EnviroStar(US:EVI)2019-11-12 21:26Financial Performance - Revenues for the three-month period ended September 30, 2019 increased by $12.3 million, or 28%, compared to the same period of the prior fiscal year[94]. - Gross profit for the same period increased by $4.1 million, or 42%, with gross margins rising from 22.4% to 24.8%[95]. - Net income for the three months ended September 30, 2019 was $580,000, down from $796,000 in the same period of the prior fiscal year[102]. Operating Expenses - Operating expenses increased by $4.3 million, or 51%, primarily due to the execution of the buy-and-build growth strategy and related growth initiatives[97]. - Net interest expense for the three-month period was $422,000, up from $165,000 in the same period of the prior fiscal year[100]. - The effective tax rate decreased to 32.5% from 37.2% year-over-year, attributed to lower effective state tax rates[101]. Assets and Liabilities - Total assets increased from $154.5 million at June 30, 2019 to $158.9 million at September 30, 2019, mainly due to the adoption of a new lease standard and the PLS Acquisition[103]. - Total liabilities rose from $73.0 million to $75.1 million during the same period, primarily due to the new lease standard[103]. - Working capital decreased from $37.2 million to $36.3 million, reflecting the new lease standard and lower accounts receivable[105]. Cash Flow - Cash increased by approximately $223,000 for the three-month period, compared to an increase of $547,000 in the same period of the prior year[104]. - For the three months ended September 30, 2019, operating activities provided cash of $1.8 million, a $7.7 million increase compared to cash used of $5.9 million in the same period of 2018[109]. - Net cash used in investing activities decreased by $3.3 million to $1.6 million in Q3 2019 from $4.9 million in Q3 2018, primarily due to reduced cash used for acquisitions[110]. - There was no net cash provided or used by financing activities in Q3 2019, compared to $11.4 million provided in Q3 2018, attributed to lower net borrowings under the revolving credit agreement[111]. Debt and Financing - As of September 30, 2019, the Company had approximately $40.8 million of outstanding borrowings with a weighted average interest rate of 3.54%[130]. - The Company believes existing cash, anticipated cash from operations, and funds available under the 2018 Credit Agreement will be sufficient to fund operations and anticipated capital expenditures for at least the next twelve months[116]. - The Company is in compliance with its covenants under the 2018 Credit Agreement, with $4.0 million available to borrow[115]. - A hypothetical 1% increase in daily interest rates would increase the Company's annual interest expense by approximately $408,000[130]. Other Considerations - Payments under leases with related parties totaled approximately $37,000 and $36,000 during Q3 2019 and 2018, respectively[121]. - The Company had no off-balance sheet financing arrangements as of September 30, 2019[118]. - Inflation did not have a significant effect on the Company's results during the reported periods[119].