EVI Industries Reports Record Third Quarter Results on 57% Revenue Growth
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
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
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 , and net income margin increased to$2.8 million 2.9% -
Diluted earnings per share increased to a record
$0.19 -
Adjusted EBITDA increased
216% to a record , and adjusted EBITDA margin increased to$6.7 million 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 , and net income margin increased to$7.8 million 3.0% -
Diluted earnings per share increased to a record
$0.54 -
Adjusted EBITDA increased
100% to a record , adjusted EBITDA margin increased to$19.2 million 7.4%
Results of Operations
The Company believes that its
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
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
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
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 |
|
|
|
|
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 |
|
|
|
|
|
|
|||
Net Earnings per Share |
|
|
||
Basic |
|
|
|
|
Diluted |
|
|
|
|
|
|
|
||
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 |
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable and accrued expenses |
|
|
|
|
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, |
|
|
- |
- |
Common stock, |
|
|
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 |
|
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|
|
|
|
|
|
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EVI Industries, Inc. | ||||
Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
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For the nine months ended |
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|
|
|
03/31/23 |
03/31/22 |
Operating activities: |
|
|
|
|
Net income |
|
|
|
|
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 |
|
|
|
|
|
|
EVI Industries, Inc. | ||||
Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
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For the nine months ended |
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|
|
03/31/23 |
03/31/22 |
Supplemental disclosures of cash flow information: |
|
|
|
|
Cash paid for interest |
|
|
|
|
Cash paid for income taxes |
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|
|
|
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Supplemental disclosures of non-cash financing activities: |
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Common stock issued for acquisitions |
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The following table reconciles net income, the most comparable GAAP financial measure, to Adjusted EBITDA. |
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EVI Industries, Inc. |
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Condensed Consolidated Earnings before Interest, Taxes, Depreciation, Amortization, and Amortization of Share-based Compensation (in thousands) |
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|
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 |
|
|
|
|
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 |
|
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|
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View source 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
Source: EVI Industries, Inc.