Alliance Laundry Holdings (ALH) risk factors, FY2025 10-K

Risks Relating to Our Business

1. 01We design, manufacture and service products that incorporate innovative technologies. The introduction of new products and technologies involves risks, and we may not realize the degree or timing of benefits initially anticipated
2. 02We operate in a competitive market
3. 03Our business depends on the performance of our third-party distributors, route operators and suppliers who are subject to additional risks that are beyond our control, including those that could harm our business, financial condition and results of operations
4. 04Our business depends upon the financial viability of our customers and the preservation of our relationships with them
5. 05Price fluctuations or shortages of raw materials could adversely affect our operations
6. 06We face inventory risk caused by inherent uncertainty in inventory forecasting and production planning
7. 07We depend on suppliers, including single-source suppliers and, in certain cases, sole-source suppliers, to consistently supply us with components for our products, and any failure to procure such components could have a material adverse effect on our product inventories, sales, operating results and cash flows
8. 08Global economic downturns could negatively impact our suppliers and customers
9. 09Failure to achieve and maintain a high level of product and service quality could damage our reputation with customers, increase our costs or otherwise negatively impact our results and market share
10. 10Our financing programs to end-customers expose us to additional risks which could adversely affect our operations
11. 11See “Part II, Item 7
12. 12We are subject to risks associated with our Asset Backed Trade Receivables Facility
13. 13Borrowings bear interest at a floating rate equal to the daily 1-month SOFR plus 110 basis points, which was 4.8% as of December 31, 2025 and we pay an unused commitment fee of 0.35% on unfunded commitments
14. 14Past growth may not be indicative of future growth
15. 15We may encounter certain risks and incur certain expenses when implementing our business strategy to continue to grow our international business, particularly in emerging markets
16. 16Because a portion of our revenue is attributable to the sale of our products outside of the United States, we are exposed to adverse as well as beneficial movements in exchange rates between the U.S. dollar and the relevant foreign currency
17. 17Additionally, currency fluctuations may affect the prices we pay for the materials used in our products, and as a result, our operating margins may be negatively impacted by higher costs for certain cross border transactions
18. 18Our international operations expose us to worldwide economic conditions; unfavorable global economic conditions could lead to reduced revenues and negatively impact our results of operations
19. 19The occurrence or continuation of any or all of these events could have a material adverse effect on our business, Our business, financial condition and results of operations could be adversely affected by ongoing international conflicts and related disruptions in the global economy
20. 20The costs and difficulties of acquiring and integrating complementary businesses and technologies could impede our future growth, diminish our competitiveness and harm our operations
21. 21Our ability to attract, develop and retain key executives and other qualified employees is crucial to our results of operations and future growth
22. 22We may not realize expected benefits from our cost reduction efforts, and our profitability or our business otherwise might be adversely affected
23. 23Unexpected events, including natural or man-made disasters or telecommunications failures, may increase our cost of doing business or disrupt our operations
24. 24Our goodwill and other intangible assets represent a substantial amount of our total assets. A decline in future operating performance could result in impairment of goodwill or other intangible assets, which could have a material adverse effect on our business, financial condition, results of operations or cash flows

Risks Relating to Government Regulation and Litigation

1. 25Our international operations require us to comply with applicable trade, export controls and foreign anti-corruption laws and regulations of the U.S. government and various other countries
2. 26Any of these mitigation efforts comes with risks to our reputation, business, financial condition, results of operations and cash flows. Raising prices to end customers could result in them choosing a more cost effective manufacturer
3. 27We could incur significant costs in complying with EHS laws and regulations and could be adversely affected by liabilities or obligations imposed under such laws

Risks Relating to Government Regulation and Litigation-Energy efficiency, water usage standards and other product-

1. 28We are subject to risks related to environmental, social and governance (“ESG”) and sustainability laws, regulations, policies and initiatives
2. 29Energy efficiency, water usage standards and other product-related standards could adversely affect our industry
3. 30Our employees and our third-party distributors, route operators and suppliers may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
4. 31Changes in accounting standards may adversely affect us
5. 32Our business may be impacted by new or changing tax laws or regulations and actions by international, federal, state, and local agencies, or by how judicial authorities apply tax laws

Risks Relating to Intellectual Property Matters

1. 33Failure to adequately protect our intellectual property rights may have a material adverse effect on our results of operations or our ability to compete
2. 34Failure to protect the confidentiality of our trade secrets or other proprietary information could harm our business, financial condition, results of operations and competitive position
3. 35If our trademarks, trade names and domain names are not adequately protected, maintained and enforced, we may not be able to build name recognition in our markets of interest and our competitive position may be harmed
4. 36We may become involved in legal proceedings to enforce our intellectual property rights or relating to allegations that we have infringed third party intellectual property rights, the outcome of which would be uncertain and could be costly, time-consuming, and have a material adverse effect on our business

Risks Relating to Data Compliance, Cybersecurity and Artificial Intelligence

1. 37The protection of our data involves risks regarding security incidents which could damage our reputation, harm our operating results or result in significant liabilities or other adverse consequences that could have a material and adverse effect on our business
2. 38Our connected products and IoT platform present unique cybersecurity risks
3. 39The convergence of Operational Technology (“OT”) and Information Technology increases our exposure to cybersecurity risk
4. 40Our use of AI technologies may not be successful, which may adversely affect our reputation, business and financial condition

Risks Relating to Our Indebtedness

1. 41Our substantial indebtedness could adversely affect our financial condition
2. 42See Note 18 - Debt to our consolidated financial statements in this Annual Report for more information on the Company’s Credit Agreement
3. 43We require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations
4. 44Interest rate fluctuations could have an adverse effect on our financial results
5. 45On August 19, 2024, our subsidiary, Alliance Laundry Systems LLC (“Alliance Laundry Systems” or the “U.S
6. 46Despite our current indebtedness levels, we and our subsidiaries may incur significant additional indebtedness in the future. This could further exacerbate the risks associated with our substantial financial leverage
7. 47We may have future capital needs and may not be able to obtain additional financing on acceptable terms

Risks Relating to Ownership of Our Common Stock

1. 48We may need to raise additional funds in the future to finance our operations or acquire complementary businesses
2. 49Our stock price could be extremely volatile and, as a result, you may not be able to resell your shares at or above the price you paid for them, and you could lose all or part of your investment as a result
3. 50Future sales, or the perception of future sales, by us or our existing stockholders of a substantial amount of our common stock in the public market could cause the price of our common stock to fall
4. 51We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates
5. 52If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business or our market, or if they change their recommendation regarding our common stock adversely, the trading price and trading volume of our common stock could decline
6. 53Our principal stockholder currently controls the direction of our business. Our principal stockholder’s interests in our business may conflict with the interests of our other stockholders
7. 54The requirements of being a public company may strain our resources, increase our costs, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members
8. 55Failure to comply with the requirements to design, implement and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could materially and adversely affect us

Risks Relating to our Organizational Structure

1. 56Some provisions of Delaware law, our Stockholders Agreement and our amended and restated certificate of incorporation and bylaws may deter third parties from acquiring us and diminish the value of our common stock
2. 57The provision of our amended and restated certificate of incorporation requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers