EnviroStar(US:EVI)2025-09-11 20:25Customer Base and Market Position - The Company serves approximately 55,000 customers primarily in the United States, Canada, the Caribbean, and Latin America, with no single customer accounting for more than 10% of revenues for fiscal 2025 or 2024[37]. - The Company competes in a highly fragmented market with over 500 distributors in the United States, focusing on competitive pricing, reliable products, and comprehensive service offerings[50]. - The Company has established long-standing relationships with its suppliers, which provide competitive advantages, including exclusivity for certain products[46]. - The Company’s foreign sales are not significant, primarily involving sales to Canada, the Caribbean, and Latin America, with all transactions requiring payment in U.S. dollars[43]. - The Company’s foreign sales are primarily to Canada, the Caribbean, and Latin America, with all transactions requiring payment in U.S. dollars[192]. Growth Strategy - The Company's growth strategy includes organic growth initiatives and a "buy-and-build" strategy, focusing on acquisitions that complement existing business and enhance growth opportunities[24]. - The Company’s growth strategy includes organic growth initiatives and a "buy-and-build" strategy focusing on acquisitions and enhancing service operations[139]. - The Company acquired ALVF, Inc. and Signature Services Corporation during fiscal 2024 for a total consideration of $2.0 million in cash and 8,621 shares of common stock[144]. - The Company acquired multiple businesses in fiscal 2025 for a total consideration of $51.0 million, primarily in cash[145]. Financial Performance - Total revenues for fiscal 2025 increased by 10% compared to fiscal 2024, driven by revenues from acquired businesses and price increases across product lines[141]. - Net income for fiscal 2025 rose by 33% from fiscal 2024, primarily due to revenue growth and improved gross margin[142]. - Revenue for the year ended June 30, 2025, was $389,830,000, representing an increase of 10.2% from $353,563,000 in 2024[214]. - Gross profit for the year ended June 30, 2025, was $118,348,000, up from $105,253,000 in 2024, indicating a gross margin improvement[214]. - Net income for the year ended June 30, 2025, was $7,498,000, a 32.6% increase compared to $5,646,000 in 2024[214]. - Revenues for fiscal 2025 increased by approximately $36.3 million (10%) compared to fiscal 2024, attributed to acquisitions and price increases[162]. Operational Insights - The Company has not noted any significant seasonality in its business operations historically[39]. - The Company employs a robust network of qualified technicians and maintains optimized inventories to ensure timely delivery and customer satisfaction[51]. - The Company operates 36 warehousing and distribution facilities across 22 U.S. states, with a total of approximately 547,000 square feet of space[123]. - The Company primarily generates revenue from the sale of commercial and industrial laundry and dry cleaning equipment, with a significant portion of contracts being short-term and having a single performance obligation[174]. - Revenue is recognized when control of the product is transferred to the customer, typically upon shipment, with longer-term contracts recognized over time using the cost-to-cost method[177]. Financial Position and Debt - The Company has a syndicated credit agreement with a maximum principal amount of $150 million, with an accordion feature increasing it to $200 million[98]. - As of June 30, 2025, the Company had $53.0 million outstanding borrowings under the credit agreement[98]. - The Company's indebtedness may impact its financial condition and results of operations, with cash being used to satisfy debt service requirements[97]. - The Company is subject to financial covenants requiring compliance with maximum leverage ratios and minimum interest coverage ratios[100]. - Long-term debt increased significantly to $53,000,000 in 2025 from $12,903,000 in 2024, indicating a strategic shift in financing[211]. Employee Relations and Culture - The Company maintains a culture that rewards performance through various incentive programs, including stock-based equity plans designed to promote long-term performance and employee retention[25]. - The Company believes it has satisfactory relations with its employees and aims to create a diverse and innovative workplace[56]. - The Company utilizes various training methods, including in-person training and instructional videos, to educate its sales personnel[59]. - The Company’s equity compensation plan is designed to promote long-term performance and employee retention[58]. - As of August 1, 2025, the Company had 850 full and part-time employees, all based in the United States[55]. Risks and Compliance - The Company is subject to various risks, including potential adverse effects on business and financial condition due to acquisitions and strategic transactions[61]. - Labor shortages and increases in labor costs may materially impact the Company's business and results of operations[69]. - The Company faces risks related to uninsured losses from natural disasters and other catastrophic events[85]. - The Company is dependent on information and communication systems, with potential disruptions adversely affecting operations[87]. - Climate change and related legal measures could negatively impact the Company's business and supply chain[96]. - The Company is subject to compliance costs related to internal control over financial reporting, which may divert management's attention from operations[110]. Shareholder Information - The management controls approximately 57.4% of the issued and outstanding shares of the Company's common stock, potentially impacting shareholder interests[102]. - The Company is classified as a "smaller reporting company," allowing it to rely on reduced disclosure requirements[106]. - The concentration of ownership may result in limited trading volume, increasing price volatility of the Company's common stock[105]. - A special cash dividend of $0.33 per share was declared on September 11, 2025, totaling approximately $4.8 million, to be paid on October 6, 2025[132]. Cash Flow and Investments - Operating activities provided cash of approximately $21.3 million in fiscal 2025, down from $32.7 million in fiscal 2024[151]. - Investing activities used cash of approximately $51.8 million during fiscal 2025, a significant increase from $6.8 million in fiscal 2024[152]. - Financing activities provided cash of approximately $34.8 million in fiscal 2025, compared to cash used of $27.2 million in fiscal 2024[153]. - The company reported a net cash provided by operating activities of $21,265,000 for the year ended June 30, 2025, down from $32,652,000 in 2024[220]. - Capital expenditures for the year were $4,861,000, slightly down from $4,867,000 in 2024[220].