EVI INDUSTRIES, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022

	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

	Commission file number 001-14757

EVI Industries, Inc.

(Exact name of registrant as specified in its charter)

	Delaware	11-2014231
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4500 Biscayne Blvd., Suite 340, Miami, FL33137
(Address of principal executive offices)

(305) 402-9300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.025 par value	EVI	NYSE American

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $.025 par value per share – 12,546,890 shares outstanding as of November 2, 2022.



PART I – FINANCIAL INFORMATION
Item 1.Financial Statements	3
Condensed Consolidated Statements of Operations (Unaudited) for the three months ended September 30, 2022 and 2021	3
Condensed Consolidated Balance Sheets at September 30, 2022 (Unaudited) and June 30, 2022	4
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the three months ended September 30, 2022 and 2021	6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended September 30, 2022 and 2021	7
Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.Controls and Procedures	27
PART II – OTHER INFORMATION
Item 1.Legal Proceedings	28
Item 1A.Risk Factors	28
Item 6.Exhibits	29
Signatures	30

	For the three months ended September 30,
	2022		2021
Revenues	$	83,428	$	63,741
Cost of sales		58,923		46,102
Gross profit		24,505		17,639
Selling, general and administrative expenses		20,122		14,970
Operating income		4,383		2,669
Interest expense, net		377		115
Income before income taxes		4,006		2,554
Provision for income taxes		1,159		535

Net income	$	2,847	$	2,019

Net earnings per share – basic	$	0.20	$	0.15

Net earnings per share – diluted	$	0.20	$	0.15

ASSETS
	September 30, 2022 (Unaudited)		June 30, 2022
Current assets
Cash	$	3,774	$	3,974
Accounts receivable, net of allowance for doubtful accounts of $1.7 million and $1.6 million, respectively		44,320		43,014
Inventories, net		54,244		49,359
Vendor deposits		1,829		1,728
Contract assets		5,368		1,519
Other current assets		5,943		6,018
Total current assets		115,478		105,612

Equipment and improvements, net		12,941		13,033
Operating lease assets		7,151		7,480
Intangible assets, net		25,708		26,234
Goodwill		71,714		71,039
Other assets		8,054		7,370

Total assets	$	241,046	$	230,768

LIABILITIES AND SHAREHOLDERS’ EQUITY
	September 30, 2022 (Unaudited)			June 30, 2022
Current liabilities
Accounts payable and accrued expenses	$	42,213		$	42,026
Accrued employee expenses		9,379			8,508
Customer deposits		19,696			21,288
Contract liabilities		-			507
Current portion of operating lease liabilities		2,471			2,518
Total current liabilities		73,759			74,847

Deferred tax liabilities, net		4,798			4,666
Long-term operating lease liabilities		5,440			5,736
Long-term debt, net		35,843			27,840

Total liabilities		119,840			113,089

Commitments and contingencies (Note 11)

Shareholders’ equity
Preferred stock, $1.00 par value; authorized shares – 200,000; none issued and outstanding		-			-
Common stock, $.025 par value; authorized shares - 20,000,000; 12,650,126 shares issued at September 30, 2022 and June 30, 2022, including shares held in treasury		316			316
Additional paid-in capital		98,224			97,544
Treasury stock, 127,801 shares at September 30, 2022 and June 30, 2022, at cost		(3,070	)		(3,070	)
Retained earnings		25,736			22,889
Total shareholders’ equity		121,206			117,679
Total liabilities and shareholders’ equity	$	241,046		$	230,768

	Three months ended September 30, 2022
	Common Stock				Additional Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at June 30, 2022		12,650,126	$	316	$	97,544		127,801	$	(3,070	)	$	22,889	$	117,679

Stock compensation		-		-		680		-		-			-		680

Net income		-		-		-		-		-			2,847		2,847
Balance at September 30, 2022		12,650,126	$	316	$	98,224		127,801	$	(3,070	)	$	25,736	$	121,206

	Three months ended September 30, 2021
	Common Stock				Additional Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at June 30, 2021		12,399,137	$	310	$	90,501		120,706	$	(2,865	)	$	18,794	$	106,740

Stock compensation		-		-		479		-		-			-		479

Net income		-		-		-		-		-			2,019		2,019
Balance at September 30, 2021		12,399,137	$	310	$	90,980		120,706	$	(2,865	)	$	20,813	$	109,238

	For the three months ended
	September 30, 2022			September 30, 2021
Operating activities:
Net income	$	2,847		$	2,019
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization		1,446			1,236
Amortization of debt discount		3			13
Provision for bad debt expense		103			108
Non-cash lease expense		(14	)		100
Stock compensation		680			479
Inventory reserve		(136	)		(31	)
(Benefit) provision for deferred income taxes		132			(162	)
Other		(36	)		(14	)
(Increase) decrease in operating assets:
Accounts receivable		(1,239	)		(4,889	)
Inventories		(4,162	)		(3,895	)
Vendor deposits		(101	)		(43	)
Contract assets		(3,849	)		222
Other assets		(609	)		(759	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		113			(2,453	)
Accrued employee expenses		776			(318	)
Customer deposits		(1,652	)		983
Contract liabilities		(507	)		(3,032	)
Net cash used by operating activities		(6,205	)		(10,436	)
Investing activities:
Capital expenditures		(771	)		(848	)
Cash paid for acquisitions, net of cash acquired		(1,224	)		-
Net cash used by investing activities		(1,995	)		(848	)
Financing activities:
Proceeds from long-term debt		15,000			15,000
Debt repayments		(7,000	)		(7,000	)
Net cash provided by financing activities		8,000			8,000
Net decrease in cash		(200	)		(3,284	)
Cash at beginning of period		3,974			6,057
Cash at end of period	$	3,774		$	2,773

	For the three months ended September 30,
	2022 (Unaudited)		2021 (Unaudited)

Net income	$	2,847	$	2,019
Less: distributed and undistributed income allocated to unvested restricted common stock		351		176
Net income allocated to EVI Industries, Inc. shareholders	$	2,496	$	1,843
Weighted average shares outstanding used in basic earnings per share		12,522		12,278
Dilutive common share equivalents		4		381
Weighted average shares outstanding used in diluted earnings per share		12,526		12,659
Basic earnings per share	$	0.20	$	0.15
Diluted earnings per share	$	0.20	$	0.15

	September 30, 2022			June 30, 2022
Revolving credit facility	$	36,000		$	28,000
Less: unamortized discount and deferred financing costs		(157	)		(160	)
Total long-term debt, net	$	35,843		$	27,840

Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)
2023 (remainder of)	$	2,088
2024		1,982
2025		1,408
2026		972
2027		798
Thereafter		1,288
Total minimum lease payments	$	8,536
Less: amounts representing interest		625
Present value of minimum lease payments	$	7,911
Less: current portion		2,471
Long-term portion	$	5,440

	Three months ended September 30,
		2022		2021
Operating lease cost
Operating lease cost (1)	$	773	$	621
Short-term lease cost (1)		-		-
Variable lease cost (1)		18		35
Total lease cost	$	791	$	656


(1)		Expenses are classified within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2023 (remainder of)	$	3,010	$	1,814	$	1,196
2024		3,131		1,891		1,240
2025		2,312		1,340		972
2026		1,660		840		820
2027		870		449		421
Thereafter		679		264		415
					$	5,064*
* Excludes residual values of $2.7 million.

	Restricted Stock Awards				Restricted Stock Units
	Shares		Weighted- Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Non-vested awards or units outstanding at June 30, 2022		1,026,183	$	21.65		416,465		$	26.75
Granted		222,672		16.30		93,789			14.73
Vested		-		-		-			-
Forfeited		-		-		(376	)		10.63
Non-vested awards or units outstanding at September 30, 2022		1,248,855	$	20.69		509,878		$	24.55


(1)	Relates to the two acquisitions consummated during September 2022, as described in Note 4, “Acquisitions.”
(2)	Represents working capital adjustments related to business acquisitions consummated by the Company during the fiscal year ended June 30, 2022.

		September 30, 2022
Weighted average remaining lease terms
Operating leases		4.7 years
Weighted average discount rate
Operating leases		3.3%

Balance at June 30, 2022	$	71,039
Goodwill from acquisitions (1)		639
Working capital adjustments (2)		36
Balance at September 30, 2022	$	71,714

Exhibit
Number	Description
*31.01	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.02	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
+32.01	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
+32.02	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Date: November 8, 2022		EVI Industries, Inc.



	By:	/s/ Robert H. Lazar
		Robert H. Lazar
		Chief Financial Officer

SEC Form 10-Q filed by EVI Industries Inc.