EVI Industries, Inc. (NYSE American: EVI) announced today record
results for the three months ended September 30, 2019, including
records in revenue, gross profit, gross margin, and adjusted
EBITDA. Operating performance for three months ended September 30,
2019 reflects the results of the Company’s buy-and-build growth
strategy.
Earnings Conference Call
The Company has provided a pre-recorded earnings conference call
and business update in the “Investors” section of the Company’s
website at www.evi-ind.com or by clicking here
https://ir.evi-ind.com/message-from-the-ceo.
Financial Performance (compared to the same period of the
prior fiscal year)
First Quarter Results
- Revenue increased 28% to a record $56 million,
- Gross profit increased 42% to a record $14 million,
- Gross margin increased from 22% to a record 25%,
- Operating income decreased 11% to $1.3 million,
- Net income decreased 27% to $0.6 million, and
- Adjusted EBITDA increased 7% to a record $2.5 million.
Highlights to Financial Performance
Acquisitions
On August 1, 2019, the Company acquired substantially all of the
assets of New York-based Commercial Laundry Products, Inc.,
Professional Laundry Systems of PA, Inc., and Professional Laundry
Systems West, Inc. (collectively, “PLS”). The addition of PLS
expands the Company’s geographic footprint and increases its market
share in the Northeast.
Henry M. Nahmad, Chairman and CEO commented: “We continue to
identify and pursue many acquisitions and strategic transactions in
the commercial laundry industry and across a wide-range of exciting
and available opportunities in related industries. Given our
Company’s reputation, growth record, financial resources,
entrepreneurial culture, and long-term growth objectives, we
believe it is an ideal time for quality independent distributors
and service providers to join the EVI family and pursue additional
growth with the full extent of our resources.”
Revenue
For the three months ended September 30, 2019, revenues
increased 28% from $43 million to a record $56 million. The
increase in revenue was primarily due to the results of operations
of acquired businesses that were not consolidated into the
Company’s financial statements for all or part of the prior year
period.
Gross Profit and Gross Margin
For the three months ended September 30, 2019, gross profit
increased 42% from $10 million to a record $14 million. For the
three months ended September 30, 2019, gross margin increased
240-basis points from 22% to 25%. The increase in gross margin was
primarily due to EVI’s engagement during the three months ended
September 30, 2018 in a larger number of longer-term contracts,
which generally result in a lower gross margin as compared to other
equipment sales. In the absence of such longer-term contracts,
gross margins nevertheless increased by 30 basis points to
25.3%.
Operating Income
Operating income decreased $0.2 million primarily due to
continued investment in the Company’s businesses as part of its
long-term growth strategy, including expenses related to
recruiting, training, and deploying sales and service
professionals, cultivating the future leaders of our businesses,
and developing and establishing best operating practices through
collaboration. The Company’s operating results also reflect
increased investments aimed to modernize its businesses through the
implementation of advanced technologies from which the Company may
achieve operating efficiencies. Additionally, operating expenses
have increased due to the Company’s growth, including increased
public company and related expenses, and expenses incurred in
connection with the pursuit of various acquisition and strategic
opportunities. EVI believes these investments, initiatives and
expenses will have a positive impact on the Company’s ability to
achieve its long-term growth goals.
Henry M. Nahmad, Chairman and CEO commented: “We are pleased to
report a strong start to fiscal 2020 and continued momentum
following a record growth year in fiscal 2019. We continue to seek
attractive investments across our businesses in the pursuit of
future growth and do not believe that we have begun to reap the
full benefits of our growing size. We intend for EVI to continue to
thoughtfully build its commercial laundry business across North
America and believe that our Company is well positioned to pursue
buy and build opportunities in complementary product and service
industries.”
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 value-added distributor, and a provider of advisory and technical
services. Through the Company’s vast sales organization, it
provides its customers 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 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 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,
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 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, their ability to achieve growth and EVI’s ability to
support growth efforts, risks related to EVI’s and its acquired
businesses’ relationships with principal suppliers and customers,
including EVI’s ability to expand or maintain such relationships,
and the impact that the loss of any principal supplier or customer
could have on EVI’s results and financial condition, risks related
to EVI’s ability to successfully build its existing operations,
risks relating to EVI’s ability to identify growth opportunities
in, successfully enter into, and compete effectively in, other
industries, including complementary product and service industries,
as well as trends related to those industries and the timing of any
such efforts, risks related to organic growth initiatives, risks
that investments, initiatives and expenses may not result in the
benefits anticipated, including long-term growth, 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, 2019. Many of these risks and factors are
beyond EVI’s control. In addition, 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
Unaudited
3-Months Ended
3-Months Ended
09/30/19
09/30/18
Revenues
$55,681
$43,375
Cost of Sales
41,847
33,653
Gross Profit
13,834
9,722
SG&A
12,553
8,290
Operating Income
1,281
1,432
Interest Expense, net
422
165
Income before Income Taxes
859
1,267
Provision for Income Taxes
279
471
Net Income
$580
$796
Net Income per Share
Basic
$0.05
$0.07
Diluted
$0.04
$0.06
Weighted Average Shares Outstanding
Basic
11,777
11,236
Diluted
12,216
11,774
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
09/30/19
09/30/18
Net Income
$580
$796
Provision for Income Taxes
279
471
Interest Expense
422
165
Depreciation and Amortization
811
533
Amortization of Share-based
Compensation
453
414
Adjusted EBITDA
$2,545
$2,379
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version on businesswire.com: https://www.businesswire.com/news/home/20191112005950/en/
EVI Industries, Inc. Henry M. Nahmad (305) 402-9300 Chairman
& CEO
Michael Steiner (305) 402-9300 Executive Vice President
EVI Industries (AMEX:EVI)
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