EVI Industries, Inc. (EVI) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended September 30, 2025 (Fiscal Q1 2026). EVI Industries, Inc. operates as a value-added distributor and provider of technical services for commercial laundry equipment, parts, and accessories. The company pursues a "buy-and-build" growth strategy, executing multiple acquisitions during the fiscal year to expand its geographic footprint and service capabilities.
Key Financial Metrics
| Metric (in thousands) | Q1 2026 (Sep 30, 2025) | Q1 2025 (Sep 30, 2024) |
|---|---|---|
| Revenues | $108,269 | $93,625 |
| Gross Profit | $33,892 | $28,855 |
| Gross Margin | 31.3% | 30.8% |
| Operating Income | $3,562 | $4,989 |
| Net Income | $1,847 | $3,231 |
| Diluted EPS | $0.11 | $0.21 |
| Cash from Operations | $1,023 | $207 |
| Long-Term Debt | $51,000 | $53,000 |
| Cash and Equivalents | $4,658 | $4,373 |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 16% ($14.6 million) year-over-year, primarily driven by acquisitions completed in the prior fiscal year (Laundry Pro of Florida, O'Dell Equipment, Haiges Machinery, and Girbau North America).
- Profitability Decline: Despite revenue growth, Net Income decreased 43% ($1.4 million). This was caused by a 27% increase in Selling, General, and Administrative (SG&A) expenses, which rose $6.5 million due to integration costs, higher commissions, and a $550,000 expense related to industry exposition participation.
- Acquisition Activity: The company acquired ASN Laundry Group on August 1, 2025, for $0.5 million in cash. This acquisition contributed to the current quarter's results.
- Dividend Declaration: The Board declared a special cash dividend of $0.33 per share ($5.0 million aggregate) on September 11, 2025, which was paid in October 2025. This is reflected in current liabilities at period end.
- Interest Expense: Net interest expense nearly doubled to $916,000 from $482,000, attributed to higher average outstanding borrowings used to fund acquisitions.
Outlook, Risks, and Management Commentary
- Growth Strategy: Management continues to pursue the "buy-and-build" strategy. While market share growth tactics may temporarily lower gross margins, the company expects long-term benefits from an expanded installed base and higher-margin service revenue.
- Liquidity: The company maintains a $150 million revolving credit facility (expandable to $200 million). As of September 30, 2025, $51.0 million was outstanding with $48.0 million available. The weighted average interest rate on borrowings was 5.54%.
- Tax Legislation: The company is assessing the impact of the "One Big Beautiful Bill Act" (OBBBA) enacted in July 2025, which includes permanent extensions of certain tax provisions effective in fiscal 2026.
- Risks: Key risks include supply chain disruptions, inflationary pressures (including tariffs), labor shortages, and the ability to successfully integrate acquired businesses. The company also faces interest rate risk on its variable-rate debt.
Investor Verification Checklist
- Acquisition Integration: Verify the timeline for realizing synergies from the four major acquisitions completed in Fiscal 2025 and the recent ASN acquisition.
- SG&A Run Rate: Confirm whether the $6.5 million increase in operating expenses is a one-time step-up due to integration or a permanent increase in the cost structure.
- Debt Covenants: Review the company's leverage ratio compliance given the increased debt load and interest expense.
- Dividend Sustainability: Assess the impact of the $5.0 million special dividend on future cash flow availability for operations and further M&A.
- Working Capital Trends: Monitor the increase in inventory ($9.5 million increase in cash used) and accounts receivable to ensure efficient capital management.