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 December 31, 2022

☐

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	(I.R.S. Employer
incorporation or organization)	Identification No.)

4500 Biscayne Blvd., Suite 340, Miami, FL 33137

(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 – 12,566,322 shares outstanding as of February 2, 2023.

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Statements of Operations (Unaudited) for the six and three months ended December 31, 2022 and 2021	3

	Condensed Consolidated Balance Sheets at December 31, 2022 (Unaudited) and June 30, 2022	4

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the six and three months ended December 31, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended December 31, 2022 and 2021	8

	Notes to Condensed Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 6.	Exhibits	32

Signatures		33

	For the six months ended December 31,				For the three months ended December 31,
	2022		2021		2022		2021

Revenues	$	166,066	$	124,443	$	82,638	$	60,702
Cost of sales		116,749		89,997		57,826		43,895
Gross profit		49,317		34,446		24,812		16,807
Selling, general and administrative expenses		41,290		30,806		21,168		15,836
Operating income		8,027		3,640		3,644		971
Interest expense, net		1,002		265		625		150
Income before income taxes		7,025		3,375		3,019		821
Provision for income taxes		1,954		828		795		293
Net income	$	5,071	$	2,547	$	2,224	$	528
Net earnings per share – basic	$	0.35	$	0.19	$	0.16	$	0.04
Net earnings per share – diluted	$	0.35	$	0.18	$	0.15	$	0.04

ASSETS
	December 31, 2022 (Unaudited)		June 30, 2022
Current assets
Cash	$	4,383	$	3,974
Accounts receivable, net of allowance for doubtful accounts of $1.8 million and $1.6 million, respectively		38,577		43,014
Inventories, net		60,088		49,359
Vendor deposits		2,208		1,728
Contract assets		8,780		1,519
Other current assets		6,820		6,018
Total current assets		120,856		105,612
Equipment and improvements, net		13,123		13,033
Operating lease assets		6,753		7,480
Intangible assets, net		25,181		26,234
Goodwill		72,895		71,039
Other assets		7,925		7,370
Total assets	$	246,733	$	230,768

LIABILITIES AND SHAREHOLDERS’ EQUITY
	December 31, 2022 (Unaudited)			June 30, 2022
Current liabilities
Accounts payable and accrued expenses	$	42,175		$	42,026
Accrued employee expenses		8,320			8,508
Customer deposits		22,317			21,288
Contract liabilities		—			507
Current portion of operating lease liabilities		2,446			2,518
Total current liabilities		75,258			74,847

Deferred tax liabilities, net		4,844			4,666
Long-term operating lease liabilities		5,051			5,736
Long-term debt, net		36,852			27,840

Total liabilities		122,005			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; 12,697,444 shares issued at December 31, 2022 and 12,650,126 shares issued at June 30, 2022, including shares held in treasury		317			316
Additional paid-in capital		99,587			97,544
Treasury stock, 131,122 shares at December 31, 2022 and 127,801 shares at June 30, 2022, at cost		(3,136	)		(3,070	)
Retained earnings		27,960			22,889
Total shareholders’ equity		124,728			117,679
Total liabilities and shareholders’ equity	$	246,733		$	230,768

	Six months ended December 31, 2022
					Additional
	Common Stock				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

Share repurchases		—		—		—		3,321		(66	)		—		(66	)

Vesting of restricted shares		20,465		—		—		—		—			—		—

Issuances of shares under employee stock purchase plan		2,610		—		59		—		—			—		59

Issuances of shares in connection with acquisitions		24,243		1		502		—		—			—		503

Stock compensation		—		—		1,482		—		—			—		1,482

Net income		—		—		—		—		—			5,071		5,071
Balance at December 31, 2022		12,697,444	$	317	$	99,587		131,122	$	(3,136	)	$	27,960	$	124,728

	Three months ended December 31, 2022
					Additional
	Common Stock				Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at September 30, 2022		12,650,126	$	316	$	98,224		127,801	$	(3,070	)	$	25,736	$	121,206

Share repurchases		—		—		—		3,321		(66	)		—		(66	)

Vesting of restricted shares		20,465		—		—		—		—			—		—

Issuances of shares under employee stock purchase plan		2,610		—		59		—		—			—		59

Issuances of shares in connection with acquisitions		24,243		1		502		—		—			—		503

Stock compensation		—		—		802		—		—			—		802

Net income		—		—		—		—		—			2,224		2,224
Balance at December 31, 2022		12,697,444	$	317	$	99,587		131,122	$	(3,136	)	$	27,960	$	124,728

	Six months ended December 31, 2021
					Additional
	Common Stock				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

Share repurchases		—		—		—		4,000		(142	)		—		(142	)

Vesting of restricted shares		8,643		—		—		—		—			—		—

Issuances of shares under employee stock purchase plan		2,008		—		59		—		—			—		59

Stock compensation		8,287		—		1,320		—		—			—		1,320

Net income		—		—		—		—		—			2,547		2,547
Balance at December 31, 2021		12,418,075	$	310	$	91,880		124,706	$	(3,007	)	$	21,341	$	110,524

	Three months ended December 31, 2021
					Additional
	Common Stock				Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at September 30, 2021		12,399,137	$	310	$	90,980		120,706	$	(2,865	)	$	20,813	$	109,238

Share repurchases		—		—		—		4,000		(142	)		—		(142	)

Vesting of restricted shares		8,643		—		—		—		—			—		—

Issuances of shares under employee stock purchase plan		2,008		—		59		—		—			—		59

Stock compensation		8,287		—		841		—		—			—		841

Net income		—		—		—		—		—			528		528
Balance at December 31, 2021		12,418,075	$	310	$	91,880		124,706	$	(3,007	)	$	21,341	$	110,524

	For the six months ended
	December 31, 2022			December 31, 2021
Operating activities:
Net income	$	5,071		$	2,547
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization		2,912			2,476
Amortization of debt discount		12			27
Provision for bad debt expense		263			137
Non-cash lease expense		(30	)		91
Stock compensation		1,482			1,320
Inventory reserve		(250	)		(178	)
Provision for deferred income taxes		178			424
Other		(183	)		(14	)
(Increase) decrease in operating assets:
Accounts receivable		4,501			(580	)
Inventories		(9,166	)		(7,790	)
Vendor deposits		(480	)		(727	)
Contract assets		(7,261	)		328
Other assets		(1,328	)		(1,080	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		(519	)		140
Accrued employee expenses		(290	)		(1,196	)
Customer deposits		723			6,310
Contract liabilities		(507	)		(3,232	)
Net cash used by operating activities		(4,872	)		(997	)
Investing activities:
Capital expenditures		(1,838	)		(1,973	)
Cash paid for acquisitions, net of cash acquired		(1,874	)		—
Net cash used by investing activities		(3,712	)		(1,973	)
Financing activities:
Proceeds from long-term debt		32,000			25,000
Debt repayments		(23,000	)		(22,000	)
Repurchases of common stock in satisfaction of employee tax withholding obligations		(66	)		(142	)
Issuances of common stock under employee stock purchase plan		59			59
Net cash provided by financing activities		8,993			2,917
Net increase (decrease) in cash		409			(53	)
Cash at beginning of period		3,974			6,057
Cash at end of period	$	4,383		$	6,004

	For the six months ended
	December 31, 2022		December 31, 2021
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	942	$	238
Cash paid during the period for income taxes	$	888	$	261


Supplemental disclosures of non-cash financing activities:
Common stock issued for acquisitions	$	503	$	—

	For the six months ended December 31,				For the three months ended December 31,
	2022 (Unaudited)		2021 (Unaudited)		2022 (Unaudited)		2021 (Unaudited)

Net income	$	5,071	$	2,547	$	2,224	$	528
Less: distributed and undistributed income allocated to unvested restricted common stock		621		249		272		52
Net income allocated to EVI Industries, Inc. shareholders	$	4,450	$	2,298	$	1,952	$	476
Weighted average shares outstanding used in basic earnings per share		12,545		12,281		12,534		12,283
Dilutive common share equivalents		237		432		120		485
Weighted average shares outstanding used in diluted earnings per share		12,782		12,713		12,654		12,768
Basic earnings per share	$	0.35	$	0.19	$	0.16	$	0.04
Diluted earnings per share	$	0.35	$	0.18	$	0.15	$	0.04

Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)
2023 (remainder of)	$	1,496
2024		2,055
2025		1,446
2026		988
2027		798
Thereafter		1,288
Total minimum lease payments	$	8,071
Less: amounts representing interest		574
Present value of minimum lease payments	$	7,497
Less: current portion		2,446
Long-term portion	$	5,051

		December 31, 2022
Weighted average remaining lease terms
Operating leases		4.5 years
Weighted average discount rate
Operating leases		3.3 %

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2023 (remainder of)	$	2,134	$	1,316	$	818
2024		3,398		2,139		1,259
2025		2,595		1,562		1,033
2026		1,988		1,040		948
2027		1,232		586		646
Thereafter		888		394		494
					$	5,198	*

	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		110,109			15.63
Vested		(9,681	)		35.94		(10,784	)		31.11
Forfeited		—			—		(376	)		10.63
Non-vested awards or units outstanding at December 31, 2022		1,239,174		$	20.58		515,414		$	24.30

	December 31, 2022			June 30, 2022
Revolving credit facility	$	37,000		$	28,000
Less: unamortized discount and deferred financing costs		(148	)		(160	)
Total long-term debt, net	$	36,852		$	27,840

	Six months ended December 31,				Three months ended December 31,
	2022		2021		2022		2021
Operating lease expense
Operating lease cost	$	1,616	$	1,248	$	843	$	627
Variable lease cost		144		138		126		103
Total operating lease expense (1)	$	1,760	$	1,386	$	969	$	730

	Six months ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	$	1,616	$	1,248
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	524	$	610

Balance at June 30, 2022	$	71,039
Goodwill from acquisitions (1)		1,673
Working capital adjustments (2)		183
Balance at December 31, 2022	$	72,895

	Six Months Ended December 31,
	2022			2021
Net cash provided (used) by:
Operating activities	$	(4,872	)	$	(997	)
Investing activities	$	(3,712	)	$	(1,973	)
Financing activities	$	8,993		$	2,917

Period	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as a Part of Publicly Announced Programs		Maximum Number of Shares That May Yet Be Purchased Under the Program
October 1 – October 31, 2022		118	$	16.39		—		—
November 1 – November 30, 2022		3,203		19.90		—		—
December 1 – December 31, 2022		—		—		—		—
Total		3,321	$	19.77		—		—

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: February 9, 2023		EVI Industries, Inc.



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

SEC Form 10-Q filed by EVI Industries Inc.