Financial Struggles for EVI Industries Despite Increased Revenue
Shares of EVI Industries, Inc. (EVI) have fallen 10% since the company’s earnings report for the quarter ending Dec. 31, 2024. In contrast, the S&P 500 index has seen a modest growth of 0.7% during this period. Notably, EVI’s stock experienced a rise of 7.2% over the past month, while the S&P 500 declined by 3.8%.
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EVI Industries reported net earnings per share (EPS) of 7 cents for the second quarter of fiscal 2025, a decrease from 9 cents in the same quarter last year.
The company achieved record revenues of $92.7 million for this quarter, reflecting a 1% increase compared to the previous year.
Gross profit also hit a record high at $27.5 million, up 4% from the year prior, leading to an increase in gross margin to 29.7%, up from 28.9%.
However, despite this top-line growth, operating income fell to $2.4 million from $3 million last year, and net income dropped to $1.1 million compared to $1.3 million in the previous year. Adjusted EBITDA similarly declined to $5.1 million from $5.5 million.
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Business Performance Highlights
EVI’s sales order backlog remains over $100 million, indicating stable demand across its industrial, on-premise, and vended laundry segments. Nonetheless, the company has faced delays in completing some significant industrial sales contracts, which has affected its revenue growth.
The workforce expanded during the quarter, with the sales team increasing by 3% to over 190 professionals and the service team by 10% to more than 425 professionals. Furthermore, over 70% of the service organization has adopted new field service technologies.
Ongoing technology initiatives, including an e-commerce platform and an Enterprise Resource Planning system, aim to enhance operational efficiency in the future.
Insights from Management
Chairman and CEO Henry M. Nahmad reinforced the company’s commitment to growth by investing in personnel, technology, and operational efficiency. He noted EVI’s financial flexibility and dedication to scaling the business, despite facing short-term cost pressures affecting operating margins.
The management team recognized that while the timing of large industrial sales has been inconsistent, they anticipate benefiting from order fulfillment in the upcoming quarters.
Factors Affecting Financial Results
Revenue growth faced challenges due to sporadic industrial sales, with just one customer invoiced for over $1 million in the quarter, down from five in the same timeframe last year. However, a shift toward higher-margin parts and services helped improve gross margins, somewhat balancing the impact of lower sales volumes.
Operating profit was also affected by increased selling, general, and administrative (SG&A) expenses, which rose to $25.1 million from $23.5 million year over year, primarily due to workforce expansions and investments in technology.
Cash flow from operations declined to $2.2 million during the first half of fiscal 2025, compared to $10.9 million a year earlier, due to fluctuations in working capital and costs related to acquisitions.
Future Outlook
Looking ahead, management expresses optimism about sustained demand in the commercial laundry sector and expects to achieve long-term growth through both acquisitions and organic expansion. While continued investments may affect near-term profitability, EVI’s backlog and strategic initiatives are seen as favorable for increasing market share.
Recent Developments
In the first half of fiscal 2025, EVI completed two acquisitions in Florida and Indiana, enhancing its sales and service capabilities in the Southeast region. Additionally, in January 2025, the company acquired a commercial laundry distributor in Illinois, marking its entry into the Midwest market.
EVI has also offered a record dividend of $4.6 million, showcasing its confidence in long-term growth prospects.
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