EVI Industries (NYSE:EVI) has established itself as a prominent player in the highly fragmented North American commercial laundry distribution and service industry. Over the past decade, the company has meticulously executed its buy-and-build growth strategy, successfully integrating 29 acquisitions and positioning itself as a leading provider of comprehensive commercial laundry solutions.
Business Overview and History
EVI Industries was founded in the 1960s and has since evolved into a diversified value-added distributor and technical services provider, specializing in the commercial laundry industry. The company's roots can be traced back to its initial focus on distributing commercial laundry equipment and providing related services.
In 2015, EVI implemented a strategic shift, adopting a buy-and-build growth model to capitalize on the highly fragmented nature of the commercial laundry industry. This approach has allowed the company to strategically acquire well-established businesses, retain their leadership teams, and leverage synergies to drive long-term growth and profitability.
Over the past several years, EVI has executed numerous strategic acquisitions, expanding its geographical footprint and enhancing its product and service offerings. Notable acquisitions include Laundry Pro of Florida in 2024 and ODell Equipment Supply in 2024, which strengthened the company's presence in the Southeast and Midwest regions, respectively.
To support its growth strategy, EVI has made significant investments in its sales organization, service operations, and technology capabilities. The company has expanded its team of experienced sales professionals and commercial laundry technicians, while also implementing new field service technologies to improve efficiency. These initiatives have been complemented by efforts to optimize operations and infrastructure, driving synergies across the acquired businesses.
Despite facing challenges such as supply chain disruptions and inflationary pressures, EVI has achieved strong financial performance in recent years. The company has reported record revenues, gross profits, and operating cash flows, demonstrating the success of its buy-and-build strategy and operational initiatives. Additionally, EVI has maintained a strong balance sheet, providing the flexibility to continue pursuing strategic acquisitions and investments to drive long-term growth.
Financial Snapshot
EVI's financial performance has been characterized by consistent growth and strong cash flow generation. In the fiscal year ended June 30, 2024, the company reported record revenue of $353.56 million, up from $354.17 million in the prior year. This growth was driven by a combination of organic initiatives and strategic acquisitions.
Despite the challenges posed by the COVID-19 pandemic, EVI maintained its financial stability, reporting net income of $5.65 million in fiscal 2024, compared to $9.72 million in the prior year. The company's operating cash flow reached a record $32.65 million in fiscal 2024, allowing it to invest in key growth initiatives and maintain a strong balance sheet.
For the six months ended December 31, 2024, EVI reported total revenues of $186.34 million, up 4% from the prior year period. Gross profit increased 8% to $56.38 million, with gross margins expanding slightly from 29% to 30.3%. Operating income grew 32% to $7.38 million, reflecting improved operating leverage.
In the most recent quarter (Q2 2025), revenue was $92.71 million, representing a 1% increase year-over-year. Net income for the quarter was $1.13 million, a 16% decrease compared to the same period in the previous year. The increase in revenue was primarily attributable to price increases across the company's product lines and services, as well as revenues from acquired businesses. The decrease in net income was due to increased operating expenses, partially offset by higher gross profit.
Liquidity
EVI's balance sheet remains robust, with a current ratio of 1.58 and a debt-to-equity ratio of 0.07 as of June 30, 2024. The company's strong liquidity position and conservative financial management have enabled it to pursue strategic acquisitions while maintaining financial flexibility.
As of December 31, 2024, EVI's liquidity position remained strong, with a current ratio of 1.58 and a quick ratio of 0.87. The company's debt-to-equity ratio stood at 0.07, indicating a conservative capital structure. EVI has a syndicated credit agreement that allows for borrowings up to $100 million, with an accordion feature to increase it to $140 million. As of December 31, 2024, the company had $28 million in outstanding borrowings under the credit facility, which accrued interest at a weighted average rate of 5.88%.
Growth Strategy and Execution
The cornerstone of EVI's growth strategy is its buy-and-build approach, which has allowed the company to strategically acquire well-established businesses in the commercial laundry industry. The company's acquisition strategy focuses on identifying and partnering with influential leaders, retaining their management teams, and empowering them to collaborate on new and transformative ideas.
Since implementing this strategy in 2015, EVI has completed 29 acquisitions, expanding its geographical presence, product portfolio, and service capabilities. These acquisitions have not only strengthened the company's market position but have also enabled it to cross-sell its diverse range of products and services to a larger customer base.
In addition to its acquisition strategy, EVI has also invested heavily in organic growth initiatives, including the modernization and optimization of its operations. The company has implemented advanced technology solutions, such as its enterprise resource planning (ERP) system, to enhance efficiency, improve customer service, and drive long-term profitability.
Furthermore, EVI has focused on expanding its service capabilities, recognizing the importance of providing comprehensive solutions to its customers. The company has built a robust network of commercial laundry technicians, enabling it to offer installation, maintenance, and repair services to its growing customer base.
Product Segments and Services
EVI Industries operates through two main product segments:
1. Commercial Laundry Equipment and Related Products Segment: EVI sells and leases commercial laundry equipment to its customers, specializing in washing, drying, finishing, material handling, water heating, power generation, and water reuse applications. The company's product offerings include single units of equipment as well as large, complex laundry systems. In support of the equipment it sells, EVI also provides related parts and accessories.
2. Technical Services Segment: Through its network of commercial laundry technicians, EVI Industries provides installation, maintenance, and repair services for the laundry equipment it sells, as well as advisory and consulting services to help customers plan, design, and operate their commercial laundry facilities.
The company's diverse product portfolio and service offerings cater to a wide range of customers, including government, institutional, industrial, commercial, and retail clients. This diversification helps EVI maintain stability and pursue growth opportunities across various end markets.
Risks and Challenges
While EVI's growth strategy has been largely successful, the company faces several risks and challenges that it must navigate.
The commercial laundry industry is highly competitive, with numerous regional and national players vying for market share. EVI's ability to maintain its competitive edge and continue its growth trajectory will depend on its ability to identify and acquire high-quality targets, effectively integrate acquired businesses, and execute its organic growth initiatives.
Additionally, the company's reliance on a limited number of suppliers and the potential for supply chain disruptions pose risks to its operations. EVI must carefully manage its supplier relationships and maintain a robust inventory management system to ensure the reliable delivery of its products and services.
Regulatory changes, such as environmental regulations or labor laws, could also impact EVI's operations and profitability. The company must stay abreast of regulatory developments and adapt its business practices accordingly to ensure compliance.
The ongoing COVID-19 pandemic has had a significant impact on the commercial laundry industry, with disruptions to customer demand and supply chains. While EVI has demonstrated resilience during this challenging period, the long-term effects of the pandemic on the industry remain uncertain.
Furthermore, EVI faces risks related to supply chain constraints, labor shortages, inflation, and the impact of interest rate increases on its financing costs and customers' purchasing decisions. These factors could potentially affect the company's ability to maintain its growth trajectory and profitability.
Outlook and Conclusion
EVI Industries has established itself as a leading player in the highly fragmented North American commercial laundry distribution and service industry. Through its strategic acquisitions and operational excellence, the company has built a diversified and resilient business model, positioning it for continued growth and profitability.
The company's focus on expanding its installed base of commercial laundry equipment through equipment sales and leasing, as well as growing its technical services business to support the installed base, provides a solid foundation for future growth. EVI's decentralized operating model and diverse product and end-market exposure are intended to provide stability and growth opportunities in the face of market fluctuations.
EVI has reported an 8% compounded annual organic revenue growth rate over the past few years, demonstrating the success of its growth strategy. The company's ability to maintain this growth rate while integrating new acquisitions and navigating industry challenges will be crucial to its long-term success.
Despite the challenges posed by a competitive landscape and external factors, EVI's management team has demonstrated a strong track record of execution, consistently delivering financial performance and creating value for shareholders. The company's robust balance sheet, ample liquidity, and disciplined capital allocation provide a solid foundation for future growth.
As EVI navigates the evolving commercial laundry industry, investors will be closely watching the company's ability to identify and integrate high-quality acquisitions, drive organic growth through technology and service enhancements, and effectively manage the risks and challenges that arise. With its proven strategy and experienced leadership team, EVI Industries appears well-positioned to maintain its position as a leading player in the market and capitalize on future growth opportunities in the commercial laundry industry.