Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• EVI Industries Inc (EVI) reported record revenues of $94 million for the first quarter of fiscal 2025.
• The company achieved a record gross profit of $29 million and a record gross margin of 30.8%.
• EVI Industries Inc (EVI) saw a significant increase in operating income, rising 92% to $5 million.
• Net income increased by 152% to a record $3.2 million, or 3.5% of revenue.
• The company declared a special cash dividend of $4.6 million, the largest in its history.

Negative Points

• Cash provided by operating activities decreased by $1.3 million compared to the previous year.
• Net debt increased from $8.3 million to $15.5 million, primarily due to acquisition-related expenses.
• The cost and expenses associated with modernization initiatives adversely impacted financial performance in the near term.
• The company's financial performance was affected by changes in working capital.
• Despite growth, the company faces risks and uncertainties as highlighted in their forward-looking statements.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with EVI.

Q: Can you elaborate on the factors contributing to the record revenue and profit margins this quarter? A: Henry Namad, Chairman and CEO, explained that the record revenue of $94 million and gross profit of $29 million were driven by steady fulfillment of customer sales orders, appropriately stocked inventory, and the performance of maintenance and repair services. These efforts resulted in a 6% increase in revenue compared to the same period last year, with gross profit increasing by 12% and gross margin reaching a record 30.8%.

Q: What impact did recent acquisitions have on the company's financials and strategy? A: Henry Namad noted that the acquisition of Laundry Pro Florida and Odell Equipment and Supply contributed to the company's growth strategy. These acquisitions are expected to benefit from EVI's resources to drive growth and profitability. The acquisitions align with EVI's strategy of acquiring long-standing, often family-owned businesses to form a cohesive organization in the commercial laundry distribution and service industry.

Q: How is EVI addressing technological advancements and their impact on operations? A: The CEO highlighted that EVI has been investing in technology since 2020 to transform into a modern, data-driven company. Recent efforts include consolidating business units into enterprise resource planning systems, implementing field service technology, and launching an e-commerce site. These initiatives, while impacting short-term financial performance, are expected to catalyze long-term growth and profitability.

Q: Could you provide more details on the special cash dividend declared this quarter? A: Henry Namad stated that the board declared a special cash dividend of 31 cents per share, the largest in the company's history. This decision reflects EVI's philosophy of sharing cash flow through dividends while maintaining a conservative financial position. Future dividends will be considered based on investment opportunities, cash flow, and overall financial conditions.

Q: What are the company's future acquisition plans and criteria? A: The CEO mentioned that EVI continues to actively pursue acquisition opportunities that meet their financial, strategic, and cultural criteria. The company focuses on internally sourcing, negotiating, and integrating acquisitions, with a strong emphasis on preserving the unique culture and legacy of acquired businesses. EVI aims to maintain its reputation and record of successful acquisitions in the commercial laundry industry.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.