Q4 2024 EVI Industries Inc Earnings Call - Pre-Recorded

Women and CEO of Evi.

Speaker Change: 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 32024.

Speaker Change: Actual results may differ materially from those expressed in or implied by the forward looking statements.

Speaker Change: Before we get started I.

Speaker Change: Sure my appreciation to the over 750 valued employees that make up <unk> today.

Speaker Change: 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 will summarize our operating results for the fiscal year ended June 32024, and.

Speaker Change: And we'll share our progress in connection with our long term goals.

Speaker Change: Fiscal 'twenty four is highlighted by a record $33 million in operating cash flow.

Speaker Change: A 71% reduction in net debt to $8.3 million record gross profit of $105 million.

Speaker Change: And record gross margin of 30%.

Speaker Change: Two acquisitions and a third acquisition consummated immediately subsequent to fiscal 'twenty four.

Speaker Change: And the implementation of new field service technologies across certain regional operations.

Speaker Change: This was achieved all while we continued to make investments across our business in the pursuit of our long term growth goals.

Speaker Change: And now our operating results.

Speaker Change: Fiscal 'twenty four revenue was $354 million and flat compared to revenue for fiscal 'twenty three.

Speaker Change: During which we achieved record results and key financial metrics, including a 32% increase in revenue over fiscal 'twenty two.

Speaker Change: Given the nature of our industry, we measure organic revenue growth by evaluating revenue over a multiyear period and I am pleased to share that the three year compounded annual revenue growth rate for businesses. We have owned for at least four years is 8%.

Speaker Change: The essential nature of the products and services, we provide to thousands of commercial laundry customers offers a consistent base of revenue opportunities in the light industrial on premise and vented laundry categories. It is important to remember that while we also generate revenue from larger industrial projects the timing of revenue related to larger industrial projects.

Speaker Change: Subject to longer sales cycles and complex installations that from time to time are uneven as compared to revenue derived from other commercial laundry categories.

Speaker Change: Excluding the impact of larger industrial customer sales order contracts during fiscal 'twenty for equipment revenue was flat while parts revenue increased six 6% and service revenue increased seven 8%.

Speaker Change: This reflects continued increase in the installed base of light industrial on premise invented laundry products, we represent and the benefit we derive from supporting our customers with a right range of parts accessories and services throughout the useful life of such laundry products.

Speaker Change: Moving to gross profit and margin during fiscal 'twenty four we set another fiscal year record for gross profit at $105 million and another fiscal year record for gross margin at 30%. These gains reflect in part a slight shift in the mix to higher margin parts and services.

Speaker Change: As well as the benefit derived from solution selling which has an example has resulted in new sales of machinery aimed to lower the operating cost of a commercial laundry by automating historically labor intensive tasks and new sales and consumables.

Speaker Change: Finally, a summary of investments across our business.

Speaker Change: Given the essential nature and the steady demand for the products and services, we provide a strong backlog of confirmed customer sales orders and an acquisition pipeline that has consistently delivered new growth opportunities, we increased investments across areas critical to scaling our operations. We grew our sales team by six.

Speaker Change: <unk> to over 190 professionals and increased our service team by 5% to approximately 400 technicians, and we implemented new field service technologies and certain regional service operations.

Speaker Change: Additions to our sales team aim to support our OEM representations increased penetration in existing distribution territories and expand into new distribution territories and ensure sales continuity the.

Speaker Change: The addition of service technicians aims to capture growing demand for our installation and maintenance capabilities across our growing installed base.

Speaker Change: And the implementation of our field service technologies designed to improve the efficiency of our service operations and customer satisfaction.

Speaker Change: The expenses incurred in connection with these investments adversely impacted our fiscal 'twenty for operating profit. We expect that these investments will yield positive returns in the forthcoming periods.

Speaker Change: From a financial strength and liquidity perspective during fiscal 'twenty four we generated a record $33 million in operating cash flow, which contributed to the 71% decrease in net debt from 29 million at June 30 of 'twenty three to $8 3 million at June 30 of 'twenty four.

Speaker Change: This includes a record $12 million in operating cash flow during the fourth quarter of fiscal 'twenty, four which represents a $4 8 million increase compared to the same period of the prior fiscal year.

Speaker Change: Given our growth and profitability prospects solid cash flows and strong balance sheet with over $100 million of available liquidity I am pleased to share that our board of directors declared a special cash dividend on the Companys common stock of <unk> 31 per share representing a 10% increase over the special cash.

Speaker Change: Dividend declared this time last year.

Speaker Change: On technology investments.

Speaker Change: In 2020, we initiated a comprehensive technology initiatives to transform <unk> into a modern data driven company.

Speaker Change: Since that time, our technology group has grown significantly various third party technology professionals have been retained and multiple technology technology initiatives were undertaken with a goal to accelerate sales and profit growth increase the speed convenience and efficiency in serving customers and extend our reach into new geographies and sales channel.

Holes and create scalable operating processes.

Speaker Change: During fiscal 'twenty for our technology team successfully successfully led efforts to consolidate business units into end state enterprise resource planning systems implemented our field service technology at certain regional service operations and commenced the configuration and implementation of our planned E Commerce site.

Speaker Change: While the costs and expenses associated with these and other modernization initiatives has adversely impacted <unk> financial performance in the near term. We believe these technological capabilities will be a catalyst to achieving our long term growth and profitability goals.

Speaker Change: On acquisitions during fiscal 'twenty four we completed the acquisition of two commercial laundry distributors and service providers.

Speaker Change: One in Pennsylvania, and the other in Texas, We also executed a definitive purchase agreement to acquire a third distributor and service provider in Florida, which was completed on July one of 24 immediately following the completion of fiscal 'twenty four.

In each case, we added similar distribution and service businesses comprised of experienced sales and service professionals with a loyal customer base and geographic areas, where we believe that our market share gain opportunities.

Speaker Change: While we have added many businesses to the evi family on average four to five per year extensive work goes into building an evi business unit. Following the completion of a transaction. The following is one of our many buy and build success stories.

Speaker Change: A little over four years ago, we purchased a commercial laundry business, we underwrote at approximately $5.6 million in revenue during the diligence.

Speaker Change: Elegance period, we collaborated with the owner and management team to create a strategic plan that included revenue and profitability goals.

Speaker Change: Over the last three years. This evi business unit increased revenue by over 160% organically increased operating income by over 280% and increased operating margin by 440 basis points to 14%.

Speaker Change: We believe these exceptional results were achieved as a result of three key factors one under the owners leadership the business unit expanded into new geographies added OEM representations and enhanced its product offerings to include consumables, all while maintaining business continuity.

Speaker Change: To the business unit effectively utilized <unk> financial and functional resources in support of its growing operations and three the team embraced a wealth of knowledge and experience provided by other members of the Evi family.

Speaker Change: Our acquisitions have been internally sourced negotiated diligence executed and integrated by our team that has been working together in Miami, Florida for seven years, our team has a profound appreciation for the sensitive process of family undertakes.

Speaker Change: Contemplating the divestiture of a family owned business, we exercise flexibility and consideration throughout the buying process and have a tremendous reputation in our industry given our record of successful acquisitions.

Speaker Change: Considering our growth record and reputation we continue to actively pursue many acquisitions and strategic transactions and opportunities in the commercial laundry industry and related industries.

Speaker Change: In summary, 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 <unk>.

Speaker Change: 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.

Speaker Change: This concludes my comments related to the fourth fiscal quarter and fiscal year ended June 30 of 'twenty four 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 B well.

Speaker Change: With.

Speaker Change: With regard.