EVI Industries, Inc. (NYSE American: EVI) reported record fiscal
fourth quarter and fiscal year ended June 30, 2021 operating
results, establishing new fiscal fourth quarter records for gross
profit and net income and fiscal year records for revenue, gross
profit and net income, which includes a gain on the forgiveness of
debt in connection with the forgiveness of PPP Loans.
Earnings Conference Call
The Company has provided a pre-recorded earnings conference call
including a business update, which can be accessed in the
“Investors” section of the Company’s website at www.evi-ind.com or
by visiting https://ir.evi-ind.com/message-from-the-ceo.
Highlights to EVI’s Financial Results
Fourth Quarter Results
- Revenue increased 19% to $65 million,
- Gross profit increased 22% to a record $16.4 million,
- Gross margin increased 70 basis points to 25%,
- Net income increased to $6.8 million from a net loss of $0.1
million, and
- Adjusted EBITDA increased 49% from $1.9 million to $2.9
million, or approximately 4.5% of revenue.
Fiscal Year Results
- Revenue increased 3% to a record $242 million,
- Gross profit increased 8% to a record $60 million,
- Gross margin increased 130 basis points to 25%,
- Net income increased 982% from $0.8 million to $8.4 million,
and
- Adjusted EBITDA increased 21% from $8.8 million to $10.6
million, and
Henry M. Nahmad, EVI’s Chairman and CEO
commented: “Strong fourth quarter results reflect a steady recovery
across certain of our end customer categories resulting in a
significant increase in demand for the commercial laundry products
and service solutions we provide. Amid the recovery and increased
demand, we are actively managing through supply chain disruptions
and labor shortages causing delays in product lead times, pricing
volatility, cost increases, and other adverse conditions.
Ultimately, we believe we are a stronger company today than at any
time in the past and consequently are better positioned to execute
on our long-term growth objectives.”
Balance Sheet Strength
At the completion of fiscal 2021, the Company had net debt of
less than $6 million, which represents a 68% decrease in net debt
as compared to the end of fiscal 2020. The significant decrease in
net debt includes two consecutive fiscal years of strong cash flows
and forgiveness of the PPP Loans received under the Cares Act,
offset in part by the Company’s deployment of cash in connection
with multiple acquisitions and costs associated with the Company’s
optimization initiatives, including one-time costs related to
ongoing implementation of new technologies.
Mr. Nahmad commented: “Given the health and
strength of our balance sheet, including a significant amount of
liquidity and other available resources, we are well-positioned to
deploy cash in connection with attractive buy and build
opportunities we are actively pursuing.”
Continued Completion of Acquisitions
During fiscal 2021, the Company successfully acquired two
businesses, Yankee Equipment Systems and Eastern Laundry Systems,
both of which are New England based commercial laundry distributors
and service providers. In adding these businesses, the Company
strengthened its existing Northeast operations, and the Company
gained an influential, young, dynamic, and entrepreneurial leader
with an exceptional team. Additionally, the acquisitions the
Company made just before the onset of COVID-19 in the third quarter
of fiscal 2020 have exceeded management’s expectations in terms of
market share growth and operating performance.
Record Revenues
Despite the continued adverse impact of the COVID-19 pandemic
and extended key supplier lead times, the Company capitalized on a
significant increase in customer demand for the commercial laundry
product and service solutions it provides. Consequently, revenue
for the fourth quarter of fiscal 2021 increased to $65 million, a
19% increase compared to the fourth quarter of fiscal 2020, and
revenue for fiscal 2021 increased 3% compared to fiscal 2020 to a
record $242 million.
Record Gross Profit and Increased Gross Margins
The Company improved gross margin despite numerous cost
increases and pricing volatility. Gross margin for the fourth
quarter of fiscal 2021 increased to approximately twenty-five
percent (25%), an increase of seventy (70) basis points compared to
the fourth quarter of fiscal 2020. Gross margin for fiscal year
2021 increased to twenty-five percent (25%), an increase of one
hundred thirty (130) basis points compared to fiscal 2020. It
should also be noted that the improvements to gross margins are
notwithstanding the impact of longer-term contracts with certain
customers in connection with complex laundries which lowered gross
margins above by 120-basis points during fiscal 2021 and 80-basis
points during fiscal 2020.
Mr. Nahmad commented: “Managing through this
period was and continues to be a difficult challenge, but also one
that provides an opportunity to improve pricing, gross margin, and
contribution margins. Our focus was to leverage the positive
pricing environment to protect and strengthen our gross margins and
to do so while further enhancing our customer value proposition. To
that end, we evaluated historical transaction data and other
metrics and based on our findings, we implemented a performance
management system, updated sales incentives, and increasingly
utilized our new technologies to better track our performance.”
Pursuit of Growth and Operational Optimization
As previously communicated, the Company continued to execute on
its growth strategy while pursuing an aggressive optimization
initiative through an extensive modernization agenda under a
thoughtful and measured approach that seeks to limit disruption and
mitigate risks to the Company.
Mr. Nahmad commented: “While we are a
long-term growth focused company, balancing growth with health was
ever more critical amid the challenging times we faced during this
fiscal year. Through these times though, the operations of certain
of our businesses were consolidated, modernized, and therefore
optimized and these businesses achieved a low double digit EBITDA
margin during fiscal 2021. This achievement is evidence that the
optimization initiatives across our consolidated Company are
effective at achieving our targeted operating results and when
combined with continued acquisition growth, we will achieve our
long-term growth objectives.”
For additional information regarding the Company’s results for
the fourth quarter and fiscal year ended June 30, 2021, see the
Company’s Annual Report on Form 10-K for the fiscal year ended June
30, 2021, filed with the Securities and Exchange Commission on or
about the date hereof.
Use of Non-GAAP Financial Information
In this press release, EVI discloses the non-GAAP financial
measure of Adjusted EBITDA, which EVI defines as earnings before
interest, taxes, depreciation, amortization, and amortization of
share-based compensation. Adjusted EBITDA is determined by adding
interest expense, income taxes, depreciation, amortization, and
amortization of share-based compensation to net income, as shown in
the attached statement of Condensed Consolidated Earnings before
Interest, Taxes, Depreciation, Amortization, and Amortization of
Share-based Compensation. EVI considers Adjusted EBITDA to be an
important indicator of its operating performance. Adjusted EBITDA
is also used by companies, lenders, investors and others because it
excludes certain items that can vary widely across different
industries or among companies within the same industry. For
example, interest expense can be dependent on a company’s capital
structure, debt levels and credit ratings, and the tax positions of
companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
jurisdictions in which they operate. Adjusted EBITDA should not be
considered as an alternative to net income or any other measure of
financial performance or liquidity, including cash flow, derived in
accordance with GAAP, or to any other method of analyzing EVI’s
results as reported under GAAP. In addition, EVI’s definition of
Adjusted EBITDA may not be comparable to definitions of Adjusted
EBITDA or other similarly titled measures used by other
companies.
About EVI Industries
EVI Industries, Inc., through its wholly owned subsidiaries, is
a value-added distributor and a provider of advisory and technical
services. Through its vast sales organization, the Company provides
its customers with planning, designing, and consulting services
related to their commercial laundry operations. The Company sells
and/or leases its customers commercial laundry equipment,
specializing in washing, drying, finishing, material handling,
water heating, power generation, and water reuse applications. In
support of the suite of products it offers, the Company sells
related parts and accessories. Additionally, through the Company’s
robust network of commercial laundry technicians, the Company
provides its customers with installation, maintenance, and repair
services. The Company’s customers include retail, commercial,
industrial, institutional, and government customers. Purchases made
by customers range from parts and accessories to single or multiple
units of equipment, to large complex systems as well as
installation, maintenance, and repair services.
Safe Harbor Statement
Except for the historical matters contained herein, statements
in this press release are forward-looking and are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward looking statements may relate to, among
other things, events, conditions, and trends that may affect the
future plans, operations, business, strategies, operating results,
financial position and prospects of the Company. Forward looking
statements are subject to a number of known and unknown risks and
uncertainties that may cause actual results, trends, performance or
achievements of the Company, or industry trends and results, to
differ materially from the future results, trends, performance or
achievements expressed or implied by such forward looking
statements. These risks and uncertainties include, among others,
those associated with: general economic and business conditions in
the United States and other countries where the Company operates or
where the Company’s customers and suppliers are located; industry
conditions and trends; risks relating to the COVID-19 pandemic and
the rapidly changing effects thereof and developments with respect
thereto, including the impact of the COVID-19 pandemic on the
Company and its business, financial condition, liquidity and
results, which in large part will depend on future developments and
are highly uncertain and beyond the Company’s control, the length
and severity of the COVID-19 pandemic and the pace of recovery
following the COVID-19 pandemic, the emergence and spread of the
Delta variant, the success of actions taken or which may be taken
by the Company in response to the COVID-19 pandemic, volatility in
the economy, including in the credit markets, supply chain
disruptions, reduced demand for products and services, delays in
the fulfillment of orders, business restrictions, worker
absenteeism, quarantines and other health-related restrictions,
governmental and agency orders, mandates and guidance in response
to the COVID-19 pandemic, the impact of the COVID-19 pandemic on
the Company’s suppliers and customers, including those operating in
certain industries (including the hospitality industry), the impact
of the provisions of the Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”), including its impact on the
Company’s income taxes, the potential impairment of goodwill or
other intangible assets; and risks related to potential audits of
the loans received by the Company and certain of its subsidiaries
under the Payroll Protection Program (the “PPP”) established under
the CARES Act notwithstanding the forgiveness of the loans during
the fourth quarter of fiscal 2021; the Company’s ability to
implement its business and growth strategies and plans, including
changes thereto; risks and uncertainties associated with the
Company’s ”buy-and-build” growth strategy, including, without
limitation, that the Company may not be successful in identifying
or consummating acquisitions or other strategic opportunities,
integration risks, risks related to indebtedness incurred by the
Company in connection with the financing of acquisitions, dilution
experienced by the Company’s existing stockholders as a result of
the issuance of shares of the Company’s common stock in connection
with acquisitions, risks related to the business, operations and
prospects of acquired businesses, risks that suppliers of the
acquired business may not consent to the transaction or otherwise
continue its relationship with the acquired business following the
transaction and the impact that the loss of any such supplier may
have on the results of the Company and the acquired business, risks
that the Company’s goals or expectations with respect to
acquisitions and other strategic transactions may not be met, and
risks related to the accounting for acquisitions, including that
preliminary valuations are subject to change and any such change
may impact the Company’s results (including in the event of any
change which results in an adjustment to the bargain purchase gain
recognized by the Company in connection with its acquisition of
Baystate Business Ventures (d/b/a Eastern Laundry Systems) during
January 2021); risks related to supply chain delays and disruptions
and the impact it may have on the Company’s business; risks
relating to the impact of pricing concessions and other measures
which the Company may take from time to time in connection with its
expansion and pursuit of market share growth, including that they
may not be successful and may adversely impact the Company’s gross
margin and other financial results; technology changes;
competition, including the Company’s ability to compete effectively
and the impact that competition may have on the Company and its
results, including the prices which the Company may charge for its
products and services and on the Company’s profit margins, and
competition for qualified employees; to the extent applicable,
risks relating to the Company’s ability to enter into and compete
effectively in new industries, as well as risks and trends related
to those industries and the costs and timing of the Company’s
efforts with respect thereto; risks relating to the Company’s
relationships with its principal suppliers and customers, including
the impact of the loss of any such relationship; risks that
equipment sales may not result in the ancillary benefits
anticipated, including that they may not lead to increases in
higher gross margin sales of parts, accessories, supplies, and
technical services related to the equipment, and the risk that the
benefit of lower gross margin equipment sales under longer-term
contracts will not outweigh the possible short-term impact to gross
margin; risks related to the Company’s indebtedness; the
availability, terms and deployment of debt and equity capital if
needed for expansion or otherwise; changes in, or the failure to
comply with, government regulation, including environmental
regulations; litigation risks, including the costs of defending
litigation and the impact of any adverse ruling; the availability
and cost of inventory purchased by the Company; the relative value
of the United States dollar to currencies in the countries in which
the Company’s customers, suppliers and competitors are located;
risks relating to the recognition of revenue, including the amount
and timing thereof (including potential delays resulting from
delays in installation or in receiving required supplies) and that
orders in the Company’s backlog may not be fulfilled as or when
expected; risks related to the adoption of new accounting standards
and the impact it may have on the Company’s financial statements
and results; risks that EVI’s decentralized operating model, and
that product, end-user and geographic diversity, may not result in
the benefits anticipated and may change over time; risks related to
organic growth initiatives and market share and other growth
strategies, including that they may not result in the benefits
anticipated; risks that investments, initiatives and expenses,
including, without limitation, investments in acquired businesses
and modernization initiatives, expenses associated with the
Company’s implementation of its ERP system, and other investments,
initiatives and expenses, may not result in the benefits
anticipated; ; and other economic, competitive, governmental,
technological and other risks and factors discussed elsewhere in
this Report, including, without limitation, in the “Risk Factors”
section of the Company’s Annual Report on Form 10-K for the fiscal
year ended June 30, 2021. Many of these risks and factors are
beyond the Company’s control. Further, past performance and
perceived trends may not be indicative of future results,
including, without limitation, in light of the impact of, and
uncertainties associated with, the COVID-19 pandemic. The Company
cautions that the foregoing factors are not exclusive. The reader
should not place undue reliance on any forward-looking statement,
which speaks only as of the date made. The Company does not
undertake to, and specifically disclaims any obligation to, update,
revise or supplement any forward-looking statement, whether as a
result of changes in circumstances, new information, subsequent
events or otherwise, except as may be required by law.
EVI Industries, Inc.
Condensed Consolidated Results of
Operations (in thousands, except per share data)
Unaudited
Unaudited
12-Months Ended
12-Months Ended
3-Months Ended
3-Months Ended
06/30/21
06/30/20
06/30/21
06/30/20
Revenues
$ 242,005
$ 235,802
$ 64,549
$ 54,423
Cost of Sales
182,165
180,595
48,176
40,955
Gross Profit
59,840
55,207
16,373
13,468
SG&A
59,594
52,427
15,264
13,125
Operating Income
3,246
2,780
1,109
343
Debt forgiveness
6,963
-
6,963
-
Interest and Other (Expense) Income,
net
(321)
(1,432)
(199)
(234)
Income before Income Taxes
9,888
1,348
7,873
109
Provision for Income Taxes
1,504
573
1,093
165
Net Income (Loss)
$ 8,384
$ 775
$ 6,780
$ (56)
Net Income per Share
Basic
$ 0.63
$ 0.06
$ 0.50
$ (0.01)
Diluted
$ 0.61
$ 0.06
$ 0.49
$ (0.01)
Weighted Average Shares Outstanding
Basic
12,142
11,841
12,264
11,921
Diluted
12,578
12,171
12,677
11,921
EVI Industries, Inc.
Condensed Consolidated Balance Sheets (in
thousands, except per share data)
06/30/21
06/30/20
Assets
Current assets
Cash and cash equivalents
$ 6,057
$ 9,789
Accounts receivable, net
28,904
23,042
Inventories, net
25,129
24,063
Vendor deposits
367
1,276
Contract assets
347
3,443
Other current assets
4,419
3,041
Total current assets
65,223
64,654
Equipment and improvements, net
10,594
7,992
Operating lease assets
7,060
5,311
Intangible assets, net
23,677
21,754
Goodwill
63,881
56,678
Other assets
7,415
4,329
Total assets
$ 177,850
$ 160,718
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable and accrued expenses
$ 26,227
$ 24,292
Accrued employee expenses
7,528
4,764
Customer deposits
10,344
8,511
Contract liabilities
3,232
558
Current portion of long-term debt
-
2,680
Current portion of operating lease
liabilities
2,131
1,672
Total current liabilities
49,462
42,477
Deferred tax liabilities, net
4,208
1,728
Long-term operating lease liabilities
5,567
3,657
Long-term debt, net
11,873
25,030
Total liabilities
71,110
72,892
Shareholders' equity
Preferred stock, $1.00 par value
-
-
Common stock, $.025 par value
310
301
Additional paid-in capital
90,501
79,127
Retained earnings
18,794
10,410
Treasury stock
(2,865)
(2,012)
Total shareholders' equity
106,740
87,826
Total liabilities and shareholders'
equity
$ 177,850
$ 160,718
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands)
For the twelve months ended
06/30/21
06/30/20
Operating activities:
Net income
$ 8,384
$ 775
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
4,596
3,696
Amortization of debt discount
55
55
Provision for bad debt expense
326
497
Non-cash lease expense
55
18
Share-based compensation
2,437
2,302
Inventory reserve
116
49
Provision (benefit) for deferred income
taxes
1,593
(178)
Debt forgiveness
(6,963)
-
Other
(230)
(109)
(Increase) decrease in operating
assets:
Accounts receivable
(4,481)
8,121
Inventories
665
3,969
Vendor deposits
909
(873)
Contract assets
3,096
(956)
Other assets
(2,191)
(356)
Increase (decrease) in operating
liabilities:
Accounts payable and accrued expenses
(798)
5,568
Accrued employee expenses
2,200
(474)
Customer deposits
1,251
1,258
Contract liabilities
2,674
(296)
Net cash provided by operating
activities
13,694
23,066
Investing activities:
Capital expenditures
(2,824)
(3,375)
Cash paid for acquisitions; net of cash
acquired
(4,818)
(1,379)
Net cash used by investing activities
(7,642)
(4,754)
Financing activities:
Proceeds from borrowings
53,500
24,892
Debt repayments
(62,500)
(37,930)
Repurchases of common stock in
satisfaction of employee tax withholding obligations
(853)
(573)
Issuances of common stock under employee
stock purchase plan
69
50
Net cash used by financing activities
(9,784)
(13,561)
Net (decrease) increase in cash and cash
equivalents
(3,732)
4,751
Cash and cash equivalents at beginning of
period
9,789
5,038
Cash and cash equivalents at end of
period
$ 6,057
$ 9,789
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands)
For the twelve months ended
06/30/21
06/30/20
Supplemental disclosures of cash flow
information:
Cash paid during the period for
interest
$ 511
$ 1,475
Cash paid during the period for income
taxes
$ 505
$ 345
Supplemental disclosure of non-cash
financing activities
Common stock issued for acquisitions
$ 8,877
$ 3,770
Forgiveness of PPP Loans
$6,963
$ -
Forgiveness of YES PPP Loan
$ 916
$ -
The following table reconciles net income, the most comparable
GAAP financial measure, to Adjusted EBITDA.
EVI Industries, Inc.
Condensed Consolidated Earnings before
Interest, Taxes, Depreciation, Amortization, and Amortization of
Share-based Compensation (in thousands)
Unaudited
Unaudited
12-Months Ended
12-Months Ended
3-Months Ended
3-Months Ended
06/30/21
06/30/20
06/30/21
06/30/20
Net Income (Loss)
$ 8,384
$ 775
$ 6,780
$ (56)
Provision for Income Taxes
1,504
573
1,093
165
Interest Expense
635
1,432
152
234
Depreciation and Amortization
4,596
3,696
1,208
1,004
Amortization of Share-based
Compensation
2,437
2,302
603
578
Debt forgiveness
(6,963)
-
(6,963)
-
Adjusted EBITDA
$ 10,593
$ 8,778
$ 2,873
$ 1,925
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210913005876/en/
EVI Industries, Inc. Henry M. Nahmad, Chairman and CEO –
(305) 402-9300 Sloan Bohlen, Investor Relations –
info@evi-ind.com
EVI Industries (AMEX:EVI)
Historical Stock Chart
From Mar 2024 to Apr 2024
EVI Industries (AMEX:EVI)
Historical Stock Chart
From Apr 2023 to Apr 2024