Executive Summary / Key Takeaways

• EVI Industries is executing a disciplined "buy-and-build" strategy to consolidate the highly fragmented commercial laundry and industrial equipment distribution market, driving significant revenue and net income growth in fiscal 2025.
• The company's strategic investments in digital transformation, including a field service technology rollout and a proprietary e-commerce platform, are enhancing operational efficiency and customer experience, bolstering its competitive moat in service delivery.
• Despite strong top-line growth fueled by acquisitions and price increases, EVI faces challenges in converting this growth into robust free cash flow due to heavy investments in expansion and technology, leading to a premium valuation relative to historical averages.
• EVI's competitive advantage lies in its comprehensive "one-stop shop" product portfolio, extensive service network, and strong supplier relationships, which differentiate it from larger, more product-centric rivals and smaller, localized distributors.
• Key risks include the successful integration of numerous acquisitions, managing supply chain disruptions and inflationary pressures, and the inherent interest rate risk associated with its debt-financed growth strategy.

EVI's Foundation and Strategic Vision: Consolidating a Fragmented Market

EVI Industries, Inc. (EVI) has steadily built a formidable presence as a value-added distributor and service provider for commercial laundry operations across the United States, Canada, the Caribbean, and Latin America. Founded in 1959 and incorporated in 1963, the company, formerly known as EnviroStar, Inc., rebranded to EVI Industries, Inc. in December 2018, signaling its evolution and broader strategic ambitions. EVI's core business encompasses the sale and leasing of specialized commercial laundry equipment—including washing, drying, finishing, material handling, water heating, power generation, and water reuse applications—along with a comprehensive suite of related parts, accessories, and critical installation, maintenance, and repair services. This integrated approach positions EVI as a "one-stop shop" for a diverse customer base, ranging from government and institutional clients to industrial, commercial, and retail establishments.

The commercial and industrial laundry and boiler distribution market is highly competitive and fragmented, characterized by over 500 full-line or partial-line equipment distributors in the United States. EVI's management believes no single competitor holds a major market share, with most rivals being independently owned and operating primarily in local markets. Against this backdrop, EVI's overarching strategy is a "buy-and-build" approach, complementing organic growth initiatives by acquiring businesses that enhance its existing operations or unlock new growth opportunities. The "build" component focuses on integrating these acquired entities and fostering a growth culture through investments in personnel, new product lines, enhanced service capabilities, improved facilities, and advanced technologies. This strategy aims to consolidate the fragmented industry and establish EVI as a market leader in North American commercial laundry distribution and service.

The company's technological differentiators, while not involving proprietary manufacturing, are crucial to its operational effectiveness and competitive stance. EVI has made significant progress in its digital transformation initiative, notably with the substantial completion of its field service technology rollout. This initiative, alongside the development of a proprietary e-commerce platform and a customer relationship management (CRM) system, is designed to enhance efficiency and customer experience across its extensive 425-person service team, reportedly the largest in the commercial laundry industry. These technological investments aim to streamline operations, improve service response times, and provide a more seamless experience for customers, thereby strengthening EVI's competitive moat in service delivery and customer retention. While specific quantitative metrics on the direct impact of these technologies are not publicly detailed, the strategic intent is clear: to leverage digital tools for operational excellence and superior customer engagement, which are vital in a service-intensive industry.

The "Buy-and-Build" Engine: Fueling Expansion and Market Reach

EVI's aggressive "buy-and-build" strategy has been a primary driver of its recent expansion. In fiscal year 2024, the company acquired Pennsylvania-based ALVF, Inc. (ALCO Washer Center) and Texas-based Signature Services Corporation (Ed Brown Distributors). The pace accelerated in fiscal year 2025 with the acquisition of Florida-based Laundry Pro of Florida, Inc. (LPF) on July 1, 2024, Indiana-based ODell Equipment Supply, Inc. (ODL) on November 1, 2024, and Illinois-based Haiges Machinery, Inc. (HMI) on February 1, 2025. A particularly significant event was the acquisition of Wisconsin-based Girbau North America, Inc. (GNA) on April 1, 2025, which EVI described as its largest acquisition to date. This deal is expected to materially increase EVI's market position, revenue, and operating profit by bringing enhanced scale and strong supplier relationships. Following the fiscal year-end, EVI continued this trajectory by acquiring New York-based ASN Laundry Group on August 1, 2025, marking its 31st acquisition in the industry.

These acquisitions are strategically chosen to complement EVI's existing business, expand its geographic footprint, and offer new growth opportunities. The integration process focuses on implementing a growth culture, exchanging business concepts among management teams, and investing in additional sales and service personnel, new product lines, enhanced service operations, improved facilities, and advanced technologies. This systematic approach allows EVI to leverage the strengths of acquired businesses while extending its comprehensive service model across a broader market.

Financial Performance: Growth Amidst Investment

EVI Industries demonstrated robust financial performance in fiscal year 2025, reflecting the impact of its strategic initiatives. Total revenues for fiscal 2025 increased by 10% to $389.83 million, up from $353.56 million in fiscal 2024. This growth was primarily attributable to revenues generated by businesses acquired during fiscal 2025, alongside price increases implemented across EVI's product lines and service offerings aimed at maintaining or increasing margins to cover incremental product and operating cost increases. Net income for fiscal 2025 saw an even more significant increase of 33%, reaching $7.50 million compared to $5.65 million in fiscal 2024. This improvement was largely driven by the increases in revenue and gross margin, though partially offset by higher selling, general, and administrative (SG&A) expenses.

The company's gross margin improved to 30.40% in fiscal 2025 from 29.80% in fiscal 2024. This favorable change was attributed to a beneficial shift in product and customer mix, as well as EVI's efforts to promote "solution selling" as a value-added distributor, thereby driving higher quality sales opportunities. However, SG&A expenses rose by approximately $11 million, or 12%, in fiscal 2025, reaching $104.58 million. As a percentage of revenues, SG&A increased slightly to 26.80% from 26.50% in fiscal 2024. This increase was primarily due to the operating expenses of acquired businesses, additional operating expenses in pursuit of future growth and optimization initiatives, and increases in salary, stock compensation, rent, technology costs, professional fees, insurance costs, and depreciation and amortization.

From a liquidity perspective, EVI's cash position improved, with cash increasing from $4.60 million at June 30, 2024, to $8.90 million at June 30, 2025. This increase was primarily due to cash generated from operations and borrowings under its credit facility, partially offset by cash consideration paid for acquisitions and capital expenditures.

Net cash provided by operating activities, however, decreased by $11.40 million in fiscal 2025 compared to fiscal 2024, primarily due to an increase in accounts receivable, though partially offset by increases in accounts payable, accrued expenses, and net income. Investing activities utilized approximately $51.80 million in fiscal 2025, a substantial $45 million increase from fiscal 2024, predominantly due to the higher cash consideration paid for business acquisitions. Financing activities provided approximately $34.80 million in fiscal 2025, a $62 million increase from fiscal 2024, largely attributable to borrowings under the company's credit facility to fund these acquisitions.

EVI amended its Credit Agreement on March 26, 2025, expanding its maximum aggregate principal amount from $100 million to $150 million, with an accordion feature increasing from $40 million to $50 million, totaling $200 million. The maturity date was also extended from May 6, 2027, to March 26, 2030. As of June 30, 2025, EVI had $53 million in outstanding borrowings under this facility, accruing interest at a weighted average rate of 5.68%. The company was in compliance with all covenants under the Credit Agreement as of that date, with $56.10 million available to borrow.

Competitive Landscape: Differentiating Through Service and Scale

EVI operates in a highly competitive and fragmented industry, where its ability to differentiate through comprehensive service and strategic scale is paramount. While direct quantitative market share figures for all niche competitors are not publicly detailed, EVI's strong performance in its target segments suggests effective competitive positioning. The company's primary competition in the U.S. stems from numerous independently owned distributors and certain foreign manufacturers that operate their own distribution businesses in North America. Globally, it also competes with independently owned distributors and manufacturer-owned distribution businesses.

EVI's competitive strategy centers on several key pillars:

• Comprehensive Product Line: Offering a wide range of commercial, industrial, and vended laundry and dry cleaning machines, boilers, and accessories positions EVI as a "one-stop shop," attracting a diverse customer base.
• Value-Added Services: The company emphasizes its experienced sales and service organization, including planning, designing, and consulting services, in-house installation, maintenance, and repair services, and on-site training. This service-heavy model fosters strong customer relationships and recurring revenue streams.
• Optimized Inventories and Delivery: Maintaining well-stocked inventories of equipment, parts, and accessories, often with same-day or overnight availability, allows EVI to meet customer needs rapidly, a critical factor in competitive bidding.
• Advanced Technologies: Investments in its field service technology, e-commerce platform, and CRM system are designed to improve customer experience and operational efficiency, providing a qualitative edge in service delivery.
• Strategic Supplier Relationships: EVI maintains long-standing relationships and contracts with several major manufacturers, which provide competitive advantages such as exclusivity for certain products in specific areas and favorable pricing and terms. Purchases from four manufacturers accounted for approximately 72% and 73% of EVI's product purchases in fiscal 2025 and 2024, respectively.

Compared to larger, more diversified industrial players like Whirlpool Corporation (WHR), Electrolux AB (ELUXY), and Dover Corporation (DOV), EVI's specialized focus on commercial laundry and boiler services provides a qualitative advantage in niche expertise and customer-specific adaptations, such as integrated water reuse systems. While Whirlpool and Electrolux leverage their larger scale for broader distribution and potentially lower operating costs, EVI's emphasis on tailored solutions and a full-service approach (sales, leasing, and servicing) differentiates it, particularly in government and institutional sectors. EVI's service network provides significantly greater efficiency in ongoing support, fostering stronger pricing power in institutional markets. However, EVI's smaller scale may lead to higher operating costs compared to its larger rivals, and it may lag in product innovation speed against companies with extensive R&D capabilities like Electrolux. Dover's broader industrial scope might offer economies of scale, but EVI's deep specialization allows it to excel in its core market.

Outlook and Strategic Trajectory

EVI's management expresses confidence that its existing cash, anticipated cash from operations, and available funds under the Credit Agreement will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve months and the foreseeable future thereafter. The company remains committed to disciplined financial management while fostering a growth-oriented culture backed by strategic investments. The ongoing digital transformation initiative, with its focus on field service technology, e-commerce, and CRM, is expected to continue enhancing efficiency and customer experience, further solidifying EVI's competitive position.

Management indicates that a healthy backlog of signed large projects supports future revenue visibility. The transformational acquisition of Girbau North America (GNA) is expected to materially increase both revenue and operating profit, bringing enhanced scale and strong supplier relationships to EVI's platform. While specific quantitative guidance for future fiscal years is not provided, the consistent execution of its "buy-and-build" strategy, coupled with investments in operational technology, suggests a continued focus on market consolidation and organic growth within its specialized segments.

Risks and Considerations

Despite its compelling growth story, EVI faces several pertinent risks that warrant investor attention. The aggressive "buy-and-build" strategy inherently carries acquisition-related risks, including challenges in identifying and consummating suitable transactions, successfully integrating acquired companies, and the potential for acquired businesses not to generate anticipated revenues, earnings, or cash flows. The diversion of management's attention and strain on operational resources during integration periods are also significant concerns.

Supply chain disruptions, labor shortages, and inflationary pressures pose ongoing challenges. Customer demand has, at times, outpaced available supply, leading to delivery delays and increased product costs. While EVI has implemented price increases to offset these costs, there is no assurance that it can always effectively do so, potentially impacting gross profit and demand. The company's dependence on a few key manufacturers for a significant portion of its product purchases also presents a risk; deterioration or loss of these relationships could materially impact the business.

EVI's increased indebtedness, primarily used to finance acquisitions, subjects it to interest rate risk, as borrowings under its credit facility bear variable interest rates. A hypothetical 1% increase in daily interest rates would increase annual interest expense by approximately $530,000 based on current outstanding amounts. Cybersecurity threats also represent a material risk, given the company's handling of sensitive information and its reliance on internal computer and telecommunication systems. Finally, the company's dependence on key executive officers, such as Henry M. Nahmad and Tom Marks, and the concentration of ownership, which grants management significant voting power, could influence corporate decisions and potentially impact the market price of EVI's common stock.

Conclusion

EVI Industries stands as a compelling investment narrative, strategically consolidating a fragmented yet essential industry through its proven "buy-and-build" approach. The company's historical journey has culminated in a robust platform that leverages a comprehensive product portfolio, an extensive service network, and strategic technological investments to deliver a differentiated value proposition to its diverse customer base. Fiscal year 2025 results underscore the effectiveness of this strategy, with significant increases in revenue and net income, driven by successful acquisitions and disciplined pricing.

EVI's commitment to digital transformation, particularly in field service and customer relationship management, is a critical enabler of its competitive edge, enhancing operational efficiency and customer loyalty in a service-intensive market. While the company's growth trajectory is strong, investors must weigh the inherent risks associated with aggressive acquisition integration, supply chain vulnerabilities, and the financial implications of its debt-financed expansion. The ability to effectively integrate future acquisitions, manage rising costs, and continue leveraging technology to deepen customer relationships will be paramount to EVI's sustained success and its journey toward becoming the dominant force in North American commercial laundry distribution and service.