Achieved Record Revenue and Gross Profits,
and a Record $20M in Operating Cash Flows for the Nine-Month
Period, Further Strengthened its Balance Sheet, and Increased
Investments Across Key Technology Initiatives
EVI Industries, Inc. (NYSE American: EVI) announced its
operating results for the three- and nine-month periods ended March
31, 2024, including record revenue, gross profit, and operating
cash flows for the nine-month period ended March 31, 2024, and
record gross margin and operating cash flows for the three-month
period ended March 31, 2024. The Company also provided commentary
on its results of operations, cash flow and financial position, and
investments in furtherance of its technology initiatives. Click
here to listen to the Company’s recorded earnings call.
In 2016, EVI commenced the execution of a long-term growth
strategy to build the undisputed leader in and around the
commercial laundry industry and in doing so, produce attractive
returns for its shareholders over the long-term. Since 2016, EVI
has established itself as a leader in the highly fragmented North
American commercial laundry distribution and service industry. The
Company has grown from one business operating from a single
location in the state of Florida with thirty-one employees,
including ten sales personnel and four service personnel, to
twenty-six businesses employing 750 employees, including over 190
sales professionals and over 400 technicians and service support
personnel each contributing to the Company’s long-term goals. Since
2016 the thoughtful execution of the Company’s long-term growth
strategy has resulted in a compounded annual growth rate in
revenue, net income, and adjusted EBITDA of 34%, 16%, and 31%,
respectively.
Henry M. Nahmad, EVI’s Chairman and CEO,
commented: “We are a long-term focused company with ambitious
growth plans. Our confidence is derived from early successes
combined with financial strength and wherewithal, the reputation of
a knowledgeable and high-quality buyer and builder of businesses,
the future impact of promising technologies, and a heavily invested
leadership team to guide the Company into the future.”
Nine-Month Results
- Revenue increased 1% to a record $263 million
- Gross profit increased 3% to a record $77.9 million
- Gross margin increased 40 basis-points to a record 29.6%
compared to 29.2%
- Operating income was $8.0 million compared to $12.5
million
- Net income was $3.6 million, or 1.4%, compared to $7.8 million,
or 3.0%
- Adjusted EBITDA was $16.4 million, or 6.2%, compared to $19.2
million, or 7.4%
Three-Month Results
- Revenue decreased 11% to $84.0 million
- Gross profit decreased 3% to $25.8 million
- Gross margin increased to a record 30.7% compared to 28.3%
- Operating income was $2.4 million compared to $4.5 million
- Net income was $1.0 million, or 1.1%, compared to $2.8 million,
or 2.9%
- Adjusted EBITDA was $4.9 million, or 5.9%, compared to $6.7
million, or 7.2%
Other Company Achievements for the Nine-Month Period Ended
March 31, 2024
- Record operating cash flows of $20 million for the nine-months,
a $27 million increase over the prior year
- Net debt declined 36% to $18.6 million as of March 31,
2024
- New confirmed customer sales order contracts exceeded the value
of those fulfilled during the period
- Completed one acquisition adding sales and service expertise to
the Company’s Northeast Region
- Paid a $4.1 million dividend, the largest dividend since the
inception of the Company’s buy-and-build strategy
Operating Results
Operating results for the three- and nine-month periods come
against the backdrop of record-breaking performance in the
comparable periods of the prior fiscal year. The 11% decline in
revenue during the third fiscal quarter is primarily attributed to
the irregular cadence of industrial revenue and in part to delays
in the completion of certain large on-premise laundry customer
sales order contracts. Specifically, the third quarter of prior
fiscal year included a disproportionately greater amount of
industrial revenues derived from a small number of large customer
sales order contracts. While the Company generates a recurring base
of industrial business, the timing of revenue related to industrial
projects is subject to longer sales cycles and complex
installations that from time to time are uneven as compared to
revenue derived from other commercial laundry categories. It is
important to note that excluding the impact of large industrial
customer sales order contracts in each of the current and
comparable prior year periods, during the third fiscal quarter
equipment revenue increased 4.5%, parts revenue increased 5.1%,
service revenue increased 13%, and gross margins were 30.7%. These
results demonstrate the incremental positive impact derived from
the Company’s investment in additional sales professionals and
service technicians, which are core to the Company’s long-term
market share strategy. Looking forward, the Company expects to
benefit from the completion of confirmed sales order contracts
contributing to its $100+ million equipment sales backlog.
Given the Company’s long-term objectives and as mentioned in
prior releases, the Company is investing heavily in key areas aimed
to drive future growth and profitability. Operating results include
the total cost and only partial benefit of twenty-one new and
additional sales professionals integral to the Company’s sales
growth goals. Operating results also include the total cost of
thirty-nine new and additional service-related personnel as
compared to the same period of prior fiscal year. Finally,
operating results include increased investment across key areas of
the Company’s technology strategy. While the combination of these
investments adversely impacted operating results in the current
periods, the Company is incrementally benefiting from these
investments in the form of greater sales and service penetration
and a 4.0% reduction in support personnel as compared to the prior
year periods and expects to benefit more as the Company’s scalable
technologies are deployed.
Technology Strategy
In 2020 the Company initiated a comprehensive modernization
initiative to transform EVI into a modern, data-driven company
capable of continuous outperformance in the digital era. Since
2020, EVI’s technology group has grown significantly, various
third-party technology professionals have been retained, and
multiple technology initiatives were undertaken to strengthen the
Company’s leadership position, accelerate sales and profit growth,
increase the speed, convenience and efficiency in serving
customers, extend EVI’s reach into new geographies and sales
channels, and create scalable operating processes.
EVI’s growing team of technology focused professionals is
leading efforts to consolidate business units into end-state
Enterprise Resource Planning (ERP) Systems, configuring multiple
software, enriching numerous data sets, and building master
databases. These initiatives are prerequisites to the efficient
utilization of internal applications and to the launch of customer
facing technologies aimed to transform the customer experience.
While the aggregate cost and expense associated with these, and
other modernization initiatives adversely impacts EVI’s financial
performance in the near-term, the Company believes these
technological capabilities will be a catalyst to achieving the
Company’s long-term growth and profitability goals.
Examples of benefits expected to be derived from implemented
technologies include:
- Business intelligence and data analytics that enable insightful
decision-making by managers across the Company.
- Digital mobile sales quoting application that empowers sales
professionals to deliver instant customer sales order proposals
with the benefit of real-time costing, product availability, lead
times, installation scheduling, and more.
- Streamlined operating processes designed to improve the speed
and reduce the cost of doing business.
- CRM capabilities designed to improve customer prospecting and
communications and increase close rates.
Cash Flows and Financial
Strength
Operating cash flow for the nine-month period was a record $20.3
million (a $27 million increase over prior year) and for the third
quarter was a record $9.4 million. Strong operating cash flows for
the three- and nine-month periods contributed to a 36% decrease in
net debt from $28.9 million as of June 30, 2023, to $18.6 million
as of March 31, 2024. The Company’s low leverage profile provides
more than $120 million of available cash for deployment in
connection with the Company’s long-term growth strategy.
This record level of operating cash flows follows the payment of
a special cash dividend on the Company’s common stock of $0.28 per
share, or $4.1 million in the aggregate, paid during the second
quarter of fiscal 2024. EVI aims to uphold its philosophy of
sharing increasing amounts of cash flow through higher dividends
while maintaining a conservative financial position. Future
dividends and increases, if any, will be considered in light of
investment opportunities, cash flow, general economic conditions
and the Company’s overall financial condition.
Acquisitions
During the nine months ended March 31, 2024, the Company
completed the acquisition of ALCO Washer Center, a commercial
laundry distributor and service provider. The acquisition
strengthens EVI’s leading market share position in the northeast
region of the United States.
Mr. Nahmad commented: “We continue to pursue
opportunities in connection with the ‘buy’ component of our
long-term strategy. We have a financial and strategic team that
understands the value of each opportunity, leadership teams with a
proven record of achieving growth across acquired businesses,
technology teams propelling acquired businesses into the digital
era, and functional support teams paving the roads to optimization.
As such, we are continuously working to harvest opportunities that
we believe will create value across our growing enterprise.”
Important Fundamentals and Growth
Drivers
The Company believes that the essential nature of commercial
laundry products and continuous demand and growth across all end
customer markets of the commercial laundry industry are catalysts
for a growing installed base of commercial laundry systems across
North America. These systems require advanced planning, thoughtful
design, knowledgeable installation, and continuous
post-installation services, including the replacement of equipment,
parts, and accessories and the performance of maintenance and
repair services. EVI’s large and growing sales and service network
represents and services a broad range of products sourced from
various domestic and international suppliers to support industrial,
on-premise, vended, and multi-family customers serving a wide array
of end-user categories. The Company believes its fundamentals,
financial strength, market strategy, entrepreneurial culture,
technology initiatives, and strong supplier relations are important
competitive advantages that support the Company’s ability to grow
and capture more profitable market share going forward.
EVI’s Core Principles
EVI upholds specific core values and principles for its
business, including:
- Invest and manage with a long-term perspective
- Uphold financial discipline with a view towards ensuring
financial strength and flexibility
- Respect the entrepreneurs and management teams that join the
EVI family
- Operate each business as a local business and empower its
leaders to make local decisions
- Promote an entrepreneurial culture
- Instill a growth mindset and culture of continuous
improvement
- Incentivize and reward performance with equity
participation
- Establish strong relationships with our OEM partners
Earnings Call and Additional
Information
The Company has provided a pre-recorded earnings conference
call, including a business update, which can be accessed under
“Financial Info” in the “Investors” section of the Company’s
website at www.evi-ind.com or by visiting
https://ir.evi-ind.com/message-from-the-ceo. For additional
information regarding the Company’s results for the three and nine
months ended March 31, 2024, please see the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2024, as filed
with the Securities and Exchange Commission on or about the date
hereof.
Use of Non-GAAP Financial
Information
In this press release, EVI discloses the non-GAAP financial
measure of adjusted EBITDA, which EVI defines as earnings before
interest, taxes, depreciation, amortization, and amortization of
share-based compensation. Adjusted EBITDA is determined by adding
interest expense, income taxes, depreciation, amortization, and
amortization of share-based compensation to net income, as shown in
the attached statement of Condensed Consolidated Earnings before
Interest, Taxes, Depreciation, Amortization, and Amortization of
Share-based Compensation. EVI considers adjusted EBITDA to be an
important indicator of its operating performance. Adjusted EBITDA
is also used by companies, lenders, investors and others because it
excludes certain items that can vary widely across different
industries or among companies within the same industry. For
example, interest expense can be dependent on a company’s capital
structure, debt levels and credit ratings, and the tax positions of
companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
jurisdictions in which they operate. Adjusted EBITDA should not be
considered as an alternative to net income or any other measure of
financial performance or liquidity, including cash flow, derived in
accordance with GAAP, or to any other method of analyzing EVI’s
results as reported under GAAP.
About EVI Industries
EVI Industries, Inc., through its wholly owned subsidiaries, is
a value-added distributor and a provider of advisory and technical
services. Through its vast sales organization, the Company provides
its customers with planning, designing, and consulting services
related to their commercial laundry operations. The Company sells
and/or leases its customers commercial laundry equipment,
specializing in washing, drying, finishing, material handling,
water heating, power generation, and water reuse applications. In
support of the suite of products it offers, the Company sells
related parts and accessories. Additionally, through the Company’s
robust network of commercial laundry technicians, the Company
provides its customers with installation, maintenance, and repair
services. The Company’s customers include retail, commercial,
industrial, institutional, and government customers. Purchases made
by customers range from parts and accessories to single or multiple
units of equipment, to large complex systems as well as the
purchase of the Company’s installation, maintenance, and repair
services.
Safe Harbor Statement
Except for the historical matters contained herein, statements
in this press release are forward-looking and are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward looking statements may relate to, among
other things, events, conditions, and trends that may affect the
future plans, operations, business, strategies, operating results,
financial position and prospects of the Company. Forward looking
statements are subject to a number of known and unknown risks and
uncertainties that may cause actual results, trends, performance or
achievements of the Company, or industry trends and results, to
differ materially from the future results, trends, performance or
achievements expressed or implied by such forward looking
statements. These risks and uncertainties include, among others,
those associated with: general economic and business conditions in
the United States and other countries where the Company operates or
where the Company’s customers and suppliers are located; industry
conditions and trends; credit market volatility; risks related to
supply chain delays and disruptions and their impact on the
Company’s business and results, including the Company’s ability to
deliver products and provide services to its customers on a timely
basis; risks relating to inflation, including the current
inflationary trend, and the impact of inflation on the Company’s
costs and its ability to increase the price of its products and
services to offset such costs, and on the market for the Company’s
products and services; risks related to labor shortages and
increases in the costs of labor, and the impact thereof on the
Company, including its ability to deliver products, provide
services or otherwise meet customers’ expectations; risks
associated with international relations and international
hostilities and the impact thereof on economic conditions,
including supply chain constraints and inflationary trends; risks
relating to rising interest rates, including the impact thereof on
the cost of the Company’s indebtedness and the Company’s ability to
raise capital if deemed necessary or advisable; risks related to
the Company’s ability to implement its business and growth
strategies and plans, including changes thereto, and the risk that
the Company may not be successful in achieving its goals; risks and
uncertainties associated with the Company’s ”buy-and-build” growth
strategy, including, without limitation, that the Company may not
be successful in identifying or consummating, or have the liquidity
to or otherwise be financially positioned or able to consummate,
acquisitions or other strategic transactions, integration risks,
risks related to indebtedness incurred by the Company in connection
with the financing of acquisitions, dilution experienced by the
Company’s existing stockholders as a result of the issuance of
shares of the Company’s common stock in connection with
acquisitions, risks related to the business, operations and
prospects of acquired businesses, risks that suppliers of the
acquired business may not consent to the transaction or otherwise
continue its relationship with the acquired business following the
transaction and the impact that the loss of any such supplier may
have on the results of the Company and the acquired business, risks
that the Company’s goals or expectations with respect to
acquisitions and other strategic transactions may not be met, and
risks related to the accounting for acquisitions; risks related to
organic growth initiatives, including that they may not result in
the benefits anticipated; risks that the Company’s investments,
including in sales and service personnel, technology investments,
including in respect of the enterprise resource planning system and
field service platform, and investments, in acquired businesses or
otherwise in support of growth, and initiatives in furtherance
thereof may not result in the benefits anticipated and may result
in disruptions to the Company’s operations, expenses in connection
with these investments and initiatives may be more costly than
anticipated and the implementation of these initiatives may not be
completed when expected; the risk that the Company may not
successfully launch an e-commerce platform and that any such
platform, if launched, may not positively impact the Company or its
operating results or financial condition; the risk that the
performance of the large industrial contracts delayed during the
quarter may not be completed when expected; technology changes; the
risk that the Company may not achieve growth consistent with
historical levels, at the level expected, or at all; risks relating
to the Company’s relationships with its principal suppliers and
customers, including concentration risks and the impact of the loss
of any such relationship; risks related to the Company’s
indebtedness, including that amounts available for borrowing under
the Company’s credit facility are subject to the terms and
conditions of the facility and, accordingly, the amount of
liquidity available to the Company may be less than the amount set
forth herein; the availability, terms and deployment of debt and
equity capital if needed for expansion or otherwise; the
availability and cost of inventory purchased by the Company, and
the risk that the sales of inventory subject to purchase orders may
not be completed as or when expected, or at all; risks relating to
the recognition of revenue, including the amount and timing thereof
(including potential delays resulting from, among other
circumstances, delays in installation); risks related to the
material weakness in the Company’s internal control over financial
reporting, the Company’s ability to remediate such weakness in the
anticipated timeframe, and the costs incurred in connection
therewith; the risk that dividends may not be paid in the future,
whether in increasing amounts or at all; risks of cybersecurity
threats or incidents, including the potential misappropriation or
use of assets or confidential information, corruption of data or
operational disruptions; and other economic, competitive,
governmental, technological and other risks and factors discussed
elsewhere in the Company’s filings with the SEC, including, without
limitation, in the “Risk Factors” section of the Company’s Annual
Report on Form 10-K for the fiscal year ended June 30, 2023. Many
of these risks and factors are beyond the Company’s control.
Further, past performance and perceived trends may not be
indicative of future results. The Company cautions that the
foregoing factors are not exclusive. The reader should not place
undue reliance on any forward-looking statement, which speaks only
as of the date made. The Company does not undertake to, and
specifically disclaims any obligation to, update, revise or
supplement any forward-looking statement, whether as a result of
changes in circumstances, new information, subsequent events or
otherwise, except as may be required by law.
EVI Industries, Inc.
Condensed Consolidated Results of
Operations (in thousands, except per share data)
Unaudited
Unaudited
Unaudited
Unaudited
9-Months Ended
9-Months Ended
3-Months Ended
3-Months Ended
03/31/24
03/31/23
03/31/24
03/31/23
Revenues
$263,417
$260,132
$83,979
$94,066
Cost of Sales
185,533
184,237
58,193
67,488
Gross Profit
77,884
75,895
25,786
26,578
SG&A
69,908
63,403
23,378
22,113
Operating Income
7,976
12,492
2,408
4,465
Interest Expense, net
2,268
1,719
675
717
Income before Income Taxes
5,708
10,773
1,733
3,748
Provision for Income Taxes
2,129
2,952
777
998
Net Income
$3,579
$7,821
$956
$2,750
Net Earnings per Share
Basic
$0.25
$0.55
$0.07
$0.19
Diluted
$0.24
$0.54
$0.06
$0.19
Weighted Average Shares Outstanding
Basic
12,639
12,545
12,677
12,570
Diluted
13,231
12,753
13,153
12,950
EVI Industries, Inc.
Condensed Consolidated Balance Sheets (in
thousands, except per share data)
Unaudited
03/31/24
06/30/23
Assets
Current assets
Cash and cash equivalents
$3,304
$5,921
Accounts receivable, net
44,848
48,391
Inventories, net
52,870
59,167
Vendor deposits
2,186
2,291
Contract assets
998
1,181
Other current assets
6,228
8,547
Total current assets
110,434
125,498
Equipment and improvements, net
13,699
12,953
Operating lease assets
8,886
8,714
Intangible assets, net
22,548
24,128
Goodwill
74,156
73,388
Other assets
9,586
9,166
Total assets
$239,309
$253,847
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued expenses
$29,203
$38,730
Accrued employee expenses
10,567
10,724
Customer deposits
29,219
23,296
Contract liabilities
-
668
Current portion of operating lease
liabilities
3,272
3,027
Total current liabilities
72,261
76,445
Deferred income taxes, net
5,153
5,023
Long-term operating lease liabilities
6,532
6,554
Long-term debt, net
21,895
34,869
Total liabilities
105,841
122,891
Shareholders' equity
Preferred stock, $1.00 par value
-
-
Common stock, $.025 par value
322
318
Additional paid-in capital
105,469
101,225
Treasury stock
(4,439)
(3,195)
Retained earnings
32,116
32,608
Total shareholders' equity
133,468
130,956
Total liabilities and shareholders'
equity
$239,309
$253,847
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the nine months ended
03/31/24
03/31/23
Operating activities:
Net income
$3,579
$7,821
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization
4,492
4,409
Amortization of debt discount
26
21
Provision for bad debt expense
493
523
Non-cash lease expense
51
95
Stock compensation
3,956
2,267
Inventory reserve
257
(723)
Provision for deferred income taxes
130
224
Other
25
(183)
(Increase) decrease in operating
assets:
Accounts receivable
3,107
(12,759)
Inventories
6,512
(11,561)
Vendor deposits
105
(429)
Contract assets
183
610
Other assets
1,899
(1,845)
(Decrease) increase in operating
liabilities:
Accounts payable and accrued expenses
(9,583)
1,893
Accrued employee expenses
(157)
878
Customer deposits
5,869
1,950
Contract liabilities
(668)
161
Net cash provided (used) by operating
activities
20,276
(6,648)
Investing activities:
Capital expenditures
(3,654)
(2,291)
Cash paid for acquisitions, net of cash
acquired
(987)
(1,947)
Net cash used by investing activities
(4,641)
(4,238)
Financing activities:
Dividends paid
(4,071)
-
Proceeds from borrowings
49,500
62,000
Debt repayments
(62,500)
(51,000)
Repurchases of common stock in
satisfaction of employee tax withholding obligations
(1,244)
(125)
Issuances of common stock under employee
stock purchase plan
63
59
Net cash (used) provided by financing
activities
(18,252)
10,934
Net (decrease) increase in cash
(2,617)
48
Cash at beginning of period
5,921
3,974
Cash at end of period
$3,304
$4,022
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the nine months ended
03/31/24
03/31/23
Supplemental disclosures of cash flow
information:
Cash paid for interest
$2,275
$1,670
Cash paid for income taxes
$4,662
$1,622
Supplemental disclosures of non-cash
financing activities:
Common stock issued for acquisitions
$229
$503
The following table reconciles net income, the most comparable
GAAP financial measure, to Adjusted EBITDA.
EVI Industries, Inc.
Condensed Consolidated Earnings before
Interest, Taxes, Depreciation, Amortization, and Amortization of
Share-based Compensation (in thousands)
Unaudited
Unaudited
Unaudited
Unaudited
9-Months Ended
9-Months Ended
3-Months Ended
3-Months Ended
03/31/24
03/31/23
03/31/24
03/31/23
Net Income
$3,579
$7,821
$956
$2,750
Provision for Income Taxes
2,129
2,952
777
998
Interest Expense, Net
2,268
1,719
675
717
Depreciation and Amortization
4,492
4,409
1,492
1,497
Amortization of Share-based
Compensation
3,956
2,267
1,032
785
Adjusted EBITDA
$16,424
$19,168
$4,932
$6,747
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509037340/en/
EVI Industries, Inc. Henry M. Nahmad Chairman and CEO (305)
402-9300
Craig Ettelman Director of Finance and Investor Relations (305)
402-9300 info@evi-ind.com
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