EVI Industries, Inc. (NYSE American: EVI) announced today its
results for the six and three-month periods ended December 31,
2018. The results, including record revenues, gross profit, and
Adjusted EBITDA, reflect the Company’s consistent execution of its
buy-and-build growth strategy.
Financial Performance
(compared to the comparable period of the prior fiscal year)
Three Month Results
- Revenue increased 68% to a record $61
million,
- Gross profit increased 66% to a record
$14 million,
- Gross margin was unchanged at 23%,
- Operating income was lower by 5% to
$2.1 million,
- Net income was lower by 16% to $1.3
million, and
- Adjusted EBITDA increased 10% to a
record $3.2 million.
Six Month Results
- Revenue increased 67% to a record $104
million,
- Gross profit increased 65% to a record
$23 million,
- Gross margin was unchanged at 23%,
- Operating income increased 11% to a
record $3.5 million,
- Net income was unchanged at $2.1
million, and
- Adjusted EBITDA increased 25% to a
record $5.6 million.
For the six and three-month periods ended December 31, 2018, the
increases in revenue and gross profit were primarily due to the
results of operations of acquired businesses, including Tri-State
Technical Services (which the Company acquired on October 31,
2017), AAdvantage Laundry Systems (which the Company acquired on
February 9, 2018), and Scott Equipment (which the Company acquired
on September 12, 2018). Operating income for the six and
three-month periods ended December 31. 2018 were impacted by
increases in operating expenses due in large part to the
consolidation of selling, general and administrative expenses of
the Company’s acquired businesses and an increase in non-cash
amortization expense specifically related to the intangible assets
the Company acquired in connection with its acquisitions.
Additionally, corporate operating expenses at the parent company
level increased in support of the Company’s execution of its
buy-and-build growth strategy and as a result of the growth in the
Company’s market capitalization. As a result, during the six and
three-month periods ended December 31, 2018, operating expenses as
a percentage of revenues increased from 18% to 19% and from 17% to
19%, respectively, when compared to the same periods of the prior
fiscal year.
Henry M. Nahmad, Chairman, Chief Executive Officer and President
of EVI, commented: “We continue to invest in the infrastructure
necessary to support our growth engine and we believe that over
time, as revenues ramp up, operating expenses as a percentage of
revenues will decrease.”
It is important to note that the timing of revenue recognition
related to the sale and installation of commercial, industrial, and
vended laundry products are occasionally impacted by delays related
to installation schedules. Also, under the new accounting standards
for revenue recognition adopted by the Company on July 1, 2018,
gross profit on delivered, but uninstalled equipment sold under
longer-termed contracts is deferred and recognized as installation
is completed instead of upon the shipment of equipment.
Acquisition Record and Pipeline
During the six-month period ended December 31, 2018, EVI
completed five acquisitions, three of which were completed during
the three-month period ended December 31, 2018. EVI believes that
it continues to appeal to owners of businesses in the spaces in
which EVI operates due to, among other things, EVI’s
entrepreneurial culture, decentralized operating model, and
long-term growth plans. Further, given EVI’s track record of
completing eleven acquisitions since the inception of its
buy-and-build growth strategy in 2015, EVI has demonstrated the
ability to effectively source, assess, and acquire high-quality
businesses that meet its leadership, financial, and strategic
criteria. Consequently, EVI believes that there exists a deep
pipeline of acquisition and other strategic opportunities available
to it.
Henry M. Nahmad, Chairman, Chief Executive Officer and President
of EVI, commented: “The EVI family of businesses continues to grow
and so do the number and size of quality opportunities we believe
to be available to our Company. We have only scratched the surface
of what is possible in terms of size, scale, and value creation.
Our team continues to exercise patience, persistence, and
thoughtful execution in the pursuit of our long-term growth goals
and we are excited about our future.”
Other Highlights
Subsequent Acquisition
As previously disclosed, subsequent to the completion of the
Company’s second fiscal quarter, the Company completed its
acquisition of PAC Industries, Inc. The acquisition of PAC was
completed on February 6, 2019 and represents the Company’s first
acquisition in the northeast region, where the Company expects to
continue to pursue opportunities under its buy-and-build growth
strategy.
Special Cash Dividend
During the three-month period ended December 31. 2018, the
Company’s Board of Directors approved a special cash dividend of
$0.13 per share on EVI’s common stock, an 8.3% increase over EVI’s
special cash dividend declared in December 2017. The dividend was
paid on January 8, 2019 to stockholders of record at the close of
business on December 26, 2018.
New Credit Facility
As previously disclosed, on November 5, 2018, the Company
entered into a new five-year, $100 million syndicated revolving
credit facility with Bank of America and US Bank as joint lead
arrangers, which at EVI’s option, can expand commitments in the
revolver to $140 million in the aggregate. The Company believes
that its cash on hand and capital available under the new credit
facility provides the Company with the necessary resources to
execute on its growth opportunities and initiatives.
Name Change
During December 2018, the Company’s Board of Directors approved
changing the Company’s corporate name from “EnviroStar, Inc.” to
“EVI Industries, Inc.” The name change, which was effected on
December 21, 2018, signifies the Company’s focus on executing its
buy-and-build growth strategy in the commercial, industrial, and
vended laundry industry and across a group of industries that meet
its strategic criteria.
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 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 distributor that generates revenues by selling, leasing or
renting, through its extensive sales organization, commercial,
industrial and vended laundry, dry-cleaning, and material handling
equipment, steam and hot water boilers, water reuse and filtration
systems, and related replacement parts and accessories.
Additionally, the Company designs, plans, and installs turn-key
laundry, dry cleaning, boiler, and water filtration systems and
provides maintenance services through its robust technical service
organization.
The Company’s customers include retail, commercial, industrial,
institutional, and government customers. Purchases and orders by
customers range from parts, accessories and maintenance services,
to single or multiple units of equipment, to large complex
systems.
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 are subject to a
number of known and unknown risks and uncertainties that may cause
actual results, trends, performance or achievements of EVI, or
industry trends and results, to differ from the future results,
trends, performance or achievements expressed or implied by such
forward-looking statements. These risks and uncertainties include,
among others, the risks related to EVI’s business, results
(including revenues and operating expenses), financial condition,
prospects, and growth strategy and plans, risks associated with
EVI’s buy-and-build growth strategy, including that EVI may not be
successful in identifying or consummating acquisitions or other
strategic opportunities where or when expected, or at all, that
acquisition and other strategic opportunities may not be available
to EVI to the extent anticipated or at all, that the potential
benefits of transactions completed or which may be consummated in
the future may not be realized to the extent anticipated or at all,
integration risks, risks related to indebtedness incurred in
connection with transactions, dilution experienced by EVI’s
stockholders as a result of shares issued in connection with
transactions, risks related to the business, operations and
prospects of acquired businesses, risks related to EVI’s and its
acquired businesses’ relationships with principal suppliers and
customers and the impact that the loss of any principal supplier or
customer could have on EVI’s results and financial condition, risks
relating to EVI’s ability to enter into and compete effectively in
new industries, as well as risks and trends related to these
industries and the costs and timing of EVI’s efforts with respect
thereto, risks related to EVI’s ability to successfully build its
existing operations, risks related to organic growth initiatives,
risks related to EVI’s indebtedness, including increases in its
debt position and the risk that funds available under EVI’s new
credit facility, individually or together with cash on hand, may
not be sufficient to support EVI’s operating, investment or other
needs, risks relating to the availability, terms and deployment of
debt and equity capital if needed for expansion or otherwise, risks
related to competition for the products and services which EVI
provides as well as for employees and for acquisition and other
strategic opportunities, and other economic, competitive,
governmental, technological and other risks and factors, including
those discussed in the Company’s filings with the Securities and
Exchange Commission, including, without limitation, the Company’s
Annual Report on Form 10-K for the fiscal year ended June 30, 2018.
Many of these risks and factors are beyond EVI’s control. In
addition, dividends are subject to declaration by EVI’s Board of
Directors based on factors deemed relevant by it from time to time,
may be restricted by the terms of EVI’s indebtedness, and may not
be paid in the future, whether with the frequency or in the amounts
previously paid or at all. Further, past performance of EVI and its
acquired businesses and perceived trends may not be indicative of
future results. EVI 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.
EVI does not undertake to, and specifically disclaims any
obligation to, update 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)
6-Months
Ended
6-Months
Ended
3-Months
Ended
3-Months
Ended
12/31/18 12/31/17 12/31/18 12/31/17 Revenues $104,216
$62,408 $60,841 $36,135 Cost of Sales 80,817 48,190
47,164 27,904 Gross Profit 23,399 14,218 13,677 8,231
SG&A 19,865 11,027 11,575 6,023 Operating
Income 3,534 3,191 2,102 2,208 Interest Expense, net 539 183
374 117 Income before Income Taxes 2,995 3,008 1,728
2,091 Provision for Income Taxes 934 935 463
581 Net Income $2,061 $2,073 $1,265 $1,510
Net Income per Share Basic $0.17 $0.18 $0.10 $0.13 Diluted
$0.16 $0.18 $0.10 $0.13 Weighted Average Shares Outstanding
Basic 11,364 10,585 11,492 10,702 Diluted 11,870 10,962 11,966
11,074
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)
6-Months
Ended
6-Months
Ended
3-Months
Ended
3-Months
Ended
12/31/18 12/31/17 12/31/18 12/31/17 Net Income $2,061 $2,073
$1,265 $1,510 Provision for Income Taxes 934 935 463 581 Interest
Expense 539 183 374 117 Depreciation and Amortization 1,255 547 722
328 Amortization of Share-based Compensation 838 773
424 416 Adjusted EBITDA $5,627 $4,511 $3,248
$2,952
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EVI Industries, Inc.Henry M. Nahmad (305) 754-8676
Michael Steiner (305) 754-8676
EVI Industries (AMEX:EVI)
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