Core Insights - EVI Industries, Inc. (EVI) shares have declined 17.8% since the earnings report for the quarter ended September 30, 2025, underperforming the S&P 500 index, which gained 1.9% during the same period [1] - For Q1 fiscal 2026, EVI reported earnings per share of 11 cents, down from 21 cents year-over-year, while revenue increased by 16% to $108.3 million [2] - Gross profit reached a record $33.9 million, with a gross margin of 31.3%, attributed to the Continental acquisition [4] Financial Performance - Operating income fell to $3.6 million from $5 million a year ago, and net income dropped 43% to $1.8 million from $3.2 million [3] - Adjusted EBITDA decreased 11% to $6.8 million, indicating margin compression due to ongoing investments [3] - Selling, general and administrative (SG&A) expenses rose to $30.3 million from $23.9 million, impacting profitability metrics [6] Management Commentary - The CEO emphasized a long-term vision focused on acquisitions, technology upgrades, and process improvements to build a resilient business [7] - Management views current revenue gains and record gross margins as validation of its buy-and-build strategy, despite a dip in profitability [8] Business Metrics - EVI's gross margin improved to 31.3% from 30.8% year-over-year, primarily due to the Continental acquisition [4] - Adjusted EBITDA margin decreased to 6.2% from 8.1% in the comparable period, reflecting increased investments [5] Strategic Investments - The company made significant investments in consolidation and optimization, which pressured earnings, while participation in a major industry exposition elevated expenses [9] - Higher SG&A costs and increased interest expense (up to $0.9 million from $0.5 million) further squeezed profitability [10] Future Outlook - EVI reiterated confidence in sustaining gross margin improvements and pursuing additional acquisitions, supported by a robust balance sheet [11] - The company declared a special cash dividend of 33 cents per share, totaling $5 million, reflecting financial strength [12] Technological Advancements - EVI scaled its proprietary field service platform, handling approximately 9,000 service appointments in September 2025, up from 1,000 a year earlier [13] - Phase one of a new CRM system was rolled out at Continental, with plans for broader implementation to improve efficiency and sales effectiveness [13]