Entrepreneurial Culture, Strong Demand, New
Acquisitions, Operating Efficiencies, and Technology Advancements
Contributed to Record Results and Support Confidence in EVI’s
Long-Term Growth Strategy
EVI Industries, Inc. (NYSE American: EVI) (“EVI” or the
“Company”) announced today record results for the three and nine
months ended March 31, 2023, and provided commentary on its growth
initiatives and financial strength.
In 2016, the Company commenced the execution of its long-term
buy-and-build growth strategy with a goal to build a
multibillion-dollar enterprise starting in the commercial laundry
industry. The Company’s buy-and-build growth strategy includes the
promotion of an entrepreneurial culture and a decentralized
operating model that empowers the Company’s regional and business
unit leadership to execute on local opportunities with speed and
conviction. Through this strategy and the thoughtful allocation of
approximately $140 million of capital, EVI has established itself
as a leader in the highly fragmented North American commercial
laundry distribution and service industry. The Company has grown
from one business operating from a single location in the state of
Florida with thirty-one employees, including ten sales personnel
and four service personnel, to twenty-four businesses employing
over 700 employees, including over 150 sales personnel and over 350
service personnel. Along the way, EVI has enhanced its customer
value proposition, increased the number of active knowledgeable and
credible sales personnel, recruited, trained, and deployed
additional service personnel. The Company has also made significant
investments in the deployment of new and advanced technologies
aimed to realize operating efficiencies and provide management
improved business intelligence in support of future investments.
Consequently, since 2016, the Company has achieved a compounded
annual growth rate in revenue, net income, and adjusted EBITDA of
40%, 28% and 37%, respectively, and management believes that the
Company is well positioned to achieve greater growth in the years
ahead.
Henry M. Nahmad, EVI’s Chairman and CEO
commented: “While our Company continues to set growth and
performance records, no achievement is more meaningful and more
critical to our long-term success than the formation and continued
growth of the EVI family. Today, we are a group that includes most
of the original owners of our acquired businesses and over 700
professionals that are bound by, beyond our shared values and
principles, a common goal to first build the undisputed leader in
the North American commercial laundry distribution and service
industry.”
Summary of the Company’s Achievements for the Three and Nine
Months Ended March 31, 2023
- Produced record operating results in key metrics for the three
and nine months ended March 31, 2023
- Sustained a strong balance sheet while investing in working
capital, new growth opportunities, and technology
- New customer sales order contracts replenished orders fulfilled
during the quarter ended March 31, 2023
- Completed three acquisitions during the nine months ended March
31, 2023, resulting in the Company having acquired twenty-three
businesses in the commercial laundry industry since 2016
Three-Month Results (compared to the three months ended March
31, 2022)
- Revenue increased 57% to a record $94.1 million
- Gross profit increased 56% to a record $26.6 million
- Gross margin decreased 10 basis points to 28.3%
- Operating income increased 2,275% to a record $4.5 million
- Net income increased 6,775% to a record $2.8 million, and net
income margin increased to 2.9%
- Diluted earnings per share increased to a record $0.19
- Adjusted EBITDA increased 216% to a record $6.7 million, and
adjusted EBITDA margin increased to 7.2%
Nine-Month Results (compared to the nine months ended March
31, 2022)
- Revenue increased 41% to a record $260.1 million
- Gross profit increased 47% to a record $75.9 million
- Gross margin improved 130 basis points to a record 29.2%
- Operating income increased 226% to a record $12.5 million
- Net income increased 202% to a record $7.8 million, and net
income margin increased to 3.0%
- Diluted earnings per share increased to a record $0.54
- Adjusted EBITDA increased 100% to a record $19.2 million,
adjusted EBITDA margin increased to 7.4%
Results of Operations The Company believes that its 57%
increase in revenue during the three-month period was the result of
an increase in products available to satisfy steady customer
demand, including for products from new OEM relationships, a
greater amount of industrial sales, and a larger sales organization
that is successfully growing market share across all end market
segments. Concurrently, the Company’s installation teams completed
new commercial laundry installations and replacement installations
with increased synchronization. Given the increasing installed base
of commercial laundry equipment EVI represents, parts and service
revenues also increased. Meanwhile, the slight decrease in gross
margin to 28.3% for the three-month period reflects the impact of
greater industrial sales as compared to the same period of the
prior fiscal year. However, EVI’s record 29.2% gross margin for the
nine-month period reflects the benefit of various initiatives
undertaken to improve the customer value proposition and in turn
deliver incrementally better profitability.
As a result of EVI’s record revenue and gross profit performance
for the three and nine-month periods ended March 31, 2023, the
Company achieved record net income and adjusted EBITDA, including
net income margin for the three and nine-month periods ended March
31, 2023 of 2.9% and 3.0%, respectively, and record adjusted EBITDA
margin of 7.2% and 7.4% for the three and nine-month periods ended
March 31, 2023, respectively. These results include a 33% increase
in SG&A for the nine-month period ended March 31, 2023, with
most of such increase attributable to increased selling expenses
and general and administrative expenses in connection with acquired
businesses. EVI believes its performance provides evidence that the
Company’s return on investments made in pursuit of growth, and its
modernized and optimized operations are yielding an increasingly
greater level of operating leverage.
Mr. Nahmad commented: “We have undertaken
various initiatives to drive growth and profitability, and to
transform the technological infrastructure and capabilities of our
Company. As a result of these initiatives, we are realizing steady
growth in key operating performance metrics, including a greater
level of operating leverage. As we continue our efforts to grow,
implement best operating practices, and deploy advanced
technologies, we expect to continue to achieve a greater level of
operating performance.”
Financial Strength and Liquidity EVI’s strong financial
position has been critical to its performance in recent periods.
Since April 1, 2020, EVI’s investment in working capital increased
by 90% from $24 million, to $51 million. The primary contributor to
this increase was the Company’s investment in inventory, which
increased by 132%, or $27 million, to $63 million, as management
sought to actively manage inventory levels through supply chain
constraints. Additionally, during this three-year period, EVI
invested $18.7 million of cash in connection with acquisitions.
Notwithstanding these investments, EVI’s financial position remains
strong, with net debt of $34.8 million at March 31,2023 and ample
liquidity to continue investing in opportunities consistent with
its long-term growth and profitability objectives. The Company
believes that its financial strength, access to capital, and
history of consistent growth provides comfort and confidence to its
stakeholders.
Mr. Nahmad commented: “We understand that
effective management of our financial resources is paramount to
achieving sustainable growth over the long term. Therefore, our
capital allocation strategy is designed to maintain the necessary
flexibility to simultaneously invest in our business and capitalize
on strategic opportunities as they arise. Our financial strategy
has served us well since the inception of our long-term growth
strategy in 2016 and we remain steadfast in this approach.”
EVI’s Core Principles EVI upholds specific core values
and principles for its business, including:
- Invest and manage with a long-term perspective
- Uphold financial discipline with a view towards ensuring
financial strength and flexibility
- Respect the entrepreneurs and management teams that join the
EVI family
- Operate as a local business and empower leaders to make local
decisions
- Promote an entrepreneurial culture
- Instill a growth mindset and culture of continuous
improvement
- Incentivize and reward performance with equity
participation
- Establish strong relationships with our OEM partners
Mr. Nahmad further added: “Given our success,
we continue to pursue acquisition and other strategic opportunities
in the commercial laundry industry and across other product and
service categories that meet our financial and strategic criteria.
Our strategy is long-term focused and takes time, patience, and
thoughtful execution. While we are pleased with our operating
performance, we remain steadfast in our continued pursuit of growth
and the execution of our long-term buy-and-build growth
strategy.
Earnings Conference Call and Additional Information 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. For
additional information regarding the Company’s results for the
three and nine months ended March 31, 2023, please see the
Company’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2023, as 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.
Adjusted EBITDA margin represents adjusted EBITDA divided by
revenues.
About EVI Industries EVI Industries, Inc., through its
wholly owned subsidiaries, is a value-added distributor and a
provider of advisory and technical services. Through its vast sales
organization, the Company provides its customers with planning,
designing, and consulting services related to their commercial
laundry operations. The Company sells and/or leases its customers
commercial laundry equipment, specializing in washing, drying,
finishing, material handling, water heating, power generation, and
water reuse applications. In support of the suite of products it
offers, the Company sells related parts and accessories.
Additionally, through the Company’s robust network of commercial
laundry technicians, the Company provides its customers with
installation, maintenance, and repair services. The Company’s
customers include retail, commercial, industrial, institutional,
and government customers. Purchases made by customers range from
parts and accessories to single or multiple units of equipment, to
large complex systems as well as the purchase of the Company’s
installation, maintenance, and repair services.
Safe Harbor Statement Except for the historical matters
contained herein, statements in this press release are
forward-looking and are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward
looking statements may relate to, among other things, events,
conditions, and trends that may affect the future plans,
operations, business, strategies, operating results, financial
position and prospects of the Company. Forward looking statements
are subject to a number of known and unknown risks and
uncertainties that may cause actual results, trends, performance or
achievements of the Company, or industry trends and results, to
differ materially from the future results, trends, performance or
achievements expressed or implied by such forward looking
statements. These risks and uncertainties include, among others,
those associated with: general economic and business conditions in
the United States and other countries where the Company operates or
where the Company’s customers and suppliers are located, and the
potential of a recession; industry conditions and trends; credit
market volatility; financial institution soundness and risk related
thereto; risks related to supply chain delays and disruptions and
their impact on the Company’s business and results, including the
Company’s ability to deliver products and provide services to its
customers on a timely basis; risks relating to inflation, including
the current inflationary trend, and the impact of inflation on the
Company’s costs and its ability to increase the price of its
products and services to offset such costs, and on the market for
the Company’s products and services; risks related to labor
shortages and increases in the costs of labor, and the impact
thereof on the Company, including its ability to deliver products,
provide services or otherwise meet customers’ expectations; risks
associated with international relations and international
hostilities, including actions of foreign governments and the
impact thereof on economic conditions, including supply chain
constraints and inflationary trends; risks relating to rising
interest rates, including the impact thereof on the cost of the
Company’s indebtedness and the Company’s ability to raise capital
if deemed necessary or advisable; risks related to the Company’s
ability to implement its business and growth strategies and plans,
including changes thereto, and the risk that the Company may not be
successful in achieving its short or long-term goals; 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, or have the liquidity
to or otherwise be financially positioned or able to consummate,
acquisitions or other strategic transactions, 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; risks related to
organic growth initiatives, including that they may not result in
the benefits anticipated; risks that investments, including those
in acquired businesses or otherwise in support of growth,
investments in working capital, and investments in advanced
technologies, and initiatives in furtherance thereof, including
modernization and optimization initiatives, may not result in the
benefits anticipated, including operating efficiencies and improved
business intelligence in support of future investments, and may
result in disruptions to the Company’s operations, and expenses in
connection with these investments and initiatives may be more
costly than anticipated; technology changes; the risk that the
Company’s performance and results, including revenues, net income
and adjusted EBITDA may not continue to improve, and the Company
may not achieve growth consistent with historical levels, at the
level expected, or at all, or a greater level of operating
leverage; risks relating to the Company’s relationships with its
principal suppliers and customers, including concentration risks
and the impact of the loss of any such relationship; risks related
to the Company’s indebtedness; the availability, terms and
deployment of debt and equity capital if needed for expansion or
otherwise; the availability and cost of inventory purchased by the
Company, and the risk that the sales of inventory subject to
purchase orders may not be completed as or when expected, or at
all; risks relating to the recognition of revenue, including the
amount and timing thereof (including potential delays resulting
from, among other circumstances, delays in installation (including
due to delays in construction or the preparation of the customer’s
facilities) or in receiving required supplies); and other economic,
competitive, governmental, technological and other risks and
factors discussed elsewhere in the Company’s filings with the SEC,
including, without limitation, in the “Risk Factors” section of the
Company’s Annual Report on Form 10-K for the fiscal year ended June
30, 2022. Many of these risks and factors are beyond the Company’s
control. Further, past performance and perceived trends may not be
indicative of future results. The Company cautions that the
foregoing factors are not exclusive. The reader should not place
undue reliance on any forward-looking statement, which speaks only
as of the date made. The Company does not undertake to, and
specifically disclaims any obligation to, update, revise or
supplement any forward-looking statement, whether as a result of
changes in circumstances, new information, subsequent events or
otherwise, except as may be required by law.
EVI Industries, Inc.
Condensed Consolidated Results of
Operations (in thousands, except per share data)
Unaudited
Unaudited
Unaudited
Unaudited
9-Months Ended
9-Months Ended
3-Months Ended
3-Months Ended
03/31/23
03/31/22
03/31/23
03/31/22
Revenues
$ 260,132
$ 184,485
$ 94,066
$ 60,042
Cost of Sales
184,237
132,977
67,488
42,980
Gross Profit
75,895
51,508
26,578
17,062
SG&A
63,403
47,680
22,113
16,874
Operating Income
12,492
3,828
4,465
188
Interest Expense, net
1,719
390
717
125
Income before Income Taxes
10,773
3,438
3,748
63
Provision for Income Taxes
2,952
851
998
23
Net Income
$ 7,821
$ 2,587
$ 2,750
$ 40
Net Earnings per Share
Basic
$ 0.55
$ 0.19
$ 0.19
$ 0.00
Diluted
$ 0.54
$ 0.18
$ 0.19
$ 0.00
Weighted Average Shares Outstanding
Basic
12,545
12,321
12,570
12,402
Diluted
12,753
12,696
12,950
12,663
EVI Industries, Inc.
Condensed Consolidated Balance Sheets (in
thousands, except per share data)
Unaudited
03/31/23
06/30/22
Assets
Current assets
Cash
$ 4,022
$ 3,974
Accounts receivable, net
55,577
43,014
Inventories, net
62,928
49,359
Vendor deposits
2,193
1,728
Contract assets
909
1,519
Other current assets
6,928
6,018
Total current assets
132,557
105,612
Equipment and improvements, net
12,605
13,033
Operating lease assets
8,201
7,480
Intangible assets, net
24,655
26,234
Goodwill
73,095
71,039
Other assets
8,334
7,370
Total assets
$ 259,447
$ 230,768
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued expenses
$ 44,587
$ 42,026
Accrued employee expenses
9,488
8,508
Customer deposits
23,679
21,288
Contract liabilities
668
507
Current portion of operating lease
liabilities
2,867
2,518
Total current liabilities
81,289
74,847
Deferred tax liabilities, net
4,890
4,666
Long-term operating lease liabilities
6,203
5,736
Long-term debt, net
38,861
27,840
Total liabilities
131,243
113,089
Shareholders' equity
Preferred stock, $1.00 par value
-
-
Common stock, $.025 par value
318
316
Additional paid-in capital
100,371
97,544
Treasury stock
(3,195)
(3,070)
Retained earnings
30,710
22,889
Total shareholders' equity
128,204
117,679
Total liabilities and shareholders'
equity
$ 259,447
$ 230,768
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the nine months ended
03/31/23
03/31/22
Operating activities:
Net income
$ 7,821
$ 2,587
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization
4,409
3,795
Amortization of debt discount
21
41
Provision for bad debt expense
523
231
Non-cash lease expense
95
138
Stock compensation
2,267
1,947
Inventory reserve
(723)
(274)
Provision (Benefit) for deferred income
taxes
224
(51)
Other
(183)
(24)
(Increase) decrease in operating
assets:
Accounts receivable
(12,759)
(3,129)
Inventories
(11,561)
(13,476)
Vendor deposits
(429)
(1,485)
Contract assets
610
(10)
Other assets
(1,845)
(1,214)
Increase (decrease) in operating
liabilities:
Accounts payable and accrued expenses
1,893
(829)
Accrued employee expenses
878
(1,170)
Customer deposits
1,950
10,081
Contract liabilities
161
(3,212)
Net cash used by operating activities
(6,648)
(6,054)
Investing activities:
Capital expenditures
(2,291)
(3,066)
Cash paid for acquisitions, net of cash
acquired
(1,947)
(3,187)
Net cash used by investing activities
(4,238)
(6,253)
Financing activities:
Proceeds from long-term debt
62,000
46,000
Debt repayments
(51,000)
(34,000)
Repurchases of common stock in
satisfaction of employee tax withholding obligations
(125)
(205)
Issuances of common stock under employee
stock purchase plan
59
59
Net cash provided by financing
activities
10,934
11,854
Net increase (decrease) in cash and cash
equivalents
48
(453)
Cash and cash equivalents at beginning of
period
3,974
6,057
Cash and cash equivalents at end of
period
$ 4,022
$ 5,604
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the nine months ended
03/31/23
03/31/22
Supplemental disclosures of cash flow
information:
Cash paid for interest
$ 1,670
$ 320
Cash paid for income taxes
$ 1,622
$ 261
Supplemental disclosures of non-cash
financing activities:
Common stock issued for acquisitions
$ 503
$ 3,840
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
Unaudited
Unaudited
9-Months Ended
9-Months Ended
3-Months Ended
3-Months Ended
03/31/23
03/31/22
03/31/23
03/31/22
Net Income
$ 7,821
$ 2,587
$ 2,750
$ 40
Provision for Income Taxes
2,952
851
998
23
Interest Expense, Net
1,719
390
717
125
Depreciation and Amortization
4,409
3,795
1,497
1,319
Amortization of Share-based
Compensation
2,267
1,947
785
627
Adjusted EBITDA
$ 19,168
$ 9,570
$ 6,747
$ 2,134
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version on businesswire.com: https://www.businesswire.com/news/home/20230510006007/en/
EVI Industries, Inc. Henry M. Nahmad Chairman and CEO (305)
402-9300
Investor Relations (305) 402-9300 info@evi-ind.com
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