Alliance Laundry Lifts 2026 EBITDA Outlook to 10% After Q3 Beat

Alliance Laundry (NYSE:ALH) raised its full-year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth outlook to approximately 10% after third-quarter revenue rose 5% year over year to $461 million. The commercial laundry equipment maker moved to the top of its previous 8% to 10% range, while keeping its revenue growth forecast of 6% to 7%. Executives warned that steel and freight costs will keep pressing on fourth-quarter profitability.

Volume and mix delivered half of the revenue increase, with pricing contributing the rest, Chief Financial Officer Dean Nolden said. Adjusted EBITDA climbed 14% to $127 million, helped by operating efficiencies and a $5 million tariff refund.

How far did margins expand?

Gross profit increased 12% to $182 million, and gross margin widened roughly 240 basis points to 39.4%. Strip out the tariff refund and the expansion was 130 basis points, Nolden said. Adjusted EBITDA margin improved 217 basis points to 27.5%; excluding the refund, adjusted EBITDA grew about 10% from the prior-year quarter.

The bottom line moved faster than the top. Adjusted net income jumped 57% to $76 million, and adjusted earnings per share rose 36% to $0.38. Lower interest expense — down roughly $20 million from a year earlier — contributed to the result. GAAP net income nearly doubled, rising 98% to $65 million.

Chief Executive Officer Mike Schoeb said pricing actions taken late last year helped offset inflation. He also credited the company's local manufacturing footprint, which shortens freight routes and reduces tariff exposure.

What drove North America?

North America revenue grew 8% to $356 million, led by commercial in-home and on-premise laundry equipment. Segment adjusted EBITDA rose 21% to $115 million, with margin up more than 300 basis points to 32.4% — a gain on par with adding roughly three points of pure margin to every sales dollar.

In the vended business — laundromats and multi-housing customers — results reflected the timing of new store projects and longer permitting and construction lead times, Nolden said. Customers kept replacing equipment with larger-capacity machines.

Schoeb called the project delays a timing issue rather than a shift in underlying demand. He noted some markets saw temporary weakness tied to immigration enforcement raids, but the effect tended to subside once the raids ended.

International revenue slipped 1% to $105 million on foreign currency translation, while segment adjusted EBITDA rose to $27 million and margin improved to 25.3% from 24% a year earlier. Latin America posted solid growth; Asia-Pacific revenue fell on project timing after earlier strength; Europe was steady; the Middle East and Africa improved, supported by hospitality and markets not directly affected by the Middle East conflict.

What happens in the fourth quarter?

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 buy some supply at spot prices rather than contracted rates.

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

On productivity, Schoeb pointed to factory technology, automation, and supplier and product-design work as cost-reduction levers. Nolden said the company also expects to leverage infrastructure and administrative costs as revenue grows.

Where does capital allocation stand?

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

Net debt stood at $1.07 billion at September 30, with net leverage (net debt divided by EBITDA) of 2.25 times, down from about 2.4 times in the second quarter. The company expects year-end leverage of approximately 2.1 times, reflecting the buyback.

Nolden said the repurchase accompanied a follow-on offering in which the company's sponsors reduced their ownership. Deleveraging remains the top priority, he said, though future buybacks, investment and further debt reduction are possible. The board has not approved an open-market share repurchase plan.

Alliance Laundry designs, manufactures and sells washers, dryers and related laundry systems for laundromats and customers in hospitality, healthcare, multifamily housing and other institutional markets, under brands including Speed Queen, UniMac, Huebsch, Primus and IPSO.