EVI's Revenue Jumps 15.6%, But Net Income Plunges 43%

TL;DR

**EVI's top-line growth is impressive, but the significant profit erosion makes it a 'show-me' story for investors.**

AI Summary

EVI Industries, Inc. reported a significant increase in revenues for the three months ended September 30, 2025, reaching $108.27 million, up from $93.63 million in the same period of 2024, representing a 15.6% increase. Despite this revenue growth, net income decreased to $1.85 million from $3.23 million year-over-year, a 42.8% decline. This reduction in net income was primarily driven by a substantial rise in selling, general and administrative expenses, which increased to $30.33 million from $23.87 million, and a higher interest expense, net, of $916,000 compared to $482,000. The company continued its 'buy-and-build' growth strategy, acquiring ASN Laundry Group for $0.5 million in cash on August 1, 2025, and previously acquiring Laundry Pro of Florida, Inc. for $5.9 million and O'Dell Equipment & Supply, Inc. for $4.5 million in fiscal 2025. Cash decreased by $4.19 million during the quarter, from $8.85 million to $4.66 million, largely due to increased inventory and accounts receivable, and cash used in investing and financing activities, including $17 million in debt repayments. Diluted net earnings per share fell to $0.11 from $0.21.

Why It Matters

EVI's strong revenue growth of 15.6% indicates robust demand for its commercial laundry products and services, which could signal a healthy underlying market for its offerings. However, the sharp 42.8% drop in net income, driven by rising SG&A and interest expenses, raises concerns about profitability and operational efficiency, potentially impacting investor returns. The company's aggressive 'buy-and-build' acquisition strategy, evidenced by the ASN Laundry Group acquisition, aims for market consolidation and scale, but the associated integration costs and increased debt (despite repayments) could pressure margins. For investors, this mixed performance suggests a need to scrutinize the sustainability of revenue growth against escalating costs and the effectiveness of integrating acquired businesses in a competitive distribution landscape.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant decline in net income by 42.8% ($1.85 million vs. $3.23 million) despite a 15.6% revenue increase. This indicates potential challenges in cost control, specifically with selling, general and administrative expenses rising by $6.46 million to $30.33 million. Additionally, increased interest expense by $434,000 to $916,000 suggests higher borrowing costs or increased debt utilization, which could impact future profitability.

Analyst Insight

Investors should closely monitor EVI's next earnings reports for signs of improved cost management and successful integration of recent acquisitions. Evaluate whether the increased SG&A expenses are temporary due to acquisition-related activities or indicative of a structural shift in operating costs. Consider the impact of rising interest rates on future profitability given the increase in interest expense.

Financial Highlights

debt To Equity

0.36

revenue

$108.27M

operating Margin

3.3%

total Assets

$321.75M

total Debt

$51.00M

net Income

$1.85M

eps

$0.11

gross Margin

31.3%

cash Position

$4.66M

revenue Growth

+15.6%

Key Numbers

• $108.27M — Revenues (Increased by 15.6% from $93.63 million in Q3 2024)
• $1.85M — Net Income (Decreased by 42.8% from $3.23 million in Q3 2024)
• $30.33M — Selling, General and Administrative Expenses (Increased from $23.87 million in Q3 2024)
• $0.11 — Diluted Net Earnings Per Share (Decreased from $0.21 in Q3 2024)
• $916K — Interest Expense, Net (Increased from $482,000 in Q3 2024)
• $4.66M — Cash at End of Period (Decreased from $8.85 million at beginning of period)
• $0.5M — Cash paid for ASN Laundry Group acquisition (Acquisition on August 1, 2025)
• $17.0M — Debt Repayments (Made during the three months ended September 30, 2025)

Key Players & Entities

• EVI Industries, Inc. (company) — registrant
• ASN Laundry Group (company) — acquired entity
• Laundry Pro of Florida, Inc. (company) — acquired entity
• O'Dell Equipment & Supply, Inc. (company) — acquired entity
• Haiges Machinery, Inc. (company) — acquired entity
• FASB (regulator) — accounting standards setter
• SEC (regulator) — filing authority
• Bloomberg (company) — publisher

FAQ

Risk Factors

• Integration of Acquisitions [medium — operational]: The company's 'buy-and-build' strategy involves acquiring new businesses like ASN Laundry Group, Laundry Pro of Florida, and O'Dell Equipment & Supply. Successful integration of these acquisitions is crucial for realizing expected synergies and growth. Failure to integrate effectively could lead to operational disruptions and hinder the achievement of strategic objectives.
• Increased Debt and Interest Expense [medium — financial]: The company's acquisitions and operations have led to increased interest expense, rising to $916,000 from $482,000 year-over-year. This, coupled with significant debt repayments of $17 million during the quarter, indicates a potentially leveraged financial position that could be sensitive to interest rate fluctuations and impact profitability.
• Declining Profitability Despite Revenue Growth [high — financial]: While revenues increased by 15.6% to $108.27 million, net income decreased by 42.8% to $1.85 million. This is largely due to a substantial increase in SG&A expenses to $30.33 million from $23.87 million, indicating potential inefficiencies or increased costs associated with growth initiatives.
• Decreasing Cash Position [medium — financial]: Cash decreased by $4.19 million during the quarter, ending at $4.66 million. This reduction is attributed to increased inventory and accounts receivable, as well as cash used in investing and financing activities, including $17 million in debt repayments. A low cash balance could limit future investment or operational flexibility.
• Inventory and Accounts Receivable Management [medium — operational]: The company experienced increases in both inventory (from $66.06 million to $75.23 million) and accounts receivable (from $60.49 million to $63.49 million). Effective management of these working capital components is essential to ensure liquidity and operational efficiency.

Industry Context

EVI Industries operates in the commercial laundry equipment distribution and service sector. This industry is characterized by a 'buy-and-build' consolidation trend, where larger players acquire smaller regional distributors to expand market share and operational scale. Key drivers include demand from laundromats, hotels, hospitals, and other institutions requiring laundry services.

Regulatory Implications

The company must comply with various regulations related to business operations, environmental standards for laundry facilities, and financial reporting requirements. Acquisitions also necessitate adherence to antitrust laws and disclosure obligations. Changes in tax laws or accounting standards could also impact financial reporting and profitability.

What Investors Should Do

1. Monitor SG&A expense control
2. Analyze acquisition integration success
3. Assess cash flow and liquidity
4. Evaluate margin trends

Key Dates

• 2025-08-01: Acquisition of ASN Laundry Group — Continues the 'buy-and-build' strategy, adding to the company's portfolio of laundry product distributors and service providers.
• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing significant revenue growth but a decline in net income and EPS.
• 2024-07-01: Acquisition of Laundry Pro of Florida, Inc. (LPF) — Part of the fiscal 2025 acquisitions, funded by credit facility, contributing to the company's expansion.

Glossary

ASC 805, Business Combinations

Accounting Standards Codification that governs how business acquisitions are accounted for, requiring the acquirer to recognize the acquired assets and liabilities at their fair values. (Used to explain the accounting treatment for acquisitions like ASN Laundry Group and Laundry Pro of Florida, Inc.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its net identifiable assets. It represents factors like brand reputation, customer loyalty, and synergies. (The company recorded $0.6 million in goodwill from the ASN acquisition, indicating the premium paid over the fair value of net assets acquired.)

Operating lease assets

Assets recognized on the balance sheet representing the right to use an asset for a period of time, typically for leased property or equipment. (These assets increased from $10.75 million to $12.46 million, suggesting increased leasing activity or changes in lease terms.)

Treasury stock

Shares of a company's own stock that it has repurchased from the open market. These shares are no longer outstanding and do not carry voting rights. (The number of treasury shares increased from 221,879 to 249,245, indicating share repurchases or other equity transactions.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, EVI Industries reported a robust 15.6% increase in revenue, reaching $108.27 million. However, this top-line growth did not translate to the bottom line, as net income saw a significant 42.8% decline to $1.85 million. This divergence is primarily driven by a substantial rise in selling, general and administrative expenses and increased interest expenses. Diluted EPS also fell from $0.21 to $0.11, reflecting the reduced profitability. The company's cash position has also weakened, decreasing by $4.19 million during the quarter.

Filing Documents

• evi-20250930.htm (10-Q) — 479KB
• ex31-01.htm (EX-31.01) — 9KB
• ex31-02.htm (EX-31.02) — 9KB
• ex32-01.htm (EX-32.01) — 4KB
• ex32-02.htm (EX-32.02) — 4KB
• 0001174947-25-001369.txt ( ) — 3942KB
• evi-20250930.xsd (EX-101.SCH) — 35KB
• evi-20250930_cal.xml (EX-101.CAL) — 64KB
• evi-20250930_def.xml (EX-101.DEF) — 197KB
• evi-20250930_lab.xml (EX-101.LAB) — 343KB
• evi-20250930_pre.xml (EX-101.PRE) — 216KB
• evi-20250930_htm.xml (XML) — 322KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Condensed Consolidated Statements of Operations (Unaudited) for the three months ended September 30, 2025 and 2024 3 Condensed Consolidated Balance Sheets at September 30, 2025 (Unaudited) and June 30, 2025 4 Condensed Consolidated Statements of Shareholders' Equity (Unaudited) for the three months ended September 30, 2025 and 2024 6 Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended September 30, 2025 and 2024 7 Notes to Condensed Consolidated Financial Statements (Unaudited) 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 Item 4.

Controls and Procedures

Controls and Procedures 31

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 31 Item 1A.

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 5. Other Information 32 Item 6. Exhibit 33

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. EVI Industries, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) For the three months ended September 30, 2025 2024 Revenues $ 108,269 $ 93,625 Cost of sales 74,377 64,770 Gross profit 33,892 28,855 Selling, general and administrative expenses 30,330 23,866 Operating income 3,562 4,989 Interest expense, net 916 482 Income before income taxes 2,646 4,507 Provision for income taxes 799 1,276 Net income $ 1,847 $ 3,231 Net earnings per share – basic $ 0.12 $ 0.22 Net earnings per share – diluted $ 0.11 $ 0.21 See Notes to Condensed Consolidated Financial Statements 3 EVI Industries, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except as otherwise noted) ASSETS September 30, 2025 (Unaudited) June 30, 2025 Current assets Cash $ 4,658 $ 8,852 Accounts receivable, net of allowance for expected credit losses of $ 3.2 million and $ 3.1 million, respectively 63,488 60,494 Inventories, net 75,231 66,059 Vendor deposits 2,726 1,396 Contract assets 95 289 Other current assets 11,939 8,346 Total current assets 158,137 145,436 Equipment and improvements, net 18,516 17,772 Operating lease assets 12,458 10,751 Intangible assets, net 30,095 30,875 Goodwill 92,096 91,667 Other assets 10,448 10,527 Total assets $ 321,750 $ 307,028 See Notes to Condensed Consolidated Financial Statements 4 EVI Industries, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except share and per share data) LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 2025 (Unaudited) June 30, 2025 Current liabilities Accounts payable and accrued expenses $ 63,159 $ 50,963 Accrued employee expenses 16,573 15,398 Customer deposits 27,339 24,316 Contract liabilities 1,340 408 Current portion of operating lease liabili

financial statements upon adoption, other than as described above

financial statements upon adoption, other than as described above. Note (4) – Acquisitions: On August 1, 2025, the Company acquired ASN Laundry Group ("ASN"), a New York-based distributor of commercial laundry products and a provider of related technical installation and maintenance services. The consideration paid by the Company in connection with the acquisition consisted of $ 0.5 million in cash. In addition, the Company assumed $ 0.1 million of accrued liabilities of ASN in connection with the transaction. Fees and expenses related to the acquisition, consisting primarily of legal and other professional fees, were not material and are classified as selling, general and administrative expenses in the Company's consolidated statement of operations for the quarter ended September 30, 2025. The acquisition was treated for accounting purposes as a purchase of ASN using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"), pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to goodwill. The Company allocated $ 0.6 million to goodwill, which is expected to be amortized and deductible for tax purposes over 15 years. Goodwill is attributable primarily to the assembled workforce, as well as the expected benefits from the increased scale of the Company as a result of the acquisition. The financial position, including assets and liabilities, of ASN is included in the Company's unaudited condensed consolidated balance sheet as of September 30, 2025 and the results of operations of ASN subsequent to the August 1, 2025 closing date are included in the Company's unaudited condensed consolidated financial statements for the quarter ended Septembe

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