8-K: EVI Industries to Acquire Girbau North America in Landmark Deal

EVI Industries announces a definitive agreement to acquire Girbau North America, marking its 30th and largest acquisition in a decade-long buy-and-build growth strategy.

Summary

• EVI Industries, Inc. has entered into a definitive agreement to acquire Girbau North America, Inc. (GNA) from Girbau S.A.
• The purchase price is approximately $43 million in cash, subject to adjustments.
• GNA generated $75 million in revenue and approximately 9.5% operating income for the twelve months ended December 31, 2024.
• GNA had a five-year compounded annual growth rate in revenue of 11% as of December 31, 2024.
• The acquisition is expected to be immediately accretive to EVI's earnings.
• EVI will fund the acquisition through its revolving credit facility.
• EVI has secured a commitment to amend its credit agreement, increasing revolving commitments by $50 million to $150 million and the accordion feature by $10 million to $50 million, totaling $200 million.
• On a pro forma basis, GNA would have contributed approximately $50 million in net revenue and approximately $7.0 million in operating income for the twelve-month period ended December 31, 2024.

Sentiment

Score: 9

Explanation: The document expresses a highly positive sentiment due to the strategic acquisition, expected accretive earnings, strong growth metrics of the acquired company, and management's confidence in future opportunities.

Positives

• The acquisition is expected to be immediately accretive to EVI's earnings.
• GNA has a strong track record of growth, with an 11% five-year compounded annual growth rate in revenue.
• The acquisition expands EVI's reach and capabilities in the commercial laundry market.
• EVI is securing long-term strategic alignment with a key manufacturing partner.
• GNA's experienced team of laundry professionals will join EVI, enhancing its functional support capabilities.
• The transaction is expected to strengthen Girbau's presence in North America.

Risks

• The anticipated benefits and projected synergies of the transaction may not be realized.
• Integration risks associated with combining GNA and EVI's operations exist.
• The conditions to closing the acquisition may not be satisfied.
• The contemplated amendment to EVI's Credit Facility may not be entered into on the contemplated terms, or at all.
• There are risks related to indebtedness incurred by EVI in connection with the proposed acquisition.

Future Outlook

EVI expects the acquisition of GNA to expand its reach, enhance its capabilities, and be immediately accretive to its earnings. EVI and GNA will pursue strategies that promote growth and create new opportunities for members of GNA's extensive distribution network.

Management Comments

• Henry Nahmad, EVI's Chairman and CEO, commented: 'Ten years ago, we embarked on a journey to build the undisputed leader in and around the commercial laundry industry and in doing so, produce attractive returns for our shareholders.'
• Henry Nahmad, EVI's Chairman and CEO, commented: 'We are excited about the growth opportunities available through GNA as we believe this addition accelerates our strategy to develop a national network of high performing commercial laundry businesses to serve end user customers with the broadest array of products and exceptional technical services.'
• Merc Girbau, Chair and CEO of Girbau commented: 'This long-term relationship will strengthen our presence in North America and allows us to continue innovating in a key market. With EVI as our distribution partner and GNA a part of the team, we are ensured continued growth and a focus on excellence in customer service.'

Industry Context

The acquisition aligns with EVI's buy-and-build growth strategy in the fragmented North American commercial laundry distribution and services market. It aims to consolidate the industry, drive organic growth, and modernize operations through technology.

Comparison to Industry Standards

• EVI's acquisition of GNA is a strategic move to strengthen its position in the commercial laundry industry, similar to how companies like унисон and Alliance Laundry Systems have expanded their market presence through acquisitions.
• The revenue and operating income metrics of GNA are comparable to other successful players in the commercial laundry equipment distribution sector.
• EVI's decentralized operating model is a common approach in the distribution industry, allowing acquired companies to maintain their local focus and customer relationships, similar to how унисон operates its acquired businesses.

Stakeholder Impact

• Shareholders can expect accretive earnings and potential long-term value creation.
• Employees of GNA will become part of the EVI family, with opportunities for growth and development.
• Customers of GNA will have access to a broader array of products and services.
• Suppliers of GNA will benefit from the combined entity's increased scale and reach.

Next Steps

• EVI will work to close the acquisition of GNA.
• EVI will amend its credit agreement to increase its revolving commitments and accordion feature.
• EVI and GNA will pursue strategies to promote growth and create new opportunities for GNA's distribution network.
• EVI will integrate GNA into its decentralized operating model.

Key Dates

Keywords

acquisition, EVI Industries, Girbau North America, commercial laundry, merger, GNA, Girbau, laundry