EVI Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. General
Nature of Business
EVI Industries, Inc., formerly EnviroStar, Inc., indirectly through its subsidiaries (EVI Industries, Inc. and its subsidiaries, collectively, the “Company”), is a value-added distributor, and provides 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 government, institutional, industrial, commercial and retail customers. Product purchases made by customers range from parts and accessories, to single or multiple units of equipment, to large complex systems. The Company also provides its customers with the services described above.
The Company reports its results of operations through a single operating and reportable segment.
“Buy-and-Build” Growth Strategy
Beginning in 2015, the Company implemented a “buy-and-build” growth strategy. The Company’s acquisitions under its “buy-and-build” growth strategy since its implementation in 2015 include, without limitation, those described below.
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On October 10, 2016, the Company purchased substantially all of the assets of Western State Design, LLC, a California-based company, for a purchase price consisting of $18.5 million in cash and 2,044,990 shares of the Company’s common stock.
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On October 31, 2017, the Company purchased substantially all of the assets of Tri-State Technical Services, Inc., a Georgia-based company, for a purchase price consisting of approximately $7.95 million in cash and 338,115 shares of the Company’s common stock.
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On February 9, 2018, the Company purchased substantially all of the assets of Dallas-based companies, Zuf Acquisitions I LLC (d/b/a/ AAdvantage Laundry Systems) and Sky-Rent LP, for total consideration of approximately $20.4 million, consisting of approximately $8.1 million in cash and 348,360 shares of the Company’s common stock.
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On September 12, 2018, the Company purchased substantially all of the assets of Scott Equipment, Inc., a Houston-based company, for approximately $6.5 million in cash and 209,678 shares of the Company’s common stock.
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On February 5, 2019, the Company acquired PAC Industries Inc. (“PAC”), a Pennsylvania-based company, for approximately $6.4 million in cash and 179,847 shares of the Company’s common stock.
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On November 3, 2020, the Company acquired Yankee Equipment Systems, LLC (“YES”), a New Hampshire-based company, for approximately $5.3 million in cash and 278,385 shares of the Company’s common stock.
The acquired companies distribute commercial, industrial, and vended laundry products and provide installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. Each acquisition was effected by the Company through a separate wholly-owned subsidiary formed by the Company for the purpose of effecting the transaction, whether by an asset purchase or merger, and operating the acquired business following the transaction. In connection with each transaction, the Company, indirectly through its applicable wholly-owned subsidiary, also assumed certain of the liabilities of the acquired business.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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The financial position, including assets and liabilities, and results of operations of the acquired businesses following the respective closing dates of the acquisitions are included in the Company’s consolidated financial statements.
See Note 3 for additional information about the acquisitions of YES and PAC and the other acquisitions consummated by the Company during fiscal 2020 and fiscal 2021.
Impact of COVID-19 Pandemic
The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the economy and has negatively impacted, and may continue to negatively impact, the Company’s business and results. Specifically, beginning at the end of the quarter ended March 31, 2020, the COVID-19 pandemic and accompanying economic disruption caused delays and declines in the placement of customer orders, the completion of equipment and parts installations, and the fulfillment of parts orders. The COVID-19 pandemic, while showing initial signs of recovery earlier in fiscal 2021 has recently had a resurgence with the increased presence and spread of the Delta variant. Accordingly, the adverse impact of the COVID-19 pandemic is expected to continue in the near-term and possibly longer, including, without limitation, if the pandemic increases in size and scope, its duration is prolonged, or, among other matters related thereto, additional governmental actions, including, without limitation, business restrictions, are imposed. In response to the economic and business disruption caused by the COVID-19 pandemic during 2020, the Company took actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating payment terms with suppliers, and reducing hiring activities. The Company continues to actively monitor the COVID-19 pandemic and may take further actions, including those that may alter business operations, if required by federal, state, local or foreign authorities or otherwise determined to be advisable by management.
As of the date of this Annual Report on Form 10-K, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. Factors arising from the COVID-19 pandemic that have impacted, or may negatively impact, the Company’s business and results, including sales and gross margin, in the future include, but are not limited to: potential limitations on the ability of suppliers to manufacture, or the Company’s ability to procure from manufacturers, the products the Company sells, or to meet delivery requirements and commitments; limitations on the ability of the Company’s employees to perform their work due to impacts caused by the pandemic or local, state, federal or foreign orders that may restrict the Company’s operations or the operations of its customers, or require that employees be quarantined; limitations on the ability of carriers to deliver products to the Company’s facilities and customers; adverse impacts of the pandemic on certain industries and customers of the Company which operate in those industries, including the hospitality industry; and potential decreased demand for products and services, including potential limitations on the ability of, or adverse changes in the desire of, the Company’s customers to conduct their business, purchase products and services and pay for purchases on a timely basis or at all.
The situation surrounding the COVID-19 pandemic remains fluid and highly uncertain. The Company is unable to determine or predict the nature, duration, or scope of the overall impact that the COVID-19 pandemic will have on the Company’s business, results of operations, liquidity, or financial condition, as such impact will depend in large part on future developments, including the severity and duration of the pandemic (including the Delta variant and any other future variants) and government and other actions taken in response thereto, all of which are highly uncertain. Further, even after the COVID-19 pandemic subsides, the Company may continue to experience adverse impacts to its business as a result of, among other things, any adverse impact that has occurred or may occur in the future in the economy or markets generally, and changes in customer or supplier behavior.
As a precautionary measure in order to increase its cash position and preserve financial flexibility in light of the uncertainties resulting from the COVID-19 pandemic, during May 2020, the Company and certain of its subsidiaries received a total of twelve PPP Loans in the aggregate principal amount of approximately $6.9 million. During the fourth quarter of fiscal 2021, the Company was notified by Fifth Third Bank, N.A., the lender with respect to the PPP Loans, that all twelve of the PPP Loans were fully forgiven. See Note 14, “Debt,” for further discussion regarding the PPP Loans.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of EVI Industries, Inc. and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions and balances have been eliminated in consolidation.
Revenue Recognition
The Company recognizes revenue when a sales arrangement with a customer exists (sales contract, purchase or sales order, or other indication of an arrangement), the transaction price is fixed and determinable, and the Company has satisfied the performance obligation(s) per the sales arrangement.
Performance Obligations and Revenue Over Time
Revenue primarily consists of revenues from the sale or leasing of commercial and industrial laundry and dry cleaning equipment and steam and hot water boilers manufactured by others; the sale of related replacement parts and accessories; and the provision of installation and maintenance services. The Company generates revenue primarily from the sale of equipment and parts to customers. Therefore, the majority of the Company’s contracts are short-term in nature and have a single performance obligation (to deliver products), which is satisfied when control of the product is transferred to the customer. Other contracts contain a combination of equipment sales with a service such as connection of the equipment, which is expected to be performed in the near-term. Such services are distinct and accounted for as separate performance obligations. Significant judgment may be required by management to identify the distinct performance obligations within each contract. Revenue is recognized on these contracts when control transfers to the Company’s customers via shipment of products or provision of services and the Company has the right to receive consideration for these products and services. Additionally, from time to time, the Company enters into longer-termed contracts which provide for the sale of equipment by the Company and the provision by the Company of related installation and construction services. The installation on these types of contracts is usually completed within six to twelve months. The Company recognizes a portion of its revenue over time using the cost-to-cost measure of progress, which measures a contract’s progress toward completion based on the ratio of actual contract costs incurred to date to the Company’s estimated costs at completion. Significant judgment may be required by management in the cost estimation process for these contracts, which is based on the knowledge and experience of the Company’s project managers, subcontractors and financial professionals. Changes in job performance and job conditions are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and the Company’s revenue recognition. The determination of the total estimated cost and progress toward completion requires management to make significant estimates and assumptions. Total estimated costs to complete projects include various costs such as direct labor, material and subcontract costs. Changes in these estimates can have a significant impact on the revenue recognized each period. From time to time, the Company also enters into maintenance contracts and ad hoc maintenance and installation service contracts. These longer-term contracts, and maintenance and service contracts have a single performance obligation where revenue is recognized over time using the cost-to-cost measure of progress, which best depicts the continuous transfer of control of goods or services to the customer.
The Company measures revenue, including shipping and handling fees charged to customers, as the amount of consideration it expects to be entitled to receive in exchange for its goods or services, net of any taxes collected from customers and subsequently remitted to governmental authorities. Costs associated with shipping and handling activities performed after the customer obtains control are accounted for as fulfillment costs and are not promised services that have to be further evaluated under revenue recognition standards.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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Revenue from products transferred to customers at a point in time include commercial and vended laundry parts and equipment sales and accounted for approximately 82% of the Company’s revenue for the fiscal year ended June 30, 2021 and 87% of the Company’s revenue for the fiscal year ended June 30, 2020. Revenue from products transferred to customers at a point in time is recognized when obligations under the terms of the contract with the Company’s customer are satisfied, which generally occurs with the transfer of control upon shipment.
The Company’s products are typically sold with a manufacturer’s warranty. Accordingly, warranty expense and product returns have not been significant.
Revenues that are recognized over time include (i) longer-termed contracts that include equipment purchase with installation and construction services, (ii) maintenance contracts, and (iii) service contracts. Revenue from products and services that are recognized over time accounted for approximately 18% of the Company’s revenue for the fiscal year ended June 30, 2021 and 13% of the Company’s revenue for the fiscal year ended June 30, 2020.
Contract Assets and Liabilities
Contract assets and liabilities are presented in the Company’s consolidated balance sheets. Contract assets consist of unbilled amounts resulting from sales under longer-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. As noted above, the cost estimation process for these contracts may require significant judgment by management. The Company typically receives progress payments on sales under longer-term contracts as work progresses, although for certain contracts, the Company may be entitled to receive an advance payment. Contract assets also include retainage. Retainage represents a portion of the contract amount that has been billed, but for which the contract allows the customer to retain a portion of the billed amount (generally, from 5% to 20% of contract billings) until final contract settlement. Retainage amounts are generally classified as current assets within the Company’s consolidated balance sheets. Retainage that has been billed, but is not due until completion of performance and acceptance by customers, is generally expected to be collected within one year. Contract liabilities consist of advanced payments, billings in excess of costs incurred and deferred revenue.
Costs, estimated earnings and billings on longer-term contracts when the cost-to-cost method of revenue recognition is utilized as of June 30, 2021 and 2020 consisted of the following (in thousands):
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June 30,
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2021
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2020
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Costs incurred on uncompleted contracts
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$
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26,833
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$
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17,019
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Estimated earnings
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3,697
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1,580
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Less: billings to date
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(33,615
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)
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(16,637
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)
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Retainage
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200
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923
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Ending balance
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$
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(2,885
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)
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$
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2,885
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These amounts are included in the Company’s consolidated balance sheets under the following captions (in thousands):
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June 30,
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2021
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2020
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Contract assets
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$
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347
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$
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3,443
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Contract liabilities
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(3,232
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)
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(558
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)
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Ending balance
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$
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(2,885
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)
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$
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2,885
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Contract liabilities are generally associated with contracts with durations of less than one year. Accordingly, such amounts are expected to be realized during the subsequent year.
The Company does not account for significant financing components if the period between the time when the transfer of the product or service to the customer occurs and when the customer pays for that service or product will be one year or less. The Company does not disclose the value of remaining performance obligations for contracts with an original expected period of one year or less or performance obligations for which the Company recognizes revenue at the amount that it has the right to invoice for services performed.
Goodwill
Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of net assets acquired in a business combination. The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit's carrying value is compared to its fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss. This step compares the current implied goodwill in the reporting unit to its carrying amount. If the carrying amount of the goodwill exceeds the implied goodwill, an impairment is recorded for the excess. The identification and measurement of goodwill impairment involves the estimation of the fair value of the reporting unit and involves uncertainty because management must use judgment in determining appropriate assumptions to be used in the measurement of fair value. The Company performed its annual impairment test on April 1, 2021 and determined there was no impairment.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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Accounts Receivable
Accounts receivable are customer obligations due under what management believes to be customary trade terms. Invoices are typically due upon receipt, however, the Company may grant extended payment terms, typically 30 days, for certain customers. The Company sells its products primarily to hospitals, nursing homes, government institutions, laundry plants, hotels, motels, vended laundry facilities and distributors and dry cleaning stores and chains. The Company performs continuing credit evaluations of its customers’ financial condition and depending on the terms of credit, the amount of the credit granted and management’s history with a customer, the Company may require the customer to grant a security interest in the purchased equipment as collateral for the receivable. Management reviews accounts receivable on a regular basis to determine whether it is probable that any amounts are impaired. The Company includes any balances that are deemed probable to be impaired in its overall allowance for doubtful accounts. The provision for doubtful accounts is recorded in selling, general and administrative expenses in the consolidated statements of operations. If customary attempts to collect a receivable are not successful, the receivable is then written off against the allowance for doubtful accounts. The Company’s allowance for doubtful accounts was $1.0 million at June 30, 2021 and $820,000 at June 30, 2020. Actual write-offs may vary from the recorded allowance.
Cash
The Company has not experienced any losses in its cash accounts and believes it is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.
Inventories
Inventories consist principally of equipment inventories and spare part inventories. Equipment inventories are valued at the lower of cost, determined on the specific identification method, or net realizable value. Spare part inventories are valued at the lower of average cost or net realizable value. Lower of cost or net realizable value adjustments are recorded in cost of goods sold in the consolidated statement of operations.
Equipment, Improvements and Depreciation
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on straight-line methods over useful lives of five to seven years for furniture and equipment and the shorter of ten years or the remaining lease term (including renewal periods that are deemed reasonably assured) for leasehold improvements. Depreciation and amortization of property and equipment is included in selling, general and administrative expenses in the consolidated statements of operations. Repairs and maintenance costs are expensed as incurred.
Software Capitalization
The Company capitalizes certain costs related to the acquisition and development of internal use software, including implementation costs incurred in a cloud computing arrangement, during the application development stages of projects. The Company amortizes these costs using the straight-line method over the estimated useful life of the software, typically seven years. Costs incurred during the preliminary project or the post-implementation/operation stages of the project are expensed as incurred. Capitalized computer software, included as a component of equipment and improvements, net in the accompanying consolidated balance sheets, net of accumulated amortization, was $343,000 and $152,000 at June 30, 2021, and 2020, respectively. Computer software amortization expense was $29,000 in fiscal 2021. There was no related amortization expense in fiscal 2020. Amortization of capitalized software is included in selling, general and administrative expenses in the consolidated statements of operations.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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Customer-Related Intangibles, Tradenames and Other Intangible Assets
Finite-lived intangibles are amortized over their estimated useful life while indefinite-lived intangibles and goodwill are not amortized. Customer-related intangibles, non-compete, and other finite-lived intangible assets are stated at cost less accumulated amortization, and are amortized on a straight-line basis over the estimated future periods to be benefited (5-10 years). The estimates of fair value of the Company’s indefinite-lived intangibles and long-lived assets are based on information available as of the date of the assessment and takes into account management’s assumptions about expected future cash flows and other valuation techniques. Amortization of finite-lived intangibles is included in selling, general and administrative expenses in the consolidated statements of operations. The Company also evaluates indefinite-lived intangible assets each reporting period to determine whether events and circumstances continue to support an indefinite useful life. The Company performed its annual impairment test on April 1, 2021 and determined there was no impairment.
Asset Impairments
The Company periodically reviews the carrying amounts of its long-lived assets, including property, plant and equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of their carrying amount or fair value less estimated costs to sell. The Company has concluded that there was no impairment of long-lived assets in the fiscal year ended June 30, 2021 or the fiscal year ended June 30, 2020.
Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates these estimates on an ongoing basis. Estimates which may be particularly significant to the Company’s consolidated financial statements include those relating to the determination of impairment of assets (including goodwill and intangible assets), the useful life of property and equipment, net realizable value of inventory, the residual value of leased equipment, the recoverability of deferred income tax assets, allowances for doubtful accounts, intangible assets, estimates to complete on contracts where revenue is recognized over time, the carrying value of inventories and long-lived assets, the timing of revenue recognition, and sales returns and allowances. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the recognition of revenues and expenses and the carrying value of assets and liabilities that are not readily apparent from other sources. Assumptions and estimates may, however, prove to have been incorrect, and actual results may differ from these estimates.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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Earnings Per Share
The Company computes earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of the Company’s common stock subject to unvested restricted stock awards are considered participating securities because these awards contain a non-forfeitable right to dividends paid prior to forfeiture of the restricted stock, if any, irrespective of whether the awards ultimately vest. During fiscal 2021 and fiscal 2020, the Company granted restricted stock awards of 8,624 and 187,169 shares, respectively, and 204,014 and 28,110 restricted stock units, respectively, under the EVI Industries, Inc. 2015 Equity Incentive Plan, as amended (see Note 20). During fiscal 2020, the Company also granted stock awards (not subject to forfeiture) of 13,550 shares of the Company’s common stock (5,262 of which shares were withheld to satisfy tax withholding obligations). Shares of restricted stock are deemed to constitute a second class of stock for accounting purposes. Basic and diluted earnings per share for fiscal 2021 and fiscal 2020 are computed as follows (in thousands, except per share data):
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For the years
ended June 30,
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2021
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2020
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Net income
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$
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8,384
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$
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775
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Less: distributed and undistributed income allocated to non-vested restricted common stock
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731
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62
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Net income allocated to EVI Industries, Inc. shareholders
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$
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7,653
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$
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713
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Weighted average shares outstanding used in basic earnings per share
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12,142
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11,841
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Dilutive common share equivalents
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436
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330
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Weighted average shares outstanding used in dilutive earnings per share
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12,578
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12,171
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Basic earnings per share
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$
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0.63
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$
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0.06
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Diluted earnings per share
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$
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0.61
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$
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0.06
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At June 30, 2021, other than 866,970 unvested shares subject to restricted stock awards, there were no potentially dilutive securities outstanding. The remaining 306,202 shares of restricted common stock were not included in the calculation of diluted earnings per share because their impact was anti-dilutive. At June 30, 2020, other than 735,040 shares subject to restricted stock awards, there were no potentially dilutive securities outstanding. The remaining 307,790 shares of restricted common stock were not included in the calculation of diluted earnings per share because their impact was anti-dilutive.
Supplier Concentration
The Company purchases laundry, dry cleaning equipment, boilers and other products from a number of manufacturers and suppliers. Purchases from three manufacturers accounted for a total of approximately 62% of the Company’s purchases for fiscal 2021 and 63% of the Company’s purchases for fiscal 2020.
Advertising Costs
The Company expenses the cost of advertising as of the first date an advertisement is run. The Company incurred approximately $435,000 and $377,000 of advertising costs for fiscal 2021 and fiscal 2020, respectively, which are included in selling, general and administrative expenses in the consolidated statements of operations.
Shipping and Handling
Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products are included in selling, general and administrative expenses.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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Fair Value of Certain Current Assets and Current Liabilities
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized based on a three-level hierarchy. The three levels of inputs used to measure fair value are as follows:
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Level 1 - Quoted prices in active markets for identical assets and liabilities.
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Level 2 - Observable inputs other than quoted prices included in Level 1. This includes dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
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Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company has no assets or liabilities that are adjusted to fair value on a recurring basis. The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis during fiscal 2021 or fiscal 2020, except for certain assets acquired and liabilities assumed in a business combination (as described in Note 3).
The Company’s cash, accounts receivable and accounts payable are reflected in the accompanying consolidated financial statements at cost, which approximated estimated fair value, using Level 1 inputs. Cash is maintained with various high-quality financial institutions and have original maturities of three months or less. Accounts receivable and accounts payable approximate their fair value due to the short term nature of such accounts. The fair value of the Company’s indebtedness was estimated using Level 2 inputs based on quoted prices for those or similar debt instruments using applicable interest rates as of June 30, 2021 and approximated the carrying value of such debt because it accrues interest at variable rates that are repriced frequently. This approximates fair value based on the variable interest rate.
Customer Deposits
Customer deposits represent advances paid by customers when placing orders for equipment with the Company.
Net Investment in Sales Type Leases
The Company derives a portion of its revenue from leasing arrangements. Such arrangements provide for monthly payments covering the equipment sales, maintenance, and interest. These arrangements meet the criteria to be accounted for as sales type leases. Accordingly, the equipment sale is recognized upon delivery of the system and acceptance by the customer. Upon the recognition of revenue, an asset is established for the investment in sales type leases. Maintenance revenue and interest are recognized monthly over the lease term.
Income Taxes
The Company recognizes income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is determined that it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized.
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EVI Industries, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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Judgment is required in developing the Company’s provision for income taxes, deferred tax assets and liabilities, and any valuation allowances that might be required against the deferred tax assets. Management evaluates the Company’s ability to realize its deferred tax assets on a quarterly basis and adjusts the valuation allowance when it believes that it is more likely than not that the asset will not be realized. There were no valuation allowance adjustments during fiscal 2021 or fiscal 2020.
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately reflect actual outcomes. The Company does not believe that there are any material unrecognized tax benefits as of June 30, 2021 or 2020 related to tax positions taken on its income tax returns. The Company’s policy is to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of interest expense and general and administrative expense, respectively, in the consolidated statements of operations.
The CARES Act, among its other provisions, includes tax provisions relating to refundable payroll tax credits, deferral of employer’s social security payments, net operating loss (“NOL”) utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP), and financing options. With the exception of the forgiveness of debt from the PPP Loans initiated under the CARES Act, the Company’s income tax provision for fiscal 2021 and fiscal 2020 was not materially impacted by the provisions of the CARES Act.
Leases
Adoption of New Lease Standard
On July 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) 842, Leases (Topic 842) (“ASC 842”), which, among other things, requires lessees to recognize substantially all leases on their balance sheets and disclose certain additional key information about leasing arrangements. The new standard establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset and liability on the balance sheet for all leases with a term longer than 12 months. Leases are required to be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The Company adopted this standard using the modified retrospective transition approach, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption without restatement of prior periods. Therefore, the accompanying consolidated financial statements for fiscal 2021 and fiscal 2020 are presented under the new standard. There was no cumulative-effect adjustment recorded on July 1, 2019.
The Company elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of: (1) whether any of the Company's contracts are or contain leases, (2) lease classification and (3) initial direct costs.
The primary impact for the Company was the balance sheet recognition of ROU assets (operating lease assets) and lease liabilities for operating leases as a lessee. The adoption of ASC 842 did not have a material impact on the results of operations or cash flows of the Company. See Note 9, “Leases,” for further discussion regarding the Company’s adoption of the new lease accounting standard.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
Recently Issued Accounting Guidance
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other specified instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied using a cumulative-effect transition method. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years (the fiscal year ending June 30, 2022 for the Company), with early adoption permitted. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new guidance provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include: contract modifications, hedging relationships, and the sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made. The provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which will eliminate certain exceptions to the existing guidance for income taxes related to the approach for intra-period tax allocations, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU also simplifies the accounting for income taxes by clarifying and amending existing guidance related to the effects of enacted changes in tax laws or rates in the effective tax rate computation, the recognition of franchise tax and the evaluation of a step-up in the tax basis of goodwill, among other clarifications. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and for interim periods within those fiscal years. The Company is currently evaluating the potential effects of this ASU; however, the Company does not expect that its adoption will have a material effect on its consolidated financial statements.
Management does not believe that other issued accounting standards and updates which are not yet effective will have a material impact on the Company’s consolidated financial position, results of operations or cash flows upon adoption.
3. Acquisitions
YES Acquisition
On November 3, 2020, the Company acquired Yankee Equipment Systems, Inc. (“YES”), pursuant to a merger whereby YES merged with and into, and became, a wholly-owned subsidiary of the Company (the “YES Acquisition”). YES is a New Hampshire-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. This acquisition expanded the Company’s footprint in the Northeast region of the United States. The consideration paid by the Company in connection with the merger consisted of $5.3 million in cash and 278,385 shares of the Company’s common stock. The Company funded the cash consideration with borrowings under its credit facility. Fees and expenses related to the YES Acquisition, consisting primarily of legal and other professional fees, totaled approximately $144,000 and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for the year ended June 30, 2021. The total purchase price for accounting purposes was $13.8 million, which included cash acquired of $792,000.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
The YES Acquisition was treated for accounting purposes as a purchase of YES using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Under the acquisition method of accounting, the aggregate consideration in the YES Acquisition was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to intangible assets and goodwill. The computation of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the following tables (in thousands):
|
Purchase price consideration:
|
|
|
|
Cash consideration, net of cash acquired(a)
|
|
$
|
4,475
|
|
|
Stock consideration(b)
|
|
|
8,521
|
|
|
Total purchase price consideration, net of cash acquired
|
|
$
|
12,996
|
|
(a) Includes $5.3 million paid net of $792,000 of cash acquired.
(b) Calculated as 278,385 shares of the Company’s common stock, multiplied by $30.61, the closing price of the Company’s common stock on the closing date.
|
Allocation of purchase price consideration:
|
|
|
|
Accounts receivable
|
|
$
|
1,482
|
|
|
Inventory
|
|
|
1,591
|
|
|
Other assets
|
|
|
1,812
|
|
|
Equipment and improvements
|
|
|
1,844
|
|
|
Intangible assets
|
|
|
3,800
|
|
|
Accounts payable and accrued expenses
|
|
|
(1,901
|
)
|
|
Accrued employee expenses
|
|
|
(534
|
)
|
|
Customer deposits
|
|
|
(525
|
)
|
|
Deferred tax liabilities
|
|
|
(887
|
)
|
|
Assumption of debt
|
|
|
(916
|
)
|
|
Total identifiable net assets
|
|
|
5,766
|
|
|
Goodwill
|
|
|
7,230
|
|
|
Total
|
|
$
|
12,996
|
|
The Company’s purchase price allocation set forth above is preliminary, as the Company is still evaluating certain working capital items in accordance with the purchase agreement.
Intangible assets consist of $1.6 million allocated to the Yankee Equipment Systems trade name and $2.2 million allocated to customer-related intangible assets. The Yankee Equipment Systems trade name is indefinite-lived and therefore not subject to amortization. The Yankee Equipment Systems trade name will be evaluated for impairment annually or more frequently if an event occurs or circumstances change that indicate it may be impaired, by comparing its fair value to its carrying amount to determine if a write-down to fair value is required. Customer-related intangible assets will be amortized over 10 years.
Goodwill is attributable primarily to the assembled workforce acquired, as well as benefits from the increased scale of the Company as a result of the YES Acquisition. The goodwill from the YES Acquisition is not deductible for income tax purposes.
ELS Acquisition
On January 15, 2021, the Company acquired Baystate Business Ventures d/b/a Eastern Laundry Systems (“ELS”), a Massachusetts-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. The acquisition was effected by the Company, indirectly through a wholly-owned subsidiary, which purchased substantially all of the assets and assumed certain of the liabilities of ELS. The total consideration for the transaction consisted of $400,000 in cash, net of $57,000 of cash acquired, and the issuance of 10,726 shares of the Company’s common stock. The Company funded the cash consideration for the acquisition with credit facility borrowings. The acquisition was treated for accounting purposes as a purchase of the acquired business using the acquisition method of accounting in accordance with ASC 805, Business Combinations, pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, based on their respective fair values as of the closing date. Under ASC 805, if the fair value of the acquired net assets exceeds the purchase price, then a bargain purchase gain in the amount of such excess is recognized in the applicable condensed consolidated statement of operations. Based on the Company’s preliminary analysis of working capital and valuation-related items, the Company recognized a bargain purchase gain of $314,000 in connection with the acquisition of ELS, which is included as interest and other (expense), net in the consolidated statement of operations for the year ended June 30, 2021. The purchase price allocations are considered preliminary, as the Company is still assessing certain working capital and valuation-related items. Any change to the preliminary estimate of working capital and valuation-related items and the related deferred tax liability, if any, will be recognized as an adjustment to the bargain purchase gain.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
Acquisitions During Fiscal 2020
During the fiscal year ended June 30, 2020, the Company completed the acquisitions of Professional Laundry Systems, LLC, which was acquired on August 1, 2019; Large Equipment, Inc. (d/b/a Laundry Systems of Tennessee) and TN Ozone, Inc. (d/b/a Premier Laundry Solutions and Premier Equipment Rental), which were acquired on January 31, 2020; and Commercial Laundry Equipment Company, Inc., which was acquired on February 28, 2020. The total consideration for these four transactions consisted of $1.6 million in cash, net of $192,000 of cash acquired, the assumption of $129,000 of long-term debt and the issuance of 132,726 shares of the Company’s common stock, with an aggregate grant date fair value of $3.8 million. The Company funded the cash consideration for each acquisition with credit facility borrowings. Each acquisition was treated for accounting purposes as a purchase of the acquired business using the acquisition method of accounting in accordance with ASC 805, Business Combinations, pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to intangible assets and goodwill. The Company has allocated a total of $2.1 million to goodwill, $680,000 to customer-related intangibles, and $410,000 to the respective trade names. Goodwill totaling $988,000 from certain of these acquisitions is expected to be amortized and deductible for tax purposes over 15 years. Goodwill is attributable primarily to the assembled workforces, as well as benefits from the increased scale of the Company as a result of these acquisitions.
PAC Acquisition
On February 5, 2019, the Company acquired PAC Industries Inc. (“PAC”) for approximately $6.4 million in cash and 179,847 shares of the Company’s common stock. As a portion of the stock consideration issued in connection with the acquisition, the Company transferred 114,634 shares to PAC’s ESOP. These shares were not permitted to be traded during the six-month period commencing on the closing date. Further, if a distribution event had occurred during such six-month period, then each participant would have had the option to require the Company to purchase such participant’s shares at fair market value. Due to the Company’s obligation under this put option, the distributed shares subject to the put option and the shares held by the ESOP were classified as temporary equity in the mezzanine section of the consolidated balance sheet as of the acquisition date. There were no distribution events during the six-month restriction period, which expired in August 2019. As a result, such shares are classified as permanent equity in the consolidated balance sheets as of June 30, 2020 and 2021.
Supplemental Pro Forma Results of Operations
The following unaudited supplemental pro forma information presents the results of operations of the Company, after giving effect to the acquisitions of YES and ELS as described above, as if the Company had completed each such transaction on July 1, 2019, using the estimated fair values of the assets acquired and liabilities assumed. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the Company would have been if the transactions had occurred on the date assumed, nor are they indicative of future results of operations.
|
|
|
For the year ended June 30,
|
|
(in thousands)
|
|
2021
(Unaudited)
|
|
2020
(Unaudited)
|
|
Revenues
|
|
$
|
254,359
|
|
|
$
|
271,298
|
|
|
Net income
|
|
|
8,796
|
|
|
|
1,939
|
|
The Company’s consolidated results of operations for fiscal 2021 include total revenue of approximately $33.0 million and total net income of approximately $1.7 million attributable to businesses acquired during fiscal 2021 and 2020, based on the consolidated effective tax rate. The Company’s consolidated results of operations for fiscal 2020 include total revenue of approximately $8.1 million and total net income of approximately $94,000 attributable to businesses acquired during fiscal 2020, based on the consolidated effective tax rate. These results of acquired businesses do not include the effects of acquisition costs or interest expense associated with consideration paid for the related acquisitions.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
4. Interest and other (expense), net
Interest and other (expense), net for fiscal 2021 and 2020 are as follows (in thousands):
|
|
|
Fiscal 2021
|
|
Fiscal 2020
|
|
|
|
|
|
|
|
Bargain purchase gain
|
|
$
|
314
|
|
|
$
|
-
|
|
|
Interest (expense), net
|
|
|
(635
|
)
|
|
|
(1,432
|
)
|
|
Interest and other (expense), net
|
|
$
|
(321
|
)
|
|
$
|
(1,432
|
)
|
5. Accounts Receivable
Accounts receivable as of June 30, 2021 and 2020 consisted of the following (in thousands):
|
June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Accounts receivable - trade
|
|
$
|
29,731
|
|
|
$
|
18,500
|
|
|
Contract receivables
|
|
|
200
|
|
|
|
5,362
|
|
|
|
|
|
29,931
|
|
|
|
23,862
|
|
|
Allowance for doubtful accounts
|
|
|
(1,027
|
)
|
|
|
(820
|
)
|
|
|
|
$
|
28,904
|
|
|
$
|
23,042
|
|
6. Inventories
Inventories as of June 30, 2021 and 2020 were comprised of (in thousands):
|
June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Equipment and parts
|
|
$
|
25,601
|
|
|
$
|
24,402
|
|
|
Reserve
|
|
|
(472
|
)
|
|
|
(339
|
)
|
|
|
|
$
|
25,129
|
|
|
$
|
24,063
|
|
The Company established reserves of approximately $472,000 and $339,000 as of June 30, 2021 and 2020, respectively, against slow moving inventory.
7. Vendor Deposits
Vendor deposits represent advances made to the Company’s vendors for specialized inventory on order.
8. Other Current Assets
Other current assets as of June 30, 2021 and 2020 were comprised of (in thousands):
|
June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Other receivables
|
|
$
|
564
|
|
|
$
|
209
|
|
|
Prepaid insurance
|
|
|
301
|
|
|
|
277
|
|
|
Net investments in sales type leases - current
|
|
|
884
|
|
|
|
762
|
|
|
Other current assets
|
|
|
2,670
|
|
|
|
1,793
|
|
|
|
|
$
|
4,419
|
|
|
$
|
3,041
|
|
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
9. Leases
Company as Lessee
The Company leases warehouse and distribution facilities and administrative office space, generally for terms of three to five years.
As described in Note 2, “Summary of Significant Accounting Policies” above, the Company adopted ASC Topic 842, Leases (“ASC 842” or “Topic 842”), utilizing the modified retrospective adoption method with an effective date of July 1, 2019. The Company made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, as permitted by Topic 842, the Company recognizes the lease payments under its short-term leases in profit or loss on a straight-line basis over the lease term. The Company elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset.
Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, certain of the Company’s leases do not provide a readily determinable implicit rate. For such leases, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses instruments with similar characteristics when calculating its incremental borrowing rates.
The Company has options to extend certain of its operating leases for additional periods of time and the right to terminate several of its operating leases prior to their contractual expirations, in each case, subject to the terms and conditions of the lease. The lease term consists of the non-cancellable period of the lease and the periods covered by Company options to extend the lease when management considers it reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain residual value guarantees. The Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.
As of June 30, 2021, the Company had 27 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2021 and 2030. Rent expense consists of monthly rental payments under the terms of the Company’s lease agreements recognized on a straight-line basis.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
The following table sets forth the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of June 30, 2021. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
|
Fiscal years ending
|
|
Maturity of
Operating Lease
Liabilities
(in thousands)
|
|
|
|
|
|
2022
|
|
$
|
2,326
|
|
|
2023
|
|
|
1,931
|
|
|
2024
|
|
|
1,052
|
|
|
2025
|
|
|
735
|
|
|
2026
|
|
|
585
|
|
|
Thereafter
|
|
|
1,692
|
|
|
Total lease payments
|
|
$
|
8,321
|
|
|
Less: amounts representing interest
|
|
|
623
|
|
|
Present value of lease liabilities
|
|
$
|
7,698
|
|
|
Less: current portion
|
|
|
2,131
|
|
|
Long-term portion
|
|
$
|
5,567
|
|
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
The table below presents additional information related to the Company’s operating leases (in thousands):
|
Operating lease cost
|
|
Twelve months
ended June 30,
2021
|
|
Twelve months
ended June 30,
2020
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost (1)
|
|
$
|
2,109
|
|
|
$
|
1,935
|
|
|
Short-term lease cost (1)
|
|
|
12
|
|
|
|
190
|
|
|
Variable lease cost (1)
|
|
|
351
|
|
|
|
177
|
|
|
Total lease cost
|
|
$
|
2,472
|
|
|
$
|
2,302
|
|
(1) Expenses are classified within selling, general and administrative expenses in the Company’s consolidated statement of operations for the years ended June 30, 2021 and 2020.
The table below presents lease-related terms and discount rates as of June 30, 2021 and 2020:
|
|
|
June 30, 2021
|
|
June 30, 2020
|
|
|
Weighted average remaining lease terms
|
|
|
|
|
|
|
Operating leases
|
|
|
5.4 years
|
|
|
|
4.0 years
|
|
|
Weighted average discount rate
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
2.9
|
%
|
|
|
3.5
|
%
|
The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for the years ended June 30, 2021 and 2020 (in thousands):
|
|
|
Twelve months
ended
June 30, 2021
|
|
Twelve months
ended
June 30, 2020
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
$
|
2,109
|
|
|
$
|
1,935
|
|
|
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:
|
|
$
|
3,649
|
|
|
$
|
1,366
|
|
Company as Lessor
The Company derives a portion of its revenue from equipment leasing arrangements. Such arrangements provide for monthly payments covering the equipment provided, maintenance, and interest. These arrangements meet the criteria to be accounted for as sales type leases. Accordingly, revenue related to the provision of the equipment is recognized upon delivery of the equipment and its acceptance by the customer. Upon the recognition of such revenue, an asset is established for the investment in sales type leases. Maintenance revenue and interest are recognized monthly over the lease term.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
The future minimum lease payments receivable for sales type leases are as follows (in thousands):
|
Fiscal years ending June 30,
|
|
Total Minimum
Lease Payments
to be Received
|
|
Amortization of
Unearned
Income
|
|
Net Investment
in
Sales Type
Leases
|
|
|
|
|
|
|
|
|
|
2022
|
|
$
|
3,059
|
|
|
$
|
1,711
|
|
|
$
|
1,348
|
|
|
2023
|
|
|
2,407
|
|
|
|
1,316
|
|
|
|
1,091
|
|
|
2024
|
|
|
1,769
|
|
|
|
926
|
|
|
|
843
|
|
|
2025
|
|
|
1,135
|
|
|
|
573
|
|
|
|
562
|
|
|
2026
|
|
|
626
|
|
|
|
294
|
|
|
|
332
|
|
|
Thereafter
|
|
|
562
|
|
|
|
257
|
|
|
|
305
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,481
|
*
|
* Excludes non-guaranteed residual values of $2.2 million.
The total net investments in sales type leases, including stated residual values, as of June 30, 2021 and June 30, 2020 was $6.7 million and $3.9 million, respectively. The current portion of $0.9 million and $0.7 million is included in other current assets in the consolidated balance sheets as of June 30, 2021 and June 30, 2020, respectively, and the long term portion of $5.8 million and $3.2 million is included in other assets in the consolidated balance sheets as of June 30, 2021 and June 30, 2020, respectively.
10. Equipment and Improvements
Major classes of equipment and improvements as of June 30, 2021 and 2020 consisted of the following (in thousands):
|
June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
$
|
9,023
|
|
|
$
|
5,099
|
|
|
Leasehold improvements
|
|
|
2,809
|
|
|
|
2,137
|
|
|
Vehicles
|
|
|
4,846
|
|
|
|
5,326
|
|
|
|
|
|
16,678
|
|
|
|
12,562
|
|
|
Accumulated depreciation and amortization
|
|
|
(6,084
|
)
|
|
|
(4,570
|
)
|
|
|
|
$
|
10,594
|
|
|
$
|
7,992
|
|
Depreciation and amortization of equipment and improvements amounted to approximately $2.7 million in fiscal 2021 and $2.0 million in fiscal 2020.
11. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill are as follows (in thousands):
|
Balance at June 30, 2019
|
|
|
54,501
|
|
|
Goodwill from fiscal 2020 acquisitions (as described in Note 3)
|
|
|
2,094
|
|
|
Other
|
|
|
83
|
|
|
Balance at June 30, 2020
|
|
$
|
56,678
|
|
|
Goodwill from YES Acquisition (as described in Note 3)
|
|
|
7,230
|
|
|
Working capital adjustments (1)
|
|
|
(27
|
)
|
|
Balance at June 30, 2021
|
|
|
63,881
|
|
|
(1) Relates to working capital adjustments from business acquisitions consummated by the Company during fiscal 2020
|
|
|
|
|
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
Customer-related intangibles, tradenames and other intangible assets as of June 30, 2021 and 2020 consisted of the following (dollars in thousands):
|
June 30,
|
|
Estimated
Useful Lives
(in years)
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
Customer-related intangibles
|
|
|
8-10
|
|
|
$
|
18,237
|
|
|
$
|
16,037
|
|
|
Tradenames
|
|
|
Indefinite
|
|
|
|
11,155
|
|
|
|
9,555
|
|
|
Covenants not to compete
|
|
|
5
|
|
|
|
566
|
|
|
|
566
|
|
|
License agreements
|
|
|
10
|
|
|
|
529
|
|
|
|
529
|
|
|
Trademarks and patents
|
|
|
10-15
|
|
|
|
176
|
|
|
|
176
|
|
|
|
|
|
|
|
|
|
30,663
|
|
|
|
26,863
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
(6,986
|
)
|
|
|
(5,109
|
)
|
|
|
|
|
|
|
|
$
|
23,677
|
|
|
$
|
21,754
|
|
Amortization expense was approximately $1.9 million in fiscal 2021 and $1.7 million in fiscal 2020, and is included in selling, general and administrative expenses in the consolidated statements of operations. Weighted average remaining estimated useful lives for customer-related intangibles, covenants not to compete, license agreements, and trademarks and patents were 7.0 years, 0.6 years, 0 years and 0 years, respectively.
Based on the carrying amount of intangible assets as of June 30, 2021, and assuming no future impairment of the underlying assets, the estimated future amortization at the end of each fiscal year in the five-year period ending June 30, 2026 and thereafter is as follows (in thousands):
|
Fiscal years ending June 30,
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
$
|
1,884
|
|
|
2023
|
|
|
1,841
|
|
|
2024
|
|
|
1,841
|
|
|
2025
|
|
|
1,837
|
|
|
2026
|
|
|
1,836
|
|
|
Thereafter
|
|
|
3,283
|
|
|
Total
|
|
$
|
12,522
|
|
12. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses as of June 30, 2021 and 2020 were comprised of (in thousands):
|
June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
20,665
|
|
|
$
|
18,888
|
|
|
Accrued expenses
|
|
|
4,376
|
|
|
|
4,572
|
|
|
Sales tax accruals
|
|
|
1,186
|
|
|
|
832
|
|
|
|
|
$
|
26,227
|
|
|
$
|
24,292
|
|
13. Income Taxes
The following are the components of income taxes (benefit) (in thousands):
|
Fiscal years ended June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(186
|
)
|
|
$
|
489
|
|
|
State
|
|
|
97
|
|
|
|
262
|
|
|
|
|
|
(89
|
)
|
|
|
751
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
1,402
|
|
|
|
(37
|
)
|
|
State
|
|
|
191
|
|
|
|
(141
|
)
|
|
|
|
|
1,593
|
|
|
|
(178
|
)
|
|
|
|
$
|
1,504
|
|
|
$
|
573
|
|
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
The reconciliation of income tax expense computed at the federal statutory tax rate of 21% for the fiscal years ended June 30, 2021 and 2020 to the provision for income taxes is as follows (in thousands):
|
Fiscal years ended June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Tax at the statutory rate
|
|
$
|
2,076
|
|
|
$
|
283
|
|
|
State income taxes, net of federal benefit
|
|
|
265
|
|
|
|
67
|
|
|
Nondeductible compensation
|
|
|
348
|
|
|
|
340
|
|
|
PPP Loan forgiveness
|
|
|
(1,462
|
)
|
|
|
-
|
|
|
Other
|
|
|
277
|
|
|
|
(117
|
)
|
|
|
|
$
|
1,504
|
|
|
$
|
573
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
15.2
|
%
|
|
|
42.5
|
%
|
Deferred income taxes reflect the net tax effect of temporary differences between the basis of assets and liabilities for financial reporting purposes and the basis used for income tax purposes. Significant components of the Company’s current and noncurrent deferred tax assets and liabilities as of June 30, 2021 and 2020 were as follows (in thousands):
|
Fiscal years ended June 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
182
|
|
|
$
|
106
|
|
|
Inventory capitalization
|
|
|
353
|
|
|
|
385
|
|
|
Stock compensation
|
|
|
557
|
|
|
|
705
|
|
|
Accrued liabilities
|
|
|
605
|
|
|
|
221
|
|
|
Other
|
|
|
69
|
|
|
|
554
|
|
|
|
|
|
1,766
|
|
|
|
1,971
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
(2,974
|
)
|
|
|
(2,120
|
)
|
|
Depreciation
|
|
|
(1,533
|
)
|
|
|
(412
|
)
|
|
Intangible assets
|
|
|
(1,268
|
)
|
|
|
(1,167
|
)
|
|
Other
|
|
|
(199
|
)
|
|
|
-
|
|
|
|
|
|
(5,974
|
)
|
|
|
(3,699
|
)
|
|
Net deferred income tax (liabilities) assets
|
|
$
|
(4,208
|
)
|
|
$
|
(1,728
|
)
|
As of June 30, 2021, the Company was subject to potential federal and state tax examinations for the tax years including and subsequent to 2016.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
14. Debt
The Company’s long-term debt as of June 30, 2021 and 2020 was as follows (in thousands):
|
|
|
June 30,
2021
|
|
June 30,
2020
|
|
Revolving Line of Credit
|
|
$
|
12,000
|
|
|
$
|
21,000
|
|
|
PPP Loans
|
|
|
-
|
|
|
|
6,892
|
|
|
Less: unamortized discount and deferred financing costs
|
|
|
(127
|
)
|
|
|
(182
|
)
|
|
Total debt, net
|
|
|
11,873
|
|
|
|
27,710
|
|
|
Less: current maturities of long-term debt
|
|
|
-
|
|
|
|
(2,680
|
)
|
|
Total long-term debt
|
|
$
|
11,873
|
|
|
$
|
25,030
|
|
On November 2, 2018, the Company entered into a syndicated credit agreement (the “2018 Credit Agreement”) for a five-year revolving credit facility in the maximum aggregate principal amount of up to $100 million, with an accordion feature to increase the revolving credit facility by up to $40 million for a total of $140 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $5 million and for the issuance of standby letters of credit of up to a sublimit of $10 million.
Borrowings (other than swingline loans) under the 2018 Credit Agreement bear interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranges from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans bear interest calculated at the Base Rate plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The 2018 Credit Agreement has a term of five years and matures on November 2, 2023.
The 2018 Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The 2018 Credit Agreement also contains other provisions which may restrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. At June 30, 2021, the Company was in compliance with its covenants under the 2018 Credit Agreement and $30.4 million was available to borrow under the revolving credit facility.
The obligations of the Company under the 2018 Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, and are guaranteed, jointly and severally, by certain of the Company’s subsidiaries.
On May 21, 2020, the Company and certain of its subsidiaries received a total of twelve loans (the “PPP Loans”) totaling approximately $6.9 million in principal amount from Fifth Third Bank, N.A. (the “Lender”) under the Paycheck Protection Program (the “PPP”). The proceeds of the PPP Loans were used primarily for payroll costs. During the fourth quarter of 2021, the Company was notified by the Lender that all twelve of the PPP Loans were fully forgiven. In accordance with ASC 405-20, Liabilities – Extinguishment of Liabilities, the Company recognized a gain of $7.0 million during fiscal 2021 in connection with the forgiveness of the PPP Loans and the related accrued interest.
The SBA reserves the right to audit any PPP loan, regardless of size. These audits may occur after the forgiveness has been granted. In accordance with the CARES Act, all borrowers are required to maintain their PPP loan documentation for six years after the loan was forgiven or repaid in full and to provide that documentation to the SBA upon request. The Company has not accrued any liability associated with any potential adverse determination of the forgiveness of the PPP Loans which may result from any audit the PPP Loans if the SBA disagrees with any position taken by management with respect to the loan or forgiveness processes.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
In addition to the PPP Loans obtained by the Company and certain of its subsidiaries during May 2020, in connection with the YES Acquisition during November 2020, the Company, indirectly through its wholly-owned subsidiary, also assumed the approximately $916,000 loan previously obtained by YES under the PPP. The terms and conditions of such PPP loan were substantially similar to those of the PPP Loans obtained by the Company and its other subsidiaries. Under the merger agreement related to the YES Acquisition, the Company was entitled to indemnification for any required repayment of the loan to YES under the PPP. During the quarter ended March 31, 2021, the loan to YES under the PPP was forgiven in full. The Company determined that the fair value of its right to indemnification was equal to the amount forgiven. Accordingly, the Company did not recognize any gain on the extinguishment of this debt.
15. Related Party Transactions
Certain of the Company’s subsidiaries lease warehouse and office space from one or more of the principals or former principals of the Company or its subsidiaries. These leases include the following:
The Company’s wholly-owned subsidiary, Steiner-Atlantic, leased 28,000 square feet of warehouse and office space from an affiliate of Michael S. Steiner, President of Steiner-Atlantic and a former director and officer of the Company, pursuant to a lease agreement dated November 1, 2014, as amended. The lease term was extended during January 2020 to run through October 31, 2020, on which date the lease expired. Monthly base rental payments under the lease were $12,000. In addition to base rent, Steiner-Atlantic was responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $25,000 and $148,000 during fiscal 2021 and 2020, respectively.
On October 10, 2016, the Company’s wholly-owned subsidiary, Western State Design, entered into a lease agreement pursuant to which it leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack, a director and Executive Vice President, Corporate Strategy of the Company, and Tom Marks, Executive Vice President, Business Development of the Company. Monthly base rental payments are $12,000 during the initial term of the lease. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under this lease totaled approximately $144,000 during each of fiscal 2021 and 2020. On September 10, 2021, the Audit Committee of the Company’s Board of Directors approved the exercise of the Company’s option to renew the lease for the first three-year renewal term. Base rent for the first renewal term will be $19,000 per month.
On October 31, 2017, the Company’s wholly-owned subsidiary, Tri-State Technical Services, entered into lease agreements pursuant to which it leases a total of 81,000 square feet of warehouse and office space from an affiliate of Matt Stephenson, President of Tri-State. Monthly base rental payments total $21,000 during the initial terms of the leases. In addition to base rent, Tri-State is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $252,000 during each of fiscal 2021 and 2020.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
On February 9, 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, entered into a lease agreement pursuant to which it leases a total of 5,000 square feet of warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Monthly base rental payments are $3,950 during the initial term of the lease. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. During February 2018, AAdvantage entered into a month-to-month lease agreement with an affiliate of Mike Zuffinetti for a total of 17,000 square feet of warehouse and office space. Monthly base rental payments under this lease were $13,500. This month-to-month lease was terminated on October 31, 2018. In addition, on November 1, 2018, AAdvantage entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti. Monthly base rental payments were $26,000 initially. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space and, in connection therewith, monthly base rental payments increased to $36,000. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under the leases described in this paragraph totaled approximately $481,000 during each of fiscal 2021 and 2020.
On September 12, 2018, the Company’s wholly-owned subsidiary, Scott Equipment, entered into lease agreements pursuant to which it leases a total of 18,000 square feet of warehouse and office space from an affiliate of Scott Martin, President of Scott Equipment. Monthly base rental payments total $11,000 during the initial terms of the leases. In addition to base rent, Scott Equipment is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $137,000 during each of fiscal 2021 and 2020.
On February 5, 2019, the Company’s wholly-owned subsidiary, PAC Industries, entered into two lease agreements pursuant to which it leases a total of 29,500 square feet of warehouse and office space from an affiliate of Frank Costabile, former President of PAC Industries, and Rocco Costabile, former Director of Finance of PAC Industries. Monthly base rental payments total $14,600 during the initial terms of the leases. In addition to base rent, PAC Industries is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of four years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $180,000 and $176,000 during fiscal 2021 and 2020, respectively.
On November 3, 2020, the Company’s wholly-owned subsidiary, Yankee Equipment Systems, entered into a lease agreement pursuant to which it leases a total of 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli, President of Yankee Equipment Systems. Monthly base rental payments total $11,000 during the initial term of the lease. In addition to base rent, Yankee Equipment Systems is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. Payments under this lease totaled approximately $92,000 during fiscal 2021.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
16. Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and accounts and trade receivables. The Company maintains its cash at large financial institutions. At June 30, 2021, bank deposits exceeded Federal Deposit Insurance Corporation insured limits. The Company believes that concentrations of credit risk with respect to trade receivables are limited due to the Company’s large customer base. Also, based on the Company’s credit evaluation, trade receivables are often collateralized by the equipment sold. Sales to a federal government agency accounted for approximately 9% and 5% of the Company’s revenues for fiscal 2021 and 2020, respectively. Additionally, no single contract for a federal government facility or other contract accounted for more than 10% of the Company’s revenues for fiscal 2021 or 2020. As of June 30, 2021, there were no accounts receivable due from any individual entity which accounted for greater than 10% of the Company’s accounts receivable at June 30, 2021.
17. Commitments and Contingencies
From time to time in the ordinary course of business, certain of the Company’s contracts require the Company to provide performance and payment bonds related to projects in process. These bonds are intended to provide assurance to the customer that the Company will perform under the terms of the contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under the contract or pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company is required to reimburse the surety for expenses or outlays it incurs. There were no outstanding performance and payment bonds at June 30, 2021 or 2020.
The Company may from time to time become subject to litigation and other legal proceedings. Litigation and other legal proceedings may require the Company to incur significant expenses, including those relating to legal and other professional fees. In addition, litigation and other legal proceedings are inherently uncertain, and adverse outcomes in litigation or other legal proceedings could adversely affect the Company’s financial condition, cash flows, and operating results.
18. Retirement Plan
The Company has participatory deferred compensation plans under which it matches half of employee contributions up to 6% of an eligible employee’s yearly compensation on a discretionary basis. In response to the ongoing COVID-19 pandemic, the Company reduced its match in fiscal 2021 to one quarter of employee contributions up to 6% of an eligible employee’s yearly compensation, with a limit of a match of 1% of an eligible employee’s yearly compensation. Employees are eligible to participate in the plans after one year of service. The Company contributed approximately $171,000 and $491,000 to the plans during fiscal 2021 and fiscal 2020, respectively. The plans are qualified plans under Section 401(k) of the Internal Revenue Code.
19. Shareholders’ Equity
No dividends were declared or paid during the years ended June 30, 2021 or 2020.
20. Equity Plan
Equity Incentive Plan
During 2015, the Company’s board of directors and stockholders approved the Company’s 2015 Equity Incentive Plan (the “Plan”). During December 2020, the Company’s stockholders approved an amendment to the Plan to increase the number of shares of the Company’s common stock authorized for issuance pursuant to awards granted under the Plan to 3,000,000 shares. The fair value of awards granted under the Plan is expensed on straight-line basis over the vesting period of the awards. Share-based compensation expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations. Non-cash share-based compensation expense under the Plan totaled $2.4 million and $2.3 million for fiscal 2021 and fiscal 2020, respectively.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
During fiscal 2021, restricted stock awards and restricted stock units of a total of 8,624 shares and 204,014 shares, respectively, were granted under the Plan. A portion of the restricted stock awards is scheduled to vest ratably over four years and the remainder is scheduled to cliff vest on or about the five-year anniversary of the applicable grant date, subject, in the case of certain restricted shares, to accelerated vesting upon the achievement of certain specified performance goals. The total grant date fair value, determined by using the stock price on the date of grant, of such restricted stock awards was $264,000. A portion of the restricted stock units is scheduled to vest ratably over four years and the remainder is scheduled to vest in 4 to 41 years. The total grant date fair value of such restricted stock units was $6.3 million.
During fiscal 2020, restricted stock awards, restricted stock units and stock awards of a total of 187,169 shares, 28,110 shares and 13,550 shares, respectively, were granted under the Plan. A portion of the restricted stock awards is scheduled to vest ratably over four years and the remainder is scheduled to vest in 10 to 21 years, subject, in the case of certain restricted shares, to accelerated vesting upon the achievement of certain specified performance goals. The total grant date fair value, determined by using the stock price on the date of grant, of such restricted stock awards was $4.2 million. A portion of the restricted stock units is scheduled to vest ratably over four years and the remainder is scheduled to vest in 4 to 37 years. The total grant date fair value of such restricted stock units was $689,000. Stock awards relate to shares of the Company’s common stock issued under the Plan which are held by the recipient upon grant without any future risk of forfeiture. The total grant date fair value of such stock awards was $300,000.
During fiscal 2021, 77,624 shares of restricted stock vested and 25,310 shares of common stock with an aggregate fair market value of $853,000 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of such restricted stock. During fiscal 2020, 55,803 shares of restricted stock vested and 17,200 shares of common stock with an aggregate fair market value of $457,000 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of such restricted stock. As described above, during fiscal 2020, the Company also granted stock awards (not subject to forfeiture) of 13,550 shares of the Company’s common stock. 5,262 of such shares of common stock, which had an aggregate fair market value of $116,000 as of the grant date, were withheld in lieu of cash to satisfy tax withholding obligations in connection with the grant of the stock awards. As of June 30, 2021, the Company had $14.9 million and $7.1 million of total unrecognized compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards and restricted stock units, respectively, which is expected to be recognized over the weighted-average period of 17.5 years and 11.2 years, respectively.
|
EVI Industries, Inc. and Subsidiaries
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
The following is a summary of non-vested restricted stock activity as of, and for the fiscal year ended, June 30, 2021:
|
|
|
Restricted Stock Awards
|
|
Restricted Stock Units
|
|
|
|
|
Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
|
Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
|
|
Non-vested restricted stock outstanding at June 30, 2020
|
|
|
987,220
|
|
|
$
|
19.40
|
|
|
|
55,610
|
|
|
$
|
30.31
|
|
|
|
Granted
|
|
|
8,624
|
|
|
|
30.61
|
|
|
|
204,014
|
|
|
|
31.03
|
|
|
|
Vested
|
|
|
(75,093
|
)
|
|
|
18.05
|
|
|
|
(2,531
|
)
|
|
|
26.40
|
|
|
|
Forfeited
|
|
|
(1,492
|
)
|
|
|
33.53
|
|
|
|
(3,180
|
)
|
|
|
30.76
|
|
|
|
Non-vested restricted stock outstanding at June 30, 2021
|
|
|
919,259
|
|
|
$
|
19.59
|
|
|
|
253,913
|
|
|
$
|
30.92
|
|
|
Employee Stock Purchase Plan
During 2017, the Company’s board of directors and stockholders approved the Company’s 2017 Employee Stock Purchase Plan, which, subject to the terms of the plan, allows eligible employees the opportunity to purchase shares of the Company’s common stock at a 5% discount. The employee stock purchase plan provides for six-month offering periods ending on December 31 and June 30 of each year. During fiscal 2021, 2,492 shares of common stock were purchased under the Company’s employee stock purchase plan for which the Company received net proceeds of $69,000. During fiscal 2020, 2,216 shares of common stock were purchased under the Company’s employee stock purchase plan for which the Company received net proceeds of $50,000.