10-K: EVI Industries Reports Strong FY25 Growth, Boosts Dividend

EVI Industries announced a 10% revenue increase and 33% net income growth for fiscal year 2025, driven by strategic acquisitions and price adjustments, alongside an increased special cash dividend.

Summary

• Revenues for fiscal year 2025 increased by 10% to $389.8 million, up from $353.6 million in fiscal year 2024.
• Net income for fiscal year 2025 rose by 33% to $7.5 million, compared to $5.6 million in fiscal year 2024.
• Gross margin improved to 30.4% in fiscal 2025 from 29.8% in fiscal 2024, primarily due to favorable changes in product and customer mix and efforts to drive higher quality sales.
• Diluted earnings per share increased to $0.49 in fiscal 2025 from $0.37 in fiscal 2024.
• The company completed four acquisitions in fiscal 2025: Laundry Pro of Florida, Inc., ODell Equipment & Supply, Inc., Haiges Machinery, Inc., and Girbau North America, Inc., with a total consideration of $51.0 million.
• Subsequent to fiscal year-end, EVI Industries acquired New York-based ASN Laundry Group on August 1, 2025, for $0.6 million in cash.
• The Credit Agreement was amended on March 26, 2025, increasing the maximum aggregate principal amount from $100 million to $150 million and extending the maturity date to March 26, 2030.
• A special cash dividend of $0.33 per share was declared on September 11, 2025, to be paid on October 6, 2025, marking an increase from the $0.31 per share paid in 2024 and $0.28 per share in 2023.
• Cash and cash equivalents increased to $8.9 million at June 30, 2025, from $4.6 million at June 30, 2024.

Sentiment

Score: 8

Explanation: The company demonstrated strong financial performance with significant revenue and net income growth, improved margins, and an increased dividend. Its aggressive 'buy-and-build' strategy is actively expanding its market presence. While there are inherent risks associated with acquisitions, supply chain, and debt, the company appears to be managing these effectively and maintaining a solid liquidity position. The positive financial results and strategic execution outweigh the identified risks, indicating a strong operational year.

Positives

• Achieved significant revenue growth of 10% in fiscal 2025, reaching $389.8 million.
• Reported strong net income growth of 33% to $7.5 million in fiscal 2025.
• Improved gross margin to 30.4% in fiscal 2025, reflecting favorable product/customer mix and strategic sales efforts.
• Successfully executed its 'buy-and-build' growth strategy with four acquisitions in fiscal 2025 and one post-year-end, expanding market presence.
• Enhanced liquidity with cash increasing to $8.9 million and $56.1 million available under the revolving credit facility.
• Extended the maturity date of its Credit Agreement to March 26, 2030, providing long-term financial flexibility.
• Increased special cash dividend to $0.33 per share, demonstrating confidence in financial performance and returning value to shareholders.
• Maintained effective internal control over financial reporting as of June 30, 2025.

Negatives

• Net cash provided by operating activities decreased by $11.4 million to $21.3 million in fiscal 2025, primarily due to an increase in accounts receivable.
• Net cash used by investing activities significantly increased to $51.8 million in fiscal 2025, mainly due to higher cash consideration paid for business acquisitions.
• Selling, general and administrative expenses increased by 12% in fiscal 2025, outpacing revenue growth as a percentage of revenues (26.8% vs 26.5%).
• The company's level of indebtedness has increased, with long-term debt rising to $53.0 million in fiscal 2025 from $12.9 million in fiscal 2024, increasing vulnerability to economic downturns and competitive pressures.

Risks

• Acquisitions and the pursuit of strategic transactions involve risks such as difficulty in identifying/consummating deals, integration challenges, diversion of management attention, strain on resources, difficulty implementing internal controls, loss of key employees/customer/supplier relationships, exposure to liabilities, and potential for dilutive equity issuances or increased debt.
• Conditions beyond the company's control (e.g., labor shortages, governmental regulations, tariffs, natural disasters, epidemics, transportation interruptions, construction delays) can interrupt supplies, increase product costs, and impair delivery capabilities.
• Labor shortages and increases in labor costs may materially impact the business by affecting staffing, increasing operating expenses, and hindering the ability to meet customer demands.
• Failure to maintain relationships with significant suppliers (four manufacturers accounted for approximately 72% of product purchases in fiscal 2025) or customers could materially and adversely impact business results.
• Product defects or failures could damage customer relationships, industry reputation, and lead to lawsuits.
• Substantial competition in a highly fragmented market, with some competitors potentially having greater financial resources, could adversely impact the company's ability to compete effectively and operate profitably.
• Compliance with federal, state, local, and foreign environmental and other laws and regulations, including those related to public company status, may result in significant costs, violations, or litigation.
• International trade policies, including the imposition of tariffs, could significantly increase product costs or limit product availability, potentially impacting gross profit if price increases are not successful or reduce customer demand.
• Unexpected events such as public health issues, natural disasters, geopolitical conflicts (e.g., Ukraine-Russia, Middle East), civil unrest, and terrorist activities may disrupt operations and increase costs.
• Foreign purchases and sales are subject to risks from currency fluctuations, trade restrictions, political instability, collection problems, and adverse tax consequences.
• Damages to or disruptions at company facilities, or those of suppliers or customers, could adversely impact business, operating results, and financial condition, with certain risks (e.g., hurricanes, earthquakes) being uninsurable or not economically insurable.
• Dependence on information and communication systems, including ERP implementation, poses risks of disruptions, delays, or failures that could affect business operations and financial reporting.
• Cybersecurity threats or incidents, including ransomware, malware, and phishing, could lead to misappropriation of information, data corruption, operational disruptions, loss of customer/employee/vendor confidence, regulatory fines, or lawsuits.
• Climate change, or legal/regulatory/market measures to address it, could negatively impact the economy, supply chain, and operational costs.
• The company's indebtedness may impact its financial condition, increase vulnerability to economic downturns, and impose restrictions through covenants on activities like acquisitions, investments, and dividend payments.
• Management, particularly Henry M. Nahmad and the Board, may be deemed to control the company with approximately 57.4% voting power, potentially leading to conflicts of interest, delaying change of control, or impacting stock price.
• As a smaller reporting company, reliance on reduced disclosure requirements may make the common stock less attractive to investors.
• The authority of the Board to issue preferred and common stock could adversely affect shareholder rights and have an anti-takeover effect, as well as result in dilution.
• The company's success depends on key personnel, and the loss of executive officers like Henry M. Nahmad and Tom Marks could harm the business.
• Litigation and legal/regulatory proceedings are inherently uncertain and could result in significant expenses or adverse financial outcomes.

Future Outlook

The company anticipates that its existing cash, projected cash from operations, and available funds under its Credit Agreement will be sufficient to cover operations and planned capital expenditures for at least the next twelve months and the foreseeable future. It may also explore raising additional funds through equity or debt issuances to support its buy-and-build growth strategy or general business operations. The company is currently evaluating the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its fiscal 2026 financial statements and is assessing the effects of ASU 2024-03 on its financial statement presentation and disclosures for the fiscal year ending June 30, 2028.

Management Comments

• The increase in revenues was attributable to revenues generated by businesses acquired by the Company during fiscal 2025 as well as price increases established throughout the Company's product lines and service offerings aimed at maintaining or increasing margins to cover incremental product and operating cost increases.
• The increase in net income was primarily attributable to increases in revenue and gross margin, partially offset by increases in selling, general, and administrative expenses.
• The Company is disciplined and conservative in its consideration of acquisitions and generally seeks to identify opportunities that fit certain financial and strategic criteria.
• The Company believes the issuance of stock consideration in transactions aligns the interests of the sellers of the acquired businesses with the interests of the Company's other stockholders.
• The Company believes that its existing cash, anticipated cash from operations and funds available under the Company's Credit Agreement will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve months from the filing of this Report, and the foreseeable future thereafter.
• Management does not believe that the covenants contained in the Credit Agreement currently materially limit the Company's ability to pay dividends or are reasonably likely to materially limit the Company's ability to pay dividends in the future.
• Management has excluded GNA, HMI, LPF, and ODL from its assessment of internal control over financial reporting as of June 30, 2025, due to the timing of their acquisitions.

Industry Context

The commercial and industrial laundry and boiler distribution business is highly competitive and fragmented, with over 500 full-line or partial-line equipment distributors in the United States. No single competitor holds a major market share, and most operate primarily in local markets. Competition is driven by effective planning and design, competitive pricing, reliable product representation, in-house installation, maintenance, and repair services, timely delivery, and continuous customer support. The company aims to compete by employing experienced professionals, offering a comprehensive product line, maintaining robust service networks, optimizing inventories, investing in advanced technologies, and expanding value-added services.

Comparison to Industry Standards

• The filing highlights the highly fragmented nature of the commercial and industrial laundry distribution market, with over 500 distributors in the U.S., suggesting that EVI Industries operates in an environment where no single competitor dominates.
• The company's 'buy-and-build' strategy is a direct response to this fragmented market, aiming to consolidate and grow market share through strategic acquisitions, which is a common strategy in fragmented industries.
• EVI Industries emphasizes competitive factors such as 'effective planning and design,' 'competitive pricing,' 'representation of reliable and high-quality products,' and 'in-house installation, maintenance, and repair services,' which are standard benchmarks for success in this service-oriented distribution sector.

Corporate Governance

Legal Proceedings

• The company is not aware of any pending legal proceedings to which it or its subsidiaries are a party that are expected to be material as of the filing date.

Related Party Transactions

• Western State Design, a wholly-owned subsidiary, leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack (director and employee) and Tom Marks (Executive Vice President, Business Development and President of the West Region). Payments totaled approximately $244,000 in fiscal 2025.
• AAdvantage Laundry Systems, a wholly-owned subsidiary, leases warehouse and office space from an affiliate of Mike Zuffinetti (former Chief Executive Officer of AAdvantage). Payments totaled approximately $480,000 in fiscal 2025.
• Yankee Equipment Systems, a wholly-owned subsidiary, leases 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli (President of Yankee Equipment Systems). Payments totaled approximately $152,000 in fiscal 2025.

Stakeholder Impact

• **Shareholders**: Positive impact from increased revenues, net income, and gross margin. Increased special cash dividend demonstrates commitment to shareholder returns. Potential for long-term growth through acquisitions. Risk of dilution from future equity issuances for acquisitions or compensation. Concentrated management ownership may limit influence of other shareholders.
• **Employees**: Benefits from stock-based equity programs, voluntary employee stock purchase plan, competitive compensation, growth opportunities, and training. Risk of labor shortages and increased labor costs impacting workload or compensation competitiveness.
• **Customers**: Benefit from expanded product offerings and services through acquisitions, aiming for a 'one-stop shop' experience. Potential for delays in order fulfillment due to supply chain or construction issues.
• **Suppliers**: Continued strong relationships with key manufacturers, but reliance on a few major suppliers (72% from four) poses concentration risk. Potential impact from international trade policies and tariffs on product costs and availability.
• **Creditors**: Increased long-term debt due to acquisitions, but the company remains in compliance with credit facility covenants and has extended its maturity date, indicating sound debt management. The company's assets collateralize the credit agreement.

Next Steps

• Integrate the recently acquired ASN Laundry Group into consolidated financial statements starting in the quarter ending September 30, 2025.
• Continue to pursue organic growth initiatives and the 'buy-and-build' growth strategy, including identifying and consummating future acquisitions.
• Assess the impact of the One Big Beautiful Bill Act (OBBBA) on fiscal 2026 consolidated financial statements.
• Evaluate the impact of ASU 2024-03 on financial statement presentation and disclosures for the fiscal year ending June 30, 2028.
• Pay the declared special cash dividend of $0.33 per share on October 6, 2025.
• Manage and monitor compliance with covenants under the amended Credit Agreement.

Key Dates

Recommendation

EVI Industries demonstrated robust financial performance in fiscal 2025, with significant increases in revenue (10%) and net income (33%), coupled with an improved gross margin. The company's aggressive and successful 'buy-and-build' strategy is effectively expanding its market footprint in a fragmented industry, positioning it for continued growth. The recent amendment to its credit facility provides enhanced financial flexibility and extended debt maturity, while the increased special cash dividend signals strong management confidence and a commitment to shareholder returns. While the increase in debt and a slight decrease in operating cash flow are noted, the overall strategic direction, strong profitability, and proactive growth initiatives make EVI Industries an attractive 'buy' for long-term investors seeking exposure to a consolidating distribution sector.

Keywords

Commercial Laundry Equipment, Industrial Laundry Equipment, Value-Added Distributor, Acquisitions, Buy-and-Build Strategy, Financial Performance, SEC Filing, 10-K, EVI Industries, Laundry Products, Technical Services, Corporate Governance, Risk Management, Dividends, Credit Facility, Supply Chain, Cybersecurity