EVI Industries, Inc. (NYSE American: EVI) (“EVI” or the
“Company”) announced record results in key performance measures for
the three and six months ended December 31, 2022, and provided
commentary on growth initiatives, technology deployments, and
financial strength.
As a result of the consistent execution of its long-term focused
buy-and-build growth strategy, the promotion of an entrepreneurial
culture, and the benefits derived from investments in technology,
EVI has established itself as a leading distributor and service
provider in the highly fragmented North American commercial laundry
industry. Since the commencement of its long-term growth strategy,
the Company has grown from one business operating from a single
location in the state of Florida to twenty-four businesses
operating from 34 locations across 19 states. In addition, the
Company has been building its business through organic growth
initiatives with a focus on enhancing its customer value
proposition by offering a wider array of products, increasing the
availability and quality of highly trained sales professionals, and
installation and service technicians, and improving customer
support. The Company has also made significant investments in the
deployment of advanced technologies aimed to drive operating
efficiencies and provide management improved business intelligence
to support future investments. As a result, since 2016, revenue,
net income and adjusted EBITDA have grown at compounded annual
growth rates (CAGR) of 39%, 23% and 34%, respectively, reflecting
strong performance amid consistent investment in buying and
building businesses.
Henry M. Nahmad, EVI’s Chairman and CEO
commented: “EVI is a collection of ambitious people, bound by an
entrepreneurial culture and core values, focused on winning. That
is our formula for success. In 2015, we embarked on a long-term
journey to build the undisputed leader in and around the commercial
laundry industry and in doing so, produce attractive returns for
our shareholders. Today’s results establish new records for
revenue, gross profit, gross margin, operating income, net income,
earnings per share, and adjusted EBITDA for the three and six-month
periods ended December 31, 2022. We are proud of the results, but
we remain focused on achieving a higher level of growth and
optimization in pursuit of our long-term goal to build a
multibillion-dollar enterprise.”
Summary of the Company’s Achievements For the Three and Six
Months Ended December 31, 2022
- Produced record operating results in key metrics for the three
and six months ended December 31, 2022
- Completed the twenty-third business acquisition since the
inception of its buy-and-build growth strategy
- Sustained a strong balance sheet while investing in growth,
working capital, and advanced technologies
- New customer sales order contracts kept pace with the prior
quarter
- Successfully deployed advanced technologies and achieved
incremental operating efficiencies
Three-Month Results (compared to the three months ended
December 31, 2021)
- Revenue increased 36% to a record $82.6 million
- Gross profit increased 48% to a record $24.8 million
- Gross margin improved 230 basis points to a record 30.0%
- Gross margin, net of longer-term customer contracts, was a
record 30.7%
- Operating income increased 275% to a record $3.6 million
- Net income increased 321% to a record $2.2 million
- Diluted earnings per share increased to a record $0.15
- Adjusted EBITDA increased 94% to a record $5.9 million and
increased 220 basis points to approximately 7.2%
Six-Month Results (compared to the six months ended December
31, 2021)
- Revenue increased 33% to a record $166.1 million
- Gross profit increased 43% to a record $49.3 million
- Gross margin improved 200 basis points to a record 29.7%
- Gross margin, net of longer-term customer contracts, was a
record 30.2%
- Operating income increased 121% to a record $8.0 million
- Net income increased 99% to a record $5.1 million
- Diluted earnings per share increased to a record $0.35
- Adjusted EBITDA increased 67% to a record $12.4 million and
increased 150 basis points to approximately 7.5%
Results of Operations
The Company reported record revenue of approximately $83 million
and $166 million for the three and six-month periods ended December
31, 2022, an increase of 36% and 33% respectively, compared to the
same periods of the prior fiscal year. Revenue growth reflects
exceptional performance by the Company’s over 125 sales
professionals, effective completion of installation and maintenance
services by the Company’s nearly 300 technicians, and diligent
fulfillment of customer sales order contracts by the Company’s over
100 sales and service support personnel. These efforts were
bolstered by the Company’s investment in securing inventory to
support new confirmed customer sales order contracts and immediate
customer needs.
This revenue performance resulted in record net income and
adjusted EBITDA, including record adjusted EBITDA margin of 7.2%
and 7.5% for the three and six-month periods ended December 31,
2022, respectively. These results include a 34% increase in
SG&A for the six-month period ended December 31, 2022, with 70%
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.
Acquisitions
During the second fiscal quarter, the Company completed the
acquisition of Wholesale Commercial Laundry Equipment SE (“WCL”), a
distributor of commercial laundry products and a provider of
related technical installation and maintenance services to the
on-premise and vended laundry segments of the commercial laundry
industry in the southeast region of the United States. The
acquisition of WCL enhances the Company’s brand name product
offering, expands the Company’s geographic footprint, adds talented
industry professionals, and increases the Company’s customer
base.
Mr. Nahmad commented: “The completion of our
twenty-third acquisition in the commercial laundry distribution and
service industry is a testament to the positive reputation we have
established in our industry and the continued support of our
long-term buy-and-build growth strategy among the independent
entrepreneurs across our industry. Given our financial strength and
flexibility, our team continues to collaborate with our regional
and business unit leaders in the pursuit of additional buy
opportunities in and around the commercial laundry industry.”
Financial Strength and Ample Liquidity
Net debt on December 31, 2022, was $32.5 million, which reflects
a $9 million increase as compared to June 30, 2022. The increase in
net debt is the result of the Company’s continued investment in
working capital and the acquisitions completed during the six
months ended December 31, 2022. The $11 million increase in
inventory as compared to June 30, 2022, primarily reflects
inventory acquired in connection with industrial projects, OPL
equipment, and vended laundries pending installation and increased
stock inventory, reflecting the continuation of supply chain
constraints, in an effort to better support short-term customer
needs.
Mr. Nahmad commented: “Our prudent capital
allocation strategy combined with solid and continuously improving
operating performance provides for a strong financial position,
which we believe serves as a significant competitive advantage
during these times. Given our financial position and ample access
to capital, we are well-positioned for continued growth.”
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 to ensure 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
- Incentive and reward performance with equity participation
- Establish strong relationships with our OEM partners
Mr. Nahmad further added: “These core
contents of our business culture successfully guided us to build
the foundation of EVI. We believe that with thoughtfulness, a
commitment to disciplined investing, and the courage to execute
with conviction, we can and will achieve sustainable long-term
success.”
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 six months ended December 31, 2022, please see the
Company’s Current Report on Form 10-Q for the quarter ended
December 31, 2022, 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.
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; credit market volatility; 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 relating
to the COVID-19 pandemic and the impact thereof on the Company and
its business, financial condition, liquidity and results and on the
Company’s suppliers and customers, including risks related to
potential audits of the loans received by the Company and certain
of its subsidiaries under the Payroll Protection Program
notwithstanding the previous forgiveness of the loans, and risks
associated with vaccine mandates, including the potential loss of
employees, fines for noncompliance and loss of, or future inability
to secure, certain contracts, including with the federal
government; 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, and the potential of a recession;
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 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
efficiency improvements, productivity gains, customer service
benefits, market share growth, new customer acquisitions, margin
improvements or other benefits anticipated 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; risks relating to the
Company’s relationships with its principal suppliers and customers,
including 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
6-Months
6-Months
3-Months
3-Months
Ended
Ended
Ended
Ended
12/31/22
12/31/21
12/31/22
12/31/21
Revenues
$ 166,066
$ 124,443
$ 82,638
$ 60,702
Cost of Sales
116,749
89,997
57,826
43,895
Gross Profit
49,317
34,446
24,812
16,807
SG&A
41,290
30,806
21,168
15,836
Operating Income
8,027
3,640
3,644
971
Interest Expense, net
1,002
265
625
150
Income before Income Taxes
7,025
3,375
3,019
821
Provision for Income Taxes
1,954
828
795
293
Net Income
$ 5,071
$ 2,547
$ 2,224
$ 528
Net Income per Share
Basic
$ 0.35
$ 0.19
$ 0.16
$ 0.04
Diluted
$ 0.35
$ 0.18
$ 0.15
$ 0.04
Weighted Average Shares Outstanding
Basic
12,545
12,281
12,534
12,283
Diluted
12,782
12,713
12,654
12,768
EVI Industries, Inc.
Condensed Consolidated Balance Sheets (in
thousands, except per share data)
Unaudited
12/31/22
06/30/22
Assets
Current assets
Cash
$ 4,383
$ 3,974
Accounts receivable, net
38,577
43,014
Inventories, net
60,088
49,359
Vendor deposits
2,208
1,728
Contract assets
8,780
1,519
Other current assets
6,820
6,018
Total current assets
120,856
105,612
Equipment and improvements, net
13,123
13,033
Operating lease assets
6,753
7,480
Intangible assets, net
25,181
26,234
Goodwill
72,895
71,039
Other assets
7,925
7,370
Total assets
$ 246,733
$ 230,768
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued expenses
$ 42,175
$ 42,026
Accrued employee expenses
8,320
8,508
Customer deposits
22,317
21,288
Contract liabilities
-
507
Current portion of operating lease
liabilities
2,446
2,518
Total current liabilities
75,258
74,847
Deferred tax liabilities, net
4,844
4,666
Long-term operating lease liabilities
5,051
5,736
Long-term debt, net
36,852
27,840
Total liabilities
122,005
113,089
Shareholders' equity
Preferred stock, $1.00 par value
-
-
Common stock, $.025 par value
317
316
Additional paid-in capital
99,587
97,544
Retained earnings
27,960
22,889
Treasury stock
(3,136)
(3,070)
Total shareholders' equity
124,728
117,679
Total liabilities and shareholders'
equity
$ 246,733
$ 230,768
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the six months ended
12/31/22
12/31/21
Operating activities:
Net income
$ 5,071
$ 2,547
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization
2,912
2,476
Amortization of debt discount
12
27
Provision for bad debt expense
263
137
Non-cash lease expense
(30)
91
Stock compensation
1,482
1,320
Inventory reserve
(250)
(178)
Provision for deferred income taxes
178
424
Other
(183)
(14)
(Increase) decrease in operating
assets:
Accounts receivable
4,501
(580)
Inventories
(9,166)
(7,790)
Vendor deposits
(480)
(727)
Contract assets
(7,261)
328
Other assets
(1,328)
(1,080)
Increase (decrease) in operating
liabilities:
Accounts payable and accrued expenses
(519)
140
Accrued employee expenses
(290)
(1,196)
Customer deposits
723
6,310
Contract liabilities
(507)
(3,232)
Net cash used by operating activities
(4,872)
(997)
Investing activities:
Capital expenditures
(1,838)
(1,973)
Cash paid for acquisitions, net of cash
acquired
(1,874)
-
Net cash used by investing activities
(3,712)
(1,973)
Financing activities:
Proceeds from long-term debt
32,000
25,000
Debt repayments
(23,000)
(22,000)
Repurchases of common stock in
satisfaction of employee tax withholding obligations
(66)
(142)
Issuances of common stock under employee
stock purchase plan
59
59
Net cash provided by financing
activities
8,993
2,917
Net increase (decrease) in cash and cash
equivalents
409
(53)
Cash and cash equivalents at beginning of
period
3,974
6,057
Cash and cash equivalents at end of
period
$ 4,383
$ 6,004
EVI Industries, Inc.
Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
For the six months ended
12/31/22
12/31/21
Supplemental disclosures of cash flow
information:
Cash paid for interest
$ 942
$ 238
Cash paid for income taxes
$ 888
$ 261
Supplemental disclosures of non-cash
financing activities:
Common stock issued for acquisitions
$ 503
$ -
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
6-Months
6-Months
3-Months
3-Months
Ended
Ended
Ended
Ended
12/31/22
12/31/21
12/31/22
12/31/21
Net Income
$ 5,071
$ 2,547
$ 2,224
$ 528
Provision for Income Taxes
1,954
828
795
293
Interest Expense, Net
1,002
265
625
150
Depreciation and Amortization
2,912
2,476
1,466
1,240
Amortization of Share-based
Compensation
1,482
1,320
802
841
Adjusted EBITDA
$ 12,421
$ 7,436
$ 5,912
$ 3,052
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230209005748/en/
EVI Industries, Inc. Henry M. Nahmad Chairman and CEO (305)
402-9300
Investor Relations Michael Callahan (203) 682-8311
info@evi-ind.com
Grafico Azioni EVI Industries (AMEX:EVI)
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Da Mag 2024 a Giu 2024
Grafico Azioni EVI Industries (AMEX:EVI)
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