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EI

EVI INDUSTRIES, INC. (EVI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 delivered record revenue ($92.71M) and gross profit ($27.52M), with gross margin expanding 80 bps YoY to 29.7%; however, operating income ($2.39M) and adjusted EBITDA ($5.14M; 5.5% margin) declined YoY amid deliberate investments in sales, service, and technology .
  • Demand indicators remain constructive: management highlighted an equipment sales backlog of “over $100 million,” continued e‑commerce and ERP progress, and field service technology now deployed to over 70% of the service organization .
  • Cash from operations for the six months declined to $2.18M vs $10.86M last year due to working capital; net debt rose to $24.0M at Dec 31, 2024 after acquisitions and an October special dividend (paid $0.31 per share; ~$4.6M) .
  • No formal quantitative guidance; management reiterated long‑term “buy‑and‑build” strategy, ongoing near‑term cost headwinds from investments, and expectation to benefit from completing confirmed orders across categories; Wall Street consensus from S&P Global was unavailable at time of writing .

What Went Well and What Went Wrong

  • What Went Well

    • Record Q2 revenue ($92.71M) and gross profit ($27.52M); gross margin rose to 29.7% (+80 bps YoY), aided by mix shift to higher‑margin parts and services and solution selling .
    • Technology execution accelerated: field service tech deployed to >70% of service org; e‑commerce platform passed key milestones—management sees these as catalysts for long‑term growth and profitability (“transform EVI into a modern, data‑driven company”) .
    • Commercial momentum: new confirmed order intake exceeded fulfillment in the period; management cites “over $100 million equipment sales backlog,” supporting forward revenue visibility .
    • Management quote: “We are a long‑term focused company with ambitious growth plans… the expected impact of promising technologies… and a heavily invested leadership team” .

  • What Went Wrong

    • Profitability compression: operating income ($2.39M) and adjusted EBITDA ($5.14M; 5.5% margin) declined YoY as investment in sales, service, and technology weighed on operating leverage; adjusted EBITDA fell vs $5.47M (6.0%) in the prior year’s Q2 .
    • Industrial cadence delays: management cited “irregular cadence of industrial revenue” and “delays in the completion of certain large industrial sales order contracts” as key drivers of modest top‑line growth and lower operating leverage .
    • Cash conversion/leverage: six‑month CFO fell to $2.18M (from $10.86M) on working capital; net debt rose to $24.0M vs $8.3M at June 30, 2024 after acquisitions and the special dividend .

Financial Results

MetricQ2 FY2024 (Dec 31, 2023)Q1 FY2025 (Sep 30, 2024)Q2 FY2025 (Dec 31, 2024)
Revenue ($USD Millions)$91.36 $93.63 $92.71
Gross Profit ($USD Millions)$26.41 $28.86 $27.52
Gross Margin (%)28.9% 30.8% 29.7%
Operating Income ($USD Millions)$2.95 $4.99 $2.39
Net Income ($USD Millions)$1.34 $3.23 $1.13
Adjusted EBITDA ($USD Millions)$5.47 $7.61 $5.14
Adjusted EBITDA Margin (%)6.0% 8.1% 5.5%
Diluted EPS ($)$0.09 $0.21 $0.07
  • Drivers: mix shift to parts/services and solution selling aided gross margin; operating leverage constrained by investments and timing of large projects .
  • Estimates: S&P Global consensus for Q2 FY25 was unavailable at time of writing; therefore, no vs‑estimates comparisons are shown.

Segment breakdown: EVI does not present segment revenue in the Q2 earnings materials; management discusses categories (equipment, parts, service) qualitatively (no segment table disclosed) .

KPIs and Operating Indicators

KPIQ4 FY2024Q1 FY2025Q2 FY2025
Equipment Sales Backlog“Strong backlog” (no amount disclosed) Not disclosed Over $100M
Field Service Tech DeploymentImplemented at certain regional ops Implemented at units in certain regions >70% of service org
Sales Headcount>190 >190 >190 (3% growth)
Service Headcount~400 >400 >425 (10% growth)
Customers Invoiced >$1M (Quarter)Not disclosed Not disclosed 1 (vs 5 in PY Q2)
Liquidity Availability>$100M >$100M (context from FY24) >$100M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal quantitative revenue/EPS/margin guidanceFY2025None provided (Q1 FY25) None provided (Q2 FY25) Maintained (no formal guidance)
Operating expense/investment cadenceFY2025Near‑term performance adversely impacted by modernization investments Expenses from investments expected to continue through at least FY2025 year‑end Maintained
Backlog commentaryNear‑termStrong backlog (no amount) Over $100M equipment backlog Clarified magnitude (positive)
LiquidityNear‑term>$100M available >$100M available Maintained
DividendsFY2025Special dividend declared $0.31/share, paid Oct 7, 2024 No new update in Q2 release Maintained (no new action)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024, Q1 FY2025)Current Period (Q2 FY2025)Trend
Technology (ERP, field service, e‑commerce)ERP consolidation; field service tech implemented at select regions; e‑commerce configuration launched Field service tech deployed to >70% of service org; e‑commerce hit key milestones Accelerating execution
Industrial cadence/backlogUneven large industrial timing; $100M+ backlog cited earlier; strong order intake Continued irregular cadence; delays in certain industrial contracts; “over $100M” equipment backlog Ongoing swing factor; visibility supported by backlog
Mix shift to parts/servicesMix shift supported gross margin (FY24) ; category growth ex‑industrial Mix shift and solution selling lifted margins Positive for margins
Headcount investmentsSales >190; service ~400 ; ongoing hiring Sales >190 (+3%); service >425 (+10%) Higher near‑term OpEx; capacity for growth
M&A2 acquisitions in FY24; Florida deal closed 7/1/24 2 acquisitions in H1; Haiges (Midwest) closed 1/31/25 Continued consolidation
Cash flow/leverageRecord FY24 OCF; net debt reduced to $8.3M 6‑mo OCF $2.18M (down YoY); net debt up to $24.0M Near‑term softer cash conversion; higher net debt

Management Commentary

  • Strategic stance: “We are a long‑term focused company with ambitious growth plans… the expected impact of promising technologies… and a heavily invested leadership team” — Henry M. Nahmad, Chairman & CEO .
  • Demand/backlog: “We expect to benefit from the completion of confirmed customer sales order contracts… which together contribute to our over $100 million equipment sales backlog” .
  • Technology thesis: “These technological capabilities will be a catalyst to achieving our long‑term growth and profitability goals” (ERP consolidation, data enrichment, e‑commerce, field service tech) .
  • Investment impact: “Expenses… adversely impacted… operating profits and are expected to continue through at least the remainder of the fiscal year ending June 30, 2025” .
  • Liquidity/dividend: Board declared a special cash dividend of $0.31 per share (paid Oct 7, 2024), with over $100M of available liquidity .

Q&A Highlights

  • EVI provided a pre‑recorded call with prepared remarks; no live analyst Q&A was conducted for Q2 FY25 (company directs investors to a recorded call link) .

Estimates Context

  • S&P Global/Capital IQ consensus for Q2 FY25 (revenue, EPS) was unavailable at time of writing due to data access limits; as such, no vs‑consensus comparisons are included. Management did not provide formal quantitative guidance .
  • Given reported results (lower operating leverage vs Q1 FY25 and YoY) and ongoing investment cadence, models may need to reflect near‑term margin headwinds alongside backlog‑supported revenue visibility (management cited “over $100M” backlog and order intake > fulfillment) .

Key Takeaways for Investors

  • Backlog and order intake support revenue visibility despite uneven large industrial timing; near‑term stock catalysts include completion timing of delayed industrial projects and ongoing e‑commerce/field‑service tech rollout .
  • Margin mix tailwind persists (parts/services, solution selling), but operating leverage is likely constrained near‑term by deliberate sales/service/tech investments; watch adjusted EBITDA margins for re‑acceleration as deployments scale .
  • Cash conversion softened (H1 CFO $2.18M) and net debt increased to $24.0M post acquisitions and special dividend; monitor working capital normalization and integration benefits (Haiges closed Jan 31, 2025) .
  • Technology execution is a multi‑quarter catalyst: ERP consolidation, >70% field‑service deployment, and e‑commerce milestones are intended to accelerate growth and efficiency; track customer adoption and service productivity metrics .
  • M&A strategy continues to expand geographic reach (first Midwest platform via Haiges); the company positions as a consolidator in a fragmented market; integration and cross‑sell are medium‑term thesis drivers .
  • No formal guidance; risk factors include industrial project timing, inflation/labor costs, and execution risk on modernization—balanced by liquidity (> $100M) and recurring parts/service revenue base .

References

  • Q2 FY25 8‑K and Exhibit 99.1 press release:
  • Q2 FY25 press release (Business Wire):
  • Q2 FY25 earnings call transcript (prepared remarks):
  • Q1 FY25 8‑K press release and tables:
  • Q4 FY24 8‑K press release and tables:
  • Q2‑related M&A press releases: Haiges Machinery (announce/close):

Non‑GAAP

  • Adjusted EBITDA definition and reconciliation provided in Q2 FY25 materials .