Release Date: February 10, 2025

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

Positive Points

• EVI Industries Inc (EVI) achieved record revenues of $93 million for the three-month period and $186 million for the six-month period ending December 31, 2024.
• The company set a gross profit record of $28 million for the three-month period and $56 million for the six-month period, with a gross margin record of 30%.
• EVI Industries Inc (EVI) completed two acquisitions during the six-month period, enhancing its sales and service expertise in the Southeast region.
• The company successfully implemented new field service technologies across over 70% of its operations, improving efficiency.
• EVI Industries Inc (EVI) paid a special cash dividend of $4.6 million, the largest in its history, reflecting strong financial performance.

Negative Points

• Revenue growth was modest, with only a 1% increase for the three-month period and a 4% increase for the six-month period, attributed to irregular industrial revenue cadence and delays in large sales orders.
• Cash provided by operating activities decreased by $8.7 million compared to the same period in the previous year, primarily due to changes in working capital.
• The company's net debt increased from $8.3 million to $24 million during the six-month period, partly due to acquisitions and dividend payments.
• Only one customer was invoiced for over a million dollars during the second quarter, compared to five in the same period of the prior year, indicating potential challenges in securing large contracts.
• The aggregate cost and expense associated with modernization initiatives are adversely impacting financial performance in the near term.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with EVI.

Q: Can you elaborate on the factors contributing to the record revenue and gross profit for the quarter? A: Henry Named, Chairman and CEO, explained that the record revenue of $93 million and gross profit of $28 million were achieved despite the irregular cadence of industrial revenue and delays in large industrial sales order contracts. The results were driven by investments in sales professionals and service technicians, which are central to EVI's long-term market share strategy.

Q: How has EVI's acquisition strategy evolved, and what are the recent developments? A: Henry Named highlighted that EVI completed two acquisitions during the six-month period and a third shortly after, marking the company's first entry into the Midwest region. The acquisitions align with EVI's strategy of acquiring long-standing, often family-owned businesses, preserving their culture, and integrating them into EVI's cohesive organization.

Q: What technological advancements has EVI implemented, and how do they impact the company's growth? A: The CEO discussed the Comprehensive Technology initiative launched in 2020, which aims to transform EVI into a modern data-driven company. This includes consolidating business units into enterprise resource planning systems and implementing field service technologies. These advancements are expected to accelerate sales growth and improve operational efficiency.

Q: Could you provide insights into the company's financial strength and liquidity? A: Henry Named noted that operating activities provided $2.2 million in cash during the six-month period, a decrease from the previous year due to changes in working capital. Despite this, EVI maintains a strong balance sheet with over $100 million in available liquidity, supporting its growth and acquisition strategies.

Q: What are the future expectations for EVI's growth and market position? A: The CEO expressed confidence in EVI's continued growth, emphasizing the company's solid foundation and long-term growth strategy. EVI plans to remain aggressive in pursuing growth opportunities while being conservative in financing, ensuring the ability to execute buy-and-build strategies effectively.

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