EnviroStar, Inc. (NYSE American:EVI) reported record results for
the three and six months ended December 31, 2017. Revenue for the
three and six months periods increased 8% and 46%, respectively,
while gross margins improved from 21% to 23% for both periods as a
result of equipment sales mix and a growing base of installation
and maintenance revenues. For the second quarter, Net Income
increased 14% to a record $1.5 million and Adjusted EBITDA
increased 19% to a record $3.0 million or 8.2%, and for the six
month period, Net Income increased 23% to a record $2.1 million and
Adjusted EBITDA increased 48% to a record $4.5 million or 7.2%.
Second Quarter Results
- Revenue increased 8% to a record $36.1
million
- Gross Margins increased from 21% to
23%
- Operating Income remained at $2.2
million
- Net Income increased 14% to a record
$1.5 million
- Adjusted EBITDA increased 19% to a
record $3.0 million or 8.2% of Revenue
Six Month Results
- Revenue increased 46% to a record $62.4
million
- Gross Margins increased from 21% to
23%
- Operating Income increased 12% to a
record $3.2 million
- Net Income increased 23% to a record
$2.1 million
- Adjusted EBITDA increased 48% to $4.5
million or 7.2% of Revenue
During the quarter ended December 31, 2017, EVI continued to
execute on its buy-and-build growth strategy by completing the
acquisition of Tri-State Technical Services, Inc. on October 31,
2017. Additionally, on December 12, 2017, the Board of Directors
approved a special cash dividend on EVI’s Common Stock of $.12 per
share.
Subsequently, EVI completed the acquisition of AAdvantage
Laundry Systems, Inc. and Sky-Rent LP (collectively “AAdvantage”)
on February 9, 2018. The additions of Tri-State and AAdvantage are
consistent with EVI’s stated goal to build a national distribution
presence and the industry’s only contiguous installation and
service network from which to best serve industrial, commercial,
and vended laundry customers. Further, the addition of Sky-Rent
provides EVI a portfolio of commercial laundry rental and lease
agreements and a proven rental and lease program for the commercial
laundry industry, which EVI intends to expand to its other business
units.
Henry M. Nahmad, EVI’s Chairman and CEO, stated: “EVI delivered
another record quarter with strong sales in the industrial,
commercial, and vended segments of the laundry industry. Our
Company experienced positive sales momentum evidenced by a growing
backlog of customer orders, which are expected to be filled during
fiscal 2018 and beyond. While we focus on building our existing
businesses, EVI is aggressively pursuing acquisition opportunities
that meet our financial and strategic criteria.”
Mr. Nahmad added: “We were pleased to reward our stockholders
with the special cash dividend, reflecting our continued confidence
in the Company’s ability to generate strong cash flow while
investing in our long-term buy-and-build growth strategy.”
It is important to note that the timing of revenue recognition
related to the sale and installation of commercial, industrial, and
vended laundry products is occasionally impacted by delays related
to installation schedules.
Use of Non-GAAP Financial Information
In this 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 Statement of Adjusted EBITDA (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 EnviroStar
EnviroStar, Inc., through its wholly-owned subsidiaries,
distributes commercial, industrial and vended laundry and dry
cleaning equipment and steam and hot water boilers manufactured by
others, supplies related replacement parts and accessories,
provides installation and maintenance services to its customers,
and designs and plans turn-key laundry, dry cleaning and boiler
systems for its customers, which include institutional, retail,
industrial and commercial customers
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 and prospects, risks associated with the EVI’s
buy-and-build growth strategy, including that EVI may not be
successful in identifying or consummating acquisitions or other
strategic opportunities when anticipated or at all, that the
potential benefits of acquisitions, including the acquisitions of
Tri-State and AAdvantage, may not be realized to the extent
anticipated or at all, integration risks, risks related to
indebtedness incurred in connection with acquisitions, dilution
experienced by EVI’s stockholders as a result of shares issued in
connection with acquisitions and the financing of acquisitions, and
risks related to the business, operations and prospects of acquired
businesses, risks related to EVI’s backlog and the fulfillment of
orders, and other economic, competitive, governmental,
technological and other risks and factors, including those
discussed in EVI’s filings with the Securities and Exchange
Commission, including, without limitation, EVI’s Annual Report on
Form 10-K for the fiscal year ended June 30, 2017. 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 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.
EnviroStar, Inc.
Condensed Consolidated Income Statement
(in thousands)
6-Months Ended 6-Months Ended 3-Months
Ended 3-Months Ended 12/31/17 12/31/16 12/31/17 12/31/16
Revenues $62,408 $42,870 $36,135 $33,398 Cost of Sales
48,190 33,872 27,904 26,330 Gross Profit
14,218 9,088 8,231 7,068 SG&A 11,027 6,247 6,023
4,792 Operating Income 3,191 2,841 2,208 2,276 Interest
Expense, net 183 50 117 50 Income before
Income Taxes 3,008 2,791 2,091 2,226 Provision for Income Taxes 935
1,111 581 897 Net Income 2,073 1,680
1,510 1,329 Net Income per Share Basic $0.18
$0.19 $0.13 $0.13 Diluted $0.18 $0.19 $0.13 $0.13 Weighted
Average Shares Outstanding Basic 10,585 8,538 10,702 10,043 Diluted
10,962 8,538 11,074 10,043
The table below reconciles net income, the most comparable GAAP
financial measure, to Adjusted EBITDA.
EnviroStar, Inc.
Condensed Consolidated Adjusted EBITDA (in
thousands)
Earnings before Interest, Taxes,
Depreciation, Amortization, and Amortization of Share-Based
Compensation
6-Months Ended 6-Months Ended 3-Months
Ended 3-Months Ended 12/31/17 12/31/16 12/31/17 12/31/16 Net
Income $2,073 $1,680 $1,510 $1,329 Interest Expense 183 50 117 50
Provision for Income Taxes 935 1,111 581 897 Depreciation and
Amortization 547 158 330 158 Amortization of Share-Based
Compensation 773 46 416 46 Adjusted EBITDA
4,511 3,045 2,954 2,480 Adjusted EBITDA % 7.2% 7.1% 8.2% 7.4%
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EnviroStar, Inc.Henry M. Nahmad / Michael Steiner,
305-754-8676
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