EnviroStar(EVI) - 2026 Q1 - Quarterly Report

Financial Performance - Revenues for the three-month period ended September 30, 2025 increased by $14.6 million, or 16%, compared to the same period of the prior fiscal year, primarily due to revenues from acquired businesses[107] - Gross profit for the same period increased by $5.0 million, or 17%, with gross margins rising from 30.8% to 31.3%[108] - Operating expenses increased by $6.5 million, or 27%, driven by expenses from acquired businesses and increased selling costs[109] - Net income for the three-month period was $1.8 million, down from $3.2 million, primarily due to increased operating expenses[112] Assets and Liabilities - Total assets increased from $307.0 million to $321.8 million, attributed to higher current assets and operating lease assets[113] - Total liabilities rose from $163.6 million to $181.0 million, largely due to increased accounts payable and customer deposits[113] - Working capital decreased from $50.6 million to $45.8 million, reflecting increases in accounts receivable and inventory[115] Cash Flow and Financing - For the three months ended September 30, 2025, operating activities provided cash of $1.0 million, an increase of $0.8 million compared to $0.2 million in the same period of 2024[117] - Investing activities used cash of $2.4 million for the three months ended September 30, 2025, a decrease of $4.7 million from $7.1 million used in the same period of 2024, primarily due to reduced cash paid for business acquisitions[118] - Financing activities used cash of $2.8 million for the three months ended September 30, 2025, compared to $6.7 million provided in the same period of 2024, reflecting a $9.5 million increase in cash used due to decreased net borrowings[119] - As of September 30, 2025, the Company had approximately $51.0 million of outstanding borrowings under its Credit Agreement, with a weighted average interest rate of 5.54%[121] - The Credit Agreement allows for borrowings up to $150 million, with an accordion feature to increase the facility by an additional $50 million, totaling $200 million[120] - The Company believes its existing cash, anticipated cash from operations, and funds available under the Credit Agreement will be sufficient to fund operations and capital expenditures for at least the next twelve months[124] - The Company is in compliance with its covenants under the Credit Agreement, with $48.0 million available to borrow under the revolving credit facility as of September 30, 2025[122] Special Events and Acquisitions - The company declared a special cash dividend of $0.33 per share, totaling $5.0 million, paid on October 6, 2025[113] - The company acquired ASN Laundry Group on August 1, 2025, which is expected to complement its existing business and provide growth opportunities[102] Economic Factors - Inflation did not significantly affect the Company's results during the reported periods, but risks related to inflation and price increases remain[125] - A hypothetical 1% increase in daily interest rates would increase the Company's annual interest expense by approximately $510,000 based on outstanding borrowings[130] Related Party Transactions - Payments under related party leases totaled approximately $63,000 and $57,000 for the three months ended September 30, 2025 and 2024, respectively[126]