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EI

EVI INDUSTRIES, INC. (EVI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered solid YoY growth with revenue up 11% to $93.5M and record gross profit of $28.1M; net income was $1.0M (1.1% margin) and diluted EPS was $0.07. Adjusted EBITDA rose to $5.1M with a 5.4% margin, while gross margin held at 30.0% despite mix headwinds .
  • Operating cash flow was a strong $9.1M in the quarter, reducing net debt by 25% versus December 31; total available liquidity exceeded $175M following a credit facility amendment that extended maturity to March 2030 and increased total potential availability to $200M, positioning the balance sheet to fund growth and acquisitions .
  • The largest acquisition in company history—Girbau North America (GNA)—closed April 1. Management expects it to “substantially increase operating profit”; pro forma FY2024 contribution was ≈$50M net revenue and ≈$7M operating income (implying 14% revenue and 54% operating income uplift), a material medium-term earnings catalyst .
  • Sequentially, Q3 revenue was flat to modestly higher vs Q2 ($93.5M vs $92.7M), EPS held at $0.07, and margins were largely stable; SG&A increased on strategic investments and acquisition-related costs ($0.3M one-time) .
  • Consensus EPS and revenue estimates from S&P Global were unavailable for Q3 2025, limiting explicit beat/miss analysis; however, the narrative suggests continued demand, stable margins, and tightening operating discipline ahead of GNA integration (estimates may need to move higher post-acquisition) .

What Went Well and What Went Wrong

What Went Well

  • Record gross profits with resilient 30.0% gross margin despite mix shift; management emphasized value selling and customer experience investments: “gross margins remained solid… through investments in technology, inventory availability, and service quality” .
  • Strong operating cash generation ($9.1M), liquidity enhancement (> $175M), and extended credit facility ($200M total potential, maturity to 2030) support buy-and-build strategy execution .
  • Strategic scale-up via GNA acquisition: “This is a transformational deal… largest acquisition in our history” with expected cost/revenue synergies and cultural alignment; pro forma adds ≈$50M net revenue and ≈$7M operating income .

What Went Wrong

  • SG&A up 10% YoY in Q3 and 7% for nine months on commission mix, integration of acquired businesses, tech investments, and $0.3M one-time M&A charge, compressing operating margin (Q3 OI $2.3M vs $2.4M YoY) .
  • Vended ASPs rose, but OPL ASPs declined due to greater proportion of smaller machines; industrial project sales were a smaller mix, muting operating leverage despite unit growth .
  • Adjusted EBITDA margin dipped YoY (5.4% vs 5.9%), reflecting investment cadence and mix; management reiterated near-term cost impact from modernization initiatives .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$83.979 $93.625 $92.711 $93.538
Gross Profit ($USD Millions)$25.786 $28.855 $27.522 $28.055
Gross Margin (%)30.7% 30.8% 29.7% 30.0%
Operating Income ($USD Millions)$2.408 $4.989 $2.390 $2.275
Adjusted EBITDA ($USD Millions)$4.932 $7.606 $5.143 $5.067
Adjusted EBITDA Margin (%)5.9% 8.1% 5.5% 5.4%
Net Income ($USD Millions)$0.956 $3.231 $1.129 $1.041
Diluted EPS ($USD)$0.06 $0.21 $0.07 $0.07
Net Income Margin (%)1.1% 3.5% 1.2% 1.1%

Notes:

  • Nine-month FYTD: Revenue $279.9M, Gross Profit $84.4M, OI $9.7M, Net Income $5.4M, Adjusted EBITDA $17.8M .

KPIs and Balance Sheet/Liquidity

KPIQ1 2025Q2 2025Q3 2025
Operating Cash Flow ($USD Millions)$0.2 $2.176 (six-month) $9.1
Equipment Sales BacklogNew contracts > fulfilled > $100M equipment backlog New contracts > fulfilled
Sales Team (approx.)>190 >190 —
Service Technicians (approx.)>400 >425 >425 on FSM platform
Available Liquidity>$100M >$100M >$175M
Credit Facility (Total Potential)——$200M (revolver $150M + accordion $50M)
Net Debt vs Dec 31—$24.0M at 12/31/24 ↓ 25% vs 12/31/24 due to CFO

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GNA Net Revenue Contribution (Pro Forma)FY 2024N/A≈$50M New
GNA Operating Income Contribution (Pro Forma)FY 2024N/A≈$7M New
Credit Facility MaturityCorporateMay 2027 March 2030 Extended
Credit Facility Total Potential AvailabilityCorporate≈$140M (rev $100M + acc $40M, inferred from increases) $200M (rev $150M + acc $50M) Raised
Dividend PolicyCorporateSpecial cash dividend $0.31/share declared Sep 11, 2024, paid Oct 7, 2024 No new dividend in Q3; philosophy maintained Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Buy-and-Build M&A28 acquisitions; continued pipeline Two acquisitions in FL/IN; first Midwest deal (Haiges) Closed largest-ever (GNA) with expected synergies Strengthening
Technology Modernization (ERP, FSM, CRM, E-commerce)ERP consolidation; FSM rollout; e-commerce setup FSM deployed to >70% org; continued build FSM supporting >425 techs; CRM and e-commerce in development Ongoing execution
Demand/BacklogSteady fulfillment; growth across parts/services >$100M equipment backlog; timing of industrial projects Contracts exceeded fulfillment; large deals signed; mix shift effects Stable demand; mix variability
Margins & MixRecord gross margin; operating leverage improvements Gross margin record (six-month); mix shift to parts/services GM 30.0% resilient; OPL ASP down on smaller-machine mix; Vended ASP up Resilient margins; operating leverage constrained by mix
Liquidity/Balance Sheet>$100M liquidity; special dividend >$100M liquidity; net debt rose with investments >$175M liquidity; net debt ↓25% on CFO; facility extended/expanded Strengthening
Regulatory/MacroSafe harbor references Inflation, rates, supply chain risks Similar risk disclosures incl. tariffs/macro Unchanged caution

Management Commentary

  • “This is a transformational deal for EVI and marks the largest acquisition in our history… we expect the acquisition to drive meaningful cost and revenue synergies” — Henry Nahmad, CEO, on GNA .
  • “Strong and consistent cash flow generation allows us to fund accretive acquisitions like G&A… we now have over $175,000,000 in liquidity with extended maturity and improved capacity” .
  • “Gross margins remained solid… investments in technology, inventory availability, and service quality” underpin margin resilience amid mix shifts .
  • “We will be aggressive in the pursuit of long-term growth yet conservative in the way we finance our growth” — reiterating capital discipline .

Q&A Highlights

  • The company provided a pre-recorded earnings call without a live Q&A session, directing investors to its website for the recording .
  • Key clarifications embedded in prepared remarks focused on the strategic rationale and expected synergy potential from GNA, the cadence of industrial project timing, and continued investment in digital infrastructure .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q3 2025 were unavailable for EVI; therefore, a formal beat/miss assessment vs Street is not possible. Given the April 1 closing of GNA and management’s commentary on synergies and integration progress, we would expect forward estimates (revenue, operating income, EBITDA) to adjust upward to reflect the pro forma contribution .
  • Disclaimer: Where estimates are not shown, S&P Global data was unavailable for the specified period.

Key Takeaways for Investors

  • Post-GNA, EVI’s revenue base and operating income should step up meaningfully; integration progress and synergy capture are likely medium-term drivers of earnings and multiple expansion .
  • Liquidity and credit flexibility (> $175M available; $200M total potential facility; maturity to 2030) provide ample capacity for continued buy-and-build and technology investments, reducing financing risk for further M&A .
  • Operating cash flow strength ($9.1M in Q3) and disciplined inventory management support deleveraging and working-capital efficiency, a constructive backdrop for margin improvement as mix normalizes .
  • Near-term margin pressure from SG&A and modernization costs should moderate as digital platforms scale (FSM deployed, CRM/e-commerce in flight), offering potential operating leverage upside .
  • Mix normalization (industrial project cadence; OPL vs vended ASP dynamics) is a key watch item for quarterly volatility; backlog and signed large deals underpin demand visibility .
  • With Street estimates unavailable for Q3, watch for upward revisions post-GNA as coverage updates pro forma run-rate; events like investor conferences and integration updates could be stock catalysts .
  • Risk factors remain (tariffs/inflation, labor costs, supply chain), but diversified customer base, supplier relationships, and decentralized model provide resilience across cycles .