Company Overview

EVI Industries, Inc. (EVI) is a value-added distributor and provider of advisory and technical services in the commercial laundry industry. Through its extensive sales organization and robust network of technicians, the company offers customers a comprehensive suite of products and services to manage their commercial laundry operations, from planning and design to installation, maintenance, and repair.

EVI's Buy-and-Build Growth Strategy Executing on Ambitious Expansion

EVI was founded in the 1960s and has undergone a remarkable transformation over the past decade, driven by its strategic "buy-and-build" growth approach. Since 2015, the company has executed an aggressive acquisition strategy, adding 27 commercial laundry distributors and service providers across North America to its portfolio. This inorganic expansion has significantly bolstered EVI's geographic reach, product offerings, and technical capabilities, positioning the company as a formidable player in the industry.

In July 2024, EVI completed the acquisition of Laundry Pro of Florida, Inc., a Florida-based distributor of commercial laundry products and provider of related technical installation and maintenance services, for $5.9 million in cash. This transaction was followed by the November 2024 acquisition of Indiana-based ODell Equipment Supply, Inc. for $4.6 million in cash, further strengthening EVI's presence in the Southeast and Midwest regions of the United States.

Throughout its history, EVI has demonstrated resilience in the face of various challenges, including industry trends and economic conditions. The company has successfully navigated periods of high inflation, which led to pricing pressures and increased costs. Additionally, EVI adapted to the operational challenges posed by the COVID-19 pandemic, which affected customer demand and caused supply chain disruptions.

EVI's diverse customer base has contributed to its success, serving government, institutional, industrial, commercial, and retail clients. This broad market reach has helped the company maintain stability and growth even during challenging economic periods.

Impressive Financial Performance Delivering Consistent Growth and Profitability

EVI's strategic acquisitions have translated into impressive financial results. For the fiscal year ended June 30, 2024, the company reported total revenue of $353.56 million, a 5.5% increase compared to the prior year. Gross profit reached $105.2 million, with a gross margin of 29.7%. EVI's operating income for the year was $11.6 million, and the company generated a net income of $5.65 million. Operating cash flow for the fiscal year was $32.65 million, with free cash flow of $27.79 million.

In the most recent quarter, ended September 30, 2024, EVI continued its strong momentum. The company reported record quarterly revenue of $93.62 million, a 6.3% increase year-over-year. This growth was primarily driven by price increases across the company's product lines and services, as well as contributions from recent acquisitions. Gross profit rose 12.3% to $28.86 million, with a robust gross margin of 30.8%, up from 29.2% in the prior year quarter. The increase in gross profit was primarily due to the higher revenues and a more favorable product and customer mix. Operating income surged 92.0% to $5.0 million, and net income reached a record $3.23 million, up 152.3% compared to the same period in the prior year.

Financials

EVI's financial position remains solid, with a healthy balance sheet. As of September 30, 2024, the company had $4.37 million in cash and $19.9 million in long-term debt, resulting in a net debt position of $15.53 million. EVI's strong operational performance and cash flow generation have enabled the company to fund its acquisition-driven growth strategy while maintaining a disciplined capital structure.

For the quarter ended September 30, 2024, operating cash flow was $207,000, while free cash flow was negative $1.05 million. The company's debt-to-equity ratio stood at 0.146, indicating a conservative leverage profile. EVI maintains a $100 million revolving credit facility, of which $20 million was drawn as of September 30, 2024. The credit facility includes an accordion feature that allows for an increase in the total facility size to $140 million.

Liquidity

EVI's strong operational performance and cash flow generation have enabled the company to fund its acquisition-driven growth strategy while maintaining a disciplined capital structure. The company's liquidity position remains robust, with a current ratio of 1.44 and a quick ratio of 0.79 as of September 30, 2024. This solid liquidity profile allows EVI to pursue further growth opportunities and navigate potential challenges in the market.

Comprehensive Product and Service Offerings Catering to the Diverse Needs of Customers

EVI's value proposition extends beyond its role as a distributor of commercial laundry equipment. The company's comprehensive offerings include advisory and technical services, such as planning, designing, and consulting for customers' commercial laundry operations. EVI's network of experienced technicians provides installation, maintenance, and repair services, ensuring seamless support for its clients.

Furthermore, EVI's product portfolio spans a wide range of commercial laundry equipment, including washers, dryers, finishing equipment, material handling solutions, water heating systems, power generation, and water reuse applications. The company also sells related parts and accessories to support its equipment offerings. This focus on providing end-to-end solutions has strengthened EVI's relationships with customers and positioned the company as a trusted partner in the industry.

Navigating Challenges and Opportunities Adapting to Evolving Market Dynamics

The commercial laundry industry has faced its share of challenges in recent years, including supply chain disruptions, labor shortages, and inflationary pressures. EVI has demonstrated its ability to navigate these headwinds, implementing strategic pricing initiatives and optimizing its operations to maintain profitability.

The company has also capitalized on emerging opportunities, such as the growing demand for sustainable and energy-efficient laundry solutions. EVI's portfolio of water reuse and power generation technologies has resonated with customers seeking to reduce their environmental impact and operating costs.

Looking Ahead Continued Growth and Shareholder Value Creation

As EVI continues to execute its buy-and-build strategy, the company remains focused on driving long-term shareholder value. The integration of acquired businesses, coupled with investments in sales, service, and operational excellence, is expected to drive further growth and margin expansion.

Moreover, EVI's decentralized operating model and geographic diversification have contributed to the company's resilience, enabling it to navigate industry challenges and capitalize on regional growth opportunities. While EVI primarily serves customers within the United States, its expanding footprint allows for targeted growth in various regions.

With a strong balance sheet and access to capital through its revolving credit facility, EVI is well-positioned to continue its strategic acquisitions and organic initiatives, solidifying its position as a leading provider of comprehensive commercial laundry solutions.

Conclusion

EVI Industries has transformed itself into a formidable player in the commercial laundry industry through its strategic buy-and-build approach. The company's impressive financial performance, comprehensive product and service offerings, and adaptability to evolving market dynamics have positioned EVI for continued growth and success. As the company leverages its robust acquisition pipeline and invests in organic initiatives, investors can look forward to EVI's ongoing pursuit of shareholder value creation in the dynamic commercial laundry market.