EVI Industries, Inc.

Hello and welcome to EBI Industries earnings call for the first quarter of fiscal 2026. I am Henry Namid, Chairman and CEO of EBI. Before we begin, I'd like to remind you that this presentation contains forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed. For additional information, please refer to our earnings press release issued today. and to our filings with the SEC, including the risk factors section of our most recent annual report on Form 10-K. This discussion will also include a reference to adjusted EBITDA, which is a non-GAAP financial measure. A full definition and reconciliation to net income can be found in our earnings release. I want to thank all our people across North America for another great quarter. through hard work, creativity, and commitment to our customers continue to drive EVI's progress and performance. During the first quarter, we achieved another set of record results, records in revenue, records in gross profit, and continued strength across our business. These results reflect not only strong execution, but also the enduring demand for the products and services we provide and the value our teams deliver every day. This quarter, revenue was up 16% to a record $108 million, and gross profit grew 17% to a record $34 million, and that's a record 31.3% gross margin. These results show that our strategy is working and that the fundamentals of our business remain strong. Now, if you look back to the first quarter of last year, we achieved solid operating leverage with adjusted EBITDA at 8.1%, and that performance came from strong revenue growth and record gross profits that more than offset our investment in modernization and optimization. Since then, we've added four more businesses to the EVI family, including the largest acquisition in our history. those moves have expanded our scale, deepened our capabilities, and strengthened our leadership position across North America. With that growth, we've also leaned in on investment in our systems, in integrations, and in the people and tools that will support us for the years to come. These efforts, along with the cost of bringing new companies and operations together, did affect near-term profitability, and that's okay. It's part of the plan. We're building for the long term, and we know these investments will pay off in stronger margins, better customer experiences, and a more scalable business in the future. Our record 31.3% gross margin this quarter is proof that our optimization initiatives are taking hold. The addition of Continental, which we acquired last year, contributed to that performance. and even without Continental, margins held strong at about 30.2%, just slightly below last year due to product mix within the legacy businesses. We're confident in our ability to sustain this higher margin profile as we continue to leverage our scale, strengthen procurement, and refine pricing and inventory management. We're also advancing initiatives across supply chain efficiency and data-driven decision-making, all of which are helping us operate smarter and more efficiently. While near-term margins reflect the investments we're making today, those investments are setting us up for stronger performance in the future, better efficiency, better customer experiences, and ultimately better returns for our shareholders. We also made investment this quarter by participating in the industry's largest North American exposition, the first since 2022. It was a huge success. It gave us the chance to strengthen relationships with customers and suppliers and to showcase EVI's capabilities to those that seek to build market share in North America. When we look at our results, it's important to remember that everything we're doing is about the long game. Every acquisition, every system we implement, every process we improve, it's all focused on building a stronger company that can perform across any market cycle. We're not optimizing for a single quarter or even a single year. We're building for sustainable growth, profitability, and long-term value. The bottom line is this, we're growing, we're modernizing, and we're investing with confidence. We're capturing market share, expanding our service and technology capabilities, and positioning EVI for sustainable long-term growth. Now on the technology front, We're also making great progress on the technology front. Our field service platform continues to scale quickly, supporting about 9,000 appointments in September, up from roughly 8,500 in June and just 1,000 a year ago. It's driving real improvements in technician productivity, scheduling efficiency, and customer responsiveness. This is a great example of how we're using technology to make our service operations faster smarter, and more scalable. At the same time, we're making steady progress on our next generation digital platform, which will take our e-commerce capabilities to the next level. The platform is being designed to integrate product ordering, service scheduling, and data analytics into one seamless customer-focused experience. When complete, it will make it easier for customers to do business with us and provide better visibility into their operations. We're also rolling out a new customer relationship management system that's transforming the way our sales teams work. It gives our people real-time access to customer data, helps them deliver a more personalized experience, and strengthens long-term relationships. We completed phase one of that project after the quarter ended and plan to deploy it across the organization over time. Together, these initiatives are strengthening our platform, improving customer experience, and positioning EBI for continued growth and long-term profitability. Moving to our capital strength and discipline, we continue to operate from a position of financial strength with a solid balance sheet, ample borrowing capacity, and steady cash flow. During the quarter, net debt increased by $2.2 million to $46.3 million, reflecting a $1 million in operating cash flow offset by investing activities. We also declared a $5 million special cash dividend, the largest in our company's history. This balance between investment and capital discipline enables us to act decisively on opportunities while maintaining a strong financial foundation. Finally, on tariffs, we continue to monitor tariff-related developments closely. and have taken proactive steps to mitigate their impacts. These include diversifying, sourcing, adjusting pricing, and strengthening our relationships with key OEM partners. Despite ongoing uncertainty, our essential products and resilient end market demand provide a strong base for continued performance. In closing, this was another strong quarter for EVI. Record results, meaningful progress, and clear proof that our long-term strategy is working. We're building a company designed for lasting success, one that can grow through any cycle and continue delivering value well into the future. As we look ahead, our priorities are clear. We'll keep executing on our buy and build strategy, expanding our technology capabilities, and driving efficiency across the business. Some of these initiatives may impact near-term results, but they're essential investments in our future. building the foundation for sustainable growth, stronger margins, and long-term value creation. Finally, I want to thank our employees, our suppliers, and customers, and our shareholders. Your dedication, loyalty, and support make everything we achieve possible. Thank you, and until we meet again, be well.