EVI Industries, Inc. (NYSE American: EVI) announced today its
results for the nine and three-month periods ended March 31, 2019.
The results, including record revenue and gross profit for both the
nine and three-month periods ended March 31, 2019, and record
Adjusted EBITDA for the nine-month period ended March 31, 2019,
reflect the Company’s consistent execution of its buy-and-build
growth strategy.
Financial Performance
(compared to the same period of the prior fiscal year)
Three Month Results
- Revenue increased 36% to a record $59
million,
- Gross profit increased 20% to a record
$13 million,
- Operating income was $1.1 million
compared to $1.9 million,
- Net income was $0.5 million compared to
$1.1 million, and
- Adjusted EBITDA was $2.3 million
compared to $2.8 million.
Nine Month Results
- Revenue increased 54% to a record $163
million,
- Gross profit increased 45% to a record
$37 million,
- Operating income was $4.6 million
compared to $5.1 million,
- Net income was $2.5 million compared to
$3.2 million, and
- Adjusted EBITDA increased 8.0% to a
record $8 million.
Long-Term Growth Strategy
EVI is focused on long-term growth and increasing shareholder
value over time. In furtherance of these goals, EVI continues to
thoughtfully execute its growth strategy, including pursuing
investments with respect to: (1) the acquisition of quality and
complementary businesses, (2) organic growth opportunities, and (3)
the realization of improved efficiency and productivity through
investments in advanced technologies.
Henry M. Nahmad, EVI’s CEO, said: “The strength of our Company
is the depth of experience and success among our leaders. Our
financial performance reflects our continued execution of our
buy-and-build growth strategy and the deployment of capital across
wide-ranging growth initiatives undertaken by the entrepreneurs
that lead our businesses. We believe these investments will have a
positive impact on achieving our long-term growth and shareholder
value goals.”
Revenues
For the nine and three-month periods ended March 31, 2019,
revenues increased $57.4 million, or 54%, to a record $163 million
and increased $15.6 million, or 36%, to a record $59 million,
respectively. 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 periods.
Gross Profit and Gross Margin
For the nine and three-month periods ended March 31, 2019, gross
profit increased $11.4 million, or 45%, to a record $37 million and
increased $2.3 million, or 20%, to a record $13 million,
respectively. For the nine and three-month periods ended March 31,
2019, gross margin decreased from 24.0% to 22.5% and from 25.6% to
22.6%, respectively.
Given EVI’s goal of long-term growth and its investments and
initiatives in furtherance of that goal, the Company believes that
its increase in equipment sales provides a strong foundation for
the Company to further strengthen its customer relationships,
including that they should in the future result in higher gross
margin opportunities from the sale of parts, accessories, supplies,
and technical services related to the equipment. It is important to
note, however, that from time to time the Company enters into
longer-term contracts to fulfill large complex laundry projects for
divisions of the federal government where the nature and structure
of such contracts may result in a lower gross margin as compared to
other equipment sales. Despite the potential for a lower gross
margin from such longer-term contracts, the Company believes that
the long-term benefit from the increase in its installed equipment
will outweigh the possible short-term impact to gross margin. As
such, the decrease in gross margin described above was primarily
due to the Company’s increased engagement in longer-term federal
government contracts during the current period. Excluding these
longer-term federal government contracts, gross margin for the nine
and three-month periods ended March 31, 2019 decreased 0.8% to
25.4% and 1.9% to 25.0%, respectively. This remaining decrease in
gross margin is attributable to typical changes in product mix.
Despite these decreases, the Company generated record gross profit
dollars during the current periods.
Operating Expenses
Operating expenses increased $11.9 million, or 58.4%, and $3.0
million, or 32.6%, for the nine and three-month periods ended March
31, 2019, respectively. For the current periods, the increase in
operating expenses is largely attributed to expenses incurred by
the Company in connection with its growth strategy: (1) operating
expenses related to the six businesses acquired during the current
fiscal year, (2) additional operating expenses at each of those
acquired businesses aimed to support future growth, (3) an increase
in total headcount of 178, of which 78% were planned increases in
sales and service related professionals, and (4) a 64% increase in
operating expenses directly related to the Company’s growth and
acquisition efforts. EVI believes these expenses will have a
positive impact on achieving the Company’s long-term growth
goals.
Acquisition Growth
During the nine-month period ended March 31, 2019, the Company
continued the execution of its long-term buy-and-build growth
strategy with the acquisition of six businesses in the commercial
laundry industry. The acquired businesses increased the Company’s
presence and market share in Florida (2 businesses), Texas (2
businesses), and the Northwest (1 business). Additionally, EVI
expanded into the Northeast with the acquisition of PAC Industries
during the three-month period ended March 31, 2019. PAC is a
distributor and service provider to the commercial, industrial, and
vended laundry industry based in Harrisburg, Pennsylvania. PAC
employs 60 professionals, of which 44 are dedicated to sales and
service functions serving thousands of customers by offering a
comprehensive suite of products as well as installation and
maintenance services.
Mr. Nahmad commented: “PAC has a longstanding history of
providing world-class laundry solutions and we are honored to be a
part of their family. Their success is the result of quality
relationships, a broad product range, and great service. Consistent
with our approach to maintain business continuity, PAC will operate
as a subsidiary of EVI under its present name and leadership team,
while we will provide them the human, financial, and technological
resources to assist them in achieving their growth plans.”
Special Cash Dividend
During the three-month period ended March 31, 2019, the Company
paid a special cash dividend of $0.13 per share on EVI’s common
stock, an 8.3% increase over EVI’s special cash dividend paid in
January 2018. The dividend was paid on January 8, 2019 to
stockholders of record at the close of business on December 26,
2018.
EVI to Attend Baird 2019 Global Consumer, Technology, and
Services Conference on June 4-6, 2019
The Company will attend and host one-on-one meetings with
interested investors during the conference dates. Conference
participation is by invitation only and registration is mandatory.
Additional information will be provided.
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 made by
customers range from parts and accessories, to single or multiple
units of equipment, to large complex systems, as well as
installation and maintenance services. The Company believes that
the increase in equipment sales provides a strong foundation for
the Company to further strengthen its customer relationships,
including that they may in the future result in higher gross margin
opportunities from the sale of parts, accessories, supplies, and
technical services related to the equipment.
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, gross profit, gross margin 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 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
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 related to organic growth initiatives, risks that investments
and expenses may not result in the benefits anticipated, including
long-term growth and increases in shareholder value, risks that
investments in advanced technologies may not result in the
realization of improved efficiency and productivity, risks that
equipment sales may not result in the ancillary benefits
anticipated, including that they not lead to increases in higher
gross margin sale of parts, accessories, supplies, and technical
services related to the equipment, and the risk that the benefit of
lower gross margin equipment sales under longer-term federal
government contracts will not outweigh the possible short-term
impact to gross margin, 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)
9-Months
Ended
9-Months
Ended
3-Months
Ended
3-Months
Ended
3/31/19 3/31/18 3/31/19 3/31/18 Revenues $163,436 $105,995
$59,290 $43,673 Cost of Sales 126,615 80,604 45,867
32,500 Gross Profit 36,821 25,391 13,423 11,173 SG&A
32,180 20,313 12,316 9,286 Operating Income
4,641 5,078 1,107 1,887 Interest Expense, net 942 376
403 193 Income before Income Taxes 3,699 4,702 704 1,694
Provision for Income Taxes 1,172 1,493 238 558
Net Income $2,527 $3,209 $466 $1,136
Net Income per Share Basic $0.20 $0.28 $0.04 $0.10 Diluted $0.20
$0.27 $0.04 $0.09 Weighted Average Shares Outstanding Basic
11,463 10,728 11,666 11,020 Diluted 11,960 11,145 12,145 11,519
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)
9-Months
Ended
9-Months
Ended
3-Months
Ended
3-Months
Ended
3/31/19 3/31/18 3/31/19 3/31/18 Net Income $2,527 $3,209
$466 $1,136 Provision for Income Taxes 1,172 1,493 238 558 Interest
Expense 942 376 403 193 Depreciation and Amortization 1,894 1,023
739 476 Amortization of Share-based Compensation 1,287 1,164
449 391 Adjusted EBITDA $7,822 $7,265
$2,295 $2,754
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version on businesswire.com: https://www.businesswire.com/news/home/20190510005523/en/
EVI Industries, Inc.Henry M. Nahmad (305) 754-8676
Michael Steiner (305) 754-8676
EVI Industries (AMEX:EVI)
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