Alliance Laundry Holdings (NYSE:ALH) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.
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Summary
Alliance Laundry Holdings reported a 7% year-over-year increase in revenue for Q2 2026, with adjusted EBITDA growing by 12% and adjusted net income up by 54%.
The company raised its full-year guidance due to strong first-half performance and improved visibility, maintaining revenue growth expectations of 6-7% and increasing EBITDA growth guidance to 8-10%.
Operational highlights include a successful debt reduction strategy, with $50 million repaid in Q2, lowering net leverage from 4.6 to 2.4 times over the past year.
Digital innovation remains a strategic focus, enhancing equipment connectivity for better service and customer experience, which supports stronger customer relationships.
Internationally, Asia Pacific showed significant growth, particularly in vended markets, while Europe remained stable. The Middle East and Africa, impacted by regional conflict and higher energy costs, contribute less than 2% of global revenue.
Management emphasized the essential, resilient nature of the commercial laundry industry and highlighted structural growth opportunities in Southeast Asia driven by urbanization and a growing middle class.
Full Transcript
OPERATOR
Good morning and welcome to Alliance Laundry Holdings' second quarter 2026 earnings conference call. After the speakers' prepared remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press Star then the number one on your telephone keypad. If you would like to withdraw your question, press Star two. We ask that you please limit yourself to one question and one follow-up, then return to the queue if needed.
With that, it is my pleasure to turn the program over to Tom Gelston, Vice President of Investor Relations. Tom, please go ahead.
Tom Gelston, Vice President of Investor Relations
Thank you, and good morning, everyone. Along with today's call, you can find our earnings press release and presentation on our investor relations website at ir.alliancelaundry.com. A replay will also be available on our website following the call. As a reminder, today's earnings release, presentation, and statements made during this call include forward-looking statements. Under federal securities laws, these statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.
Such risks and uncertainties include factors set forth in the earnings release and in our filings with the SEC, including the Risk Factors section of our 10-K filing and subsequent 10-Q filings. We assume no obligation to update or revise any forward-looking statements except as required by law. Additionally, during today's call we will discuss certain non-GAAP financial measures outlined in our earnings presentation. We believe these measures are important indicators of our operations as they exclude items that may not be indicative of ongoing business performance.
Reconciliations to the most directly comparable GAAP measures can be found in our earnings release and presentation appendix. And with that, I'd like to now turn the call over to Mike Shabe, our Chief Executive Officer.
Mike Shabe, Chief Executive Officer
Thanks, Tom, and thank you for joining our earnings call. Our second quarter results reinforce the message we have carried since becoming a public company: that a resilient, replacement-driven, essential industry, a market-leading position, and disciplined operational excellence combine to deliver strong, sustainable outcomes through any environment. In the second quarter, revenue grew 7% year over year, with adjusted EBITDA growth of 12% and adjusted net income up 54%.
This performance was broad-based, and it reflects the diversification that defines our business across products, end markets, and geography. The strength of our first half, combined with our growing visibility into the balance of the year, gives us the confidence to raise our guidance today, and Dean will take you through that detail shortly. I'd like to highlight again that this performance was achieved in a macro environment that's still volatile in many parts of the world.
But remember, every day really is laundry day. Commercial laundry is a vibrant, growing, and essential part of modern life. Our diversified geographies and end markets serving nondiscretionary needs—hospitals and elder care, hospitality, industrial, emergency responders, and many other verticals—have performed across all economic cycles, giving us a level of growth, consistency, and downside protection that is hard to find. This quarter was no different.
Revenue met our expectations with strong adjusted EBITDA and net income conversion. Digital innovation also continues to see strong adoption, and our strategy here is unchanged. The more connected our equipment is, the more value we can deliver through better uptime, smarter servicing, lower costs and higher revenue, and ultimately a better end-user or end-consumer experience that further strengthens our customer relationships. Turning to the regions, North America delivered another strong, broad-based quarter with growth across every vertical and pricing that helped offset inflation and tariff impacts.
Internationally, we saw strength in Asia Pacific, especially in vended markets, and Europe was steady. As we noted previously, the Middle East Africa region represents less than 2% of our global revenue, so the direct impact of the ongoing conflict is small. And while we are seeing some knock-on effects in other regions, mainly due to higher energy costs, we expect normal growth dynamics to return when the conflict subsides. We also continued to strengthen our balance sheet, repaying $50 million of debt in the quarter, bringing year-to-date paydown to $115 million and over $800 million over the past 12 months, which has resulted in a reduction in net leverage from 4.6 to 2.4 times. So, taken together, the strengths we demonstrated this quarter—broad-based demand, pricing discipline, our local-for-local manufacturing footprint, and a strengthened balance sheet—are what we expect to carry us through the balance of 2026. So before Dean walks you through the financials, I want to share a recent event that brings a key aspect of our long-term growth story to life. In late June, I attended our annual event in Bangkok, where we bring current and prospective laundromat operators together with our distribution partners.
Southeast Asia has long been a strategic growth engine for us, and laundromats are leading the way. The demand for new stores continues to impress me in a market that largely barely existed a decade ago and one we're proud to have helped create. This demand is structural, not cyclical—urbanization, a growing middle class, and the shift toward modern out-of-home laundry. It's durable, essential demand, the kind that has carried this company through every economic cycle.
And here our advantages are unmistakable: our technology, our distribution network, our highly trained team, and unmatched product reliability. Operators choose Alliance Laundry Holdings because our connected, durable equipment delivers a lower total cost of ownership and a better experience for their customers. There's a second tailwind building underneath the growth. This equipment runs hard all day, every day in high-throughput stores, and that intensity of use sets up a durable replacement cycle in the years ahead.
So even as new stores drive the top line today, the installed base we're building now becomes a recurring source of demand tomorrow. The event generated hundreds of qualified leads across Thailand, with the opportunity extending across the region. And Thailand isn't the exception—it's the template. We see the same early-innings dynamics taking shape in market after market: structural tailwinds, a growing installed base, and emerging market runway, all pointing to a business built to compound for years to come.
And on that note, I'll hand it over to Dean to provide details of our second quarter performance and increased guidance.
Dean, Chief Financial Officer
Thanks, Mike. Starting on slide five, I'll walk through our financial results, including our strengthening balance sheet. Second quarter net revenue grew 7% versus the prior year. Pricing contributed slightly more than half of the increase, with the balance coming mainly from volume. Gross profit grew 9%, representing a gross margin of 39.8%, up approximately 90 basis points from the prior year. Regarding the cost environment, pricing actions already in place help to offset our tariff exposure and other current inflationary pressures.
Our domestic manufacturing footprint continues to provide a meaningful structural advantage relative to our peers. Adjusted EBITDA grew 12% versus the prior year, with a margin of 28.1%, up 135 basis points. This expansion came from volume leverage, operational excellence and supply chain efficiency, and also includes continued investment in people, digital engineering and commercial capabilities at scale versus the competition. In addition, during the quarter we received tariff refunds and a business interruption insurance claim totaling approximately $3.8 million.
Excluding these two items, adjusted EBITDA grew 9% versus the prior year quarter and EBITDA margin expanded 60 basis points. Adjusted net income was up 55% year over year and adjusted earnings per share was up 32% to $0.41. This result reflects both strong operating performance and the meaningful benefit of significantly lower interest expense, down roughly $22 million from the prior year quarter. Moving to cash and the balance sheet, operating cash flow was $66 million in the quarter, reflecting strong conversion and continued working capital discipline.
We paid down $50 million of debt in the quarter, bringing our year-to-date pay down to $115 million. Net leverage at the end of the quarter was 2.4 times, down 0.2 turns in the quarter and down 0.4 turns from year end. Stepping back, the progress over the past year is striking. Since June 30, 2025, we have paid down $825 million against our term loan funded by strong organic cash generation and IPO proceeds, cutting our net leverage nearly in half over the last 12 months from 4.6 times to 2.4 times, with one full turn of that deleveraging due to organic cash flow generation and EBITDA expansion.
In addition, we are quite pleased that both Moody's and S&P have upgraded our corporate and senior debt ratings, recognizing our ability to both grow and delever at the same time. This action also has the benefit of lowering our borrowing costs on our term loan by 25 basis points going forward. Drilling into the segments on slide 6, North America delivered a strong quarter with revenue up 9%, adjusted EBITDA up 17% and adjusted EBITDA margin of 31.6%.
Adjusted EBITDA growth was over 12% if you exclude the impact from the insurance recovery and tariff refund mentioned previously. Growth was broad-based across our end markets with mix providing a modest positive impact in the quarter. Internationally, revenue was approximately flat with adjusted EBITDA of $34 million and a margin of 28.9%. Asia Pacific saw strong growth, particularly in fast-developing vended markets, and Europe was steady across all end markets with operators actively investing in new stores, fleet upgrades and energy efficiency.
This flat result masked genuinely strong underlying momentum. As we noted, our Middle East and Africa region, which makes up less than 2% of global revenue, saw a temporary pause in demand tied to the ongoing regional conflict as well as higher energy costs, which also weighed on certain other international markets in the quarter. The year-over-year international EBITDA and margin comparison reflects regional mix within the segment as well as our ongoing investments in people and products to support future growth.
International EBITDA and profitability will be lumpier quarter to quarter than North America given the smaller base and the swings in regional strength and mix. We look at progress over time and the trajectory is toward improved profitability and continued parity with our North America margins. Now we will turn to our updated full-year guidance on slide 7. The strength of our first half performance and our growing visibility into the balance of 2026 give us the confidence to raise our full-year guidance.
Today we are maintaining our full-year revenue growth guidance of 6% to 7%, with volume and price expected to contribute equally. We are raising our adjusted EBITDA growth guidance to a range of 8% to 10%. We expect revenue to be fairly consistent between quarters across the second half, with margin expansion weighted more toward the fourth quarter, given our geographical mix expectations and normal seasonal patterns. We now anticipate net leverage of 2.0x at the end of the year, down from the prior forecast of the low-2-times range.
Of course, this is based on our current expectations of business operations and capital expenditures and does not take into account the potential impact of other capital deployment opportunities. A few additional adjustments to our full-year outlook: we now expect 2026 interest expense to total approximately $80 million. We anticipate a lower effective tax rate of 23%. Our CapEx and share count guidance are unchanged. Now I'll turn the call back over to Mike.
Thanks, Dean.
Mike Shabe, Chief Executive Officer
And with that, I want to close with our four consistent messages. First, commercial laundry is a vibrant, growing and essential industry. Second, we hold a leading market position as the only scaled pure-play operator, two times the size of our number two competitor. Third, we have an experienced, hungry and proven team that has long delivered results through every economic cycle and that gives us the confidence to raise our outlook for the full year.
And finally, there are systemic tailwinds of magnitude that we believe will continue to power this company for the next several years. So I'll close by thanking our employees, our distribution partners, our customers and our shareholders for your continued support. We really appreciate it and look forward to continuing to create long-term value for Alliance's stakeholders. Before we open the line for questions, I do want to note that Dean is unable to participate in the Q&A portion of today's call due to a personal matter.
I'll be handling questions this morning alongside Tom and Bob Calver, our outgoing head of IR and future International COO. So with that, operator, let's open the line for questions.
OPERATOR
Thank you, sir. We'll now begin the question and answer session, and that is star one to enter the queue. As a reminder, we ask that you please limit yourself to one question and one follow-up, then return to the queue if needed. Our first question will come from Amit Mehrotra with UBS. Please go ahead.
Amit Mehrotra, Analyst at UBS
Great, thank you. Good morning, gentlemen. Appreciate the question. Maybe I can just start by asking about the Middle East conflict and sort of the direct and indirect impacts there. I'd be curious how much you think that impacted the international business, both on revenue and earnings, and maybe just give us a sense of kind of—I know it's going to be lumpy prospectively—but as we think about third and fourth quarter, what are sort of the continuing impacts?
Thank you.
Mike Shabe, Chief Executive Officer
Yeah, hi Amit, this is Mike. I would say, you know, remember it's 2% of revenue, so the region itself, you know, de minimis in terms of impact. What you have there is, honestly, it's more transit, some vessels being delayed, things of that nature. And the good news is it includes Africa also, which has been an area that, candidly, we have not—we've done okay in select countries, but there's a lot of opportunity if you think about the demographics of that part of the world.
Large family sizes and other things. And so we've got a lot of opportunity. In many ways, like any crisis, it's a gift if you look at it the right way. And that gift is forcing that team to refocus on the African market, which again is pretty stunning in terms of the long-term potential opportunity. And then, as I said in the opening remarks, it's more about the knock-on effects where, understandably, some people are pausing a little bit on the international side.
Energy costs are a little bit higher. You know, the regions that matter there obviously are Asia and in Europe in particular. You know, the thing that we see is, as you know, Asia put in a great quarter. We're still very confident about that. I think in Europe a little slower. But we've seen this before, and usually what happens is people are a little hesitant, they pause, and then all of a sudden it sort of comes back because people realize laundry is every day and they got to get to work and the business comes back.
So it's not—I would say we're probably seeing that same phenomenon where, to use your words, a little lumpy, a little bumpy, but long term, you know, they are and we believe, you know, we'll be fine.
Amit Mehrotra, Analyst at UBS
Okay, that's helpful. And just maybe as a follow-up, you know, obviously the North American margins were just spectacular. And what I found interesting is you only attributed mix to sort of a modest benefit in the quarter. You know, we have North America margin sort of approaching 32% here. I think that's sort of an all-time high tied to maybe something you did back in 2023. But what is—is there a ceiling here? Because the incremental margins are so far in excess of the absolute margins and your growth is good.
It implies that you can continue on this expansion trajectory. But I just want to make sure I'm thinking about it correctly.
Mike Shabe, Chief Executive Officer
Yeah, look, I would sort of caution on that side, but I mean, as you know, we've got some internal targets that we won't talk about. We think we continue to grow—that is our plan on the margin side—but I would say sort of slow, steady, upward trajectory, nothing radically different, but confident in our ability to, again, be cost down, to offset any tariffs and inflation, to just get better every day through our operational excellence. Right. And then on the new product side, a lot of the design criteria that our engineering team is very, very capable of doing, particularly given, as we've talked about on some of the past calls, the expansion of our laboratory testing facilities. And also we have added additional folks to our engineering team and the technicians and other guys that are involved in that. So, again, being a little long-winded here, but think up to the right and continual progress.
OPERATOR
Thank you. Our next question will come from Susan McLauri with Goldman Sachs. Please go ahead.
Susan McLauri, Analyst at Goldman Sachs
Thank you. Good morning, everyone. My first question is on the strength, the mix shift that you saw in vended. Can you talk a little more about what's driving that and how you're overcoming some of those underlying, perhaps headwinds, given the macro and some of the other constraints you mentioned last quarter relative to the initiatives that you're putting through and the innovations that you're launching?
Mike Shabe, Chief Executive Officer
So the mix we've talked about, Susan, in the past, and I think it's pretty consistent. And that is in those retail locations. Right. It's all about revenue per square foot. The larger-capacity product simply just drives better returns. Right. The footprint is smaller, the ability to charge more is higher. So revenue per square foot is significantly higher. And again, you see people doing that. The other thing is the end consumer—most people don't like doing laundry.
They particularly don't like doing laundry in public many times. So what they really want to do is they want to get in and they want to get out and they want to get on with their life and go play baseball with the kids or do whatever their free time allows them to do. So it's really, really strong that way. And then it is the trifecta in terms of the third part, which is for us, right. The engineering content is higher in larger-capacity product.
There is less of a competitive set on that side. And those things allow us to make a little more margin forward. So it's really a win across the board for the consumer, for the store owner, and for us as a manufacturer.
Susan McLauri, Analyst at Goldman Sachs
Okay, that's helpful. And then maybe shifting to the margin and the cost side. Can you talk a bit about price/cost and what you're seeing there, especially just given the move in steel and how you're thinking about the potential for any further pricing as we look to the back half of the year.
Dean, Chief Financial Officer
Yeah, so, so steel, we're locked through the first quarter of '27. We are watching it. It does look like for '27, hey, the inflationary environment is a little more hot than we would like. But we're early days again. We're watching everything. We're seeing, you know, lots of different things in terms of freight and other things that are sort of moving around. I think my message would be, hey, as we have done traditionally, we will get ahead of any of those cost increases and offset that with price and again some of the cost-down other efforts that we have to continue to be, you know, really attractive in terms of our margin profile.
But right now, again, just a little looks like it'd be a little hot, but too early to tell.
OPERATOR
Thank you. Our next question will come from Mike Holloran with Baird. Please go ahead.
Mike Holloran, Analyst at Baird
Good morning everyone. So can we start on just some of the channels in North America? Maybe talk a little more depth on the commercial and home, what you're seeing on that side, any broader macro headwinds impacting that demographic or that buying group, any change in trajectory, any kind of loose thoughts?
Mike Shabe, Chief Executive Officer
So, morning. Yeah, I mean having just returned actually night before last from a buying group show, I can tell you the demand is extraordinary, the preference for the Speed Queen brand is extraordinary and it is all signs green. There is no slowdown and they're really asking for us to deliver more product. That's probably the biggest opportunity is to really scale that up a little bit more.
Mike Holloran, Analyst at Baird
And you know you're going to be sub two times leverage exiting the year here. Maybe just give a little context to what your capital allocation or deployment plan looks like. Beyond that, does a dividend come into the cards, how are you thinking about the M&A market? You know, buybacks seems maybe a little premature given the float, but maybe just add some context around the plan after you get down to two turns.
Bob Calver (Outgoing Head of IR and Future International COO)
Yeah, hi Mike, it's Bob Calver. Yet really no change from what Dean talked about the last three quarters. You know, primary use is to get that leverage down and we're, as you know, tracking really strongly against that. Investing in the business, be that CapEx or M&A, remains, you know, the next best use of capital. We've talked about it before. There's the limited M&A out there that we see and you've seen that over the last few years. We've, we think fairly successfully, done those distributor roll-ups in the U.S. and that may continue. But they're fairly small-dollar items. And then you're absolutely right. Cash generation is really, really strong and we do need to start thinking about what we do with it at that point. I think it's a little bit premature right now to be talking about that in any detail. But think long term, that combination of dividends, buybacks is kind of where you land logically. But we don't have a firm plan to share with anyone at this point.
OPERATOR
Thank you. Our next question will come from Kyle Mingus with Citigroup. Please go ahead.
Kyle Mingus, Analyst at Citigroup
Great, thank you, guys. I just wanted to understand maybe a little bit more what's embedded in the second half expectations for international markets. I mean it seems like in the second quarter Middle East and Africa was down quite a bit year over year and Europe flat. So just trying to understand, are you basically assuming more of the same in the second half? And just any color you can provide on how you're thinking about some of these international markets in the second half and what's embedded in the guide?
Mike Shabe, Chief Executive Officer
Yeah, I mean what I would say, Kyle, is we still feel pretty good about—international is and can be lumpy at times. What we see is Europe continuing to perform, nothing really systemic there in any way and, as I've said on multiple calls, an incredible team, really, really strong manufacturing base where we can be very, very competitive from a cost side. You know, our competitive set, they're very capable. But as you know, we've continued to grow.
We think we have a lot of tailwinds still, particularly on the vended side that is continuing to grow. It's a new market and that region has always been strong on the on-prem. So, you know, very diverse, lots of opportunities. Still feel good about it. Asia Pacific, we should be okay. I don't expect anything negative. Again, lots of opportunity to grow. Certainly challenges in the region for sure. Probably a little more energy conscious in that part of the world.
Latin America, again, we feel like these emerging markets, sometimes lumpy but long term strong. For us that region is really about what's happening in Mexico and Brazil that drives the majority of the business. And Middle East, Africa, as I said—and actually as an example, they've had a pretty good start to Q3—but it is going to be dependent on what the team can do there. And, you know, I would say it's more like we talked about, vessels that get delayed, transport, that kind of thing.
Saudi and the UAE are down. So it's really up to that team to find other opportunities for growth. Very capable, and I would expect that to be down for sure. I don't see recovery there for the year, but as I stated, it's about 2% of revenue, so love to have it up. But if there's a region that's going to be down, that's the one that would have my vote.
Kyle Mingus, Analyst at Citigroup
That's helpful, Mike. And then just a quick follow-up. Bob, I think you mentioned the potential for some M&A. I mean, it sounds like small dollars. Just curious how the M&A pipeline is looking now that you'll be at about two times leverage exiting this year. If it's mostly small dollars or anything bigger in the pipeline. Thank you.
Bob Calver (Outgoing Head of IR and Future International COO)
Yeah, we've talked about it before. There's a limited amount that we need. We've got everything that we think we need to continue growing historic rates well into the future. If anything did come up that was attractive in terms of filling product gaps, distribution gaps, those kind of things, we'd absolutely consider it. But we certainly don't believe that we need it. So yeah, it's always a lever that's there. But I think we're very happy with what we've got and what the future looks for us like at the minute.
OPERATOR
Thank you. Our next question will come from Tomo Sano with JP Morgan. Please go ahead.
Tomo Sano, Analyst at JP Morgan
Hi. Good morning, everyone. Thank you. If you could talk about the international business, especially the primary drivers for margin pressures—geographic mix and cost and investment ramp and staffing and pricing. If you give us more color on what happened in Q, and how should we think about the back half? Thank you.
Mike Shabe, Chief Executive Officer
Yeah, so there's some dynamics going on. But let's start with the manufacturing base that we have, right. So in Europe, or in the Czech Republic, it is highly, highly cost competitive. We feel really good both about that location, our sourcing team, and the product design. So the international markets, I think in general what you see there is more large chassis which is produced in each of those regions—or certainly in Europe—and in the case of Asia, just to touch on that a little bit from the cost side.
Right. And our Thai factory, it is state of the art. It is our newest factory. It is highly efficient and again it is sourcing all materials locally. So very competitive with local manufacturers. And outside of Australia, New Zealand, not a lot of product coming from outside of the region. Right. So it is primarily high margin—we use this term large chassis, as you know—product where again you've got more engineering content, a lesser competitive set and we think opportunity to go.
So sometimes you'll have some mix shifts where there'll be a country or two that all of a sudden takes a large order of lower-margin product—that would be the small chassis product—again, highly differentiated but not an equal margin versus the large chassis product. And over time, what those regions use small chassis to sort of seed the market, particularly on the vended side because it's a lower capital cost. If you want to start up a store as an example—let's just stay on that for a minute—and then they get comfortable and then they realize, hey, this is a really good business.
It is every day. And then their next store, what they will do traditionally is they will upgrade them to a larger-chassis product which has longer life, got faster cycle times and offers a better return on investment. But they will dip their toes. And we use that to allow them to dip, get comfortable. And then that second and third and fourth store, hopefully, if all goes well, right, you do not see them using small chassis in those subsequent stores.
Does that answer your question?
Tomo Sano, Analyst at JP Morgan
Yes. Thank you, Mike. And follow up on Bob—congratulations on leadership transitions. And this is questions for Mike and Bob. Under Bob's leadership, what will concretely change to improve speed and execution, and where will decision making be different versus today in international business? Thank you.
Bob Calver (Outgoing Head of IR and Future International COO)
Yeah. So Tom, first, and thank you for the congratulations. I'm going to defer this one to Mike because I think this sounds like an objective conversation. So.
Mike Shabe, Chief Executive Officer
Yeah, Tom. Well, trust me, we have those ongoing dialogues. I'm looking at him right now and everything is going to change. But we feel really good. As you know, he's very capable. He's been in the business for a long period of time. One of the good things, Tomo, is we've had, you know, Tom join us. The transition—and Tom's experience and tenure and professionalism, honestly—has allowed Bob to get a running start on the transition. So I can say, for example, we've been in almost every region of the world over the last two months and, you know, meeting customers, they know him already.
He knows the sales team and I think he is bringing in, you know, good perspective. You always win when you bring somebody in new. They look at things differently. They uncover opportunities, they challenge. And I feel really good about the trajectory, the opportunity and I think Bob's leadership and knowledge. So he's not starting from zero. He's an experienced guy who's been around for a long time and, as you know, the numbers matter. And so actually his background on the finance and investor relations side is super helpful to help drive that into his regional teams and, you know, I feel really good.
OPERATOR
Thank you. Our next question will come from Andrew Obin with Bank of America. Please go ahead.
David Ridley Lane, Analyst
Hi, good morning. This is David Ridley Lane on for Andrew. Just a question here. A competitor has instituted surcharges in response to, as you said, a little bit higher inflationary environment. What has Alliance done historically, and what are your plans on pricing second half, and maybe early thoughts on 2027?
Mike Shabe, Chief Executive Officer
Thank you. Yeah, so David, actually, look, we've done all of the above. A little bit is hyperinflationary. We have used surcharges for shorter periods of time, sort of waited, watched. You know, if I go back a year or so ago, it was on the freight side, and then as that looked to be a consistent cost increase, we did roll out a price increase. So you'll see us do that. At the moment, we're watching. We feel we can offset the majority of that with a lot of other different actions that we're taking here.
But the one thing you should know about us is we have consistently gotten ahead of any price increase to make sure our margin profile remains attractive. So we're not quite there yet. We're watching it. As I said, I think '27 will be a little bit hotter than normal — nothing like what we've seen in the past — but it's likely to be a little bit hotter. But again, you'll see us announce, get ahead of it. We don't chase it, because you can never catch it, is my experience anyways.
So that's how I frame it.
David Ridley Lane, Analyst
Thank you. And then just to follow up, there's been a number of tariff changes. I know you're primarily local for local. Do the Section 301 tariffs, kind of the 10 or 12.5%, have any benefit to you in the second half? Any thoughts on that? Thank you.
Bob Calver (Outgoing Head of IR and Future International COO)
Yeah, David, I'll just take that one. I think you should consider the second half very similar to the first half. We don't see any changes, and it's fairly neutral for us right now.
OPERATOR
Thank you. Our last question will come from Katyn Memtora with BMO Capital Markets. Please go ahead.
Patrick Birso, Analyst at BMO Capital Markets
Morning. This is Patrick Birso on for Katyn. I wanted to ask about the demand trends in Europe, both by end market and region, and how did you see those trends sort of evolve through Q2?
Mike Shabe, Chief Executive Officer
Yeah, I'm sorry, I missed the first part of the question. Can you repeat that?
Patrick Birso, Analyst at BMO Capital Markets
Yeah, I just wanted to ask on the demand trends in Europe on an end market and region basis, and then how you saw those trends sort of evolve through Q2.
Mike Shabe, Chief Executive Officer
Yeah. So I don't think there's any material change. Again, the vended piece continues to grow. Again, you've got a lot of new storefronts that are going in. No real change there. The incremental growth of that part of the business has been quite strong, and then again it is more on-premise heavy as a percent of revenue. There are a lot of opportunities in terms of the same phenomena you see here where Europeans are staying more often; they're staying in the region.
So a lot of the bed and breakfast — and you do have a different sort of hospitality market there where you've got a lot of smaller properties versus what you have here of, you know, 300-, 400-room hotels. You don't see that there. You've got a lot of 50-, 60-room locations that have on-premise laundry. So a lot of opportunity there and others, I would say, tailwinds that are favorable. The Eastern Europe is a little more hard hit with the energy costs.
You don't see — I mean there's concern across the region. As everybody knows, sustainability is really, really critical in that part of the world. We've got the right product suite that allows them to get much, much higher efficiency and lower costs. But I would say the east is a little bit more stressed than Western Europe. And particularly where we are strong in France, Spain, and Italy, which has a high population base, we have a direct business there that has long been outperforming and growing faster than some of our independent distributor countries.
Patrick Birso, Analyst at BMO Capital Markets
That's helpful. And then on the tariff refund side, are you expecting anything for the remainder of the year?
Bob Calver (Outgoing Head of IR and Future International COO)
Yeah, Patrick, it's Bob again. Look, we're not going to share anything specific. There was the benefit we got in Q2. The reality is that there's probably still something out there, but it's still subject to confirmation. So just to be clear on guidance, it's not included in our full-year guidance. Nothing over and above what we've seen in the second quarter is in there. So if there is any, it will be additional benefit.
OPERATOR
Thank you. This brings us to the end of the Q&A portion and also the conclusion of Alliance Laundry Holdings' second quarter 2026 earnings conference call. You may now disconnect your lines and have a wonderful day.
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