EnviroStar, Inc. (NYSE American: EVI) (“EVI” or the “Company”)
reported record results for the first quarter of its fiscal year
ending June 30, 2019. The record results reflect the Company’s
consistent execution of its buy-and-build growth strategy.
Q1 of Fiscal 2019 Highlights (compared to EVI’s results
for the first quarter of the fiscal year ended June 30, 2018):
- Revenue increased 65% to a record $43.4
million,
- Gross margin dollars increased 58% to a
record $9.7 million,
- Gross margin, as a percentage of
revenue, was lower by 1.0% due to product mix,
- Operating income increased 46% to a
record $1.4 million,
- Net income increased 41% to a record
$0.8 million, and
- Adjusted EBITDA increased 53% to a
record $2.4 million.
The improvement in the Company’s performance during the first
quarter of fiscal 2019 compared to the first quarter of fiscal 2018
is due primarily to the results of Tri-State Technical Services,
Inc. (“Tri-State”), which was acquired by EVI during the second
quarter of fiscal 2018, and AAdvantage Laundry Systems, Inc.
(“AAdvantage”) and Sky-Rent LP (“Sky-Rent”), which were acquired by
EVI during the third quarter of fiscal 2018. In addition, as
described in further detail below, EVI acquired two additional
companies, Industrial Laundry Services, Inc. and Scott Equipment,
Inc., during September 2018, and EVI’s results for the first
quarter of fiscal 2019 include less than a month of results of
those companies. EVI also acquired Washington Automated, Inc.
following the completion of the first quarter of fiscal 2019. The
increases in revenue and gross margin dollars during the first
quarter of fiscal 2019 were partially offset by increases in
SG&A, which primarily reflect increases to corporate level
expenses in connection with EVI’s growth and in support of the
execution of EVI’s buy-and-build growth strategy.
Buy Activity
During the first quarter of fiscal 2019, EVI continued the
execution of its buy-and-build growth strategy through the addition
of Industrial Laundry Services, an Orlando-based business, which
EVI acquired on September 4, 2018, and Scott Equipment, a
Houston-based business, which EVI acquired on September 12, 2018.
As previously announced, it is expected that the addition of
Industrial Laundry Services will bolster the service capabilities
of EVI’s Florida operations and that the addition of Scott
Equipment will substantially increase EVI’s market share in Texas.
In addition, subsequent to the completion of the first quarter of
fiscal 2019, EVI completed the acquisition of Washington Automated,
a Seattle-based business, and entered into definitive agreements to
purchase Worldwide Laundry, Inc., a Miami-based business, and
Skyline Equipment, Inc., a Houston-based business.
Build Activity
In addition to the acquisitions described above, EVI’s
leadership teams have undertaken growth initiatives, including the
addition of new product lines, the enhancement of installation and
service capabilities, and the implementation of scalable
technologies. EVI believes that these growth initiatives may have a
positive impact on the Company’s future performance. To lead and
fulfill these and other growth initiatives, EVI successfully
recruited, and continues to recruit, talented and long-term focused
professionals.
During the quarter the Company entered into a new five-year,
$100 million syndicated credit facility with Bank of America and US
Bank as joint lead arrangers, and Fifth Third Bank. The new credit
facility includes a $100 million revolving line of credit and an
accordion feature, which at EVI’s option, can expand commitments in
the revolver to $140 million in the aggregate. The new credit
facility replaces the existing $27 million asset-based credit
facility with Wells Fargo that was scheduled to mature in October
2021.
Henry M. Nahmad, Chairman, Chief Executive Officer and President
of EVI, commented: “EVI delivered another record quarter with
strong sales in the industrial, commercial, and vended segments of
the laundry industry. While our existing operating subsidiaries and
their management teams remain focused on building their businesses,
we also added important businesses in key markets, resulting in
increased market share and further strengthening the depth,
experience, and capabilities of our sales and service
organizations. EVI continues to aggressively pursue buy-and-build
growth opportunities in and around the laundry industry with a
long-term goal of building a national enterprise.”
It is important to note that the timing of revenue recognition
related to the sale and installation of commercial, industrial, and
vended laundry products are occasionally impacted by delays related
to installation schedules.
Use of Non-GAAP Financial Information
In this press release, EVI discloses the non-GAAP financial
measure of Adjusted EBITDA, which EVI defines as earnings before
interest, taxes, depreciation, amortization, and amortization of
share-based compensation. Adjusted EBITDA is determined by adding
interest expense, income taxes, depreciation, amortization, and
amortization of share-based compensation to net income as shown in
the attached Condensed Consolidated Earnings before Interest,
Taxes, Depreciation, Amortization, and Amortization of Share-based
Compensation. EVI considers Adjusted EBITDA to be an important
indicator of its operating performance. Adjusted EBITDA is also
used by companies, lenders, investors and others because it
excludes certain items that can vary widely across different
industries or among companies within the same industry. For
example, interest expense can be dependent on a company’s capital
structure, debt levels and credit ratings, and the tax positions of
companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
jurisdictions in which they operate. Adjusted EBITDA should not be
considered as an alternative to net income or any other measure of
financial performance or liquidity, including cash flow, derived in
accordance with GAAP, or to any other method of analyzing EVI’s
results as reported under GAAP. In addition, EVI’s definition of
Adjusted EBITDA may not be comparable to definitions of Adjusted
EBITDA or other similarly titled measures used by other
companies.
About EnviroStar
EnviroStar, Inc., through its wholly-owned subsidiaries, is a
distributor that sells, leases, and rents commercial, industrial,
and vended laundry and dry cleaning equipment and steam and hot
water boilers manufactured by others, supplies related replacement
parts and accessories, designs and plans turn-key laundry, dry
cleaning, and boiler systems, and provides installation and
maintenance services to thousands of customers, which include
commercial, industrial, institutional, government, and retail
customers. These activities are conducted in the United States,
Canada, the Caribbean and Latin America.
Safe Harbor Statement
Except for the historical matters contained herein, statements
in this press release are forward-looking and are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are subject to a
number of known and unknown risks and uncertainties that may cause
actual results, trends, performance or achievements of EVI, or
industry trends and results, to differ from the future results,
trends, performance or achievements expressed or implied by such
forward-looking statements. These risks and uncertainties include,
among others, the risks related to EVI’s business, results,
financial condition, growth strategy, market share and prospects,
risks related to EVI’s ability to successfully build its existing
operations, risks related to organic growth initiatives and EVI’s
recruitment efforts in connection therewith, including that such
initiatives may not be successful or otherwise have a positive
impact on EVI’s financial condition and results of operations,
risks associated with the EVI’s buy and build growth strategy,
including that EVI may not be successful in identifying or
consummating acquisitions or other strategic opportunities,
including that acquisitions as to which definitive agreements have
been entered into but which have not yet been consummated may not
be completed when expected, on the contemplated terms, or at all,
that the potential benefits of acquisitions completed or which may
be consummated in the future may not be realized to the extent
anticipated or at all, integration risks, risks related to
indebtedness incurred in connection with acquisitions, dilution
experienced by EVI’s stockholders as a result of shares issued in
connection with acquisitions, risks related to the business,
operations and prospects of acquired businesses, risks related to
EVI’s and its acquired businesses’ relationships with principal
suppliers and customers and the impact that the loss of any
principal supplier or customer could have on EVI’s results and
financial condition, risks related to EVI’s indebtedness, including
increases in its debt position, and other economic, competitive,
governmental, technological and other risks and factors, including
those discussed in the Company’s filings with the Securities and
Exchange Commission, including, without limitation, the Company’s
Annual Report on Form 10-K for the fiscal year ended June 30, 2018.
Many of these risks and factors are beyond EVI’s control. Further,
past performance of EVI and its acquired businesses and perceived
trends may not be indicative of future results. EVI cautions that
the foregoing factors are not exclusive. The reader should not
place undue reliance on any forward-looking statement, which speaks
only as of the date made. EVI does not undertake to, and
specifically disclaims any obligation to, update or supplement any
forward-looking statement, whether as a result of changes in
circumstances, new information, subsequent events or otherwise,
except as may be required by law.
EnviroStar, Inc.
Condensed Consolidated
Results of Operations (in thousands, except per share data)
(Unaudited) 3-Months Ended 3-Months Ended 9/30/18 9/30/17
Revenues $ 43,375 $ 26,273 Cost of Sales 33,653
20,124 Gross Profit 9,722 6,149 SG&A
8,290 5,166 Operating Income 1,432 983
Interest Expense, net 165 66 Income
before Income Taxes 1,267 917 Provision for Income Taxes 471
354 Net Income $ 796 $ 563
Net Income per Share Basic $ 0.07 $ 0.05 Diluted $ 0.06 $
0.05 Weighted Average Shares Outstanding Basic 11,236 10,468
Diluted 11,774 10,849
The following table reconciles net income, the most comparable
GAAP financial measure, to Adjusted EBITDA.
EnviroStar, Inc. Condensed Consolidated Earnings
before Interest, Taxes, Depreciation, Amortization, and
Amortization of Share-based Compensation (in thousands) (Unaudited)
3-Months Ended 3-Months Ended
9/30/18 9/30/17 Net Income $ 796 $ 563 Provision for Income
Taxes 471 354 Interest Expense 165 66 Depreciation and Amortization
533 219 Amortization of Share-based Compensation 414
357 Adjusted EBITDA $ 2,379 $ 1,559
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version on businesswire.com: https://www.businesswire.com/news/home/20181109005116/en/
EnviroStar, Inc.Henry M. Nahmad, 305-754-8676orMichael Steiner,
305-754-8676
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