EVI Industries, Inc. (NYSE: EVI) (“EVI” or the “Company”), a
leading distributor and service provider dedicated to the
commercial laundry industry, today reported record operating
results for the first quarter of its fiscal year ending June 30,
2023.
First Quarter of Fiscal 2023 Financial Highlights
- Revenue increased 31% to a record $83.4 million
- Gross profit increased 39% to a record $24.5 million
- Gross margin improved 170 basis points to a record 29.4%
- Gross margin, net of longer-term customer contracts, was a
record 30%
- Operating income increased 64% to record $4.4 million
- Net income increased 41% to a record $2.8 million
- Diluted earnings per share increased to a record $0.20
- Adjusted EBITDA increased 49% to a record $6.5 million and
increased 90 bps to approximately 8.0%
First Quarter of Fiscal 2023 Operational and Strategic
Highlights
- Completed two acquisitions that increased market share in
existing geographies
- New customer sales order contracts kept pace with the prior
quarter
- Sustained a strong balance sheet while completing acquisitions
and investing further in working capital
- Continued to deploy advanced operating technologies across the
business
- Realized certain gains in gross margin and operating margin
because of better business intelligence
Henry M. Nahmad, EVI’s Chairman and CEO
commented: “Record operating performance in a substantial number of
important financial metrics is a testament to the well-synchronized
efforts of our over 650 employees dedicated to serving our
customers while executing on a series of initiatives in pursuit of
our long-term operating performance goals. We believe that these
results also reflect our values, financial discipline,
entrepreneurial culture, operating model, and long-term focus, each
of which have been instrumental to our success thus far. While we
are still early in our long-term strategy to build the undisputed
leader in the North American commercial laundry industry, we are
starting to realize some of the benefit of our market strategy.
Given our success and position in the industry, we believe that
business owners, customers, and prospective leaders will continue
to be attracted to joining the EVI family and to working with our
Company in the months and years ahead.”
Results of Operations for the First
Quarter of Fiscal 2023
First quarter revenue performance reflects steady fulfillment of
customer sales orders from the Company’s backlog and appropriately
stocked inventory, installations in connection with equipment
sales, maintenance and repair services, and the sale of parts and
accessories. These factors contributed to a 31% increase in revenue
as compared to the same period of prior fiscal year despite
continued supply chain challenges. In addition to the significant
increase in revenue, gross profit increased 39% to a record $24.5
million and gross margin increased to a record 29.4%.
Mr. Nahmad commented: “A core aspect of our
growth strategy is to assemble a broad array of products from which
our salesforce can design commercial laundry solutions for any
customer across the four commercial laundry categories. Given our
progress on this strategy, customers are increasingly recognizing
what our businesses and our teams of highly trained commercial
laundry professionals can deliver.”
The increases in revenue and gross profit offset an increase in
operating expenses, which was largely driven by operating expenses
related to acquired businesses, the Company’s continued investment
in new and advanced operating technologies, and other efforts in
connection with its optimization goals. Ultimately, operating
income increased 64% from $2.7 million to a record $4.4 million,
net income increased from $2.0 million to a record $2.8 million,
and Adjusted EBITDA increased 49% to a record $6.5 million, or to
approximately 8.0% of revenue.
Mr. Nahmad commented: “We feel that our
results validate our belief that, with greater size, we can achieve
a higher level of operating leverage. While our business is getting
bigger, our leaders are also making smarter and faster decisions
resulting from our collaborative leadership culture and better
information provided by the advanced technologies we continue to
deploy across our company. Given the effectiveness of the
initiatives we have undertaken, we remain confident in our ability
to achieve a greater level of operating leverage as we scale up our
business to provide our customers more products and services in and
around our core commercial laundry business.”
Acquisitions
During the first quarter of fiscal 2023, the Company completed
the acquisitions of K&B Laundry Service LLC and Aldrich
Clean-Tech Equipment Corp. K&B Laundry Service is a provider of
installation and maintenance services to the industrial and
on-premise laundry segments of the commercial laundry industry in
the southeast region of the United States. Aldrich is a distributor
of commercial laundry products and a provider of related
installation and maintenance services to commercial laundry
customers in the northeast region of the United States. The Company
believes that these acquisitions will strengthen its existing
operations, and each of them resulted in the addition of highly
trained commercial laundry professionals and increased the
Company’s customer base. In addition, following the end of the
first quarter of fiscal 2023, EVI completed the acquisition of
Wholesale Commercial Laundry Equipment SE, an Alabama-based
distributor of commercial laundry products and a provider of
related technical installation and maintenance services to the
on-premise and vended laundry segments of the commercial laundry
industry.
Mr. Nahmad commented: “We believe that each
acquisition will be integral to achieving our long-term growth goal
to build North America’s largest value-added distributor of
commercial laundry and related products and the most dynamic
network of commercial laundry technicians through which we may best
support commercial laundry customers. We are excited about our
latest additions to the EVI family and continue to work diligently
through our pipeline of acquisition opportunities, which we believe
will make valuable contributions to achieving our long-term growth
and profitability goals.”
Financial Strength and Ample Liquidity
Net debt at the end of the first quarter of fiscal 2023 was
$32.1 million, which reflects an $8 million increase as compared to
June 30, 2022. The increase in net debt is the result of the
Company’s continued investment in working capital and acquisitions
completed during the quarter. Despite the increase, EVI continues
to have a strong balance sheet with low leverage and ample
liquidity provided by its recently renewed $140 million credit
facility. As a result, EVI believes that it has the flexibility to
continue buying high quality businesses, investing in working
capital, and building its businesses in pursuit of its long-term
growth goals.
Mr. Nahmad commented: “Our capital allocation
strategy is unchanged. Given our strong and flexible financial
position, we believe we are well positioned to capitalize on
attractive growth opportunities in the quarters ahead.”
Earnings Conference Call and Additional Information
The Company has provided a pre-recorded earnings conference
call, including a business update, which can be accessed 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 quarter ended September 30, 2022, please see the Company’s
Current Report on Form 10-Q 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. In addition, EVI’s definition of
Adjusted EBITDA may not be comparable to definitions of Adjusted
EBITDA or other similarly titled measures used by other
companies.
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
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 the impact they may have on
the Company’s business and results, including the Company’s ability
to deliver products and 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 relating
to the COVID-19 pandemic and the impact thereof on the Company and
its business, financial condition, liquidity and results and on the
Company’s suppliers and customers, including risks related to
potential audits of the loans received by the Company and certain
of its subsidiaries under the Payroll Protection Program
notwithstanding the previous forgiveness of the loans, and risks
associated with vaccine mandates, including the potential loss of
employees, fines for noncompliance and loss of, or future inability
to secure, certain contracts, including with the federal
government; risks associated with international relations and
international hostilities, including actions of foreign governments
and the impact thereof on economic conditions, including supply
chain constraints and inflationary trends; risks relating to rising
interest rates and the potential of a recession; the Company’s
ability to implement its business and growth strategies and plans,
including changes thereto; 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 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 investments in acquired
businesses and modernization and optimization initiatives,
including that they may not result in efficiency improvements,
productivity gains, customer service benefits, market share growth,
new customer acquisitions, margin expansion or other benefits
anticipated and may result in disruptions to the Company’s
operations, and expenses in connection with these investments,
initiatives and strategy may be more costly than anticipated;
technology changes; the risk that the Company’s performance and
results, including revenues and gross margin, will not continue to
improve, whether as a result of the Company’s gross margin
improvement strategy, other business strategy or otherwise; risks
relating to the Company’s relationships with its principal
suppliers and customers, including the impact of the loss of any
such relationship; risks related to the Company’s indebtedness; 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 in the Company’s backlog 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 delays in installation
or in receiving required supplies); 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, 2022. 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
3-Months Ended
3-Months Ended
09/30/22
09/30/21
Revenues
$ 83,428
$ 63,741
Cost of Sales
58,923
46,102
Gross Profit
24,505
17,639
SG&A
20,122
14,970
Operating Income
4,383
2,669
Interest Expense, net
377
115
Income before Income Taxes
4,006
2,554
Provision for Income Taxes
1,159
535
Net Income
$ 2,847
$ 2,019
Net Income per Share
Basic
$ 0.20
$ 0.15
Diluted
$ 0.20
$ 0.15
Weighted Average Shares Outstanding
Basic
12,522
12,278
Diluted
12,526
12,659
EVI Industries, Inc.
Condensed Consolidated Balance Sheets (in
thousands, except per share data)
Unaudited
09/30/22
06/30/22
Assets
Current assets
Cash
$ 3,774
$ 3,974
Accounts receivable, net
44,320
43,014
Inventories, net
54,244
49,359
Vendor deposits
1,829
1,728
Contract assets
5,368
1,519
Other current assets
5,943
6,018
Total current assets
115,478
105,612
Equipment and improvements, net
12,941
13,033
Operating lease assets
7,151
7,480
Intangible assets, net
25,708
26,234
Goodwill
71,714
71,039
Other assets
8,054
7,370
Total assets
$ 241,046
$ 230,768
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued expenses
$ 42,213
$ 42,026
Accrued employee expenses
9,379
8,508
Customer deposits
19,696
21,288
Contract liabilities
-
507
Current portion of operating lease
liabilities
2,471
2,518
Total current liabilities
73,759
74,847
Deferred tax liabilities, net
4,798
4,666
Long-term operating lease liabilities
5,440
5,736
Long-term debt, net
35,843
27,840
Total liabilities
119,840
113,089
Shareholders' equity
Preferred stock, $1.00 par value
-
-
Common stock, $.025 par value
316
316
Additional paid-in capital
98,224
97,544
Retained earnings
25,736
22,889
Treasury stock
(3,070)
(3,070)
Total shareholders' equity
121,206
117,679
Total liabilities and shareholders'
equity
$ 241,046
$ 230,768
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the three months ended
09/30/22
09/30/21
Operating activities:
Net income
$ 2,847
$ 2,019
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization
1,446
1,236
Amortization of debt discount
3
13
Provision for bad debt expense
103
108
Non-cash lease expense
(14)
100
Stock compensation
680
479
Inventory reserve
(136)
(31)
(Benefit) provision for deferred income
taxes
132
(162)
Other
(36)
(14)
(Increase) decrease in operating
assets:
Accounts receivable
(1,239)
(4,889)
Inventories
(4,162)
(3,895)
Vendor deposits
(101)
(43)
Contract assets
(3,849)
222
Other assets
(609)
(759)
Increase (decrease) in operating
liabilities:
Accounts payable and accrued expenses
113
(2,453)
Accrued employee expenses
776
(318)
Customer deposits
(1,652)
983
Contract liabilities
(507)
(3,032)
Net cash used by operating activities
(6,205)
(10,436)
Investing activities:
Capital expenditures
(771)
(848)
Cash paid for acquisitions, net of cash
acquired
(1,224)
-
Net cash used by investing activities
(1,995)
(848)
Financing activities:
Proceeds from long-term debt
15,000
15,000
Debt repayments
(7,000)
(7,000)
Net cash provided by financing
activities
8,000
8,000
Net decrease in cash and cash
equivalents
(200)
(3,284)
Cash and cash equivalents at beginning of
period
3,974
6,057
Cash and cash equivalents at end of
period
$ 3,774
$ 2,773
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the three months ended
09/30/22
09/30/21
Supplemental disclosures of cash flow
information:
Cash paid for interest
$ 371
$ 98
Cash paid for income taxes
$ 794
$ 18
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
3-Months Ended
3-Months Ended
09/30/22
09/30/21
Net Income
$ 2,847
$ 2,019
Provision for Income Taxes
1,159
535
Interest Expense, Net
377
115
Depreciation and Amortization
1,446
1,236
Amortization of Share-based
Compensation
680
479
Adjusted EBITDA
$ 6,509
$ 4,384
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108005702/en/
EVI Industries, Inc. Henry M. Nahmad Chairman and CEO
(305) 402-9300
Investor Relations Michael Callahan (203) 682-8311
info@evi-ind.com
EVI Industries (AMEX:EVI)
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