EVI Industries, Inc. (EVI) Earnings Call Transcript & Summary

Hello, and welcome to EVI Industries' Earnings Call for the third quarter of the fiscal year ended June 30, 2025. I am Henry Nahmad, Chairman and CEO of EVI. Before we proceed, we would like to disclose our cautionary statement. This earnings call contains forward-looking statements as defined by SEC rules and regulations. Forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our earnings press release issued today and in our SEC filings, including the Risk Factors section of our annual report on Form 10-K for the fiscal year ended June 30, 2024. Actual results may differ materially from those expressed in or implied by the forward-looking statements. Before we get started, I want to share my appreciation to the nearly 900 valued employees that make up EVI today. Our people are the most valuable asset we have, and without their devotion to our company, our mission and the thousands of customers we serve, the consistent progress we have made towards achieving our long-term growth goals would not be possible. Today, I'll summarize our operating results for the third quarter of the fiscal year ended June 30, 2025, and provide greater context around the progress we're making to scale our platform, enhance our capabilities and extend our leadership position in the market. Let's begin with a few performance highlights. We delivered record revenues of $280 million and record gross profit of $84 million for the fiscal year-to-date period and revenues of $94 million and record gross profit of $28 million for the third quarter, demonstrating continued strength in customer demand and operational execution. We generated $11 million in operating cash flow for the fiscal year-to-date and $9 million in operating cash flow for the third quarter, underscoring the quality of our earnings and the efficiency of our business model. While SG&A increased, this reflects intentional investments in strategic areas, particularly in digital, infrastructure and integration of acquired businesses. Let me now spend some time on what we view as the most important strategic development of the third quarter, our acquisition of Girbau North America, which closed on April 1. The opportunity to acquire GNA emerged from years of mutual success and trust. Since 2018, we've had a productive distribution relationship with Girbau through GNA, and over time, we developed a strong foundation of confidence and shared values that made this transaction possible. This is a transformational deal for EVI and marks the largest acquisition in our history. GNA is a best-in-class master distributor with a strong and loyal customer base across the United States, highly experienced team, deep supply chain capabilities and a well-established reputation for excellence and reliability. More than just geographic expansion, this acquisition fundamentally enhances our operating scale, logistics infrastructure and customer reach. It significantly strengthens our presence in key growth markets and creates substantial cross-sell opportunities within our existing base. We've already begun integrating GNA's operations, and I'm encouraged by how aligned the cultures, systems and customer-centric values are. The early response from both customers and employees has been overwhelmingly positive. Longer term, we expect the acquisition to drive meaningful cost and revenue synergies, greater operational leverage as we expand our national platform, and enhanced value for our customers through improved product availability, faster delivery and broader service capabilities. GNA reflects the power and purpose of our buy-and-build strategy and our ability to execute large complex transactions with discipline and vision. Our acquisition strategy is reinforced by technology investments that are creating a durable competitive advantage. This quarter, we expanded adoption of our Field Service Management platform, now supporting over 425 technicians in the field and continued building our next-generation CRM and digital commerce capabilities. These investments are core to our long-term strategy, even as they impact near-term SG&A. They enable us to scale efficiently, serve customers more effectively and unify acquired businesses under a common data-driven infrastructure. One of the most important stories behind our performance this quarter is the strength of our operating cash flow, which exceeded $9 million. This is not just a reflection of our profitability but a powerful strategic enabler. Strong and consistent cash flow generation allows us to fund accretive acquisitions like GNA without overreliance on equity or excess leverage; continue investing in systems, teams and infrastructure to support growth; and preserve a healthy balance sheet, giving us the flexibility to navigate changing market conditions with confidence. In fact, following our March amendment to the credit facility, we now have over $175 million in liquidity with extended maturity and improved capacity. That puts us in an excellent position to continue executing our buy-and-build strategy sustainably and responsibly. We are focused on scaling with strength, growing our top and bottom line while remaining disciplined stewards of capital. Looking ahead, our long-term strategy is clear: expand the customer base through acquisitions and organic growth, digitize and modernize our operating platform, deliver exceptional service at scale and grow profitably while maintaining financial strength. With the addition of GNA, continued momentum in technology and a robust pipeline of opportunities, we're confident in our ability to accelerate growth and create lasting value for customers, employees and shareholders. In closing, I have said time and again that we will be aggressive in the pursuit of long-term growth yet conservative in the way we finance our growth so that we are able to execute on buy-and-build opportunities at any time. Today, EVI is a fundamentally solid business that, under our continuous leadership, has demonstrated consistent growth over many years. We believe that we are well positioned for continued growth and intend to continue executing on our long-term growth strategy. This concludes my comments related to the third quarter of the fiscal year ended June 30, 2025. As always, I want to thank our valued employees, our loyal suppliers and customers and our shareholders for your support and participation in EVI. Until next time, be well.