EVI Industries, Inc. (NYSE American: EVI) announced today record
results in key financial metrics for the fourth fiscal quarter and
the fiscal year ended June 30, 2023. The Company provided
commentary on growth opportunities, its financial position,
technology initiatives, and industry fundamentals. Click here to
listen to the Company’s recorded earnings conference call or visit
the “Investors” section of the Company’s website at
www.evi-ind.com.
Through disciplined execution of its buy-and-build growth
strategy and a thriving entrepreneurial culture, EVI has
established itself as a leader in the highly fragmented North
American commercial laundry distribution and services market. Since
2016, EVI has, among other things, completed twenty-five
acquisitions, expanded into new geographies, retained and invested
in additional sales and service personnel, broadened its OEM
representations, and implemented advanced operating technologies.
As a result of these initiatives, since 2016 EVI’s revenue, net
income, and Adjusted EBITDA have grown at compounded annual growth
rates (CAGRs) of 39%, 28%, and 37%, respectively, and over this
period, EVI has experienced a 7.0% organic revenue CAGR for
businesses it has owned for at least three years.
The Company also announced today that its Board of Directors has
declared a special cash dividend on the Company’s common stock of
$0.28 per share to be paid on October 26, 2023, to stockholders of
record at the close of business on October 16, 2023.
Summary of the Company’s Fiscal 2023
Achievements
- Record results in key financial metrics, including a 32%
increase in revenue year over year.
- Maintained a strong customer sales order backlog as of June 30,
2023, despite record revenues.
- Sustained a healthy balance sheet with $29 million of net debt
as of June 30, 2023.
- Generated $7.6 million in cash flow from operations during the
fourth fiscal quarter.
- Completed four acquisitions.
Henry M. Nahmad, EVI’s Chairman and CEO,
commented: “Our achievements to date are the product of our
entrepreneurial leadership team that is thoughtful, collaborative,
and committed in the pursuit of our goals. While we are still early
in our long-term growth plans, the strength of our team and their
successes as demonstrated by our Company’s consistent growth,
performance, and financial strength, provide great confidence in
our ability to achieve our long-term growth and profitability
goals.”
Fiscal Fourth Quarter
Results (compared to the fourth
quarter of fiscal 2022)
- Revenue increased 14% to a record $94.0 million.
- Gross profit increased 25% to a record $27.8 million.
- Gross margin increased 270 basis points to a record 29.5%.
- Operating income increased 57% to a record $4.0 million.
- Net income increased 26% to $1.9 million, approximately
2.0%.
- Diluted earnings per share increased to $0.13.
- Adjusted EBITDA increased 39% to a record $6.4 million,
approximately 6.8%.
Fiscal Year 2023 Results
(compared to fiscal 2022)
- Revenue increased 32% to a record $354.2 million.
- Gross profit increased 41% to a record $103.7 million.
- Gross margin improved 170 basis points to a record 29.3%.
- Operating income increased 158% to a record $16.5 million.
- Net income increased 137% to a record $9.7 million,
approximately 2.7%.
- Diluted earnings per share increased to a record $0.67.
- Adjusted EBITDA increased 80% to a record $25.6 million,
approximately 7.2%.
Drivers of Record Sales and Operating
Performance
The Company’s record $354 million in revenue for fiscal 2023
reflects the performance of acquired businesses and organic growth
at legacy businesses, a more consistent fulfillment of confirmed
customer sales order contracts from the Company’s backlog, the
completion of on-demand sales fulfilled from a larger available
base inventory, and recurring demand for replacement parts and
accessories. Additionally, the increased readiness of customer
locations to accept installations accelerated the speed with which
the Company was able to complete the customer sales order
fulfillment process as compared to fiscal 2022. These factors
combined with continuous demand for the products and services the
Company provides across all four commercial laundry categories and
all end customer markets contributed to record revenue in all four
fiscal quarters and record revenue for fiscal 2023.
As the Company previously described, manufacturers of commercial
laundry products experienced inflationary pressures and raised
prices accordingly. Since the onset of this inflationary trend in
June 2020, the Company raised selling prices and took other
measures aimed to improve gross margins. These actions resulted in
a 590 basis-point increase in gross margins from 23.4% at fiscal
year-end 2020 to 29.3% at fiscal year-end 2023. While the
significant increase in gross margins has been a catalyst for
driving improved operating profit, the Company's ongoing
modernization investments and optimization initiatives, including
successful efforts to regionalize operations and implement new
technologies at legacy business units, also had a positive impact
on operating profit. These investments and initiatives are designed
to reduce costs, enhance efficiency, and promote consistency across
the Company’s operations and result in a more agile and responsive
organization capable of scaling up with continued growth. Although
these fundamental initiatives in connection with legacy business
units is nearing completion, this is expected to be a perpetual
effort in light of the buy-component of the Company’s growth
strategy.
Financial Strength and
Liquidity
EVI’s strong financial position has enabled simultaneous
investments in acquisitions, organic growth, working capital, and
technological innovations. Since June 30, 2021, EVI’s working
capital more than tripled to nearly $50 million and the Company
deployed approximately $19 million of capital in connection with
acquisitions. Despite these investments, EVI’s financial position
remains strong with low leverage and the ability to simultaneously
invest in various buy-and-build opportunities. As of June 30, 2023,
the Company had net debt of $29 million, with net income and
Adjusted EBITDA for fiscal 2023 of approximately $10 million and
$26 million, respectively. The Company believes this financial
strength, access to low-cost capital and its historical ability to
generate cash flow provide comfort and confidence to the Company’s
stakeholders.
Cash Flow and Special Cash
Dividend
Cash provided by operations was $7.6 million and approximately
$1 million for the fourth fiscal quarter and fiscal 2023,
respectively. EVI’s operating cash flow for fiscal 2023 reflects
the continued build-up of working capital started in June 2021 with
the advanced placement of product orders in connection with
confirmed customer sales orders in the Company’s backlog and stock
orders required to fulfill on-demand customer orders amid the
continuation of an inefficient supply chain as compared to
historical. While the speed of the customer order fulfillment
process is not yet where it once was, the Company’s OEM’s and
vendors have improved lead times and external parties responsible
for preinstallation preparations are increasingly performing on
schedule. Accordingly, the Company does not currently expect
further significant investment in working capital in the near-term,
which it expects will positively benefit future cash flow from
operations.
On October 4, 2023, the Company’s Board of Directors declared a
special cash dividend on the Company’s common stock of $0.28 per
share to be paid on October 26, 2023 to stockholders of record at
the close of business on October 16, 2023.
Mr. Nahmad commented: “Our strong fiscal 2023
performance allows us the opportunity to reward those who are
invested in our long-term strategy, and it reflects the confidence
we have in our business outlook, which is supported by our strong
balance sheet.”
The Company has considered, and will continue to consider, the
payment of dividends to share cash flow while maintaining a
conservative financial position with continued capacity to build
its distribution and service network. Future dividends will be
considered in light of investment opportunities, general economic
conditions, the Company’s liquidity and overall financial
position.
Acquisitions
During fiscal 2023, the Company completed the acquisition of
four commercial laundry distributors and service providers (K&B
Laundry Service, Aldrich Clean-Tech Equipment, Wholesale Commercial
Laundry Equipment, and Express Parts and Services). In each case,
EVI added experienced sales professionals with a track record of
growth across an established customer base and a team of
knowledgeable service technicians with a longstanding reputation
for providing reliable services.
Mr. Nahmad 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. We believe that
our expansion through acquisitions and other strategic transactions
is integral to our ability to achieve our long-term growth goals
and given our Company’s reputation, growth record, financial
resources, entrepreneurial culture, and long-term growth plans, we
believe that the EVI family of businesses will continue to
grow.”
Industry Fundamentals
The attractiveness of the commercial laundry industry is
evidenced by decades of consistent demand for commercial laundry
products and services driven by steady growth experienced across
all end customer markets, including, but not limited to,
healthcare, hospitality, food service, institutional, vended, and
multifamily. Commercial laundries that serve these end markets
require advanced planning, thoughtful design, knowledgeable
installation, and continuous post-installation service and support.
Given the varying complexity of such laundry operations and that
clean laundry is the essential service provided by such businesses,
customers need the products and services a distributor and service
company provide to deliver clean linens effectively and profitably
to the end users they serve. Demand for commercial laundry products
and services is also driven by functional and economic
obsolescence. Specifically, demand has increased due to the
introduction of new equipment with advanced technologies that yield
attractive returns on invested capital derived from water, energy,
and labor savings.
To best address the various industry growth opportunities, the
Company serves as both distributor and service provider. EVI’s
sales organization has continued to grow and, to the Company’s
knowledge, now represents the single largest sales organization in
the commercial laundry industry, representing the broadest range of
commercial laundry and related products sourced from various
domestic and international suppliers. With these products, the
Company’s sales organization creates laundry solutions
predominantly for the replacement and new construction markets for
industrial, on-premise, vended, and multifamily laundry
applications. The Company also has the single largest and growing
network of technicians responsible for the proper installation of
such laundries and capable of servicing and supporting commercial
laundry facilities throughout its useful life.
Given the Company’s position in the industry value chain,
specifically the fact that it owns the end customer relationship,
the Company can increasingly capitalize on its visibility to
numerous complementary products and services its customers purchase
for their laundry operations from other businesses, most of which
represent long-term growth opportunities for the Company. The
Company believes that the time-tested fundamentals and favorable
attributes of the commercial laundry industry combined with the
Company’s long-term growth strategy, financial strength,
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
The Company 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 as a local business and empower 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 OEM partners.
Mr. Nahmad further added: “Our strategy is
long-term focused, and it takes time, patience, and thoughtful
execution to achieve our goals. We continue to pursue acquisition
and other strategic opportunities in the commercial laundry
industry and across other product and service categories that meet
our financial and strategic criteria. While we are pleased with our
operating performance, we are steadfast in our pursuit of growth in
the execution of our long-term buy-and-build growth strategy.”
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 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, including
the potential of a recession; 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 services to
its customers on a timely basis and the risk that further
significant investment in working capital may be required and that
any decrease in investment in working capital may not positively
benefit the Company’s cash flow from operations to the extent
anticipated or at all; 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
related to interest rate increases, 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 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; 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 and other
strategic transactions, 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 or other
strategic transactions (or for other purposes), 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 relating to the impact of pricing
concessions and other measures which the Company may take from time
to time in connection with its expansion efforts and pursuit of
market share growth, including that they may not be successful and
may adversely impact the Company’s gross margin and other financial
results; technology changes; competition, including the Company’s
ability to compete effectively and the impact that competition may
have on the Company and its results, including the prices which the
Company may charge for its products and services and on the
Company’s profit margins, and competition for qualified employees;
to the extent applicable, risks relating to the Company’s ability
to enter into and compete effectively in new industries, as well as
risks and trends related to those industries; risks relating to the
Company’s relationships with its principal suppliers and customers,
including the impact of the loss of any such relationship; the risk
that orders in the Company’s backlog may not be fulfilled as or
when expected; risks related to organic growth initiatives and
market share and other growth strategies, including that they may
not result in the benefits anticipated; risks that investments,
initiatives and expenses, including, without limitation,
investments in acquired businesses and modernization initiatives,
technology integration initiatives, expenses associated with the
Company’s implementation of its enterprise resource planning
system, and other investments, initiatives and expenses, may not
result in the benefits anticipated and may take longer than
expected or be more costly than expected; the risk that the
Company’s performance and results, including revenues, net income
and adjusted EBITDA may not continue to improve, and the Company
may not achieve growth consistent with historical levels, at the
level expected, or at all; dividends may not be declared in the
future; 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, as filed with
the Securities and Exchange Commission on or about the date
hereof.. 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
12-Months Ended
12-Months Ended
3-Months Ended
3-Months Ended
06/30/23
06/30/22
06/30/23
06/30/22
Revenues
$ 354,173
$ 267,316
$ 94,041
$ 82,831
Cost of Sales
250,490
193,609
66,253
60,632
Gross Profit
103,683
73,707
27,788
22,199
SG&A
87,177
67,318
23,774
19,638
Operating Income
16,506
6,389
4,014
2,561
Interest Expense, net
2,507
679
788
289
Income before Income Taxes
13,999
5,710
3,226
2,272
Provision for Income Taxes
4,280
1,615
1,328
764
Net Income
$ 9,719
$ 4,095
$ 1,898
$ 1,508
Net Earnings per Share
Basic
$ 0.68
$ 0.30
$ 0.13
$ 0.11
Diluted
$ 0.67
$ 0.29
$ 0.13
$ 0.11
Weighted Average Shares Outstanding
Basic
12,553
12,367
12,575
12,505
Diluted
12,804
12,650
12,959
12,513
EVI Industries, Inc.
Condensed Consolidated Balance Sheets (in
thousands, except per share data)
06/30/23
06/30/22
Assets
Current assets
Cash and cash equivalents
$ 5,921
$ 3,974
Accounts receivable, net
48,391
43,014
Inventories, net
59,167
49,359
Vendor deposits
2,291
1,728
Contract assets
1,181
1,519
Other current assets
8,547
6,018
Total current assets
125,498
105,612
Equipment and improvements, net
12,953
13,033
Operating lease assets
8,714
7,480
Intangible assets, net
24,128
26,234
Goodwill
73,388
71,039
Other assets
9,166
7,370
Total assets
$ 253,847
$ 230,768
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued expenses
$ 38,730
$ 42,026
Accrued employee expenses
10,724
8,508
Customer deposits
23,296
21,288
Contract liabilities
668
507
Current portion of operating lease
liabilities
3,027
2,518
Total current liabilities
76,445
74,847
Deferred income taxes, net
5,023
4,666
Long-term operating lease liabilities
6,554
5,736
Long-term debt, net
34,869
27,840
Total liabilities
122,891
113,089
Shareholders' equity
Preferred stock, $1.00 par value
-
-
Common stock, $.025 par value
318
316
Additional paid-in capital
101,225
97,544
Treasury stock
(3,195)
(3,070)
Retained earnings
32,608
22,889
Total shareholders' equity
130,956
117,679
Total liabilities and shareholders'
equity
$ 253,847
$ 230,768
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands)
For the twelve months ended
06/30/23
06/30/22
Operating activities:
Net income
$ 9,719
$ 4,095
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization
6,024
5,209
Amortization of debt discount
29
133
Provision for bad debt expense
710
446
Non-cash lease expense
93
136
Stock compensation
3,062
2,598
Inventory reserve
(178)
(105)
Provision (benefit) for deferred income
taxes
357
(164)
Other
(103)
(24)
(Increase) decrease in operating
assets:
Accounts receivable
(5,664)
(12,139)
Inventories
(8,302)
(20,396)
Vendor deposits
(527)
(1,191)
Contract assets
338
(1,172)
Other assets
(4,296)
(433)
(Decrease) increase in operating
liabilities:
Accounts payable and accrued expenses
(4,164)
13,265
Accrued employee expenses
2,114
814
Customer deposits
1,567
9,755
Contract liabilities
161
(2,725)
Net cash provided (used) by operating
activities
940
(1,898)
Investing activities:
Capital expenditures
(3,708)
(3,981)
Cash paid for acquisitions, net of cash
acquired
(2,278)
(11,953)
Net cash used by investing activities
(5,986)
(15,934)
Financing activities:
Proceeds from borrowings
77,000
65,000
Debt repayments
(70,000)
(49,000)
Payment of debt issuance costs
-
(166)
Repurchases of common stock in
satisfaction of employee tax withholding obligations
(125)
(205)
Issuances of common stock under employee
stock purchase plan
118
120
Net cash provided by financing
activities
6,993
15,749
Net increase (decrease) in cash and cash
equivalents
1,947
(2,083)
Cash and cash equivalents at beginning of
period
3,974
6,057
Cash and cash equivalents at end of
period
$ 5,921
$ 3,974
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands)
For the twelve months ended
06/30/23
06/30/22
Supplemental disclosures of cash flow
information:
Cash paid for interest
$ 2,469
$ 494
Cash paid for income taxes
$ 3,099
$ 430
Supplemental disclosures of non-cash
financing activities:
Common stock issued for acquisitions
$ 503
$ 4,331
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
12-Months Ended
12-Months Ended
3-Months Ended
3-Months Ended
06/30/23
06/30/22
06/30/23
06/30/22
Net Income
$ 9,719
$ 4,095
$ 1,898
$ 1,508
Provision for Income Taxes
4,280
1,615
1,328
764
Interest Expense, Net
2,507
679
788
289
Depreciation and Amortization
6,024
5,209
1,615
1,414
Amortization of Share-based
Compensation
3,062
2,598
795
651
Adjusted EBITDA
$ 25,592
$ 14,196
$ 6,424
$ 4,626
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231004037920/en/
EVI Industries, Inc. Henry M. Nahmad Chairman and CEO (305)
402-9300
Investor Relations (305) 402-9300 info@evi-ind.com
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