emerging customer base you’re winning? Is that keeping up with your installed base share of the market? Or is that maybe an opportunity where you’re outgrowing?

Michael Schoeb: Yes. Good question. So if you think about the newer entrant coming in, is they’re really looking to scale up faster. They are looking for a multisite or as I stated in my earlier comments, oftentimes, it’s multistate. So what you must have to do that is you need a full digital suite to allow that operator to understand what’s happening to be able to maximize revenue to be able to manage their costs and really get the intelligence. And as a matter of fact, we call our digital platform insights because it gives the operator insights on how to be more effective, how to be more efficient and when they adopt those technologies, the financial performance of those stores improves. So we think our value proposition is very strong.

but particularly for the newer entrant, again, looking to scale, we believe we have, by far, the most comprehensive digital solution in the marketplace, and we are continuing to invest in that. We see a lot of opportunity for continued value. And so you’ll see us strengthen that offering.

Operator: This concludes today’s question-and-answer session. I would now like to turn the call back over to Mike Schoeb for any additional or closing remarks.

Michael Schoeb: Okay. Well, thank you very much. That concludes our meeting. I really, really appreciate everybody joining. Thank you for the questions, and we look forward to updating you on the next quarter. Thanks again.

Operator: Thank you. That concludes today’s third quarter 2025 Alliance Laundry Earnings Conference Call. You may now disconnect your lines at this time, and have a wonderful day.