Alliance Laundry Holdings Inc. (ALH) Risk Factors

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 trade 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 borrowing 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 Facility.

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 2025, 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

as:

•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 investors (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 we 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 SEC.

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.