Item 1A. Risk Factors
An investment in our common stock involves risks. Before making an investment decision, you should carefully
consider the following risks and uncertainties, together with the other information contained in this Annual Report. The
risks and uncertainties described below are not the only ones we face. If any of these risks actually occur, our business,
prospects, operating results or financial condition could suffer materially, the trading price of our common stock could
decline and you could lose all or part of your investment. These disclosures reflect the Company’s beliefs and opinions as
to factors that could materially and adversely affect the Company and its securities in the future. References to past events
are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not
such factors have occurred in the past or their likelihood of occurring in the future.
Some statements in this Annual Report, including statements in the following risk factors, constitute forward-looking
statements. See the section titled “Cautionary Note Regarding Forward-Looking Statements . ”
Risks Relating to Our Business
We 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.
Our future success depends on designing, developing, producing, selling and supporting innovative products with
innovative technologies and anticipating industry changes. The regulations and policies applicable to our products, as well
as our customers’ product and service needs, change from time to time. Moreover, regulatory and policy changes, including
those relating to energy infrastructure, consumption and efficiency, as well as other events and their impacts, may render
our products and technologies non-compliant or non-competitive and may subject us to operational, compliance, business
and reputational risks and increased costs. See “Item 1A. Risk Factors - Risks Relating to Government Regulation and
Litigation-Energy efficiency, water usage standards and other product-related standards could adversely affect our
industry.” Our ability to realize the anticipated benefits of our technological advancements or product improvements-
including those associated with regulatory or policy changes-depends on a variety of factors, including: meeting
development, production and regulatory approval schedules; meeting performance plans and expectations; the availability
of raw materials and parts; our suppliers’ performance; our distributors’ performance; the hiring, training and deployment
of qualified personnel; achieving efficiencies; identifying emerging regulatory and technological trends; validating
innovative technologies; the level of customer interest in new technologies and products; and the costs and customer
acceptance of our new or improved products .
Our research and development efforts, including those aimed at advancing the environmental sustainability of our
products, such as reducing product water and energy consumption, may not culminate in new technologies or timely
products, or may not meet the needs or expectations of our customers as effectively as competitive offerings. Our
competitors may develop competing technologies that gain market acceptance before or instead of our products. In
addition, we may not be successful in anticipating or reacting to changes in the regulatory environments in which our
products are sold, and the markets for our products may not develop or grow as we anticipate.
Additionally, our products and services also may incorporate technologies developed or manufactured by third parties,
which, when combined with our technology or products, creates additional risks and uncertainties. As a result, the
performance and market acceptance of these third-party products and services could affect the level of customer interest
and acceptance of our own products in the marketplace.
We operate in a competitive market.
We have several large competitors within the markets in which we operate. There can be no assurance that significant
new competitors or increased competition from existing competitors will not have a material adverse effect on our
business, financial condition, results of operations and cash flows. There can be no assurance that we will not encounter
increased competition in the future, which could have a material adverse effect on our business, financial condition, results
of operations and cash flows.
In addition, we may face competition from companies outside of the U.S. that may have lower costs of production
(including labor or raw materials). These companies may pass along these lower production costs to customers, resulting in
a lower price for products like ours. As a result, our revenues and profits could be adversely affected. Certain of our
competitors have more experience than we do in the international markets we compete in. As a result, certain of our
competitors may have preexisting relationships with customers and may have obtained regulatory approvals in foreign
jurisdictions, which may negatively affect our ability to compete successfully in these international markets.
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Our 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.
We utilize third-party distributors to sell our products into international end-markets and route operators with global
delivery systems in order to manage the delivery of our products to such distributors. We rely on approximately 600
distributors worldwide who provide services from design and installation to aftermarket. Additionally, though our strategy
generally involves sourcing inputs from the same or nearby geographic regions as our manufacturing facilities, we continue
to face risks associated with supply disruptions or delays in shipments and supply chains regionally and globally. As a
result of our international operations, we are subject to risks associated with doing business in multiple jurisdictions,
including retailer and consumer boycotts due to actual or perceived ethical, environmental, social or political issues in
certain countries in which we do business and where our products are distributed, including reputational harm related to
substantiated or unsubstantiated human rights and labor concerns; the need to navigate and difficulty ensuring compliance
with existing and new laws and regulations in many jurisdictions, including those relating to labor conditions and
workplace safety, environmental protection, chemical regulations, water and energy usage, quality and safety standards,
imports, duties, taxes and other changes on imports; reduced protection for intellectual property rights in some countries;
disruptions or delays in shipments and supply chains globally; and changes in local economic conditions where
distributors, suppliers, route operators, retailers and customers are located. If our internal controls and compliance
programs do not adequately monitor, deter or prevent our employees as well as our distributors, route operators, suppliers
and other third parties with whom we do business from violating anti-bribery, anti-corruption or trade laws and regulations,
we may incur defense costs, fines, penalties, reputational harm, business disruptions and damage to our business.
In particular, compliance with sanctions and customs trade orders could affect the sourcing and availability of raw
materials used by our suppliers in the manufacturing of certain of our products. Our ability to successfully import such
materials may be adversely affected by changes in laws across jurisdictions. There are also increasing requirements and
expectations in various jurisdictions that companies proactively monitor the environmental and social performance of their
value chain, including compliance with a variety of labor practices and human rights considerations, as well as
consideration of a wider range of environmental and social matters, including the end-of-life considerations for products.
For example, various jurisdictions have adopted, or are considering adopting, regulations that would require organizations
to, among other things, conduct due diligence to identify certain environmental and human rights risks in their supply
chains and take steps to mitigate any such risks identified. We have been and may continue to be subject to costs associated
with such regulations, as well as any future regulations on the source of products or their component parts or materials,
including for the diligence pertaining to these matters and the cost of remediation and other changes to products, processes
or sources of supply as a consequence of such verification activities. The impact of such regulations may result in a limited
pool of acceptable suppliers, and we cannot guarantee that we will be able to obtain products in sufficient quantities at
competitive prices and of similar quality. Additionally, because our supply chain is complex, we may face regulatory
challenges in complying with applicable sanctions and trade regulations and reputational challenges with our consumers
and other stakeholders if we are unable to sufficiently verify the origins of the materials used in the products we sell. See
“ Item 1A. Risk Factors - Risks Relating to Our Business— Tariffs and other trade restrictions could adversely affect our
business and financial results, and we may not be able to raise prices sufficiently to offset increased costs caused by any
such tariffs ” for more information on tariff-related risks. Even if we comply with applicable regulations, we may be subject
to additional expectations and scrutiny from investors, business partners, wholesale partners, consumers or other
stakeholders on our environmental and human rights practices. These expectations are evolving quickly, and, as a result,
certain of our actions or decisions, either currently or in the future, may be perceived to not align with best practices or as
otherwise inconsistent with stakeholder expectations, which could damage our reputation and adversely impact our
business. See “ Item 1A. Risk Factors - Risks Relating to Government Regulation and Litigation—We are subject to risks
related to environmental, social and governance (“ESG”) and sustainability laws, regulations, policies and initiatives.”
Further, if any distributors, route operators, suppliers, retailers or servicers are unable or unwilling to perform
according to the negotiated terms and timetable of its respective agreement for any reason or if any terminates its
agreement, we would be required to engage a substitute distributor, supplier, retailer or servicer. This would likely result in
significant project delays and increased costs, which could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
We do not have long-term purchase commitments from our distributors, suppliers and retailers and may have to rely on
distributor, supplier and retailer forecast in making production decisions, and any cancellation of purchase
commitments or orders may result in the waste of raw materials or work in process associated with those orders,
reducing both our revenues and profitability.
A variety of conditions, both specific to our distributors and generally affecting the demand for these products, may
cause our distributors to cancel, reduce or delay orders. Cancellations, reductions or delays by a significant distributor or a
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number of distributors would result in a material reduction in our revenue. Those distributor decisions could also result in
excess and obsolete inventory or unabsorbed manufacturing capacity, which could reduce our profits or impair our cash
flow. On occasion, distributors require rapid increases in production, which could strain our resources, leading to a
potential reduction in our margins because of the additional costs necessary to meet those demands.
Our distributors generally do not make firm, long-term volume purchase commitments. In addition, industry trends
over the past five years have led to dramatically shortened lead times on purchase orders, as rapid product cycles have
become the norm. Although we sometimes enter manufacturing contracts with our customers, these contracts principally
clarify order lead times, inventory risk allocation and similar matters, rather than providing for firm, long-term
commitments to purchase a specified volume of products at a fixed price. As a result, distributors can generally cancel
purchase commitments or reduce or delay orders at any time. The large percentage of our sales to distributors in the
industry, which is subject to severe competitive pressure, rapid technological change and product obsolescence, increases
our inventory and overhead risks, among others, as we must maintain inventories of raw materials, work in process and
finished goods to meet customer delivery requirements, and those inventories may become obsolete if the anticipated
market demand does not materialize. Additionally, there has been consolidation of distributors in our industry. Increased
consolidation may result in fewer alternatives for distributors, which in turn could decrease our bargaining power as it
relates to pricing and purchase order terms.
We also make significant decisions, including determining the levels of business that we will seek and accept,
production schedules, component and raw material procurement commitments, facility requirements, personnel need, and
other resource requirements, based upon our estimates of distributor requirements. The short-term nature of our
distributors’ commitments and the possibility of rapid changes in demand for these products reduce our ability to estimate
accurately their future requirements. Because many of our costs and operating expenses are fixed, a reduction in customer
demand can reduce our gross margins and operating results. To transact business, we assess the integrity and
creditworthiness of our distributors and suppliers and we may, based on this assessment, incur design and development
costs that we expect to recoup over several orders produced for the customer. Such assessments are not always accurate and
expose us to potential costs, including the write off costs incurred and inventory obsolescence if the orders anticipated do
not materialize. We may also occasionally place orders with suppliers based on a customer’s forecast or in anticipation of
an order that is not realized. Additionally, from time to time, we may purchase quantities of supplies and materials greater
than required by customer orders to secure more favorable pricing, delivery or credit terms. These purchases can expose us
to losses from cancellation costs, inventory carrying costs or inventory obsolescence, and hence adversely affect our
business and operating results.
Our business depends on our customers and their continued engagement with us.
Our business depends upon the financial viability of our customers and the preservation of our relationships with them.
Some of our sales arrangements with these customers are by purchase order and are terminable at will at the option of
either party, rather than long-term contracts. For customers with long-term contracts, these customers have no obligation to
renew their contracts after their initial contract is satisfied, and in the normal course of business, some customers will elect
not to pursue additional contracts for our products. Any material cancellation, reduction or delay in purchases by these
customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Additionally, certain of our contractual arrangements with customers limit our ability to raise our prices during the term of
the contract. These limitations may restrict our ability to respond to inflationary pressures, resulting in a negative impact to
our business, financial condition, results of operations and cash flows.
Moreover, our continued success depends in part on our ability to sell additional products, updated products replacing
pre-existing products or enhancements to pre-existing products to our current customers. This may require increasingly
sophisticated and costly sales efforts. Similarly, the rate at which our customers purchase new products depends on a
number of factors, including general economic conditions and customer receptiveness to any price changes related to these
additional features and services.
Price fluctuations or shortages of raw materials could adversely affect our operations.
The major raw materials and components we purchase for our production process are carbon and stainless steel,
motors, aluminum castings, electronic controls, corrugated boxes and plastics. The price and availability of these raw
materials and components are subject to market conditions affecting supply. Many of the commodities that affect our raw
material and component costs have fluctuated significantly over the past several years, due to supply and demand trends,
government regulations and tariffs, currency exchange rates, transportation costs and global economic factors. We take
steps to contain such cost fluctuations by using hedge instruments or contracts, implementing price increases, increasing
our inventory or entering into fixed-price contracts. However, there can be no assurance that any such mitigation efforts,
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including holding excess inventory, will be effective, or that any such price increases would not negatively impact
customer demand, such that increases in raw material or component costs (to the extent we are unable to pass on such
higher costs to customers) will not have a material adverse effect on our business, financial condition, results of operations
and cash flows.
We purchase a portion of these raw materials and component parts from foreign suppliers using foreign currency, and
as a result, we are subject to exchange rate fluctuations. Complex global political and economic dynamics can affect
exchange rate fluctuations. For example, the implementation of tariffs, quotas, duties or other measures related to the level
of trade between the United States and other markets could impact the value of the U.S. dollar. It is difficult to predict
future fluctuations and the effect these fluctuations may have on our business, financial condition, results of operations and
cash flows. Our reliance on suppliers to secure the raw materials and components used in our products, and on service
providers to deliver our products, also exposes us to volatility in the prices and availability of these services. Because we
maintain limited raw material and component inventories, even brief unanticipated delays in delivery by suppliers,
including those due to capacity constraints, labor disputes, impaired financial condition of suppliers, weather emergencies
or natural or man-made disasters, may impair our ability to satisfy our customers’ needs and could adversely affect our
business and financial performance.
We face inventory risk caused by inherent uncertainty in inventory forecasting and production planning.
We are exposed to inventory risks that may adversely affect our operating results as a result of new product launches,
changes in product pricing, defective products and associated product liability and changes in consumer demand and
spending patterns. We endeavor to accurately predict these changes and avoid overstocking or understocking products we
manufacture or sell. Demand for products, however, can change significantly between the time we order major raw
materials and components we purchase for our production process and the date of sale of our resulting inventory. In
addition, when we begin selling or manufacturing a new product, it may be difficult to establish third-party distributor
relationships for sale of such new product, determine appropriate product or component selection, or accurately forecast
demand. The acquisition of raw materials and components we purchase for our production process requires significant
lead-time and prepayment, and they may not be returnable. We carry a broad selection and significant inventory levels of
certain products, and at times we are unable to sell products in sufficient quantities or meet consumer demand. If our
inventory forecasting and production planning processes result in higher inventory levels exceeding the levels demanded
by customers or should our customers decrease their orders with us, our operating results could be adversely affected due
to costs of carrying the inventory and additional inventory write-downs for excess and obsolete inventory.
We 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.
We rely on single-source suppliers for certain proprietary component parts in our products. A single-source supplier is
a supplier from which we make all purchases of a particular component used in our products even though other suppliers of
the component exist. A sole-source supplier is a supplier from which we make all purchases of a particular component used
in our product, and the supplier is the only source of that particular component in the market. If these single-source or sole-
source suppliers were to cease or interrupt production or otherwise fail to supply these components to us, we would be
unable to obtain these proprietary component parts for an indeterminate period of time, which could adversely affect our
product inventories, sales, operating results and cash flows. These single-source and sole-source suppliers also expose us to
pricing risk.
Establishing additional or replacement suppliers for any of these materials or components, if required, could limit our
ability to manufacture our products, result in production delays and increased costs and adversely affect our ability to
deliver products to our customers on a timely basis or at all. Delays related to supplier changes could also arise due to
increased shipping times if new suppliers are located farther away from our markets or from other participants in our
supply chain. In addition, freight capacity issues continue to persist worldwide as there is much greater demand for
shipping and reduced capacity and equipment. If we are not able to identify alternate sources of supply for the components,
we might need to modify our product to use substitute components, which could cause delays in shipments, increase design
and manufacturing costs and increase prices for our products. Any such modified product might not be as effective as the
predecessor product or might not gain market acceptance. This could lead to customer or consumer dissatisfaction and
damage to our reputation and could materially and adversely affect our product inventories, sales, operating results and
cash flows.
Operations at any of our suppliers’ facilities are subject to disruption for a variety of reasons, including, but not limited
to, work stoppages, labor relations, intellectual property claims against suppliers, information technology failures,
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cybersecurity incidents, data breaches and hazards such as fire, earthquakes, flooding or other natural or man-made
disasters. Such disruptions could interrupt our ability to manufacture certain products, which could negatively impact our
revenue and earnings performance. It may be difficult or impossible for us to obtain insurance to protect against any such
disruptions at an adequate coverage level or at all.
Global economic downturns could negatively impact our suppliers and customers.
Our suppliers and customers are subject to some of the same risks regarding worldwide economic conditions, and
therefore could be negatively affected by global economic downturns. Such downturns may tighten credit markets and
lower liquidity levels and there can be no assurance that conditions will improve. Lower credit availability may increase
borrowing costs for our customers and suppliers. In addition, some of our customers and suppliers may experience
financial problems due to reduced access to credit and lower revenues. Financial duress may prompt some of our suppliers
to seek to renegotiate supply terms with us, eliminate or reduce production of certain components we purchase or file for
bankruptcy protection. In addition, some of our customers may be unable to obtain financing to purchase products or meet
their payment obligations to us. Further, negative economic conditions could result in the insolvency of one or more of our
customers or suppliers.
Failure 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.
Product and service quality issues could harm customer confidence in our products, company and our brands. If certain
of our product and service offerings do not meet applicable safety standards or our customers’ expectations regarding
safety or quality, or if we fail to obtain or maintain applicable product safety certifications, we can experience lost sales or
increased costs and we can be exposed to legal, financial and reputational risks, including due to poor reviews on consumer
review platforms and through social media. Our ability to satisfy customer expectations and respond to any negative
feedback quickly and effectively may impact our results. Actual, potential or perceived product safety concerns could also
expose us to litigation as well as government enforcement actions. In addition, when our products fail to perform as
expected, we may be exposed to warranty, product liability, personal injury and other claims in the future.
While we maintain strict quality controls and procedures, we cannot be certain that these controls and procedures will
reveal defects in our products or their raw materials, which may not become apparent until after the products have been
placed in use in the market. Accordingly, there is a risk that products will have defects, which could require a product recall
or field corrective action. Product recalls and field corrective actions can be expensive to implement and may damage our
reputation, customer relationships and market share.
We provide our customers a warranty covering workmanship and, in some cases, materials in products we
manufacture, and we have in the past faced, and may in the future face, potential warranty or safety breaches in products
we manufacture. Certain of our product warranties also include coverage for the labor cost of the servicing company. If a
product fails to comply with the warranty, we may be obligated, at our expense, to correct any defect by repairing or
replacing the defective component, and we have in the past been, and may in the future be, required to incur such expense
to resolve warranty or safety claims. We maintain warranty reserves in an amount based primarily on the number of units
shipped and on historical and anticipated warranty claims. However, there can be no assurance that future warranty claims
will follow historical patterns or that we can accurately anticipate the level of future warranty claims. An increase in the
rate of warranty claims or the occurrence of unexpected warranty claims could materially and adversely affect our business,
financial condition, results of operations and cash flows.
In many jurisdictions, product liability claims are not limited to any specified amount of recovery. Personal injury or
property damage lawsuits resulting from product liability risks may involve individual and purported class actions. We
cannot be sure that our existing insurance or any additional insurance will provide adequate coverage against potential
liabilities and any such liabilities could adversely affect our business, financial condition, results of operations and cash
flows. In addition to direct expenditures for damages, settlements and defense costs, there is also a possibility of adverse
publicity as a result of product liability claims.
A recall or claim could require us to review our entire product portfolio to assess whether similar issues are present in
other products, which could result in a significant disruption to our business and which could have a further adverse impact
on our business, financial condition, results of operations and cash flows. There can be no assurance that we will not
experience any material warranty or product liability claims in the future, that we will not incur significant costs to defend
such claims or that we will have adequate reserves or insurance to cover any recall, repair and replacement costs.
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Product installation also frequently depends on third-party distributors or other service providers. Our inability to find
qualified technicians to perform these installation services, or any of these service providers damaging or failing to
properly install any of our products, could also expose us to warranty, product liability, personal injury or other claims in
the future. Moreover, as customers often see these downstream service providers as an extension of the Alliance business
despite their independence as third parties, any such issues could damage our reputation, customer relationships and market
share.
Our financing programs to end-customers expose us to additional risks which could adversely affect our operations.
We offer an extensive financing program to end-customers, primarily laundromat owners, to assist them in their
purchases of new equipment from our distributors or, in the case of route operators, from us. Typical terms for equipment
financing receivables range from two to twelve years . As of December 31, 2025 , the average principal loan balance is
approximately $0.1 million . We fund these financing programs through our $530.0 million Asset Backed Equipment
Facility. In the case of a rapid amortization event or an event of default under our Asset Backed Equipment Facility, we
will not be permitted to request new borrowings thereunder. In this case, or if certain limits in the size of our Asset Backed
Equipment Facility are reached (either overall size or certain sublimits) or upon termination of our Asset Backed
Equipment Facility, we would be required to obtain additional funding to support our customer financing program. Our
inability to obtain such additional funding or our inability to securitize our equipment financing pursuant to the Asset
Backed Equipment Facility could limit our ability to provide our end-customers with financing, which could result in the
loss of sales and have a material adverse effect on our business, financial condition, results of operations and cash flows.
See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this
Annual Report for further information regarding our Asset Backed Equipment Facility.
Our financing program also subjects us to additional regulatory requirements and compliance obligations. In particular,
the program requires that the Company be licensed as a lender in certain jurisdictions in which the Company operates. The
Company has been subject to, and in the future may be subject to, potential supervision, examinations or enforcement
actions by federal and state licensing and regulatory agencies or penalties for violations of financial services, consumer
protections and other applicable laws and regulations. If any proceedings or investigations are determined adversely to us
or result in legal actions, claims, regulatory proceedings, enforcement actions, or judgments, fines or settlements involving
a payment of material amounts, or if injunctive relief is issued against us, our business, financial condition, results of
operations and cash flows could be materially adversely affected.
We are subject to risks associated with our Asset Backed Trade Receivables Facility.
We may finance a portion of our working capital through our Asset Backed Trade Receivables Facility administered
by our special-purpose, bankruptcy-remote subsidiary, Alliance Laundry Trade Receivables LLC. Under this facility, we
sell newly originated tra de receivables to the subsidiary, which in turn borrows against those receivables. The facility limit
is $120.0 million and the revolving period currently extends to May 1, 2028 , after which no new borrowings may be
requested and outstanding balances are scheduled to amortize over 180 days, with any remaining amount due at maturity.
Borrowings 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.
Our borrowin g capacity is dependent on the size and performance of the eligible receivables pool and our compliance
with facility covenants and performance triggers. Sales slowdowns, increased customer delinquencies or dilutions, changes
in eligibility or concentration limits, or servicing issues could reduce availability, increase borrowing costs, or otherwise
limit our access to receivable collections. We may be unable to renew, refinance, or replace the facility on acceptable terms
before the end of the revolving period. We also face risk that the facility’s lenders will default on its obligations and are
exposed to changes in interest rates. Although we consolidate the subsidiary and its assets and liabilities in our financial
statements, the receivables and related collections are pledged to facility lenders and subject to control provisions; as a
result, adverse developments under the facility could restrict access to collections and negatively affect our liquidity, results
of operations, and financial condition. See Note 6 - Asset Backed Facilities to our consolidated financial statements in this
Annual Report for further information regarding our Asset Backed Trade Receivables Fac ility.
Past growth may not be indicative of future growth.
Historically, we have experienced substantial sales growth through organic market share gains, geographic expansion,
technological innovation, new product offerings, increased demand and acquisitions that have increased our size, scope and
geographic footprint. However, our various business strategies and initiatives, including our growth initiatives, are subject
to business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond our control.
For example, delays in laundromat construction or increased permitting requirements may adversely impact our ability to
expand our business. In certain prior periods, our results in a particular period have been impacted by unanticipated delays
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in construction. If we are not able to continue to compete in our markets, expand into new markets and grow our existing
business, our business, financial condition, results of operations and cash flows could be adversely affected.
We may encounter certain risks and incur certain expenses when implementing our business strategy to continue to
grow our international business, particularly in emerging markets.
The continued execution of our strategy to grow our international business could cause us to incur unforeseen capital
expenditures or significant start-up expenses related to growth initiatives and cause us to incur losses on assets devoted to
the strategy. In addition, expansion of international marketing and advertising efforts could lead to a significant increase in
our marketing and advertising expenses and could increase our customer acquisition costs. Furthermore, certain
international markets may not be receptive to our products and services or we may face increased competition from lower
cost manufacturers. Any failure to continue to successfully execute this strategy could adversely affect our business,
financial condition, results of operations and cash flows.
Further, we expect that sales to emerging markets will continue to account for a meaningful portion of our sales as
developing nations and regions around the world increase their demand for our products. Emerging markets are subject to
different risks as compared to more developed markets, and operating a business in an emerging market can involve a
greater degree of risk than operating a business in more developed markets, including, in some cases, increased political,
economic and legal risks. There is no guarantee that future political or economic instability will not occur in countries in
which we operate, and the risks we may face with respect to these countries include the risk of unforeseen government
actions, acts of god, terrorism, hostage taking, military repression, extreme fluctuations in currency exchange rates, high
rates of inflation, labor unrest, war or civil unrest, expropriation and nationalization, renegotiation or nullification of
existing concessions, licenses, permits and contracts, changes in taxation policies, and restrictions on foreign exchange and
repatriation, as well as changing political conditions, currency controls, export controls and governmental regulations that
favor or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or
purchase supplies from, a particular jurisdiction or other events. Moreover, emerging market governments and judiciaries
often exercise broad, unchecked discretion and are susceptible to abuse and corruption. Additionally, financial turmoil in
any emerging market country tends to adversely affect the value of investments in all emerging market countries as
investors move their money to more stable, developed markets. Financial problems or an increase in the perceived risks
associated with investing in companies in emerging economies could dampen foreign investment and adversely affect local
economies in which we operate. While these factors and their impact are difficult to predict, any one or more of them could
have a material adverse effect on our competitive position, results of operations, cash flows or financial condition.
We are exposed to the risk of foreign currency fluctuations.
Because 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.
Moreover, some of our operations are or will be conducted by subsidiaries organized in foreign countries. The results of
operations and financial position of these subsidiaries will be reported in the relevant foreign currencies and then translated
into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, which are stated in
U.S. dollars. In addition, our balance sheet reflects non-U.S. dollar denominated assets and liabilities, including
intercompany balances eliminated in consolidation. Accordingly, fluctuations in exchange rates may give rise to gains or
losses when financial statements of non-U.S. operating subsidiaries are translated into U.S. dollars. The exchange rates
between many of these currencies, including the euro, Czech koruna, Thai baht and U.S. dollar, have fluctuated
significantly in recent years and may fluctuate significantly in the future. Such fluctuations may have a material adverse
effect on our results of operations and financial position and may significantly affect the comparability of our results
between financial periods.
Additionally, 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.
We also incur currency transaction risk whenever one of our operating subsidiaries enters into a transaction using a
different currency than its functional currency. While we attempt to reduce currency transaction risk by matching cash
flows and payments in the same currency and entering into foreign exchange contracts for hedging purposes, we cannot
provide assurance that we will be successful in reducing or hedging our exposure.
Our international operations expose us to worldwide economic conditions; unfavorable global economic conditions
could lead to reduced revenues and negatively impact our results of operations.
We compete in various geographic regions and markets around the world and increasingly manufacture and sell our
products outside of the United States . For the year ended December 31, 2025 , approximately 26% of our net revenue was
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attributable to products sold outside of the United States. Beyond our locations in the U.S., we have manufacturing
facilities located in the Czech Republic, Thailand and China, and sales offices in nine different countries. We also export
our products to other foreign countries, and expanding international sales is part of our growth strategy.
International operations generally are subject to various risks, including political, military, religious and economic
instability, local labor market conditions, the imposition of tariffs, the impact of government regulations, foreign national
priorities, government budgets, the effects of income and withholding tax, foreign exchange controls, repatriation of
earnings, investments, governmental expropriation and differences in business practices. We may incur increased costs and
experience delays or disruptions in product deliveries and receipt of payments in connection with international
manufacturing and sales that could result in a loss of revenue. Unfavorable changes in the political, regulatory and business
climate of various foreign jurisdictions in which we operate could have a material adverse effect on our business, financial
condition, results of operations and cash flows. Additionally, government policies on international trade and investments
such as import quotas, capital controls, taxes or tariffs or similar trade barriers, whether imposed by individual
governments or regional trade blocs, can affect demand for our products and services, impact the competitive position of
our products or services or encumber our ability to manufacture or sell products in certain countries.
In addition, we may also be affected by broader macroeconomic trends. We have experienced, and expect to continue
to experience, fluctuations in sales and results of operations due to economic and business cycles. Several economic
factors, including, but not limited to, gross domestic product, availability of consumer credit, interest rates, consumer
sentiment and debt levels, fiscal and credit market uncertainty and foreign currency exchange rates, generally affect
demand for our products. Higher unemployment rates, higher fuel and other energy costs, higher deficit spending and debt
levels and higher tax rates adversely affect demand. A decline in economic activity and conditions in the markets in which
we operate has had an adverse effect on our financial condition and results of operations in recent years, and future declines
and adverse conditions could have a similar adverse effect.
The occurrence or continuation of any or all of these events could have a material adverse effect on our business,
financial condition, results of operations and cash flows.
Our business, financial condition and results of operations could be adversely affected by ongoing international
conflicts and related disruptions in the global economy.
The global economy has been negatively impacted by the military conflict between Russia and Ukraine, the ongoing
conflict between Israel and Hamas, and the US-Israel-Iran conflict has caused political, economic and military instability in
Israel and surrounding regions. Our business may indirectly be adversely affected by these conflicts and their respective
effects, including as a result of financial and economic sanctions imposed by governments in the U.S., United Kingdom
and European Union, among others, on certain industry sectors and parties in Russia.
We are unable to predict the impact of either the Russia-Ukraine conflict or the Israel-Hamas conflict on our business
or the global economy. The impact of further escalation of geopolitical tensions related to these conflicts or other
unforeseen conflicts, including increased trade barriers or restrictions on global trade, is unknown and could result in
heightened cybersecurity threats, protracted or further increased inflation, lower consumer demand, fluctuations in interest
and foreign exchange rates and increased volatility in financial markets, among other things, any of which could adversely
affect our business, financial condition, results of operations and cash flows.
The costs and difficulties of acquiring and integrating complementary businesses and technologies could impede our
future growth, diminish our competitiveness and harm our operations.
As part of our growth strategy, from time to time we consider selective acquisitions of complementary businesses. We
might not be able to identify suitable acquisition candidates or business relationships, negotiate acceptable terms for such
acquisitions or relationships or obtain necessary financing on acceptable terms for such acquisitions or relationships. Even
if we consummate acquisitions, such acquisitions could be dilutive to earnings. Moreover, the margins for these companies
might differ from our historical gross and operating margins, resulting in a material adverse effect on our results of
operations.
Additionally, we are responsible for liabilities associated with businesses that we acquire to the extent we are not
entitled to receive indemnification from the relevant sellers or coverage under our insurance policies. Our due diligence
reviews may not identify all of the material issues necessary to accurately estimate the cost and potential loss contingencies
of a particular transaction.
Acquisitions also involve numerous other risks, including:
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• problems implementing adequate financial reporting and disclosure controls and procedures for the newly
acquired business;
• the challenges in achieving strategic objectives, cost savings and other anticipated benefits;
• unanticipated liabilities, costs or expenses, including post-closing impairment charges as well as expenses
associated with eliminating duplicate facilities;
• difficulties in integrating acquired businesses with our operations, including with respect to technological
integration, applying our internal controls to these acquired businesses, or in managing strategic investments;
• diversion of management’s attention and other resources;
• failure to retain existing, key personnel of the acquired business; and
• the ability to obtain the financing necessary to complete acquisitions on attractive terms, or at all.
Our ability to attract, develop and retain key executives and other qualified employees is crucial to our results of
operations and future growth.
We are dependent on the continued services and performance of our senior management team and certain other key
employees. An inability to hire, develop, engage and retain a sufficient number of qualified employees or to effectively
manage succession planning could materially hinder our business, which could have a material adverse effect on our
business, financial condition, results of operations and cash flows. We do not currently maintain life insurance policies with
respect to key employees.
Additionally, we are dependent on a labor force with technical and manufacturing industry experience to operate our
businesses successfully. From time to time there may be shortages of skilled labor which may make it more difficult or
more expensive for us to attract and retain qualified employees. An inability to attract and retain qualified individuals or
increases in our costs to do so could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
Adverse relations with employees could harm our business.
As of December 31, 2025 , 1,691 of our employees at our Wisconsin facilities are represented by the United
Steelworkers union and subject to a collective bargaining agreement, all of our employees at our Guangzhou, China facility
are represented by a workers’ union and subject to a collective bargaining agreement, and all of our employees at our
facility in Pribor, Czech Republic are subject to a collective bargaining agreement, with certain of those employees
represented by a worker’s union. The Wisconsin collective bargaining agreement requires certain minimum full-time
hourly employment levels, unless deviations from those levels are caused by specified events, such as sales fluctuations or
events beyond our reasonable control. However, there can be no assurance that we can successfully maintain such
employment levels at our Wisconsin facilities. In many cases, before we take significant actions with respect to these
production facilities, such as workforce reductions or closures, we must reach agreement with the relevant union or
employee works council, which may result in operational inefficiencies or impede our ability to carry out our cost
reduction efforts. Additionally, these agreements have historically been renewed for two to five year terms, and are
therefore subject to periodic renegotiation, and the terms of future agreements may impose additional costs and operating
inefficiencies on our business. The current union agreement with the United Steelworkers expires February 28, 2027.
Although we have not experienced any recent labor disruptions, strikes or other forms of labor unrest in connection
with our personnel, there can be no assurance that labor disruptions by employees will not occur in the future. Such activity
could result in the incurrence of additional costs, as well as limitations on our ability to operate or provide products and
services to our customers, which may materially affect our business, financial condition, results of operations and cash
flows.
In addition, the transportation and delivery of raw materials to our manufacturing facilities and of our products to our
customers by workers employed by third parties that are members of labor unions is critical to our business. Any work
stoppages by these workers could have a material adverse effect on our business, financial condition, results of operations
and cash flows.
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We may not realize expected benefits from our cost reduction efforts, and our profitability or our business otherwise
might be adversely affected.
We continue to focus on our cost reduction efforts in order to drive improvement across direct material procurement,
labor efficiency and product design optimization. However, these activities are complex and may involve or require
changes to our operations. If we do not successfully manage these activities, expected efficiencies and benefits might be
delayed or not realized. Additionally, risks associated with these actions and other workforce management issues include:
unfavorable political responses and reputational harm; unforeseen delays in the implementation of the restructuring
activities; additional costs; unforeseen negative impact on product quality; adverse effects on employee morale; the failure
to meet operational targets due to the loss of employees or work stoppages; and difficulty managing our operations during
or after facility consolidations, any of which may impair our ability to achieve anticipated cost reductions, harm our
business or reputation, or have a material adverse effect on our competitive position, business, financial condition, results
of operations or cash flows.
Unexpected events, including natural or man-made disasters or telecommunications failures, may increase our cost of
doing business or disrupt our operations.
The occurrence of one or more unexpected events or natural or man-made disasters, including fires, tornadoes,
tsunamis, hurricanes, earthquakes, floods and other forms of severe weather, telecommunications failures or other
disruptions impacting information technology systems in the U.S. or in other countries in which we operate or in which our
suppliers, distributors or customers are located could adversely affect our operations and financial performance. Natural or
man-made disasters, pandemic illness, equipment failures, power outages or other unexpected events could result in
physical damage to, and complete or partial closure of, one or more of our manufacturing facilities or distribution centers,
temporary or long-term disruption in the supply of component products from some local and international suppliers,
disruption in the transport of our products to distributors and end-users, delay in the delivery of our products to our
distribution centers or our inability to communicate with our distributors, customers or suppliers. Existing insurance
arrangements may not provide protection for all costs and disruption that may arise from such events. The occurrence of
any of these events could also increase our insurance and other operating costs.
Our 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.
As of December 31, 2025 , goodwill and other intangible assets totaled $1.4 billion , or approximately 50% of our total
assets. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in connection with the
August 2015 acquisition of Alliance Laundry Holdings by our principal stockholder (the "BDTCP Transaction") and
subsequent acquisitions exceeding the fair value of acquired net assets. We assess annually whether there has been
impairment in the value of our goodwill and other intangible assets. If future operating performance at one or more of our
reporting units were to fall significantly below current levels, we could be required to recognize a non-cash charge to
operating earnings for goodwill or record an impairment charge related to other intangible assets. Significant negative
industry or economic trends, disruptions to our business, planned or unexpected significant changes in the use of the assets,
and sustained market capitalization declines may result in recognition of impairments to goodwill or certain other
intangible assets. Any significant goodwill or intangible asset impairment could reduce earnings in such period and have a
material adverse effect on our business, financial condition, results of operations or cash flows.
We have remediated the material weaknesses previously reported in our internal control over financial reporting, but if
we identify additional material weaknesses in the future or fail to maintain an effective system of internal control we
may not be able to accurately and timely report our financial results, which may affect investor confidence and cause us
to incur additional costs resulting in adverse impacts to our results of operations.
As a public company, we are required to establish and periodically evaluate procedures with respect to our disclosure
controls and procedures and our internal control over financial reporting. In connection with the preparation and audit of
our financial statements as of December 31, 2024, management and our independent registered public accounting firm
determined that the Company had not maintained appropriately designed controls to prevent or detect material
misstatements to our consolidated financial statements. Specifically, a material weakness was identified relating to our
failure to design, implement and maintain an adequate review and approval process with respect to manual or non-routine
journal entries. After completing several remedial actions as described in Part II, Item 9A “Controls and Procedures” we
have remediated the previously identified material weaknesses as of December 31, 2025.
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However, there can be no assurance that the measures we have taken to date, or any actions we may take in the future,
will be effective in preventing or mitigating potential future material weaknesses. Our current controls and any new
controls that we develop may become inadequate because of changes in conditions in our business. Further, additional
weaknesses in our disclosure controls and procedures and internal control over financial reporting may be discovered in the
future. If we are then unable to remediate the material weaknesses in a timely manner and further implement and maintain
effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process, and
report financial information accurately, and to prepare financial statements within required time periods could be adversely
affected, which could result in material misstatements in our financial statements that may continue undetected or a
restatement of our financial statements for prior periods. This may negatively impact the public perception of the Company
and cause investors to lose confidence in the accuracy and completeness of our financial reports, harm our ability to raise
capital on favorable terms, or at all, in the future, and subject us to litigation or investigations by regulatory authorities,
which could require additional financial and management resources or otherwise have a negative impact on our financial
condition.
In addition, we have incurred and expect to continue to incur significant expenses and devote substantial management
effort toward our efforts to achieve and maintain effective internal control over financial reporting. As a result of the
complexity involved in complying with the rules and regulations applicable to public companies, our management’s
attention may be diverted from other business concerns, which could harm our business, operating results, and financial
condition. Although we have already implemented various actions to remediate the material weakness, we may find in the
future that we do not have adequate systems, processes or personnel with the appropriate level of knowledge over financial
reporting required of public companies and may need to take additional remediation steps in the future, or engage outside
consultants, which will increase our operating expenses.
Risks Relating to Government Regulation and Litigation
Our 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.
Doing business on a worldwide basis requires us and our subsidiaries to comply with the trade and sanctions laws and
regulations of the U.S. government and various other countries, and our failure to successfully comply with these laws and
regulations may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers and
employees, and to the activities of agents acting on our behalf, and may restrict our operations, trade practices and
partnering activities.
For example, we cannot provide products or services to certain countries or individuals subject to U.S. economic
sanctions or export controls restrictions administered by the Office of Foreign Assets Control of the U.S. Department of the
Treasury or the U.S. Department of Commerce. In addition, our international operations are subject to U.S. and non-U.S.
anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (the “FCPA”). The FCPA prohibits us
from directly or indirectly offering or providing anything of value to a “foreign official” for the purpose of improperly
influencing official decisions or obtaining or retaining business or otherwise obtaining an improper business advantage,
and requires us to maintain adequate record-keeping and internal accounting practices to accurately reflect the transactions
of the company. In addition, some of the countries in which we operate have a high degree of corruption. As a result of the
above activities, we are exposed to the risk of violating the FCPA and other anti-corruption laws. Recent years have seen a
substantial increase in anti-bribery law enforcement activity, including increased enforcement activity by non-U.S.
regulators and increases in criminal and civil proceedings brought against companies and individuals. While we have
established certain safeguards and policies designed to promote compliance with applicable laws, these safeguards and
policies may prove to be less than effective and our employees or agents may engage in conduct for which we might be
held responsible. Violations of these laws or regulations could result in significant sanctions including fines, onerous
compliance requirements, the denial of export privileges, criminal fines and imprisonment, civil penalties, disgorgement of
profits, injunctions, as well as remedial measures, and can also subject us to reputational damage and loss of authorizations
needed to conduct aspects of our international business, which could adversely affect our reputation, business, financial
condition, results of operations and cash flows.
Tariffs and other trade restrictions could adversely affect our business and financial results, and we may not be able to
raise prices sufficiently to offset increased costs caused by any such tariffs.
Our business is impacted by international or cross-border trade, including the import and export of products and goods
into and out of the U.S., and trade tensions among nations. We purchase key parts and components from international
suppliers and use these parts and components in many of our products. Any country in which our products are produced or
sold may eliminate, adjust or impose new quotas, duties, tariffs, safeguard measures, anti-dumping duties, cargo
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restrictions to prevent terrorism, restrictions on transfer of currency, or other charges or restrictions, any of which could
have an adverse effect on our business, financial condition, results of operations and cash flows. See “ Item 1A. Risk
Factors - Risks Relating to Our Business—Price fluctuations or shortages of raw materials could adversely affect our
operations.” Further, any emerging protectionist or nationalist trends in the U.S. or any of the countries in which our
products are produced or sold could affect the trade environment. In 2025, the Trump Administration announced additional
tariffs on goods from all countries pursuant to the International Emergency Economic Powers Act. These tariffs were later
found to have exceeded presidential authority and were invalidated by the courts. Following such ruling, President Trump
implemented a 150-day “global tariff” of 10% effective February 24, 2026, using presidential powers under the Trade Act
of 1974, and indicated a desire to increase such “global tariff” to 15% and to seek to extend such tariffs under other
statutes. We sell our products globally, and if other countries enact retaliatory tariffs in response to U.S. trade policy, our
sales into such countries may be adversely impacted.
To date, tariffs have not materially impacted our business or financial results, in large part due to our “local for local”
production approach, by which our manufacturing plants in each region fulfill the majority of the volume requirements in
their respective regions. Currently, our largest import exposure arises out of Mexico; however, the majority of our imported
goods from Mexico currently originate under the U.S.-Mexico-Canada Agreement (“USMCA”) and thus enter the U.S.
tariff-free. The USMCA is currently undergoing its mandatory Joint Review, with all three countries required to agree by
July 1, 2026 on whether to extend the agreement for an additional 16 years. Key issues under review include increased
trade deficits, Chinese investment and transshipment through Mexico, and potential strengthening of rules of origin
requirements. If the parties do not agree to extend the USMCA, or if the agreement is amended to impose more restrictive
terms, our imports from Mexico could become subject to increased tariffs or other trade restrictions. We carry some
exposure arising from export of materials from China, but this has historically been an immaterial part of our cost base. We
cannot ensure that tariffs will not materially impact on our business or financial results in the future.
In order to mitigate the impacts that various tariffs may have on the cost and availability of our manufacturing inputs,
we have taken, and in the future may take, various actions, including increasing prices to our customers through permanent
price increases or surcharges, increasing inventory levels on hand in advance of tariffs or to protect against material
availability, and transitioning our sourcing over the long term away from vendors in countries most impacted by tariffs. At
this time, the overall effectiveness of our responses in managing these challenges remains uncertain and depends on
multiple factors, including the duration and potential expansion of current tariffs, future changes to tariff rates, scope of
enforcement, retaliatory measures by impacted exporting countries, inflationary effects and broader macroeconomic
responses or changes to consumer purchasing behavior. If we are unable to effectively mitigate tariff-related risks through
price increases or inventory and source adjustments, financial performance and growth prospects could be negatively
affected.
Any 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.
Increasing inventory stockpiles, if such stockpiles are not used in current production, could result in us having to lower
prices in order to sell down inventory or in inventory write-offs. Changing our sources of raw materials may require us to
increase our cost of engineering in order to test and approve these new sources, negatively impact the availability of
inventory when needed for production, or diminish overall product quality.
We could incur significant costs in complying with EHS laws and regulations and could be adversely affected by
liabilities or obligations imposed under such laws.
We are subject to comprehensive and frequently changing foreign, federal, state and local EHS laws and regulations,
including laws and regulations governing emissions of air pollutants, including greenhouse gas emissions, discharges of
wastewater and stormwater, releases of hazardous materials to soil and water, the transportation, treatment, storage and
disposal of hazardous wastes and the regulation of, and exposure to, hazardous materials in current or former products, the
workplace or the environment. We could incur significant costs, including fines, cleanup costs and third-party claims, as a
result of violations of or liabilities under these laws and regulations. We may also incur significant costs to achieve or
maintain compliance with EHS laws in the future, including for obligations to install pollution control equipment or
eliminate certain hazardous materials from our products.
In addition, it is difficult to accurately predict the nature and extent of environmental liabilities and obligations that
may result from laws or regulations adopted in the future and how existing or future laws and regulations will be
administered or interpreted. For example, changes in environmental laws, including laws relating to energy and water
consumption and efficiency and greenhouse gas emissions, will likely require additional investments in product designs,
which may be more expensive or difficult to manufacture, qualify for applicable certifications and sell, or may involve
additional product safety risks, and could increase environmental compliance expenditures. See “Item 1A. Risk Factors -
Risks Relating to Government Regulation and Litigation-Energy efficiency, water usage standards and other product-
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related standards could adversely affect our industry.” Furthermore, various jurisdictions and regulators may take different
approaches to and impose differing or inconsistent requirements under environmental laws, which may make it more costly
or difficult for us to sell our products (including by requiring that we monitor such developments, incur increased test and
certification costs, increase time-to-market and develop additional country-specific variants for certain products) or prevent
us from selling certain products in certain geographic markets .
Our facilities and operations also are subject to various hazards incidental to the manufacturing and transportation of
commercial-grade laundry equipment. We are also subject to potential strict, joint and several liability for the investigation
and remediation of contamination, including contamination caused by other parties, at properties we currently own or
operate and previously owned or operated and at other properties where we or our predecessors have arranged for the
disposal of hazardous substances. Some of our facilities have a history of industrial and commercial operations or are
located on property with previously identified contamination, and we may incur significant additional costs, including
cleanup costs and other environmental liabilities, as a result of environmental conditions that are existing or discovered or
obligations that are imposed in the future. From time to time, we have been and may, in the future, be involved in
administrative and judicial proceedings, investigation and remediation activities, inquiries and other claims relating to these
and other environmental matters. Our existing insurance or any additional insurance may not provide adequate coverage
against potential liability resulting from any such liabilities, proceedings, inquiries and claims. As a result, the aggregate
amount of future cleanup costs and other environmental liabilities and obligations could have a material adverse effect on
our business, financial condition, results of operations and cash flows.
We are subject to risks related to environmental, social and governance (“ESG”) and sustainability laws, regulations,
policies and initiatives.
There is continued focus from various stakeholders and regulatory authorities in the United States, European Union
and other jurisdictions in which we operate, on ESG and sustainability matters. Stakeholders’ expectations are not uniform,
and proponents and opponents of various ESG- and sustainability-related matters have increasingly resulted in a range of
activism and legal and regulatory developments. If we do not succeed in meeting, or are perceived as failing to meet,
stakeholders’ expectations, whether in support of or against ESG- and sustainability-related matters, or our publicly-stated
goals, or if we do not effectively respond to new or revised legal, regulatory or reporting requirements concerning such
matters, we may be subject to litigation risks, regulatory enforcement and sanctions, our reputation may suffer and our
stock price may be negatively affected, among other potential impacts. New, increasingly stringent, revised or conflicting
ESG and sustainability laws, regulations and expectations in and across the jurisdictions in which we do business may
increase compliance burdens and costs for us and for third parties throughout our global supply chain. For example, the
Corporate Sustainability Reporting Directive (“CSRD”) enacted in the European Union and certain laws enacted in
California will require us to report on various sustainability-related information, including greenhouse gas emissions.
These laws also have been or may be subject to amendments, delays in implementation or legal challenges, the outcomes of
which are difficult to predict, as is their impact on us. In addition, there are existing and changing requirements and
expectations in various jurisdictions that may require us to proactively monitor the ESG practices of our value chain. See
“ Item 1A – Risk Factors - Risks Relating to Our Business—Our 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.”
Energy efficiency, water usage standards and other product-related standards could adversely affect our industry.
Certain of our washer products are subject to foreign, federal, state and local laws and regulations which pertain to
energy and water usage and efficiency. There are federal standards for energy and water efficiency for both residential
(consumer) and small-chassis commercial washers. There is also a federal energy efficiency standard for residential
(consumer) dryers. Currently our equipment is required to be compliant with the guidelines of numerous regulatory
agencies worldwide.
We anticipate there will continue to be proposals and actions by legislators and regulators at the foreign, federal, state
and local levels to modify or expand laws and regulations relating to energy and water usage and efficiency and other
similar concerns. For example, in 2024, the U.S. Department of Energy (the “DOE”) finalized new energy and water
efficiency standards for residential clothes washers and dryers which will require compliance from March 2028
(“Efficiency Standards”). Compliance with these standards would require us to make changes to the design of certain of
our washer and dryer products, which would require significant engineering, manufacturing, design and equipment costs.
In February 2025, the DOE announced a postponement of the implementation of the Efficiency Standards and in May
2025, the DOE proposed to rescind or reduce 47 regulations related to electric and gas appliances, including water use and
conservation standards related to residential clothes washers. While the ultimate outcome of such regulatory developments,
as well as their future enforcement, is difficult to predict, these or other similar regulatory changes applicable to our
products may impact demand for, or the cost and difficulty of producing or selling, our products and services, create short-
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term market conditions which are economically disadvantageous to us, require additional investments, make our products
more expensive or difficult to qualify for applicable certifications, increase environmental compliance expenditures, or
involve additional product safety risks. Any of the foregoing could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
We are subject to risks of future legal proceedings.
At any given time, we are a defendant in various legal proceedings and litigation arising in the ordinary course of
business. These may relate to, among other things, product safety, personal injuries, intellectual property rights,
cybersecurity incidents, contract-related claims, taxes, EHS matters, employee health and safety, competition laws and
laws governing improper business practices. For example, we have in the past been subject to litigation related to
allegations of anti-trust and labor law violations. The possibility of such litigation, and its timing, is in large part outside
our control. Although we maintain insurance policies, we can make no assurance that this insurance will be adequate to
protect us from all material expenses related to potential claims or that these levels of insurance will be available in the
future at commercially reasonable prices or at all.
Additionally, as a global business, we are subject to complex laws and regulations in the U.S. and other countries in
which we operate. These laws and regulations, including interpretations thereof, may change from time to time. A
significant judgment against us, the loss of a significant permit or other approval or the imposition of a significant fine or
penalty could have a material adverse effect on our business, financial condition, results of operations and cash flows. See
“Part II, Item 3. Legal Proceedings,” in this Annual Report for further information regarding legal proceedings involving
the Company.
Our 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.
We are exposed to the risk that our employees and our third-party distributors, route operators and suppliers may
engage in fraudulent conduct, bribery or other illegal activity. Misconduct by these parties could include intentional,
reckless or negligent conduct or disclosure of unauthorized activities to us that violate the regulations of regulatory
authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities, or
laws that require the reporting of financial information or data accurately. We are subject to extensive laws and regulations
intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
We have a code of conduct applicable to all of our employees as well as a business partners code of conduct applicable
to our third-party distributors, route operators and suppliers, but it is not always possible to identify and deter misconduct
by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in
controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or
lawsuits stemming from a failure to comply with these laws or regulations. Failure of our employees and our third-party
distributors, route operators and suppliers to comply with applicable laws may subject us to litigation or other reputational
risks. Additionally, we have been in the past, and may again be in the future, subject to the risk that a person could allege
such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not
successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business,
including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages,
reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely
affect our ability to operate our business and our results of operations.
Changes in accounting standards may adversely affect us.
Our financial statements are subject to the application of U.S. generally accepted accounting principles (“GAAP”),
which is periodically revised or expanded. Accordingly, from time to time, we are required to adopt new or revised
accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board
(“FASB”) and the Securities and Exchange Commission. Such changes could have a material impact on how we report our
financial condition and results of operations.
Our 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.
Our operations are subject to various international, federal, state and local tax laws and regulations. Tax laws are
dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In many
cases, the application of tax laws is uncertain and subject to differing interpretations, especially when evaluated in the
context of a new administration for the U.S. federal government. Moreover, if and to the extent that the U.S. federal income
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tax code is changed as part of a comprehensive corporate tax reform plan or otherwise, our net income may be impacted
positively or negatively. Alternately, changes in tax laws could negatively impact our ability to continue to source high-
quality raw materials and components at costs similar to those which we currently obtain.
In 2 025, changes to U.S. federal tax law and the limitation of the deductibility of our officer compensation under IRC
Section 162(m), increased our effective tax rate compared to the prior year. Further, the One Big Beautiful Bill Act
(OBBBA) was enacted on July 4, 2025 and amends key business tax provisions, including the “GILTI” provision, other
international provisions, interest deduction limitations and reinstates the ability to currently expense research and
experimental expenditures. While the OBBBA had no material impact on our provision for income taxes as of December
31, 2025, certain provisions of the OBBBA may change the timing of cash payments in the current fiscal year and future
periods. Additionally, future legislative or regulatory changes could increase our effective tax rate, alter the timing of cash
obligations and adversely affect our financial results and liquidity. We cannot predict future changes to tax laws and
regulations or the impact such changes may have on our business. See Note 15 - Income Taxes to our consolidated
financial statements in this Annual Report for further information regarding Income tax-related risks to the Company.
Risks Relating to Intellectual Property Matters
Failure to adequately protect our intellectual property rights may have a material adverse effect on our results of
operations or our ability to compete.
We attempt to protect our intellectual property rights in the U.S. and in foreign countries through a combination of
patent, trademark, copyright and trade secret laws, as well as licensing agreements and agreements preventing the
unauthorized disclosure and use of our intellectual property. These efforts are critical to safeguarding the proprietary
designs, technologies and control systems in our commercial laundry equipment that distinguish us in the market. We
cannot assure that these protections will be adequate to prevent competitors from copying or reverse engineering our
products, or independently developing and marketing products that are substantially similar to our own. We may be unable
to obtain or maintain adequate protections for certain of our intellectual property in the U.S. or foreign countries and third
parties may be able to successfully challenge, oppose or invalidate our intellectual property rights. Our patent and
trademark applications we may file in the future may never be granted and, even if we are successful in obtaining effective
protection, it is expensive to maintain these rights, both in terms of application and maintenance costs, and the time and
cost required to defend our rights could be substantial. Limited resources or strategic priorities might constrain our ability
to secure comprehensive intellectual property coverage across all regions where our products are sold, leaving
vulnerabilities in our portfolio.
Further, our intellectual property rights may not receive the same degree of protection in foreign countries as they
would in the U.S. because of the differences in foreign trademark, patent and other laws concerning proprietary rights. In
some markets, differing legal standards could allow competitors to exploit our innovations, undermining our ability to
maintain a differentiated position. The laws of some foreign countries do not afford intellectual property protection to the
same extent as the laws of the U.S., and many companies have encountered significant problems in protecting and
defending intellectual property rights in certain foreign jurisdictions. For example, the requirements for patentability may
differ in certain countries, particularly in developing countries. Moreover, our ability to protect and enforce our intellectual
property rights may be adversely affected by unforeseen changes in foreign intellectual property laws, particularly in
developing countries, and there may be unforeseen changes in intellectual property rights laws, which could make it
difficult for us to stop the infringement of our patents or the misappropriation or other violation of our other intellectual
property rights. Such failure or inability to obtain or maintain adequate protection of our intellectual property rights for any
reason could have a material adverse effect on our business, financial condition, results of operations and cash flows, as
third parties may be able to commercialize and use products and technologies that are substantially the same as ours to
compete with us without incurring the development and licensing costs that we have incurred.
Failure to protect the confidentiality of our trade secrets or other proprietary information could harm our business,
financial condition, results of operations and competitive position.
We rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology and other
proprietary information and to maintain our competitive position. However, trade secrets and know-how can be difficult to
protect. We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and
confidentiality agreements with parties who have access to them, such as certain of our employees, corporate collaborators,
outside contractors, consultants, advisors and other third parties, but we cannot guarantee that we have entered into such
agreements with each party that may have or has had access to our trade secrets or proprietary or confidential information,
including our technology and processes. In addition, despite these efforts, we have experienced and may in the future
experience breaches of confidentiality agreements and disclosure of our proprietary or confidential information (including
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our trade secrets) by these parties, including former employees. We may not be able to obtain adequate remedies for such
breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and
time-consuming, and the outcome is unpredictable.
In addition, some courts inside and outside the U.S. are less willing or unwilling to protect trade secrets. If any of our
trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have
no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to
be disclosed to or independently developed by a competitor or other third party, it could have a material adverse effect on
our competitive position, business, financial condition, results of operations and cash flows.
If 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.
We rely on trademark registrations and enforcement measures to protect our brand identity, logos and other distinctive
marks and to maintain our competitive position in the marketplace. If we are unable to successfully register our trademarks,
trade names and domain names and establish name recognition based on our trademarks and trade names, we may not be
able to build name recognition in our target markets and our ability to maintain our competitive position in the marketplace
may be adversely affected. In addition, competitors or other third parties have in the past, and may in the future, adopt trade
names or trademarks similar to ours, thereby impeding our ability to build brand identity, interfering with our consumer
communications or infringing or otherwise decreasing the value of our trademarks, domain names and other intellectual
property and proprietary rights possibly leading to market confusion and potentially requiring us to pursue legal action.
Furthermore, the laws protecting trademarks and the regulations governing domain names and other intellectual property
and proprietary rights could change in ways that block or interfere with our ability to use relevant domains or our current
brands. In addition, there could be potential trade name or trademark infringement claims brought by owners of other
registered trademarks or trademarks that incorporate variations of our unregistered trademarks or trade names.
We 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.
Third parties may infringe, misappropriate or otherwise violate our intellectual property rights, which could require us
to pursue costly and time-consuming enforcement proceedings with uncertain outcomes. Despite our efforts to protect our
intellectual property, third parties may attempt to use our technologies, designs, brands or proprietary information without
our permission, which could adversely affect our commercial success. We may discover competing products or services in
the market that use our protected intellectual property without authorization. While we actively monitor for unauthorized
use of our intellectual property and may take enforcement actions, such as initiating claims or litigation against third parties
for infringement, misappropriation or other violation of our intellectual property rights or other proprietary rights or to
establish the validity of such rights, detecting and addressing all potential infringements can be difficult and resource-
intensive. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and
countersuits attacking the validity and enforceability of our intellectual property rights, and we may not always prevail in
these matters. Additionally, because of the substantial amount of discovery required in connection with intellectual
property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this
type of litigation. Any litigation, whether or not it is resolved in our favor, could result in the impairment or loss of portions
of our intellectual property, which may materially and adversely affect our business, financial condition, results of
operations and cash flows.
In some jurisdictions, particularly internationally, enforcement of our intellectual property rights may be especially
challenging or impractical. While we intend to protect our intellectual property rights in the major markets for our products,
we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to
market our products. Additionally, even if we successfully enforce our rights, the process could be lengthy and expensive,
during which time the infringing products may cause market confusion or diminish our competitive position. These
challenges in protecting and enforcing our intellectual property rights against third-party infringement could have a
material adverse effect on our business, financial condition, results of operations and cash flows, and divert management’s
attention from our core business operations.
Further, we have received, and may in the future receive, notices alleging infringement of the intellectual property
rights of third parties. Certain of such notices have proceeded to litigation, and similar claims may arise and proceed to
litigation in the future. These claims and related allegations, regardless of their merit or our defenses, could be time-
consuming, result in considerable litigation costs, result in injunctions against us or the payment of damages by us, require
significant amounts of management time, result in the diversion of significant operational resources and expensive changes
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to our business model, result in the payment of substantial damages or injunctions against us, result in ongoing royalty
payments or significant settlement payments, or require us to enter into costly royalty or licensing agreements, but such
licenses or arrangements may not be available on terms acceptable to us or at all. Any payments we are required to make or
any injunctions we are required to comply with as a result of such infringement actions could materially and adversely
affect our business, financial condition, results of operations and cash flows. In addition, we may be unable to obtain or use
on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual property we do not own. These
risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property may cause us to
incur significant expenses, have a material adverse effect on our business, financial condition, results of operations and
cash flows, and could distract our technical and management personnel from their normal responsibilities.
We may be subject to claims that our employees, consultants, advisors or independent contractors have wrongfully used
or disclosed alleged trade secrets or other confidential information from their current or former employers, or other
third parties or claims asserting ownership of what we regard as our own intellectual property or proprietary rights.
Although we try to ensure that our employees, consultants, advisors and independent contractors do not use the
confidential or proprietary information, trade secrets or know-how of others in their work for us, we may be subject to
claims that we or these individuals have, inadvertently or otherwise, improperly used or disclosed intellectual property
rights, confidential or proprietary information, trade secrets or know-how, of any such individual’s current or former
employer or other third party. Additionally, to the extent we hire personnel from competitors, we may be subject to
allegations that such personnel have divulged proprietary or other confidential information to us.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to
paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in
defending against such claims, litigation could result in substantial costs and be a distraction to management.
Further, while it is our policy to require certain of our employees, suppliers, consultants, advisors and independent
contractors who may be involved in the conception or development of intellectual property rights to execute agreements
assigning such intellectual property rights to us, we cannot guarantee that we have entered into such agreements with each
party that may have developed intellectual property rights for us. Individuals involved in the development of intellectual
property rights for us, whether or not subject to such assignment agreements, may make adverse ownership claims to our
current and future intellectual property rights. The assignment of intellectual property rights in agreements entered into by
individuals involved in the development of intellectual property rights for us may be insufficient or breached, and we may
not be able to obtain adequate remedies for such breaches. We may be forced to bring claims against third parties, or
defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property
rights. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition,
results of operations and cash flows.
Some of our products and services contain open source software, which may pose particular risks to our proprietary
software, products and services in a manner that could have a material and adverse effect on our business, financial
condition, results of operations and cash flows.
We use open source software in connection with our products and services and anticipate using open source software
in the future. Our use of open source software may also pose particular cybersecurity risks to our proprietary software and
systems. Because the source code for open source software is publicly available, it may be easier for hackers and other
third parties to identify vulnerabilities and determine how to breach our sites and systems that rely on such software. Some
open source software licenses require users who distribute open source software as part of their own software product to
publicly disclose all or part of the source code to such software product or to make available any derivative works of the
open source code on unfavorable terms or at no cost, and we may be subject to such terms.
While we monitor our use of open source software and try to ensure that none is used in a manner that would require
us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use
could inadvertently occur, or could be claimed to have occurred, in part because open source license terms are often
ambiguous. The terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk
that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to
commercialize our technology. As a result, we could face claims from third parties claiming ownership of, or demanding
release of, derivative works that we have developed using such open source software, which could include proprietary
source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in
litigation and could require us to make our software source code freely available, purchase a costly license or cease offering
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the implicated products or services unless and until we can recode or reengineer such source code in a manner that avoids
infringement. This reengineering process could require us to expend significant additional research and development
resources, and we may not be able to complete the reengineering process successfully.
In addition to risks related to open source license requirements, use of certain open source software can lead to greater
risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties,
indemnification or other contractual protection regarding infringement claims or the quality of the code. Open source
licensors generally do not provide assurances of non-infringement or functionality, and there is typically no support
available. We cannot ensure that the authors of such open source software will implement or push updates to address
security risks, or that such software will continue to be maintained or developed. There is little legal precedent in this area
and any actual or claimed requirement to disclose our proprietary source code or pay damages for breach of contract could
harm our business and could help third parties, including our competitors, develop products and services that are similar to
or better than ours. Any of the foregoing could have a material adverse effect on our competitive position, business,
financial condition, results of operations and cash flows. These risks may be difficult to eliminate or manage and, if not
adequately addressed, could have an adverse effect on our competitive position, business, financial condition, results of
operations and cash flows.
Risks Relating to Data Compliance, Cybersecurity and Artificial Intelligence
The protection of our data involves risks regarding potential failure to comply with data privacy and security laws,
regulations and other obligations, 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.
We collect, store, process and transmit sensitive data, including personal information from customers, employees and
business partners, through our equipment financing program and Speed Queen and Huebsch apps, subjecting us to a
complex and evolving array of data privacy laws and regulations in the U.S. and abroad. These include the California
Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”), which broadly
defines personal information and requires companies that process information of California residents to make disclosures to
consumers about their data collection, use and sharing practices, as well as imposes stringent requirements on how we
handle personal information, such as payment data, increasing our compliance burden and exposure to potential penalties.
The CCPA also gives California residents expanded privacy rights and protections, such as affording them the right to opt
out of certain data sharing with third parties, right to access and request deletion of their information and provides a new
cause of action for certain data breaches that result in the loss of personal information. This private right of action has
increased the likelihood of, and risks associated with, data breach litigation. The law also prohibits covered businesses from
discriminating against California residents (for example, charging more for services) for exercising any of their CCPA
rights. The CCPA provides for severe civil penalties and statutory damages for violations. Certain laws and regulations
may also require us to implement security measures to protect our systems and internet-of-things (“IoT”) connected
devices. For example, the California Internet of Things Security Law, which became effective in 2020, requires us to
implement reasonable security measures for IoT devices, and failure to do so could expose us to penalties. Moreover, laws
in all 50 U.S. states require businesses to provide notice under certain circumstances to consumers whose personal data has
been disclosed as a result of a data breach. It is possible that new laws, regulations and other requirements, or amendments
to or changes in interpretations of existing laws, regulations and other requirements, may require us to incur significant
costs, implement new processes, or change our processing of information, including Personal Information, and business
operations. It is unclear how the laws and regulations relating to the collection, processing and use of personal data will
further develop in the U.S., and to what extent this may affect our operations in the future.
In addition, we are required to comply with various global data privacy regulations, such as the European Union’s
General Data Protection Regulation (the “EU GDPR”) and the United Kingdom (“UK”) equivalent (the “UK GDPR” and,
together with the EU GDPR, the “GDPR”). The GDPR imposes stringent requirements for controllers and processors of
personal data of individuals within the European Economic Area (“EEA”) or the UK. Companies that must comply with
the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection
requirements. Additionally, although currently the EU GDPR and UK GDPR remain largely aligned, the UK has
announced plans to reform the country’s data protection legal framework in its Data Reform Bill, which will introduce
significant changes from EU GDPR. This may lead to additional compliance costs and could increase our overall risk
exposure as we may no longer be able to take a unified approach across the EEA and the UK, and we will need to amend
our processes and procedures to align with the new framework. Implementing mechanisms to endeavor to ensure
compliance with the GDPR and relevant local legislation may be onerous and may adversely affect our business, financial
condition, results of operations and cash flows. While we have taken steps to comply with the GDPR where applicable, our
efforts to achieve and remain in compliance with GDPR may not be fully successful.
In addition to the foregoing, failure to safeguard personal data in our possession or control or to comply with
applicable privacy laws and regulations could result in regulatory investigations, reputational damage, orders to cease or
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change use of our data, significant fines-such as up to 20 million Euros (£17.5 million) or 4% of our annual global revenue
under the GDPR, whichever is greater-or civil litigation, including pursuant to a private right of action for data breaches
under the CCPA or pursuant to class-action litigation, which could heighten our legal and financial risks. These
proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
Further, while we strive to implement privacy policies that are accurate, comprehensive and compliant with applicable
laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements regarding
our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy
and security. Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged to
have failed to do so. Our privacy policies and other documentation that provide promises and assurances about data privacy
and security can subject us to potential government or legal action if they are found to be deceptive, unfair or
misrepresentative of our actual practices. Any inability to adequately address privacy concerns, even if unfounded, could
result in additional cost and liability to us, damage our reputation and harm our business.
The 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.
We rely on the proper functioning, availability and uninterrupted operation of our computer systems, hardware,
software, technology infrastructure and online sites and networks for both internal and external operations that are critical
to our business (collectively, “IT Systems”) and any failure, interruption or breach in the security of such IT Systems could
severely disrupt our operations and adversely affect our business or financial condition. We own and manage some of these
IT Systems but also rely on third parties for a range of IT Systems and related products and services, including but not
limited to third-party-hosted solution providers.
Information security threats, including cybersecurity threats, could pose risks to the security of our systems and
networks, as well as the confidentiality, availability and integrity of our data. Cyberattacks are expected to accelerate on a
global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and
tools-including artificial intelligence (“AI”)-that circumvent security controls, evade detection and remove forensic
evidence. Recently, the United States government has raised concerns about a potential increase in cyberattacks generally
as a result of the military conflict between Russia and Ukraine and the related sanctions imposed by the United States and
other countries and the ongoing conflict between Israel and Gaza and the US-Israel-Iran conflict. Although we maintain
systems and processes that are designed to protect the security of our technology infrastructure, security incidents-such as
physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorism and other cyber-related attacks-can occur
that could compromise the security of our infrastructure, thereby exposing our confidential information to unauthorized
access by third parties. Any material incidents could cause us to experience financial losses that are either not insured
against or not fully covered through any insurance maintained by us and increased expenses related to addressing or
mitigating the risks associated with any such material incidents. Despite our efforts to ensure the integrity of our systems,
as cyber threats evolve and become more difficult to detect and successfully defend against, one or more cyber threats
might defeat the measures that we or our vendors take to anticipate, detect, avoid or mitigate such threats. For example, we
experienced a prior data breach incident on information systems of an acquired company that resulted in unauthorized
access to personal data. We detected the access and notified governmental agencies and impacted individuals in a
timeframe which we believe minimized any financial, operational and reputational risk, and at no point was our ability to
generate revenues disrupted. However, if future attacks occur, there is no assurance we will be able to detect the incident in
a timely manner or at all.
We also depend on the security of our networks and that of our third-party service providers. These infrastructures
may be vulnerable to cybersecurity incidents, acts of vandalism, computer viruses, misplaced or lost data, programming or
human errors or other similar events. While we generally perform cybersecurity diligence on our key service providers,
because we do not directly control any of such parties’ information security operations, we cannot ensure the cybersecurity
measures they take will be sufficient to protect any information we share with them. Due to applicable laws and regulations
or contractual obligations, we may be held responsible for cyberattacks or other similar incidents attributed to our service
providers as they relate to the information we share with them. Any actual or perceived jeopardization of the security of our
customers’ confidential information resulting from unauthorized use of our, or our third-party service providers’, networks
could severely damage our reputation and our relationship with our customers as well as expose us to risks of litigation,
liability or other penalties, all of which could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
We may be required to expend significant capital and other resources to protect against, remedy or alleviate these and
related problems, and we may not be able to remedy these problems in a timely manner, or at all.
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Our connected products and IoT platform present unique cybersecurity risks.
Our cloud-connected commercial laundry equipment platform encompasses a significant and growing number of
machines and serves millions of users globally. This IoT infrastructure expands our areas of vulnerability beyond
traditional enterprise systems. Vulnerabilities in device firmware, communication protocols, mobile applications, or cloud
services could be exploited to disrupt customer operations, compromise user data, or serve as an entry point for broader
network intrusions. The distributed nature of these devices across customer locations worldwide presents additional
challenges for monitoring, patching, and incident response. A security incident affecting our connected products could
damage customer trust, result in product liability claims, and require costly remediation efforts.
The convergence of Operational Technology (“OT”) and Information Technology increases our exposure to
cybersecurity risk.
As a global manufacturer operating six production facilities across North America, Europe, and Asia, we rely on
operational technology systems to control and monitor manufacturing processes. The increasing integration of these OT
systems with our IT networks enhances operational efficiency but also introduces cybersecurity risks. A successful attack
on our OT environment could disrupt manufacturing operations, damage equipment, compromise product quality, or create
safety hazards. Securing OT systems presents distinct challenges, including managing legacy equipment with limited
security capabilities, accommodating extended asset lifecycles, and balancing security controls with operational continuity.
Our use of AI technologies may not be successful, which may adversely affect our reputation, business and financial
condition.
We currently use machine learning and AI technologies licensed from third parties to enhance our commercial laundry
equipment and systems. These AI technologies, which we integrate into our products and solutions and expect to expand
on, support features such as predictive maintenance, usage analytics and optimization of our laundry systems. The
integration of AI technologies into our laundry equipment and systems may result in new or enhanced governmental or
regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, legal liability or other complications. A
failure on our part to develop solutions to ensure compliance with regulatory regimes may result in unforeseen costs or
delays in deploying new and improved features using AI technologies. In some cases, we are subject to contractual
limitations from our AI technology providers that restrict how we can use certain data in connection with the training and
use of AI systems. Further, while we aim to develop and use AI responsibly and attempt to mitigate ethical and legal issues
presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise.
Uncertainty around emerging AI technologies may require additional investment in the development and maintenance
of proprietary datasets and machine learning models, development of new approaches related to the collection and use of
training data, and development of appropriate protections and safeguards for handling the use of customer data with AI
technologies, which may be costly and could impact our expenses. AI technologies from third parties that are incorporated
into our laundry systems and business processes may use algorithms, datasets or training methodologies that may be flawed
or contain deficiencies that could be difficult for us to detect during testing, and such AI technologies can pose risks from
an intellectual property, data protection and privacy perspective. Use of third-party AI-powered software in connection
with our business or services, may lead to the inadvertent disclosure or incorporation of our confidential information into
publicly available training sets, which may impact our ability to realize the benefit of, or adequately maintain, protect and
enforce our intellectual property or confidential information, harming our competitive position and business. As the
utilization of AI becomes more prevalent, we anticipate that it will continue to present new or unanticipated ethical,
reputational, technical, operational, legal, competitive and regulatory issues, among others. We expect that our
incorporation of AI in our business will require additional resources. We may not have adequate access to such resources
or the ability to attract talent in the product development, data science and engineering fields to develop and implement the
tools necessary to compete. Further, our competitors or other third parties may incorporate AI into their products more
quickly or more successfully than us, which could impair our ability to compete effectively.
Additionally, we may face challenges in adequately complying with new or changing laws, regulations or industry
standards, or contractual requirements regarding the use of licensed AI technologies and data in our commercial laundry
systems and solutions and may incur significant operational costs in our attempts to do so. It is possible that new laws and
regulations will be adopted in the United States and in non-U.S. jurisdictions, or that existing laws and regulations may be
interpreted in ways that would affect the operation of our products and solutions and the way in which we use AI and
similar technologies. We may not be able to adequately anticipate or respond to these evolving laws and regulations, and
we may need to expend additional resources to adjust our offerings in certain jurisdictions if applicable legal frameworks
are inconsistent across jurisdictions. Moreover, because these technologies are themselves highly complex and rapidly
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developing, it is not possible to predict all of the legal or regulatory risks that may arise relating to our use of such
technologies. Further, the cost to comply with such laws or regulations could be significant and would increase our
operating expenses, which could adversely affect our business, financial condition, results of operations and cash flows.
Any of the foregoing challenges presented with our use of AI may result in decreased demand for our laundry
solutions, harm to our business, results of operations or reputation, legal liability, regulatory action or failure to achieve
expected results.
Risks Relating to Our Indebtedness
Our substantial indebtedness could adversely affect our financial condition.
At December 31, 2025 , we had $1,365.2 million of indebtedness outstanding, consisting of $1,365.0 million of
indebtedness outstanding under our Term Facility and $0.2 million of finance lease obligations. We also had $250.0
million of undrawn capacity under our Revolving Facilities. Beginning with the fiscal year ended December 31, 2025, our
Term Loan requires annual prepayments of a portion of “Excess Cash Flow,” subject to specified leverage-based step-
downs, which may limit our ability to allocate cash to strategic investments, working capital or other corporate purposes.
See Note 18 - Debt to our consolidated financial statements in this Annual Report for more information on the Company’s
Credit Agreement.
Our substantial indebtedness, combined with our other financial obligations and contractual commitments, could have
important consequences, including to:
• increase our vulnerability to adverse economic and industry conditions, which could place us at a competitive
disadvantage compared to our competitors that have relatively less indebtedness;
• require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness,
thereby reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions,
research and development efforts, growth in international markets and other general corporate needs;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
and
• limit our ability to borrow additional funds, if needed, for working capital, capital expenditures, acquisitions,
product development and other corporate purposes.
We 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.
Our ability to make scheduled payments of principal and interest with respect to our indebtedness will depend on our
ability to generate cash and on future financial results. This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our control.
There can be no assurances that our business will generate sufficient cash flow from operations to enable us to pay our
indebtedness when due. In such circumstances, we may need to refinance all or a portion of our indebtedness on or before
maturity, sell material assets or operations, delay capital expenditures, or raise additional debt or equity capital. Our ability
to refinance our debt will depend on the condition of the capital markets and our financial condition at that time. Any
refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which
could further restrict our business operations.
Interest rate fluctuations could have an adverse effect on our financial results.
We are exposed to market risk associated with adverse movements in interest rates. Specifically, we are primarily
exposed to changes in earnings and related cash flows on our variable interest rate debt obligations, including obligations
outstanding under our Term Facility and Revolving Facilities. As a result, increases in interest rates would increase the cost
of servicing our debt. Each 1% increase in underlying base interest rates on our variable-rate debt would increase our
annual forecasted interest expense by approximately $2.3 million on the non-hedged portion of our borrowings based on
balances as of December 31, 2025 . See Note 18 - Debt for more information on the Company’s debt and financing
arrangements. The impact of rising interest rates could be more significant for us than it would be for some other
companies because of our substantial indebtedness.
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The agreements governing our indebtedness contain restrictions and limitations that could restrict our current and
future operations, particularly our ability to respond to change or pursue our business strategies.
On August 19, 2024, our subsidiary, Alliance Laundry Systems LLC (“Alliance Laundry Systems” or the “U.S.
Borrower”), entered into a Credit Agreement (as amended on February 20, 2025 and as further amended on August 21,
2025, the “Credit Agreement”) with Alliance Laundry Holdings LLC (“Holdings”), Alliance Laundry (Thailand) Company
Limited (the “Thai Borrower” and, together with the U.S. Borrower, the “Borrowers”), Citibank, N.A., as administrative
agent, and the lenders and issuing banks from time to time party thereto. The Credit Agreement provides for senior secured
credit facilities consisting of (1) a term loan facility in an aggregate principal amount of $2,075.0 million (the “Term
Facility,” and the loans thereunder, the “Term Loans”), (2) a revolving credit facility with aggregate commitments of
$225.0 million (the “Primary Revolving Facility,” and the loans thereunder, “Primary Revolving Facility Loans”),
including a $102.2 million letter of credit sub-facility, and (3) a revolving credit facility with aggregate commitments of
$25.0 million, all of which is available for letters of credit. The Credit Agreement contains a number of restrictive
covenants that impose restrictions on our ability to pursue our business plans and activities and that could limit our ability
to plan for or react to market conditions, meet capital needs or make acquisitions, including, among other things,
restrictions on our ability, to:
• incur or guarantee additional indebtedness;
• create or maintain liens;
• pay dividends or make other distributions in respect of equity interests, or redeem, purchase or retire equity
interests;
• make payments in respect of subordinated debt;
• make investments, loans, advances, guarantees and acquisitions;
• consolidate, merge, liquidate or dissolve;
• dispose of assets;
• enter into transactions with affiliates; and
• materially alter the conduct of our business.
The Revolving Facilities are also subject to a financial maintenance covenant that imposes on us a maximum first lien
secured net leverage ratio in the event usage under the Revolving Facilities exceeds a specified threshold. Our ability to
comply with this financial maintenance covenant may be affected by events beyond our control, including prevailing and
future economic, financial and industry conditions, and we cannot provide assurance that we will continue to comply with
this covenant in the future. If we are unable to comply with the financial maintenance covenant, we may have to request an
amendment or waiver from lenders under the Revolving Facilities. There is no assurance that we would be able to obtain
any such amendment or waiver, either on commercially reasonable terms or at all.
Our failure to comply with these covenants and restrictions could result in an event of default which, if not waived,
could result in the lenders terminating our ability to make further borrowings under the Revolving Facilities and
accelerating our outstanding indebtedness under the Term Facility, the Revolving Facilities and any other material
indebtedness. In the event of such acceleration, we may not have sufficient assets to satisfy our repayment obligations,
which could cause us to become bankrupt or insolvent. Additionally, if we are unable to satisfy our repayment obligations,
the lenders under the Term Facility and the Revolving Facilities will also have the right to proceed against the collateral
that secures those borrowings, which could have serious adverse consequences to our business, financial condition, results
of operations and cash flows. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” in this Annual Report for further information regarding our Term Facility and Revolving Facilities.
The repayment obligations under our outstanding debt may also have the effect of discouraging, delaying or preventing
a takeover of our company.
Despite 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.
Although the Credit Agreement contains restrictions on the incurrence of additional indebtedness, these restrictions are
subject to several qualifications and exceptions, and the additional indebtedness incurred in compliance with these
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restrictions could be substantial. If new debt is added to our current debt levels, the related risks that we now face could
intensify.
We may have future capital needs and may not be able to obtain additional financing on acceptable terms.
Although we believe that our current cash position and the additional funding available under our Revolving Facilities
is sufficient for our current operations, we may require additional financing if our cash flow from operations is less than we
anticipate, if our cash requirements are more than we expect, if we intend to finance acquisitions or if our operating plan
changes because of factors currently unknown to us. In addition, we may seek additional capital due to favorable market
conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Our ability to secure additional financing on favorable terms or at all and to satisfy our financial obligations under
indebtedness outstanding from time to time will depend upon our future operating performance and operating cash flows,
the condition of the capital markets, the availability of credit generally, economic conditions and financial, business and
other factors, many of which are beyond our control. Furthermore, if financing is not available when needed, or is available
on unfavorable terms, we may be unable to take advantage of business opportunities or respond to competitive pressures,
any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If we incur additional debt or raise equity through the issuance of additional capital shares, the terms of the debt or capital
shares issued may give the holders rights, preferences and privileges senior to those of holders of our shares of common
stock offered hereby, particularly in the event of liquidation. The terms of the debt may also impose additional and more
stringent restrictions on our operations than we currently have. If we raise funds through the issuance of additional equity,
the percentage ownership of existing stockholders in our company would decline.
Risks Relating to Ownership of Our Common Stock
We may require additional capital to meet our financial obligations and support business growth, and this capital may
not be available on acceptable terms, if at all, and such additional capital and other equity issuances we make may
cause dilution to existing stockholders.
We may need to raise additional funds in the future to finance our operations or acquire complementary businesses.
However, debt or equity financing may not be available to us on acceptable terms, if at all. If we do obtain capital in future
offerings on a per-share basis that is less than the current price per share, the value of the price per share of your common
stock will likely be reduced. In addition, if we issue additional equity securities in a future offering and you do not
participate in such offering, there will effectively be dilution in your percentage ownership interest in the Company.
Further, we may in the future grant stock options and other awards to certain of our current or future officers, directors,
employees and consultants under additional plans or individual agreements. The grant, exercise, vesting or settlement of
these awards, as applicable, will have the effect of diluting your ownership interests in the Company. We may also issue
additional equity securities in connection with other types of transactions, including shares issued as part of the purchase
price for acquisitions of assets or other companies from time to time or in connection with strategic partnerships or joint
ventures, or as incentives to management or other providers of resources to us. Such additional issuances are likely to have
the same dilutive effect.
Our 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.
The market price of our common stock may be highly volatile, and investors in our common stock may experience a
decrease, which could be substantial, in the value of their stock, including decreases unrelated to our operating performance
or prospects, and could lose all or part of their investment. The price of our common stock could be subject to wide
fluctuations in response to a number of factors, including those described elsewhere in this Annual Report and others such
• variations in our operating performance and the performance of our competitors;
• actual or anticipated fluctuations in our quarterly or annual operating results;
• publication of research reports by securities analysts about us, our competitors or our industry;
• our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors
may give to the market;
• additions or departures of key personnel;
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• strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic
investments or changes in business strategy;
• an increase in our indebtedness or the interest rates applicable to our indebtedness;
• future sales of our common stock or other securities;
• the passage of legislation or other regulatory developments affecting us or our industry;
• changes in legislation, regulation and government policy as a result of the U.S. presidential and congressional
elections;
• speculation in the press or investment community;
• changes in accounting principles;
• terrorist acts, acts of war or periods of widespread civil unrest;
• natural or man-made disasters and other calamities;
• changes in general market and economic conditions in our industry or the economy as a whole; and
• the other factors described in this “ Item 1A. Risk Factors ” and the section titled “Cautionary Note Regarding
Forward-Looking Statements.”
Additionally, in the past, securities class action litigation has often been initiated against companies following periods
of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s
attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.
Future 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.
In connection with our IPO, each of our executive officers and directors, certain senior employees that are not
executive officers and certain former directors, and BDTBH, the funding vehicle through which our principal stockholder
and certain other institutional investor s (the “Minority Investment Institutional Co-Investors”) hold their respective
interests, which collectively owned approximately 99% of our outstanding common stock prior to our IPO, entered into a
lock-up agreement with the representatives of the underwriters in our IPO, which regulates their sales of our common stock
until April 6, 2026, subject to certain exceptions. The representatives may, in their sole discretion, release all or some
portion of the shares subject to lock-up agreements at any time and for any reason.
In addition to the lock-up agreements described above, certain of our current and former employees hold equity awards
or shares of our common stock that are subject to equity award or purchase agreements containing market standoff or lock-
up provisions, which covers the balance of all of our outstanding common stock owned prior to IPO. These provisions
generally prohibit the sale or transfer of any shares of our common stock acquired pursuant to such agreements, whether or
not any such awards have been exercised and the shares are held outright, until April 6, 2026. We have agreed to enforce
all such market standoff or lock-up restrictions and not to amend or waive any such provisions until April 6, 2026 without
first obtaining the written consent of the representatives, provided that we may release shares from such restrictions to the
extent such shares would be entitled to release under the lock-up agreements described above.
Sales of substantial amounts of our common stock in the public market in the future, the perception that such sales will
occur, or early release of these lock-up agreements could adversely affect the market price of our common stock and make
it difficult for us to raise funds through securities offerings in the future.
We 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.
We currently do not expect to declare any dividends on our common stock in the foreseeable future. Instead, we
anticipate that all of our earnings in the foreseeable future will be used to support our operations, to finance the growth and
development of our business and to pay down debt. Any determination to declare or pay dividends in the future will be at
the discretion of our board of directors, subject to applicable laws and dependent upon a number of factors, including our
earnings, capital requirements and overall financial conditions. In addition, because we are a holding company, our ability
to pay dividends on our common stock is dependent upon cash dividends, distributions and other transfers from our
subsidiaries. The agreements governing certain indebtedness of our subsidiaries also impose restrictions on our ability to
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pay dividends, and we may be further restricted from doing so by the terms of any future debt or preferred securities.
Accordingly, your only opportunity to achieve a return on your investment in the Company may be if the market price of
our common stock appreciates and you sell your common stock at a profit. The market price for our common stock may
never exceed, and may fall below, the price that you pay for such common stock.
If 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.
The trading market for our common stock will depend in part on the research and reports that securities or industry
analysts publish about us, our business, our market or our competitors. If any analysts cease coverage of us unexpectedly,
the price and trading volume of our common stock likely would be negatively impacted. If securities or industry analysts
who cover us downgrade our common stock or publish inaccurate or unfavorable research about us, the trading price of our
common stock would likely decline. If analysts publish target prices for our common stock that are below the then-current
public price of our common stock, it could cause the trading price of our common stock to decline significantly .
Our 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.
Our principal stockholder currently owns 71.3% of our outstanding common stock. In connection with our IPO, we
entered into a stockholders agreement with our principal stockholder to govern the relationship between us and our
principal stockholder, including matters related to our corporate governance, rights to designate directors and additional
matters. The stockholders agreement provides that, so long as our principal stockholder beneficially owns at least 40% of
the aggregate outstanding shares of our common stock, our principal stockholder may designate a majority of the nominees
for election to our board of directors; so long as our principal stockholder beneficially owns at least 10% but less than 40%
of the aggregate outstanding shares of our common stock, our principal stockholder will continue to retain certain
designation rights under the Stockholders Agreement proportionate to its percentage ownership in our common stock. In
addition, so long as our principal stockholder beneficially owns at least 25% of the aggregate outstanding shares of our
common stock, our principal stockholder will have the right to appoint and remove the chairman of our board of directors
and the lead independent director, if any. This concentration of ownership may have the effect of deterring, delaying or
preventing a change of control of the Company, could deprive our stockholders of an opportunity to receive a premium for
their common stock as part of a sale of the Company and might ultimately affect the market price of our common stock.
We have opted out of Section 203 of the DGCL, which prohibits a publicly held Delaware corporation from engaging
in a business combination transaction with an interested stockholder for a period of three years after the interested
stockholder became such unless the transaction fits within an applicable exemption, such as board approval of the business
combination or the transaction which resulted in such stockholder becoming an interested stockholder. Therefore, after the
180-day lock-up period expires, our principal stockholder will be able to transfer control of us to a third party by
transferring their shares of our common stock (subject to certain restrictions and limitations), which would not require the
approval of our board of directors or our other stockholders.
Our principal stockholder may also have interests that differ from yours. For example, our principal stockholder, and
the members of our board of directors who are affiliated with our principal stockholder, by the terms of our certificate of
incorporation, will not be required to offer us any corporate opportunity of which it becomes aware and can take any such
corporate opportunity for itself or offer it to other companies in which it has an investment. We, by the terms of our
certificate of incorporation, will expressly renounce any interest or expectancy in any such corporate opportunity to the
extent permitted under applicable law, even if the opportunity is one that we or our subsidiaries might reasonably have
pursued or had the ability or desire to pursue if granted the opportunity to do so. In addition, our principal stockholder is in
the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that
directly or indirectly compete with our business, as well as in businesses that are significant existing or potential customers.
We are a “controlled company” within the meaning of the corporate governance standards of the NYSE. As a result, we
qualify for, and may in the future rely on, exemptions from certain corporate governance requirements. You do not
have the same protections afforded to stockholders of companies that are subject to such requirements.
Our principal stockholder controls a majority of the voting power of shares eligible to vote in the election of our
directors. Because more than 50% of the voting power in the election of our directors will be held by an individual, group
or another company, we are a “controlled company” within the meaning of the corporate governance standards of the
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NYSE. As a controlled company, we may elect in the future not to comply with certain corporate governance requirements,
including the requirements that, within one year of the date of the listing of our common stock:
• our board of directors be composed of a majority of “independent directors,” as defined under the NYSE’s rules;
• the compensation of our executive officers be determined, or recommended to our board of directors for
determination, by a compensation committee comprised solely of independent directors; and
• our director nominees be selected, or recommended for our board of director’s selection, by a nominating and
governance committee comprised solely of independent directors.
We do not intend to rely on these exemptions at this time but may decide to do so in the future. Accordingly, you will
not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance
requirements of the NYSE.
The 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.
As a public company, we incur significant legal, accounting, reporting and other expenses, including costs associated
with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also incur
costs associated with compliance with the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer
Protection Act and related rules implemented by the SEC and the NYSE listing rules. The expenses incurred by public
companies generally for reporting and corporate governance purposes have been increasing. Our management will need to
devote a substantial amount of time to ensure that we comply with all of these requirements.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are
creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more
time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their
lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by
regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices. We intend to continue to invest resources to
comply with evolving laws, regulations and standards, and this investment may result in increased general and
administrative expenses and a diversion of management’s time and attention from revenue-generating activities to
compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended
by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal
proceedings against us, which could have an adverse effect on our business, financial condition, results of operations and
cash flows.
These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance,
including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more
difficult to attract and retain qualified persons to serve on our board of directors, our board committees or as executive
officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of
our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
Failure 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.
As a public company, we have significant requirements for enhanced financial reporting and internal controls. The
process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and
react to changes in our business and the economic and regulatory environments and to expend significant resources to
maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. Testing and
maintaining internal controls may divert our management’s attention from other matters that are important to our business.
If w e are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause
us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial
statements and harm our operating results. Although we are required to disclose changes that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting on a quarterly basis, we are not
required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act (“Section 404”) until our second annual report on Form 10-K. This assessment will need to include
disclosure of any material weaknesses identified by our management in an internal control over financial reporting. In
addition, our independent registered public accounting firm will be required to formally attest to the effectiveness of our
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internal control over financial reporting pursuant to Section 404(b) commencing the year following our first annual report
required to be filed with the SE C.
In connection with the implementation of the necessary procedures and practices related to internal control over
financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed
by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems
or delays in completing the remediation of any deficiencies identified by us or our independent registered public
accounting firm in connection with the issuance of their attestation report.
We previously identified a material weakness in our internal control over financial reporting. We may not be able to
conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section
404 or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to
conclude that we have effective internal control over financial reporting or our independent registered public accounting
firm is unable to provide us with an unqualified report, investors could lose confidence in our reported financial
information, which could cause the price of our common stock to decline, and we may be subject to investigation or
sanctions by the SEC.
Risks Relating to our Organizational Structure
Some 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.
Our Stockholders Agreement and our amended and restated certificate of incorporation and bylaws provide for, among
other things:
• division of our board of directors into three classes of directors, with each class as equal in number as possible,
serving staggered three-year terms;
• a prohibition on business combinations with interested stockholders (other than our principal stockholder and its
transferees) similar to that set forth in Section 203 of the DGCL;
• so long as our principal stockholder beneficially owns at least 40% of the aggregate outstanding shares of our
common stock, our principal stockholder may designate a majority of the nominees for election to our board of
directors;
• so long as our principal stockholder beneficially owns at least 25% of the aggregate outstanding shares of our
common stock, our principal stockholder will have the right to appoint and remove the chairman of our board of
directors and the lead independent director, if any;
• following the time when our principal stockholder no longer maintains beneficial ownership of at least a majority
of the aggregate outstanding shares of our common stock, there will be:
◦ restrictions on the ability of our stockholders to call a special meeting and the business that can be conducted
at such meeting or to act by written consent; and
◦ removal of directors by the affirmative vote of holders of 66 2 / 3 % of the total voting power of our outstanding
shares of common stock, voting together as a single class, and, for so long as our board of directors remains
classified, only for cause;
• following the time when our principal stockholder no longer maintains beneficial ownership of at least 40% of the
aggregate outstanding shares of our common stock, there will be supermajority approval requirements for
amending or repealing certain provisions in the certificate of incorporation and bylaws;
• our ability to issue additional shares of common stock and to issue preferred stock with terms that our board of
directors may determine, in each case without stockholder approval (other than as specified in our certificate of
incorporation);
• the absence of cumulative voting in the election of directors; and
• advance notice requirements for stockholder proposals and nominations.
These provisions in our Stockholders Agreement and our amended and restated certificate of incorporation and bylaws
may discourage, delay or prevent a transaction involving a change in control of our company that is in the best interest of
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our minority stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely
affect the prevailing market price of our common stock if they are viewed as discouraging future takeover attempts. These
provisions could also make it more difficult for stockholders to nominate directors for election to our board of directors and
take other corporate actions.
The 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.
Our amended and restated certificate of incorporation provides that, unless we, in writing, select or consent to the
selection of an alternative forum, all complaints asserting any internal corporate claims (defined as claims, including claims
in the right of the Company: (i) that are based upon a violation of a duty owed to us or our stockholders by a current or
former director, officer or other employee in such capacity; or (ii) as to which the DGCL confers jurisdiction upon the
Court of Chancery), to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be
brought solely in the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to
accept, subject matter jurisdiction, another state court or a federal court located within the State of Delaware). Additionally,
unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be
the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Our
choice-of-forum provision does not apply to suits brought to enforce any liability or duty created by the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Any person or entity purchasing or otherwise acquiring or
holding any interest in our common stock shall be deemed to have notice of and to have consented to the forum selection
provisions described in our amended and restated certificate of incorporation. Although we believe these exclusive forum
provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in
the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a
claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or stockholders, which
may discourage lawsuits with respect to such claims. Our stockholders will not be deemed to have waived our compliance
with the federal securities laws and the rules and regulations thereunder as a result of our exclusive forum provisions.
Further, in the event a court finds either exclusive forum provision contained in our certificate of incorporation to be
unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other
jurisdictions, which could harm our business, financial conditions, results of operations and cash flows.
