EVI Industries Reports Record Second Quarter Results

Record Revenue and Gross Profits, Continued Investment in Operations and Completed Acquisition

MIAMI--(BUSINESS WIRE)--February 10, 2025-- 

EVI Industries, Inc. (NYSE American: EVI) announced its operating results for the three and six-month periods ended December 31, 2024, including record revenue and record gross profit for both periods and record gross margin for the six-month period. The Company also provided commentary on its results of operations, cash flow and financial position, and investments in furtherance of its technology initiatives. Click here to listen to the Company's recorded earnings call.

Since 2016, EVI has established itself as a leader in the highly fragmented North American commercial laundry distribution and service industry by thoughtfully executing the Company's long-term growth strategy, which has resulted in a compounded annual growth rate in revenue, net income and adjusted EBITDA of 31%, 19% and 28%, respectively.

Henry M. Nahmad, EVI's Chairman and CEO, commented: "We are a long-term focused company with ambitious growth plans. The continued confidence in our strategy is derived from early successes combined with financial strength and wherewithal, our reputation as a knowledgeable and high-quality buyer and successful builder of businesses, the expected impact of promising technologies, and a heavily invested leadership team to guide the Company into the future. As part of our long-term focus, we are committed to continuous investment--including in people, processes, and technologies--aimed at enhancing operational efficiency and driving sustained success."

Company Achievements for the Three and Six Months Ended December 31, 2024

   -- 
 Continued deployment of EVI's field service technology, now deployed to 
      over 70% of the service organization 
 
 
   -- 
 Surpassed important milestones in development of the Company's 
      e-commerce platform 
 
 
   -- 
 New confirmed customer sales order contracts exceeded the value of 
      those fulfilled during the period 
 
 
   -- 
 Completed two acquisitions adding sales and service expertise to the 
      Company's Southeast region 
 
 
   -- 
 Paid a $4.6 million dividend, the largest dividend in the Company's 
      history 
 

Three-Month Results (compared to the three months ended December 31, 2023)

   -- 
 Revenue increased 1% to a second quarter record of $92.7 million 
 
 
   -- 
 Gross profit increased 4% to a second quarter record of $27.5 million 
 
 
   -- 
 Gross margin increased to 29.7% compared to 28.9% 
 
 
   -- 
 Operating income was $2.4 million compared to $3.0 million 
 
 
   -- 
 Net income was $1.1 million, or 1.2%, compared to $1.3 million, or 
      1.5% 
 
 
   -- 
 Adjusted EBITDA was $5.1 million, or 5.5%, compared to $5.5 million, or 
      6.0% 
 

Six-Month Results (compared to the six months ended December 31, 2023)

   -- 
 Revenue increased 4% to a record of $186.3 million 
 
 
   -- 
 Gross profit increased 8% to a record of $56.4 million 
 
 
   -- 
 Gross margin increased to a record of 30.3% compared to 29.0% 
 
 
   -- 
 Operating income increased to $7.4 million compared to $5.6 million 
 
 
   -- 
 Net income increased to $4.4 million, or 2.3%, compared to $2.6 million, 
      or 1.5% 
 
 
   -- 
 Adjusted EBITDA increased to a record of $12.7 million, or 6.8%, 
      compared to $11.5 million, or 6.4% 
 

Operating Results

The Company reported record revenue of approximately $93 million and $186 million for the three and six-month periods ended December 31, 2024, an increase of 1% and 4%, respectively, compared to the same periods of the prior fiscal year. The modest increases in revenue during the three and six-month periods is primarily attributed to the irregular cadence of industrial revenue and in part to delays in the completion of certain large industrial sales order contracts. While the Company generates a recurring base of industrial business, the timing of revenue related to industrial projects is subject to longer sales cycles and complex installations that from time to time are uneven as compared to revenue derived from other commercial laundry categories. Record revenues for the quarter were achieved notwithstanding the fact that during the second quarter only one customer was invoiced for an amount in excess of $1 million, as compared to five in the same period of the prior year. These results demonstrate the incremental positive impact derived from our investment in additional sales professionals and service technicians, which are core to the Company's long-term market share strategy. Over the longer term, these investments in growth are expected to reduce the overall sensitivity of the Company's results and operating performance to the irregular cadence of larger industrial sales order contracts. Looking forward, we expect to benefit from the completion of confirmed sales order contracts across the industrial, on-premise, and vended laundry categories, which together contribute to our over $100 million equipment sales backlog.

During the three and six-month periods ended December 31, 2024, the Company set second quarter and six month records for gross profit at $28 million and $56 million, respectively. The Company also set a gross margin record for the six-month period of 30%. These results reflect in part a slight shift in mix to higher margin parts and services, as well as the benefit derived from solution selling, which has resulted in new sales of machinery aimed to lower the operating costs of a commercial laundry by automating historically labor-intensive tasks and new sales in consumables.

The variability in the timing of sales across certain laundry categories is expected to, from time to time, impact the amount of operating leverage achieved on a quarter-by-quarter basis. The Company's investments in scalable technologies and investments in additional businesses remains central to the execution of its growth strategy. Specifically, the "build" component of its strategy focuses on encouraging growth at its acquired businesses through the addition of product lines, growing its sales teams, expanding installation and service operations, investing in scalable technologies, and promoting the exchange of ideas and business concepts between the management teams of its businesses.

Given steady demand for the products and services the Company provides, a strong backlog of confirmed customer sales orders, and an acquisition pipeline that has delivered new growth opportunities, the Company increased investments across areas which it believes are critical to drive growth and scale its operations. The Company grew its sales team by 3% to over 190 professionals and increased its service team by 10% to over 425 professionals, and it implemented new field service technologies to most of its regional service operations. Additions to the Company's sales team aim to support the Company's OEM representations, increase penetration in existing distribution territories, expand into new distribution territories, and ensure sales continuity. The addition of service technicians aims to capture growing demand for the Company's installation and maintenance capabilities across its growing installed base. The implementation of the Company's field service technologies is designed to improve the efficiency of the Company's service operations and improve customer satisfaction. While the expenses incurred in connection with these investments adversely impacted the Company's operating profits and are expected to continue through at least the remainder of the fiscal year ending June 30, 2025, the Company expects that these investments will yield positive returns in the future.

Technology Investments

In 2020, the Company commenced a comprehensive technology initiative to transform EVI into a modern, data-driven company. Since that time, EVI's technology group has grown significantly, various third-party technology professionals have been retained. This growing team is leading efforts to consolidate business units into end-state Enterprise Resource Planning (ERP) Systems, enriching numerous data sets, building master databases, and configuring and implementing multiple softwares, including our field service technologies and future e-commerce platform. These technology initiatives were undertaken with a goal to accelerate sales and profit growth, increase the speed, convenience and efficiency in serving customers, extend our reach into new geographies and sales channels, and create scalable operating processes. While the time, costs and expenses associated with these and other modernization initiatives has adversely impacted EVI's financial performance in the near-term, the Company continues to believe that these technological capabilities will be a catalyst to achieving its long-term growth and profitability goals.

Cash Flow, Financial Strength, and Special Cash Dividend

During the six-month period ended December 31, 2024, operating activities provided cash of $2.2 million compared to $10.9 million of cash provided by operating activities during the six months ended December 31, 2023. This $8.7 million decrease in cash provided by operating activities was primarily attributable to changes in working capital, partially offset by an increase in net income. Given the Company's growth and profitability prospects, solid cash flows, and strong balance sheet with over $100 million of available liquidity, on September 11, 2024, the Company's Board of Directors declared a special cash dividend on the Company's common stock of $0.31 per share, which was paid on October 7, 2024. As a result of these investments in working capital, the cash paid in connection with business acquisitions consummated during the six-month period (as described in further detail below) and the payment of the special cash dividend, the Company's net debt increased from $8.3 million at June 30, 2024 to $24.0 million at December 31, 2024

Acquisitions

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