EnviroStar(EVI) - 2025 Q1 - Quarterly Report

Financial Performance - Revenues for the three-month period ended September 30, 2024 increased by $5.6 million, or 6$3.2 million, or 12%, with gross margins rising from 29.2% to 30.8%[83]. - Net income for the three months ended September 30, 2024 was $3.2 million, an increase from$1.3 million in the same period of the prior fiscal year[86]. - Interest expense decreased to $482,000 for the three-month period ended September 30, 2024, down from$770,000 in the same period of the prior fiscal year[85]. - The effective tax rate decreased to 28.3% for the three-month period ended September 30, 2024, compared to 30.6% for the same period of the prior fiscal year[85]. Expenses and Liabilities - Operating expenses increased by $0.8 million, or 3$94.1 million at June 30, 2024 to $109.5 million at September 30, 2024, mainly due to increased accounts payable and long-term debt[87]. Acquisitions and Growth Strategy - The Company acquired Laundry Pro of Florida, Inc. for$5.9 million in cash on July 1, 2024, and O'Dell Equipment & Supply, Inc. for $4.6 million in cash on November 1, 2024[76]. - The "buy-and-build" growth strategy includes pursuing acquisitions and implementing a growth culture at acquired businesses[76][77]. - The Company aims to increase market share through various strategies, which may lead to lower gross margins but strengthen customer relationships[78]. Assets and Working Capital - Total assets increased from$230.7 million at June 30, 2024 to $245.5 million at September 30, 2024, primarily due to increases in current assets and goodwill from the acquisition of Laundry Pro of Florida[87]. - Working capital increased from$32.1 million at June 30, 2024 to $34.5 million at September 30, 2024, reflecting increases in accounts receivable and inventory[89]. Cash Flow and Financing - Cash provided by operating activities was$0.2 million for the three months ended September 30, 2024, down from $1.5 million in the same period of 2023, a decrease of$1.3 million[92]. - Investing activities used cash of $7.1 million for the three months ended September 30, 2024, compared to$2.0 million in the same period of 2023, an increase of $5.1 million primarily due to business acquisitions[93]. - Financing activities provided cash of$6.7 million for the three months ended September 30, 2024, compared to cash used of $1.3 million in the same period of 2023, an increase of$8.0 million[94]. - As of September 30, 2024, the Company had approximately $20 million of outstanding borrowings under its Credit Agreement with a weighted average interest rate of 6.40$0.31 per share, totaling $4.6 million, on September 11, 2024, payable on October 7, 2024[87]. - The Company believes existing cash and anticipated cash from operations will be sufficient to fund operations and capital expenditures for at least the next twelve months[99]. Inflation Impact - Inflation did not significantly affect the Company's results, but there are risks related to the current inflationary trend impacting product pricing[100].