10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021
	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to
	Commission file number 001-14757

EVI Industries, Inc.

(Exact name of registrant as specified in its charter)

	Delaware	11-2014231
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4500 Biscayne Blvd., Suite 340, Miami, FL 33137
(Address of principal executive offices)
(305) 402-9300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.025 par value	EVI	NYSE American
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐    Accelerated filer ☒    Non-accelerated filer ☐    Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $.025 par value per share – 12,278,431 shares outstanding as of November 1, 2021.

PART I – FINANCIAL INFORMATION
Item 1.Financial Statements		3
Condensed Consolidated Statements of Operations (Unaudited) for the three months ended September 30, 2021 and 2020	3
Condensed Consolidated Balance Sheets at September 30, 2021 (Unaudited) and June 30, 2021	4
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the three months ended September 30, 2021 and 2020	6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended September 30, 2021 and 2020	7
Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.Controls and Procedures	28
PART II – OTHER INFORMATION
Item 1.Legal Proceedings	30
Item 1A.Risk Factors	30
Item 6.Exhibits	31
Signatures	32

2

PART I—FINANCIAL INFORMATION

Item 1.Financial Statements.

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data) (Unaudited)

	For the three months ended September 30,
	2021		2020
Revenues	$	63,741	$	57,878
Cost of sales		46,102		44,545
Gross profit		17,639		13,333
Selling, general and administrative expenses		14,970		12,437
Operating income		2,669		896
Interest expense, net		115		169
Income before income taxes		2,554		727
Provision for income taxes		535		209
Net income	$	2,019	$	518
Net earnings per share – basic	$	0.15	$	0.04
Net earnings per share – diluted	$	0.15	$	0.04

See Notes to Condensed Consolidated Financial Statements

3

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

ASSETS
	September 30, 2021 (Unaudited)		June 30, 2021
Current assets
Cash	$	2,773	$	6,057
Accounts receivable, net of allowance for doubtful accounts of $1.1 million and $1.0 million, respectively		33,685		28,904
Inventories, net		29,055		25,129
Vendor deposits		410		367
Contract assets		125		347
Other current assets		5,595		4,419
Total current assets		71,643		65,223
Equipment and improvements, net		10,693		10,594
Operating lease assets		7,153		7,060
Intangible assets, net		23,190		23,677
Goodwill		63,895		63,881
Other assets		6,998		7,415
Total assets	$	183,572	$	177,850

See Notes to Condensed Consolidated Financial Statements

4

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

LIABILITIES AND SHAREHOLDERS' EQUITY
	September 30, 2021 (Unaudited)			June 30, 2021
Current liabilities
Accounts payable and accrued expenses	$	23,774		$	26,227
Accrued employee expenses		7,210			7,528
Customer deposits		11,327			10,344
Contract liabilities		200			3,232
Current portion of operating lease liabilities		2,293			2,131
Total current liabilities		44,804			49,462
Deferred tax liabilities, net		4,046			4,208
Long-term operating lease liabilities		5,598			5,567
Long-term debt, net		19,886			11,873
Total liabilities		74,334			71,110
Commitments and contingencies (Note 10)
Shareholders’ equity
Preferred stock, $1.00 par value; authorized shares – 200,000; none issued and outstanding		-			-
Common stock, $.025 par value; authorized shares – 20,000,000; 12,399,137 shares issued at September 30, 2021 and June 30, 2021, including shares held in treasury		310			310
Additional paid-in capital		90,980			90,501
Treasury stock, 120,706 shares at September 30, 2021 and June 30, 2021, at cost		(2,865	)		(2,865	)
Retained earnings		20,813			18,794
Total shareholders’ equity		109,238			106,740
Total liabilities and shareholders’ equity	$	183,572		$	177,850

See Notes to Condensed Consolidated Financial Statements

5

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(In thousands, except share data) (Unaudited)

	Three months ended September 30, 2021
	Common Stock				Additional Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at June 30, 2021		12,399,137	$	310	$	90,501		120,706	$	(2,865	)	$	18,794	$	106,740
Stock compensation		-		-		479		-		-			-		479
Net income		-		-		-		-		-			2,019		2,019
Balance at September 30, 2021		12,399,137	$	310	$	90,980		120,706	$	(2,865	)	$	20,813	$	109,238

	Three months ended September 30, 2020
	Common Stock				Additional Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at June 30, 2020		12,029,910	$	301	$	79,127		95,396	$	(2,012	)	$	10,410	$	87,826
Stock compensation		-		-		578		-		-			-		578
Net income		-		-		-		-		-			518		518
Balance at September 30, 2020		12,029,910	$	301	$	79,705		95,396	$	(2,012	)	$	10,928	$	88,922

See Notes to Condensed Consolidated Financial Statements

6

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

	For the three months ended
	September 30, 2021			September 30, 2020
Operating activities:
Net income	$	2,019		$	518
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Depreciation and amortization		1,236			985
Amortization of debt discount		13			14
Provision for bad debt expense		108			96
Non-cash lease expense		100			29
Share-based compensation		479			578
Inventory reserve		(31	)		(26	)
Benefit for deferred income taxes		(162	)		(760	)
Other		(14	)		60
(Increase) decrease in operating assets:
Accounts receivable		(4,889	)		530
Inventories		(3,895	)		(585	)
Vendor deposits		(43	)		1,049
Contract assets		222			(5,211	)
Other assets		(759	)		(1,667	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		(2,453	)		3,229
Accrued employee expenses		(318	)		(208	)
Customer deposits		983			2,847
Contract liabilities		(3,032	)		2,841
Net cash (used) provided by operating activities		(10,436	)		4,319
Investing activities:
Capital expenditures		(848	)		(997	)
Net cash used by investing activities		(848	)		(997	)
Financing activities:
Proceeds from borrowings		15,000			12,000
Debt repayments		(7,000	)		(20,000	)
Net cash provided (used) by financing activities		8,000			(8,000	)
Net decrease in cash		(3,284	)		(4,678	)
Cash at beginning of period		6,057			9,789
Cash at end of period	$	2,773		$	5,111

See Notes to Condensed Consolidated Financial Statements

7

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

	For the three months ended
	September 30, 2021		September 30, 2020
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	98	$	137
Cash paid during the period for income taxes	$	18	$	453

See Notes to Condensed Consolidated Financial Statements

8

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

Note (1) – General: The accompanying unaudited condensed consolidated financial statements include the accounts of EVI Industries, Inc. and its subsidiaries (the “Company”). All material intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Article 10 of Regulation S-X related to interim period financial statements. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include certain information and footnotes required by GAAP for complete financial statements. However, in management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals and adjustments) which are necessary in order to state fairly the Company’s results of operations, financial position, shareholders’ equity and cash flows as of and for the periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period, particularly in light of the COVID-19 pandemic and its effects and potential future effects (which are highly uncertain) on economic and market conditions and on the Company and its business, results and financial condition, as described below and elsewhere herein. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes, including the Summary of Significant Accounting Policies, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021. The June 30, 2021 balance sheet information contained herein was derived from the Company’s audited consolidated financial statements as of that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The estimates and assumptions made may not prove to be correct, and actual results could differ from the estimates.

The Company, through its wholly-owned subsidiaries, is a value-added distributor, and provides advisory and technical services. Through its vast sales organization, the Company provides its customers with planning, designing, and consulting services related to their commercial laundry operations. The Company sells and/or leases its customers commercial laundry equipment, specializing in washing, drying, finishing, material handling, water heating, power generation, and water reuse applications. In support of the suite of products it offers, the Company sells related parts and accessories. Additionally, through the Company’s robust network of commercial laundry technicians, the Company provides its customers with installation, maintenance, and repair services.

The Company’s customers include government, institutional, industrial, commercial and retail customers. Product purchases made by customers range from parts and accessories, to single or multiple units of equipment, to large complex systems. The Company also provides its customers with the services described above.

The Company’s growth strategy includes organic growth initiatives and business acquisitions pursuant to the Company’s “buy-and-build” growth strategy, which was implemented in 2015.

The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the economy and has negatively impacted, and may continue to negatively impact, the Company’s business and results. Specifically, beginning at the end of the quarter ended March 31, 2020, the COVID-19 pandemic and accompanying economic disruption caused delays and declines in the placement of customer orders, the completion of equipment and parts installations, and the fulfillment of parts orders. During the fiscal year

9

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

ended June 30, 2021, the COVID-19 pandemic had a resurgence with the increased presence and spread of the Delta variant and other variants may arise in the future or the pandemic may otherwise persist. Accordingly, the adverse impact of the COVID-19 pandemic is expected to continue in the near-term and possibly longer, including, without limitation, if the pandemic increases in size and scope, its duration is prolonged, or, among other matters related thereto, additional governmental actions, including, without limitation, business restrictions, are imposed. In response to the economic and business disruption during 2020, the Company took actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating payment terms with suppliers, and reducing hiring activities. The Company continues to actively monitor the COVID-19 pandemic and may take further actions, including those that may alter business operations, if required by federal, state, local or foreign authorities or otherwise determined to be advisable by management.

As of the date of this Quarterly Report on Form 10-Q, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. Factors arising from the COVID-19 pandemic that have impacted, or may in the future negatively impact, the Company’s business and results, including sales and gross margin, include, but are not limited to: supply chain disruptions as the current operating environment is constantly shifting in response to the COVID-19 pandemic, which is placing significant pressure on the supply chain and has resulted in, and may continue to result in, delays in delivering products or services to the Company’s customers; limitations on the ability of the Company’s employees to perform their work due to impacts caused by the pandemic or local, state, federal or foreign orders that may restrict the Company’s operations or the operations of its customers, or require that employees be quarantined; limitations on the ability of carriers to deliver products to the Company’s facilities and customers; risks associated with vaccine mandates, including potential loss of employees, fines for noncompliance and loss or inability to secure certain contracts, including with the federal government; adverse impacts of the pandemic on certain industries and customers of the Company which operate in those industries, including the hospitality industry; and potential decreased demand for products and services, including potential limitations on the ability of, or adverse changes in the desire of, the Company’s customers to conduct their business, purchase products and services, and pay for purchases on a timely basis or at all.

The situation surrounding the COVID-19 pandemic remains fluid and highly uncertain. The Company is unable to determine or predict the nature, duration, or scope of the overall impact that the COVID-19 pandemic will have on the Company’s business, results of operations, liquidity, or financial condition, as such impact will depend in large part on future developments, including the severity and duration of the pandemic and government and other actions taken in response thereto, all of which are highly uncertain. Further, even after the COVID-19 pandemic subsides, the Company may continue to experience adverse impacts to its business as a result of, among other things, any adverse impact that has occurred or may occur in the future in the economy or markets generally, and changes in customer or supplier behavior.

Note (2) – Summary of Significant Accounting Policies: There have been no changes to the Company’s significant accounting policies from those described in Note 1 to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

Note (3) – Recently Issued Accounting Guidance: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other specified instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied

10

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited)

using a cumulative-effect transition method. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and for interim periods within those fiscal years (the fiscal year ending June 30, 2024 for the Company), with early adoption permitted. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12 (“ASU 2019-12”), “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to improve consistent application and simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principals in Topic 740 and clarifies and amends existing guidance. This standard is effective for the Company for fiscal reporting periods beginning after June 30, 2021. The Company adopted the standard as of September 30, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements or related disclosures.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new guidance provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include: contract modifications, hedging relationships, and the sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made. The provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.

Other than as described above, management does not believe that accounting standards and updates which have been issued but are not yet effective will have a material impact on the Company’s consolidated financial statements upon adoption.

Note (4) – Earnings Per Share: The Company computes earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of the Company’s common stock subject to unvested restricted stock awards and restricted stock units are considered participating securities because they contain a non-forfeitable right to cash dividends (in the case of restricted stock awards) or dividend equivalents (in the case of restricted stock units) paid prior to vesting or forfeiture, if any, irrespective of whether the awards or units ultimately vest. Basic and diluted earnings per share for the three months ended September 30, 2021 and 2020 are computed as follows (in thousands, except per share data):

	For the three months ended September 30,
	2021 (Unaudited)		2020 (Unaudited)
Net income	$	2,019	$	518
Less: distributed and undistributed income allocated to unvested restricted common stock		176		42
Net income allocated to EVI Industries, Inc. shareholders	$	1,843	$	476
Weighted average shares outstanding used in basic earnings per share		12,278		11,935
Dilutive common share equivalents		381		344
Weighted average shares outstanding used in diluted earnings per share		12,659		12,279
Basic earnings per share	$	0.15	$	0.04
Diluted earnings per share	$	0.15	$	0.04

11

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited)

At September 30, 2021 and 2020, other than 1,175,163 shares and 1,042,830 shares, respectively, of common stock subject to unvested restricted stock awards or restricted stock units, there were no potentially dilutive securities outstanding.

Note (5) – Debt: Long-term debt as of September 30, 2021 and June 30, 2021 are as follows (in thousands):

	September 30, 2021			June 30, 2021
Revolving Line of Credit	$	20,000		$	12,000
Less: unamortized discount and deferred financing costs		(114	)		(127	)
Total long-term debt, net	$	19,886		$	11,873

On November 2, 2018, the Company entered into a syndicated credit agreement (the “2018 Credit Agreement”) for a five-year revolving credit facility in the maximum aggregate principal amount of up to $100 million, with an accordion feature to increase the revolving credit facility by up to $40 million for a total of $140 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $5 million and for the issuance of standby letters of credit of up to a sublimit of $10 million.

Borrowings (other than swingline loans) under the 2018 Credit Agreement bear interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranges from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans bear interest calculated at the Base Rate plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The 2018 Credit Agreement has a term of five years and matures on November 2, 2023.

The 2018 Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The 2018 Credit Agreement also contains other provisions which may restrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. As of September 30, 2021, the Company was in compliance with its covenants under the 2018 Credit Agreement and $27.5 million was available to borrow under the revolving credit facility.

The obligations of the Company under the 2018 Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, and are guaranteed, jointly and severally, by certain of the Company’s subsidiaries.

Note (6) – Leases:

Company as Lessee

The Company leases warehouse and distribution facilities, administrative office space and service and other fleet vehicles, generally for terms of three to ten years.

12

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

The Company applies ASC Topic 842, Leases (“ASC 842” or “Topic 842”), which, among other things, requires lessees to recognize substantially all leases on their balance sheets and disclose certain additional key information about leasing arrangements. The standard established a right-of-use model that requires a lessee to recognize a right-of-use asset and liability on the balance sheet for all leases with a term longer than 12 months. Leases are required to be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The Company adopted this standard effective July 1, 2019 using the modified retrospective transition approach, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption without restatement of prior periods.

The Company made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, the Company, as permitted by Topic 842, recognizes the lease payments under its short-term leases in profit or loss on a straight-line basis over the lease term. The Company elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and right-of-use liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, certain of the Company’s leases do not provide a readily determinable implicit rate. For such leases, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses instruments with similar characteristics when calculating its incremental borrowing rates.

The Company has options to extend certain of its operating leases for additional periods of time and the right to terminate several of its operating leases prior to its contractual expiration, in each case, subject to the terms and conditions of the lease. The lease term consists of the non-cancellable period of the lease and the periods covered by Company options to extend the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain residual value guarantees. The Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.

As of September 30, 2021, the Company had 27 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2021 and 2030. Rent expense consists of monthly rental payments under the terms of the Company’s lease agreements recognized on a straight-line basis.

The following table provides details of the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of September 30, 2021. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)
2022 (remainder of)	$	1,878
2023		2,182
2024		1,303
2025		834
2026		603
Thereafter		1,692
Total minimum lease payments	$	8,492
Less: amounts representing interest		601
Present value of minimum lease payments	$	7,891
Less: current portion		2,293
Long-term portion	$	5,598

13

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

The table below presents additional information related to the Company’s operating leases (in thousands):

	Three months ended September 30,
		2021		2020
Operating lease cost
Operating lease cost (1)	$	621	$	474
Short-term lease cost (1)		-		12
Variable lease cost (1)		35		116
Total lease cost	$	656	$	602

(1) Expenses are classified within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

The table below presents lease-related terms and discount rates as of September 30, 2021:

	September 30, 2021
Weighted average remaining lease terms
Operating leases	5.1 years
Weighted average discount rate
Operating leases	2.9%

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for the three months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30, 2021
		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:	$	621	$	474
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	610	$	1,928

Company as Lessor

The Company derives a portion of its revenue from equipment leasing arrangements. Such arrangements provide for monthly payments covering the equipment provided, maintenance, and interest. These arrangements meet the criteria to be accounted for as sales type leases. Accordingly, revenue from the provision of the equipment is recognized upon delivery of the equipment and its acceptance by the customer. Upon the recognition of such revenue, an asset is established for the investment in sales type leases. Maintenance revenue and interest are recognized monthly over the lease term.

14

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

The future minimum lease payments receivable for sales type leases are as follows (in thousands):

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2022 (remainder of)	$	2,470	$	1,489	$	981
2023		2,639		1,549		1,090
2024		2,055		1,135		920
2025		1,448		746		702
2026		928		412		516
Thereafter		629		279		350
					$	4,559*
* Excludes residual values of $2.4 million.

The total net investments in sales type leases, including stated residual values, as of September 30, 2021 and June 30, 2021 was $7.0 million and $6.7 million, respectively. The current portion of $1.5 million and $0.9 million is included in other current assets in the consolidated balance sheets as of September 30, 2021 and June 30, 2021, respectively, and the long term portion of $5.5 million and $5.8 million is included in other assets in the consolidated balance sheets as of September 30, 2021 and June 30, 2021, respectively.

Note (7) – Income Taxes: Income taxes are recorded in the Company’s quarterly financial statements based on the Company’s estimated annual effective income tax rate, subject to adjustment for discrete events, should they occur.

As of September 30, 2021 and June 30, 2021, the Company had net deferred tax liabilities of approximately $4.0 million and $4.2 million, respectively. Consistent with the guidance of the FASB regarding accounting for income taxes, the Company regularly estimates its ability to recover deferred tax assets and establishes a valuation allowance against deferred tax assets to reduce the balance to amounts expected to be recoverable. This evaluation includes the consideration of several factors, including an estimate of the likelihood of generating sufficient taxable income in future periods over which temporary differences reverse, the expected reversal of deferred tax liabilities, past and projected taxable income, and available tax planning strategies. As of September 30, 2021, management believed that it was more-likely-than-not that the results of future operations will generate sufficient taxable income to realize the net amount of the Company’s deferred tax assets over the periods during which temporary differences reverse.

The Company follows ASC Topic 740-10-25, “Accounting for Uncertainty in Income Taxes” (“ASC 740”). ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. During the three months ended September 30, 2021 and 2020, the Company’s accounting for income taxes in accordance with this standard did not result in any adjustment to the Company’s provision for income taxes.

As of September 30, 2021, the Company was subject to potential federal and state tax examinations for the tax years 2018 through 2021.

Note (8) – Equity Plans:

Equity Incentive Plan

In November 2015, the Company’s stockholders approved the Company’s 2015 Equity Incentive Plan (the “Plan”). During December 2020, the Company’s stockholders approved an amendment to the Plan to

15

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

increase the number of shares of the Company’s common stock authorized for issuance pursuant to awards granted under the Plan to 3,000,000 shares. The fair value of awards granted under the Plan is expensed on a straight-line basis over the vesting period of the awards. Share-based compensation expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

During the three months ended September 30, 2021, restricted stock awards of a total of 10,303 shares were granted under the Plan. During the three months ended September 30, 2021, no restricted stock units were granted under the Plan. During the three months ended September 30, 2021, restricted stock units of a total of 8,327 shares were forfeited and returned to the Plan. There were no restricted stock awards forfeited during the three months ended September 30, 2021. There were no restricted stock awards or units granted of forfeited under the Plan during the three months ended September 30, 2020.

For the three months ended September 30, 2021 and 2020, non-cash share-based compensation expense related to awards (inclusive of restricted stock awards and restricted stock units) granted under the Plan totaled $479,000 and $578,000, respectively.

As of September 30, 2021, the Company had $14.8 million and $6.7 million of total unrecognized compensation expense related to restricted stock awards and restricted stock units, respectively, granted under the Plan, which is expected to be recognized over the weighted-average period of 17.1 years and 10.9 years, respectively.

The following is a summary of non-vested restricted stock activity as of and for the three months ended September 30, 2021:

	Restricted Stock Awards				Restricted Stock Units
	Shares		Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Non-vested awards or units outstanding at June 30, 2021		919,259	$	19.59		253,913		$	30.92
Granted		10,303		24.75		-			-
Vested		-		-		-			-
Forfeited		-		-		(8,327	)		33.50
Non-vested awards or units outstanding at September 30, 2021		929,562	$	19.65		245,586		$	30.84

Employee Stock Purchase Plan

The Company’s employee stock purchase plan provides for six-month offering periods ending on December 31 and June 30 of each year. No shares were issued under the Company’s employee stock purchase plan during the three months ended September 30, 2021 or 2020.

Note (9) – Transactions with Related Parties: Certain of the Company’s subsidiaries lease warehouse and office space from one or more of the principals or former principals of those subsidiaries. These leases include the following:

During October 2016, the Company’s wholly-owned subsidiary, Western State Design, Inc. (“Western State Design”), entered into a lease agreement pursuant to which it leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack, a director and Executive Vice President, Corporate

16

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

Strategy of the Company, and Tom Marks, Executive Vice President, Business Development and President of the West Region of the Company. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Monthly base rental payments were $12,000 during the initial term of the lease. The Company has exercised its option to renew the lease for the first three-year renewal term, which commenced in October 2021. Base rent for the first renewal term is $19,000 per month. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $36,000 during each of the three months ended September 30, 2021 and 2020.

During October 2017, the Company’s wholly-owned subsidiary, Tri-State Technical Services, LLC (“Tri-State”), entered into lease agreements pursuant to which it leases a total of 81,000 square feet of warehouse and office space from an affiliate of Matt Stephenson, President of Tri-State. Monthly base rental payments total $21,000 during the initial terms of the leases. In addition to base rent, Tri-State is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $63,000 during each of the three months ended September 30, 2021 and 2020.

During February 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, LLC (“AAdvantage”), entered into a lease agreement pursuant to which it leases a total of 5,000 square feet of warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Monthly base rental payments are $4,000 during the initial term of this lease. In addition, during November 2018, AAdvantage entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti. Monthly base rental payments under this lease were $26,000 initially. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space and, in connection therewith, monthly base rental payments under this lease increased to $36,000. In addition to base rent, AAdvantage is responsible under each of these leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $120,000 during each of the three months ended September 30, 2021 and 2020.

During September 2018, the Company’s wholly-owned subsidiary, Scott Equipment, LLC (“Scott Equipment”), entered into lease agreements pursuant to which it leases a total of 18,000 square feet of warehouse and office space from an affiliate of Scott Martin, former President of Scott Equipment. Monthly base rental payments total $11,000 during the initial terms of the leases. In addition to base rent, Scott Equipment is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $35,000 during each of the three months ended September 30, 2021 and 2020.

During February 2019, the Company’s wholly-owned subsidiary, PAC Industries, LLC (“PAC Industries”), entered into two lease agreements pursuant to which it leases a total of 29,500 square feet of warehouse and office space from an affiliate of Frank Costabile, former President of PAC Industries, and Rocco Costabile, former Director of Finance of PAC Industries. Monthly base rental payments total $15,000 during the initial terms of the leases. In addition to base rent, PAC Industries is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of four years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $46,000 and $45,000 during the three months ended September 30, 2021 and 2020, respectively.

17

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

During November 2020, the Company’s wholly-owned subsidiary, Yankee Equipment Systems, LLC (“Yankee Equipment Systems”), entered into a lease agreement pursuant to which it leases a total of 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli, President of Yankee Equipment Systems. Monthly base rental payments are $11,000 during the initial term of the lease. In addition to base rent, Yankee Equipment Systems is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. Payments under this lease totaled approximately $35,000 during the three months ended September 30, 2021.

Note (10) – Commitments and Contingencies: In the ordinary course of business, certain of the Company’s contracts require the Company to provide performance and payment bonds related to projects in process. These bonds are intended to provide a guarantee to the customer that the Company will perform under the terms of the contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under the contract or pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company is required to reimburse the surety for expenses or outlays it incurs. At September 30, 2021 and June 30, 2021, no such performance or payment bonds were outstanding.

The Company may from time to time become subject to litigation and other legal proceedings. Litigation and other legal proceedings may require the Company to incur significant expenses, including those relating to legal and other professional fees. In addition, litigation and other legal proceedings are inherently uncertain, and adverse outcomes in litigation or other legal proceedings could adversely affect the Company’s financial condition, cash flows, and operating results.

Note (11) – Goodwill: The changes in the carrying amount of goodwill are as follows (in thousands):

Balance at June 30, 2021	$	63,881
Working capital adjustments (1)		14
Balance at September 30, 2021	$	63,895

⁽¹⁾ Represents working capital adjustments related to business acquisitions consummated by the Company during the fiscal year ended June 30, 2021.

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Item 2.Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

Forward Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, words such as “may,” “should,” “seek,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “strategy” and similar expressions are intended to identify forward looking statements. Forward looking statements may relate to, among other things, events, conditions and trends that may affect the future plans, operations, business, strategies, operating results, financial position and prospects of the Company. Forward looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results, trends, performance or achievements of the Company, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward looking statements. These risks and uncertainties include, among others, those associated with: general economic and business conditions in the United States and other countries where the Company operates or where the Company’s customers and suppliers are located; industry conditions and trends; risks relating to the COVID-19 pandemic and the rapidly changing effects thereof and developments with respect thereto, including the impact of the COVID-19 pandemic on the Company and its business, financial condition, liquidity and results, which in large part will depend on future developments and are highly uncertain and beyond the Company’s control, the length and severity of the COVID-19 pandemic and the pace of recovery following the COVID-19 pandemic, the persistence of the Delta variant and the potential emergence and spread of new variants, the success of actions taken or which may be taken by the Company in response to the COVID-19 pandemic, volatility in the economy, including in the credit markets, supply chain disruptions, reduced demand for products and services, delays in the fulfillment of orders, business restrictions, worker absenteeism, quarantines and other health-related restrictions, governmental and agency orders, mandates and guidance in response to the COVID-19 pandemic, the impact of the COVID-19 pandemic on the Company’s suppliers and customers, including those operating in certain industries (including the hospitality industry), the impact of the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), including its impact on the Company’s income taxes, the potential impairment of goodwill or other intangible assets, and risks related to potential audits of the loans received by the Company and certain of its subsidiaries under the Payroll Protection Program (the “PPP”) established under the CARES Act notwithstanding the forgiveness of the loans during the fourth quarter of fiscal 2021; risks associated with vaccine mandates, including potential loss of employees, fines for noncompliance and loss or inability to secure certain contracts, including with the federal government; the Company’s ability to implement its business and growth strategies and plans, including changes thereto; risks and uncertainties associated with the Company’s ”buy-and-build” growth strategy, including, without limitation, that the Company may not be successful in identifying or consummating acquisitions or other strategic opportunities, integration risks, risks related to indebtedness incurred by the Company in connection with the financing of acquisitions, dilution experienced by the Company’s existing stockholders as a result of the issuance of shares of the Company’s common stock in connection with acquisitions, risks related to the business, operations and prospects of acquired businesses, risks that suppliers of the acquired business may not consent to the transaction or otherwise continue its relationship with the acquired business following the transaction and the impact that the loss of any such supplier may have on the results of the Company and the acquired business, risks that the Company’s goals or expectations with respect to acquisitions and other strategic transactions may not be met, and risks related to the accounting for acquisitions; risks related to supply chain delays and disruptions and the impact it may have on the Company’s business; risks relating to the impact of pricing concessions and other measures which the Company may take from time to time in connection with its expansion and pursuit of market share growth, including that they may not be successful and may adversely impact the Company’s gross margin and other financial results; technology changes; competition, including the Company’s ability to compete effectively and the impact that competition may have on the Company and its results, including the prices which the Company may charge for its products and services and on the Company’s profit margins, and competition for qualified employees; to the extent applicable, risks relating to the Company’s ability to enter into and compete effectively in new industries, as well as risks and trends related to those industries and the costs and timing of the Company’s efforts with respect thereto; risks

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relating to the Company’s relationships with its principal suppliers and customers, including the impact of the loss of any such relationship; risks that equipment sales may not result in the ancillary benefits anticipated, including that they may not lead to increases in customers (or a stronger relationship with customers) or higher gross margin sales of parts, accessories, supplies, and technical services related to the equipment, and the risk that the benefit of lower gross margin equipment sales under longer-term contracts will not outweigh the possible short-term impact to gross margin; the risk that the Company’s service operations may not expend to the extent anticipated, or at all; risks related to the Company’s indebtedness; the availability, terms and deployment of debt and equity capital if needed for expansion or otherwise; changes in, or the failure to comply with, government regulation, including environmental regulations; litigation risks, including the costs of defending litigation and the impact of any adverse ruling; the availability and cost of inventory purchased by the Company; the relative value of the United States dollar to currencies in the countries in which the Company’s customers, suppliers and competitors are located; risks relating to the recognition of revenue, including the amount and timing thereof (including potential delays resulting from delays in installation or in receiving required supplies) and that orders in the Company’s backlog may not be fulfilled as or when expected; risks related to the adoption of new accounting standards and the impact it may have on the Company’s financial statements and results; risks that the Company’s decentralized operating model, and that product, end-user and geographic diversity, may not result in the benefits anticipated and may change over time; risks related to organic growth initiatives and market share and other growth strategies, including that they may not result in the benefits anticipated; risks that investments, initiatives and expenses, including, without limitation, investments in acquired businesses and modernization initiatives, expenses associated with the Company’s implementation of its ERP system, and other investments, initiatives and expenses, may not result in the benefits anticipated; and other economic, competitive, governmental, technological and other risks and factors discussed in the Company’s filings with the SEC, including, without limitation, those described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021. Many of these risks and factors are beyond the Company’s control. Further, past performance and perceived trends may not be indicative of future results, including, without limitation, in light of the impact of, and uncertainties associated with, the COVID-19 pandemic. The Company cautions that the foregoing factors are not exclusive. The reader should not place undue reliance on any forward looking statement, which speaks only as of the date made. The Company does not undertake to, and specifically disclaims any obligation to, update or supplement any forward looking statement, whether as a result of changes in circumstances, new information, subsequent events or otherwise, except as may be required by law.

Company Overview

EVI Industries, Inc., through its wholly-owned subsidiaries (collectively “EVI” or the “Company”), is a value-added distributor, and provides advisory and technical services. Through its vast sales organization, the Company provides its customers with planning, designing, and consulting services related to their commercial laundry operations. The Company sells and/or leases its customers commercial laundry equipment, specializing in washing, drying, finishing, material handling, water heating, power generation, and water reuse applications. In support of the suite of products it offers, the Company sells related parts and accessories. Additionally, through the Company’s robust network of commercial laundry technicians, the Company provides its customers with installation, maintenance, and repair services.

The Company’s customers include government, institutional, industrial, commercial and retail customers. Product purchases made by customers range from parts and accessories, to single or multiple units of equipment, to large complex systems. The Company also provides its customers with the services described above.

The Company’s operating expenses consist primarily of (a) selling, general and administrative expenses, primarily salaries, and commissions and marketing expenses that are variable and correlate to changes in sales, (b) expenses related to the operation of warehouse facilities, including a fleet of installation and

20

service vehicles, and facility rent, which are payable mostly under non-cancelable operating leases, and (c) operating expenses at the parent company, including compensation expenses, fees for professional services, other expenses associated with being a public company, and expenses in furtherance of the Company’s “buy-and-build” growth strategy.

Growth Strategy; Acquisition History

During 2015, the Company implemented a “buy-and-build” growth strategy. The “buy” component of the strategy includes the consideration and pursuit of acquisitions and other strategic transactions which management believes would complement the Company’s existing business or otherwise offer growth opportunities for, or benefit, the Company. The Company generally seeks to structure acquisitions to include both cash and stock consideration.

Since the implementation of its “buy-and-build” growth strategy in 2015, the Company has consummated 16 business acquisitions. The Company has effected each business acquisition through a wholly-owned subsidiary which acquires the business or assets of the acquired company, whether by an asset purchase or merger, and operates the acquired business following the transaction. In connection with each transaction, the Company, indirectly through its applicable wholly-owned subsidiary, also assumed certain of the liabilities of the acquired business. The financial position, including assets and liabilities, and results of operations of the acquired businesses following the respective closing dates of the acquisitions are included in the Company’s consolidated financial statements.

The “build” component of the Company’s “buy-and-build” growth strategy involves implementing a growth culture at acquired businesses based on the exchange of ideas and business concepts among the management teams of the Company and the acquired businesses as well as through certain initiatives, which may include investments in additional sales and service personnel, new product lines, enhanced service operations and capabilities, new and improved facilities, and advanced technologies.

The Company pursues market share growth using a variety of strategies aimed at increasing the installed base of the wide range of commercial laundry equipment the Company represents. Certain market share growth tactics may, from time to time, result in lower gross margins. However, the Company believes that a greater installed base of equipment strengthens the Company’s existing customer relationships and may lead to increases in the total number of customers, consequently creating a larger and stronger customer base to which the Company may sell products and services. These may include certain higher margin products and services and any additional products and services which the Company may offer or sell from time to time as a result of any business acquisitions, the sale or lease of complementary products, and expansion of its service operations. From time to time, the Company also enters into longer-term contracts, including to fulfill large complex laundry projects for divisions of the federal government, where the nature of, and competition for, such contracts may result in a lower gross margin as compared to other equipment sales. Despite the potential for a lower gross margin from such longer-term contracts, the Company believes that the long-term benefit from the increase in its installed equipment will outweigh the possible short-term impact to gross margin.

Further, as a value-added distributor and a provider of technical services in the commercial laundry industry, the Company partners with its customers to plan, design, install, and maintain their commercial laundry operations. The nature of the Company’s business not only requires an experienced and well-trained sales organization to procure customer orders, but also requires proper, timely, and cost-effective installation ranging from single units of equipment to complex multimillion dollar laundry systems. Such installations also require coordination and collaboration with the Company’s customers and any third parties they may retain. Consequently, the recognition of revenue and profit may from time to time be impacted by delays in construction and/or the preparation of customer facilities for the installation of

21

purchased commercial laundry equipment and systems. This may result in decreased revenue and profit in a current period but a source of future revenue and profit through the ultimate fulfillment of the orders.

Impact of COVID-19 on the Company’s Business

The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the economy and has negatively impacted, and may continue to negatively impact, the Company’s business and results. Specifically, beginning at the end of the quarter ended March 31, 2020, the COVID-19 pandemic and accompanying economic disruption caused delays and declines in the placement of customer orders, the completion of equipment and parts installations, and the fulfillment of parts orders. During the fiscal year ended June 30, 2021, the COVID-19 pandemic had a resurgence with the increased presence and spread of the Delta variant and other variants may arise in the future or the pandemic may otherwise persist. Accordingly, the adverse impact of the COVID-19 pandemic is expected to continue in the near-term and possibly longer, including, without limitation, if the pandemic increases in size and scope, its duration is prolonged, or, among other matters related thereto, additional governmental actions, including, without limitation, business restrictions, are imposed. In response to the economic and business disruption during 2020, the Company took actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating payment terms with suppliers, and reducing hiring activities. The Company continues to actively monitor the COVID-19 pandemic and may take further actions, including those that may alter business operations, if required by federal, state, local or foreign authorities or otherwise determined to be advisable by management.

As of the date of this Quarterly Report on Form 10-Q, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. Factors arising from the COVID-19 pandemic that have impacted, or may in the future negatively impact, the Company’s business and results, including sales and gross margin, include, but are not limited to: supply chain disruptions as the current operating environment is constantly shifting in response to the COVID-19 pandemic, which is placing significant pressure on the supply chain and has resulted in, and may continue to result in, delays in delivering products or services to the Company’s customers; limitations on the ability of the Company’s employees to perform their work due to impacts caused by the pandemic or local, state, federal or foreign orders that may restrict the Company’s operations or the operations of its customers, or require that employees be quarantined; limitations on the ability of carriers to deliver products to the Company’s facilities and customers; risks associated with vaccine mandates, including potential loss of employees, fines for noncompliance and loss or inability to secure certain contracts, including with the federal government; adverse impacts of the pandemic on certain industries and customers of the Company which operate in those industries, including the hospitality industry; and potential decreased demand for products and services, including potential limitations on the ability of, or adverse changes in the desire of, the Company’s customers to conduct their business, purchase products and services and pay for purchases on a timely basis or at all.

The situation surrounding the COVID-19 pandemic remains fluid and highly uncertain. The Company is unable to determine or predict the nature, duration, or scope of the overall impact that the COVID-19 pandemic will have on the Company’s business, results of operations, liquidity, or financial condition, as such impact will depend in large part on future developments, including the severity and duration of the pandemic, and government and other actions taken in response thereto, all of which are highly uncertain. Further, even after the COVID-19 pandemic subsides, the Company may continue to experience adverse impacts to its business as a result of, among other things, any adverse impact that has occurred or may occur in the future in the economy or markets generally, and changes in customer or supplier behavior.

Recent Accounting Pronouncements

Refer to Note 3 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a description of Recently Issued Accounting Guidance.

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Results of Operations

Three-Month Period Ended September 30, 2021 Compared to the Three-Month Period Ended September 30, 2020

Revenues

Revenues for the three-month period ended September 30, 2021 increased $5.9 million, or 10%, compared to the same period of the prior fiscal year. The increase in revenue was due to a greater adverse impact of the COVID-19 pandemic in the fiscal 2020 period and the completion during the fiscal 2021 period of projects previously delayed by the COVID-19 pandemic. In addition, the Company’s revenues for the three months ended September 30, 2021 benefited from the results of businesses acquired following the three-month period ended September 30, 2020, including primarily Yankee Equipment Systems.

Gross Profit

Gross profit for the three-month period ended September 30, 2021 increased $4.3 million, or 32%, compared to the same period of the prior fiscal year, primarily as a result of increased revenues and more favorable product and customer mix, which resulted in an increase in gross margin from 23.0% for the three-month period ended September 30, 2020 to 27.7% for the three-month period ended September 30, 2021.

As previously described, longer-term contracts with divisions of the federal government, including those to fulfill large complex laundry projects, generally have a lower gross margin compared to other equipment sales and, as a result, may adversely impact the Company’s gross margin. The Company believes that these longer-term contracts will result in higher gross margin opportunities over the long-term. Changes in these longer-term federal government contracts resulted in an increase in gross margin of 100 basis points during the three-month period ended September 30, 2021.

Selling, General and Administrative Expenses

Operating expenses increased by approximately $2.5 million, or 20%, for the three-month period ended September 30, 2021 compared to the same period of the prior fiscal year. The increase is primarily attributable to (a) operating expenses of acquired businesses, including additional operating expenses at the acquired businesses in pursuit of future growth and in connection with the Company’s optimization initiatives, (b) increases in selling costs, including commissions, from increases in revenues, (c) increases in operating expenses and investments at the parent company level in connection with the Company’s optimization initiatives, including expenses related to the consolidation of the Company’s operations, the modernization of the Company’s operations through the implementation of advanced technologies, including a new ERP software system, a new customer relations management system, and a completely digital sales and service operating platform, and (d) increased operating expenses in support of the Company’s “buy-and-build” growth strategy.

Interest and Other (Expense) Income, Net

Net interest expense for the three-month period ended September 30, 2021 was $115,000 compared to $169,000 for the same period of the prior fiscal year. The decrease in net interest expense is primarily due a decrease in average outstanding borrowings and a decrease in the average effective interest rate.

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Income Taxes

The Company’s effective tax rate was 20.9% for the three-month period ended September 30, 2021 compared to 28.7% for the same period of the prior fiscal year. The decrease in the effective tax rate for the three-month period ended September 30, 2021 is mostly attributable to a decrease in the net impact of permanent book-tax differences resulting primarily from a decrease in nondeductible compensation.

Net Income

Net income for the three months ended September 30, 2021 was $2.0 million, compared to net income of $518,000 for the same period of the prior fiscal year. The increase in net income for the three-month period ended September 30, 2021 was attributable primarily to the increases in revenue and gross profit, partially offset by an increase in selling, general and administrative expenses, all as described in further detail above.

Consolidated Financial Condition

The Company’s total assets increased from $177.9 million at June 30, 2021 to $183.6 million at September 30, 2021. The increase in total assets was primarily attributable to an increase in current assets, as described below under “Liquidity and Capital Resources - Working Capital.” The Company’s total liabilities increased from $71.1 million at June 30, 2021 to $74.3 million at September 30, 2021, which was primarily attributable to an increase in long-term debt, partially offset by a decrease in current liabilities. The increase in long-term debt was attributable to borrowings on the Company’s existing credit facility in excess of optional repayments. The decrease in current liabilities mostly pertains to decreases in accounts payable and accrued expenses and contract liabilities, as further described under “Liquidity and Capital Resources - Working Capital” below.

Liquidity and Capital Resources

For the three-month period ended September 30, 2021, cash decreased by approximately $3.3 million compared to a decrease of approximately $4.7 million during the three-month period ended September 30, 2020.

Working Capital

Working capital increased from $15.8 million at June 30, 2021 to $26.8 million at September 30, 2021, primarily reflecting increases in accounts receivable and inventory and decreases in accounts payable and accrued expenses and contract liabilities, partially offset by a decrease in cash on hand. The increase in accounts receivable is due to an increase in revenue and the increase in inventory is due to an increase in inventory stock levels and adjustments to timing of inventory procurement in light of extended inventory lead times due to supply chain constraints. The decrease in accounts payable and accrued expenses is due primarily to the timing of vendor payments. The decrease in contract liabilities was due in large part to the completion of certain large complex laundry projects for divisions of the federal government, as described above.

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Cash Flows

The following table summarizes the Company’s cash flow activity for the three months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,
	2021			2020
Net cash provided (used) by:
Operating activities	$	(10,436	)	$	4,319
Investing activities	$	(848	)	$	(997	)
Financing activities	$	8,000		$	(8,000	)

The individual items contributing to cash flow changes for the periods presented are detailed in the unaudited condensed consolidated statements of cash flows included in Item 1 of this Quarterly Report on Form 10-Q.

Operating Activities

For the three months ended September 30, 2021, operating activities used cash of $10.4 million compared to $4.3 million of cash provided by operating activities during the three months ended September 30, 2020. This $14.8 million increase in cash used by operating activities was primarily attributable to changes in working capital, including increases from changes in operating assets such as accounts receivable and inventory, partially offset by decreases in operating assets such as contract assets and other assets and decreases from changes in operating liabilities such as accounts payable and accrued expenses and contract liabilities.

Investing Activities

Net cash used in investing activities decreased $149,000 to $848,000 during the three months ended September 30, 2021 compared to $997,000 during the three months ended September 30, 2020. This $149,000 decrease was attributable primarily to a decrease in capital expenditures.

Financing Activities

For the three months ended September 30, 2021, financing activities provided cash of $8.0 million compared to $8.0 million of cash used by financing activities during the three months ended September 30, 2020. This $16.0 million increase in cash provided by financing activities was attributable primarily to an increase in proceeds from borrowings during the three months ended September 30, 2021 in excess of optional debt payments to fund changes in working capital.

Revolving Credit Agreement

On November 2, 2018, the Company entered into a syndicated credit agreement (the “2018 Credit Agreement”) for a revolving credit facility with a five-year term and a maximum aggregate principal amount of up to $100 million, with an accordion feature to increase the revolving credit facility by up to $40 million for a total of $140 million. The Company uses borrowings under the revolving credit facility to fund in part its working capital needs, acquisitions, dividends (if and to the extent declared by the Company’s Board of Directors), capital expenditures, amounts paid to satisfy tax withholding obligations upon the vesting of certain restricted stock awards, issuances of letters of credit, and for other general corporate purposes. The obligations of the Company under the 2018 Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, and are guaranteed, jointly and severally, by certain of the Company’s subsidiaries.

Borrowings (other than swingline loans) under the 2018 Credit Agreement bear interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranges from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded

25

indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans bear interest calculated at the Base Rate plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The 2018 Credit Agreement has a term of five years and matures on November 2, 2023.

The 2018 Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The 2018 Credit Agreement also contains other provisions which may restrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. As of September 30, 2021, the Company was in compliance with its covenants under the 2018 Credit Agreement and $27.5 million was available to borrow under the revolving credit facility.

The Company believes that its existing cash, anticipated cash from operations and funds available under the Company’s 2018 Credit Agreement will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve months from the filing of this Report. The Company may also seek to raise funds through the issuance of equity and/or debt securities or the incurrence of additional secured or unsecured indebtedness, including in connection with acquisitions or other transactions pursued by the Company as part of its “buy-and-build” growth strategy.

Off-Balance Sheet Financing

The Company had no off-balance sheet financing arrangements within the meaning of Item 303(a)(4) of Regulation S-K at September 30, 2021.

Inflation

Inflation did not have a significant effect on the Company’s results during any of the reported periods.

Transactions with Related Parties

Certain of the Company’s subsidiaries lease warehouse and office space from one or more of the principals of those subsidiaries. These leases include the following:

During October 2016, the Company’s wholly-owned subsidiary, Western State Design, Inc. (“Western State Design”), entered into a lease agreement pursuant to which it leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack, a director and Executive Vice President, Corporate Strategy of the Company, and Tom Marks, Executive Vice President, Business Development and President of the West Region of the Company. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Monthly base rental payments were $12,000 during the initial term of the lease. The Company has exercised its option to renew the lease for the first three-year renewal term, which commenced in October 2021. Base rent for the first renewal term is $19,000 per month. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $36,000 during each of the three months ended September 30, 2021 and 2020.

During October 2017, the Company’s wholly-owned subsidiary, Tri-State Technical Services, LLC (“Tri-State”), entered into lease agreements pursuant to which it leases a total of 81,000 square feet of warehouse and office space from an affiliate of Matt Stephenson, President of Tri-State. Monthly base rental payments total $21,000 during the initial terms of the leases. In addition to base rent, Tri-State is responsible under

26

the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $63,000 during each of the three months ended September 30, 2021 and 2020.

During February 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, LLC (“AAdvantage”), entered into a lease agreement pursuant to which it leases a total of 5,000 square feet of warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Monthly base rental payments are $4,000 during the initial term of this lease. In addition, during November 2018, AAdvantage entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti. Monthly base rental payments under this lease were $26,000 initially. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space and, in connection therewith, monthly base rental payments under this lease increased to $36,000. In addition to base rent, AAdvantage is responsible under each of these leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $120,000 during each of the three months ended September 30, 2021 and 2020.

During September 2018, the Company’s wholly-owned subsidiary, Scott Equipment, LLC (“Scott Equipment”), entered into lease agreements pursuant to which it leases a total of 18,000 square feet of warehouse and office space from an affiliate of Scott Martin, former President of Scott Equipment. Monthly base rental payments total $11,000 during the initial terms of the leases. In addition to base rent, Scott Equipment is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $35,000 during each of the three months ended September 30, 2021 and 2020.

During February 2019, the Company’s wholly-owned subsidiary, PAC Industries, LLC (“PAC Industries”), entered into two lease agreements pursuant to which it leases a total of 29,500 square feet of warehouse and office space from an affiliate of Frank Costabile, former President of PAC Industries, and Rocco Costabile, former Director of Finance of PAC Industries. Monthly base rental payments total $15,000 during the initial terms of the leases. In addition to base rent, PAC Industries is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of four years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $46,000 and $45,000 during the three months ended September 30, 2021 and 2020, respectively.

During November 2020, the Company’s wholly-owned subsidiary, Yankee Equipment Systems, LLC (“Yankee Equipment Systems”), entered into a lease agreement pursuant to which it leases a total of 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli, President of Yankee Equipment Systems. Monthly base rental payments are $11,000 during the initial term of the lease. In addition to base rent, Yankee Equipment Systems is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. Payments under this lease totaled approximately $35,000 during the three months ended September 30, 2021.

Critical Accounting Policies

In connection with the preparation of its financial statements, the Company makes estimates and assumptions, including those that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenues and expenses during the reported periods. Estimates and assumptions made may not prove to be correct, and actual results may differ from the estimates. The accounting policies that the

27

Company has identified as critical to its business operations and to an understanding of the Company’s financial statements remain unchanged from those described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

Recently Issued Accounting Guidance

See Note 3 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a description of recently issued accounting guidance.

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

The Company’s indebtedness subjects the Company to interest rate risk. Interest rates are subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The nature and timing of any changes in such policies or general economic conditions and the effect they may have on the Company are unpredictable. The Company’s indebtedness may also have other important impacts on the Company, including that the Company will be required to utilize cash flow to service the debt, indebtedness may make the Company more vulnerable to economic downturns, and the Company’s indebtedness subjects the Company to covenants and may place restrictions on its operations and activities, including its ability to pay dividends and take certain other actions. Interest on borrowings under the Company’s 2018 Credit Agreement accrues at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranges from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one-month LIBOR rate plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. As of September 30, 2021, the Company had approximately $20.0 million of outstanding borrowings under the 2018 Credit Agreement with a weighted average interest rate of 1.33%. Based on the amounts outstanding at September 30, 2021, a hypothetical 1% increase in daily interest rates would increase the Company’s annual interest expense by approximately $200,000.

All of the Company’s export sales require the customer to make payment in United States dollars. Accordingly, foreign sales may be affected by the strength of the United States dollar relative to the currencies of the countries in which the Company’s customers are located, as well as the strength of the economies of the countries in which the Company’s customers are located. The Company has, at times in the past, paid certain suppliers in Euros. The Company had no foreign exchange contracts outstanding at September 30, 2021 or June 30, 2021.

The Company’s cash is maintained in bank accounts which bear interest at prevailing interest rates. At September 30, 2021, bank deposits exceeded Federal Deposit Insurance Corporation limits.

Item 4.Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, management of the Company, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of September 30, 2021, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the

28

Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. It should be noted that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2021, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

29

PART II—OTHER INFORMATION

Item 1.Legal Proceedings

From time to time, the Company is involved in, or subject to, legal and regulatory claims, proceedings, demands or actions arising in the ordinary course of business. There have been no material changes with respect to such matters from the disclosure included in the “Legal Proceedings” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

Item 1A.Risk Factors

There have been no material changes in the risks and uncertainties that the Company faces from those disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

30

Item 6.Exhibits.

Exhibit
Number	Description
*31.01	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.02	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
+32.01	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
+32.02	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed with this Quarterly Report on Form 10-Q.

+ Furnished with this Quarterly Report on Form 10-Q.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 9, 2021		EVI Industries, Inc.
	By:	/s/ Robert H. Lazar
		Robert H. Lazar
		Chief Financial Officer

32

EX-31.01

EXHIBIT 31.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Henry M. Nahmad, certify that:

1.I have reviewed this quarterly report on Form 10-Q of EVI Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

1

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2021	/s/ Henry M. Nahmad
	Henry M. Nahmad
	Principal Executive Officer

2

EX-31.02

EXHIBIT 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert H. Lazar, certify that:

1.I have reviewed this quarterly report on Form 10-Q of EVI Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

1

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2021	/s/ Robert H. Lazar
	Robert H. Lazar
	Principal Financial Officer

2

EX-32.01

EXHIBIT 32.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of EVI Industries, Inc. (the “Company”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Henry M. Nahmad, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 9, 2021	/s/ Henry M. Nahmad
	Henry M. Nahmad
	Principal Executive Officer

EX-32.02

EXHIBIT 32.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of EVI Industries, Inc. (the “Company”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert H. Lazar, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 9, 2021

/s/ Robert H. Lazar

Robert H. Lazar

Principal Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2021	Nov. 01, 2021
Cover [Abstract]
Entity Central Index Key	0000065312
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2021
Entity File Number	001-14757
Entity Registrant Name	EVI Industries, Inc.
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	11-2014231
Entity Address, Address Line One	4500 Biscayne Blvd
Entity Address, Address Line Two	Suite 340
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33137
City Area Code	305
Local Phone Number	402-9300
Title of 12(b) Security	Common Stock, $.025 par value
Trading Symbol	EVI
Name of Exchange on which Security is Registered	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		12,278,431

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Revenues	$ 63,741	$ 57,878
Cost of sales	46,102	44,545
Gross profit	17,639	13,333
Selling, general and administrative expenses	14,970	12,437
Operating income	2,669	896
Interest expense, net	115	169
Income before income taxes	2,554	727
Provision for income taxes	535	209
Net income	$ 2,019	$ 518
Net earnings per share - basic	$ 0.15	$ 0.04
Net earnings per share - diluted	$ 0.15	$ 0.04

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021
Current assets
Cash	$ 2,773	$ 6,057
Accounts receivable, net of allowance for doubtful accounts of $1.1 million and $1.0 million, respectively	33,685	28,904
Inventories, net	29,055	25,129
Vendor deposits	410	367
Contract assets	125	347
Other current assets	5,595	4,419
Total current assets	71,643	65,223
Equipment and improvements, net	10,693	10,594
Operating lease assets	7,153	7,060
Intangible assets, net	23,190	23,677
Goodwill	63,895	63,881
Other assets	6,998	7,415
Total assets	183,572	177,850
Current liabilities
Accounts payable and accrued expenses	23,774	26,227
Accrued employee expenses	7,210	7,528
Customer deposits	11,327	10,344
Contract liabilities	200	3,232
Current portion of operating lease liabilities	2,293	2,131
Total current liabilities	44,804	49,462
Deferred tax liabilities, net	4,046	4,208
Long-term operating lease liabilities	5,598	5,567
Long-term debt, net	19,886	11,873
Total liabilities	74,334	71,110
Commitments and contingencies (Note 10)
Shareholders' equity
Preferred stock, $1.00 par value; authorized shares - 200,000; none issued and outstanding
Common stock, $.025 par value; authorized shares - 20,000,000; 12,399,137 shares issued at September 30, 2021 and June 30, 2021, including shares held in treasury	310	310
Additional paid-in capital	90,980	90,501
Treasury stock, 120,706 shares at September 30, 2021 and June 30, 2021, at cost	(2,865)	(2,865)
Retained earnings	20,813	18,794
Total shareholders' equity	109,238	106,740
Total liabilities and shareholders' equity	$ 183,572	$ 177,850

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2021	Jun. 30, 2021
Statement of Financial Position [Abstract]
Accounts receivable, net of allowance for doubtful accounts	$ 1.1	$ 1.0
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.025	$ 0.025
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	12,399,137	12,399,137
Treasury stock, shares	120,706	120,706

XML

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Total
Balance, beginning at Jun. 30, 2020	$ 301	$ 79,127	$ (2,012)	$ 10,410	$ 87,826
Balance, shares, beginning at Jun. 30, 2020	12,029,910		95,396
Stock compensation		578			578
Net income				518	518
Balance, ending at Sep. 30, 2020	$ 301	79,705	$ (2,012)	10,928	88,922
Balance, shares, ending at Sep. 30, 2020	12,029,910		95,396
Balance, beginning at Jun. 30, 2021	$ 310	90,501	$ (2,865)	18,794	106,740
Balance, shares, beginning at Jun. 30, 2021	12,399,137		120,706
Stock compensation		479			479
Net income				2,019	2,019
Balance, ending at Sep. 30, 2021	$ 310	$ 90,980	$ (2,865)	$ 20,813	$ 109,238
Balance, shares, ending at Sep. 30, 2021	12,399,137		120,706

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Operating activities:
Net income	$ 2,019	$ 518
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Depreciation and amortization	1,236	985
Amortization of debt discount	13	14
Provision for bad debt expense	108	96
Non-cash lease expense	100	29
Share-based compensation	479	578
Inventory reserve	(31)	(26)
Benefit for deferred income taxes	(162)	(760)
Other	(14)	60
(Increase) decrease in operating assets:
Accounts receivable	(4,889)	530
Inventories	(3,895)	(585)
Vendor deposits	(43)	1,049
Contract assets	222	(5,211)
Other assets	(759)	(1,667)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses	(2,453)	3,229
Accrued employee expenses	(318)	(208)
Customer deposits	983	2,847
Contract liabilities	(3,032)	2,841
Net cash (used) provided by operating activities	(10,436)	4,319
Investing activities:
Capital expenditures	(848)	(997)
Net cash used by investing activities	(848)	(997)
Financing activities:
Proceeds from borrowings	15,000	12,000
Debt repayments	(7,000)	(20,000)
Net cash provided (used) by financing activities	8,000	(8,000)
Net decrease in cash	(3,284)	(4,678)
Cash at beginning of period	6,057	9,789
Cash at end of period	2,773	5,111
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	98	137
Cash paid during the period for income taxes	$ 18	$ 453

XML

General

3 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

Note (1) – General: The accompanying unaudited condensed consolidated financial statements include the accounts of EVI Industries, Inc. and its subsidiaries (the “Company”). All material intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Article 10 of Regulation S-X related to interim period financial statements. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include certain information and footnotes required by GAAP for complete financial statements. However, in management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals and adjustments) which are necessary in order to state fairly the Company’s results of operations, financial position, shareholders’ equity and cash flows as of and for the periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period, particularly in light of the COVID-19 pandemic and its effects and potential future effects (which are highly uncertain) on economic and market conditions and on the Company and its business, results and financial condition, as described below and elsewhere herein. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes, including the Summary of Significant Accounting Policies, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021. The June 30, 2021 balance sheet information contained herein was derived from the Company’s audited consolidated financial statements as of that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The estimates and assumptions made may not prove to be correct, and actual results could differ from the estimates.

The Company, through its wholly-owned subsidiaries, is a value-added distributor, and provides advisory and technical services. Through its vast sales organization, the Company provides its customers with planning, designing, and consulting services related to their commercial laundry operations. The Company sells and/or leases its customers commercial laundry equipment, specializing in washing, drying, finishing, material handling, water heating, power generation, and water reuse applications. In support of the suite of products it offers, the Company sells related parts and accessories. Additionally, through the Company’s robust network of commercial laundry technicians, the Company provides its customers with installation, maintenance, and repair services.

The Company’s customers include government, institutional, industrial, commercial and retail customers. Product purchases made by customers range from parts and accessories, to single or multiple units of equipment, to large complex systems. The Company also provides its customers with the services described above.

The Company’s growth strategy includes organic growth initiatives and business acquisitions pursuant to the Company’s “buy-and-build” growth strategy, which was implemented in 2015.

The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the economy and has negatively impacted, and may continue to negatively impact, the Company’s business and results. Specifically, beginning at the end of the quarter ended March 31, 2020, the COVID-19 pandemic and accompanying economic disruption caused delays and declines in the placement of customer orders, the completion of equipment and parts installations, and the fulfillment of parts orders. During the fiscal year

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

ended June 30, 2021, the COVID-19 pandemic had a resurgence with the increased presence and spread of the Delta variant and other variants may arise in the future or the pandemic may otherwise persist. Accordingly, the adverse impact of the COVID-19 pandemic is expected to continue in the near-term and possibly longer, including, without limitation, if the pandemic increases in size and scope, its duration is prolonged, or, among other matters related thereto, additional governmental actions, including, without limitation, business restrictions, are imposed. In response to the economic and business disruption during 2020, the Company took actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating payment terms with suppliers, and reducing hiring activities. The Company continues to actively monitor the COVID-19 pandemic and may take further actions, including those that may alter business operations, if required by federal, state, local or foreign authorities or otherwise determined to be advisable by management.

As of the date of this Quarterly Report on Form 10-Q, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. Factors arising from the COVID-19 pandemic that have impacted, or may in the future negatively impact, the Company’s business and results, including sales and gross margin, include, but are not limited to: supply chain disruptions as the current operating environment is constantly shifting in response to the COVID-19 pandemic, which is placing significant pressure on the supply chain and has resulted in, and may continue to result in, delays in delivering products or services to the Company’s customers; limitations on the ability of the Company’s employees to perform their work due to impacts caused by the pandemic or local, state, federal or foreign orders that may restrict the Company’s operations or the operations of its customers, or require that employees be quarantined; limitations on the ability of carriers to deliver products to the Company’s facilities and customers; risks associated with vaccine mandates, including potential loss of employees, fines for noncompliance and loss or inability to secure certain contracts, including with the federal government; adverse impacts of the pandemic on certain industries and customers of the Company which operate in those industries, including the hospitality industry; and potential decreased demand for products and services, including potential limitations on the ability of, or adverse changes in the desire of, the Company’s customers to conduct their business, purchase products and services, and pay for purchases on a timely basis or at all.

The situation surrounding the COVID-19 pandemic remains fluid and highly uncertain. The Company is unable to determine or predict the nature, duration, or scope of the overall impact that the COVID-19 pandemic will have on the Company’s business, results of operations, liquidity, or financial condition, as such impact will depend in large part on future developments, including the severity and duration of the pandemic and government and other actions taken in response thereto, all of which are highly uncertain. Further, even after the COVID-19 pandemic subsides, the Company may continue to experience adverse impacts to its business as a result of, among other things, any adverse impact that has occurred or may occur in the future in the economy or markets generally, and changes in customer or supplier behavior.

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Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note (2) – Summary of Significant Accounting Policies: There have been no changes to the Company’s significant accounting policies from those described in Note 1 to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

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Recently Issued Accounting Guidance

3 Months Ended

Sep. 30, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recently Issued Accounting Guidance

Note (3) – Recently Issued Accounting Guidance: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other specified instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited)

using a cumulative-effect transition method. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and for interim periods within those fiscal years (the fiscal year ending June 30, 2024 for the Company), with early adoption permitted. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12 (“ASU 2019-12”), “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to improve consistent application and simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principals in Topic 740 and clarifies and amends existing guidance. This standard is effective for the Company for fiscal reporting periods beginning after June 30, 2021. The Company adopted the standard as of September 30, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements or related disclosures.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new guidance provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include: contract modifications, hedging relationships, and the sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made. The provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.

Other than as described above, management does not believe that accounting standards and updates which have been issued but are not yet effective will have a material impact on the Company’s consolidated financial statements upon adoption.

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Earnings Per Share

3 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Note (4) – Earnings Per Share: The Company computes earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of the Company’s common stock subject to unvested restricted stock awards and restricted stock units are considered participating securities because they contain a non-forfeitable right to cash dividends (in the case of restricted stock awards) or dividend equivalents (in the case of restricted stock units) paid prior to vesting or forfeiture, if any, irrespective of whether the awards or units ultimately vest. Basic and diluted earnings per share for the three months ended September 30, 2021 and 2020 are computed as follows (in thousands, except per share data):

	For the three months ended September 30,
	2021 (Unaudited)		2020 (Unaudited)
Net income	$	2,019	$	518
Less: distributed and undistributed income allocated to unvested restricted common stock		176		42
Net income allocated to EVI Industries, Inc. shareholders	$	1,843	$	476
Weighted average shares outstanding used in basic earnings per share		12,278		11,935
Dilutive common share equivalents		381		344
Weighted average shares outstanding used in diluted earnings per share		12,659		12,279
Basic earnings per share	$	0.15	$	0.04
Diluted earnings per share	$	0.15	$	0.04

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited)

At September 30, 2021 and 2020, other than 1,175,163 shares and 1,042,830 shares, respectively, of common stock subject to unvested restricted stock awards or restricted stock units, there were no potentially dilutive securities outstanding.

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Debt

3 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

Note (5) – Debt: Long-term debt as of September 30, 2021 and June 30, 2021 are as follows (in thousands):

	September 30, 2021			June 30, 2021
Revolving Line of Credit	$	20,000		$	12,000
Less: unamortized discount and deferred financing costs		(114	)		(127	)
Total long-term debt, net	$	19,886		$	11,873

On November 2, 2018, the Company entered into a syndicated credit agreement (the “2018 Credit Agreement”) for a five-year revolving credit facility in the maximum aggregate principal amount of up to $100 million, with an accordion feature to increase the revolving credit facility by up to $40 million for a total of $140 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $5 million and for the issuance of standby letters of credit of up to a sublimit of $10 million.

Borrowings (other than swingline loans) under the 2018 Credit Agreement bear interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranges from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans bear interest calculated at the Base Rate plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The 2018 Credit Agreement has a term of five years and matures on November 2, 2023.

The 2018 Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The 2018 Credit Agreement also contains other provisions which may restrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. As of September 30, 2021, the Company was in compliance with its covenants under the 2018 Credit Agreement and $27.5 million was available to borrow under the revolving credit facility.

The obligations of the Company under the 2018 Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, and are guaranteed, jointly and severally, by certain of the Company’s subsidiaries.

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Leases

3 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

Note (6) – Leases:

Company as Lessee

The Company leases warehouse and distribution facilities, administrative office space and service and other fleet vehicles, generally for terms of three to ten years.

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

The Company applies ASC Topic 842, Leases (“ASC 842” or “Topic 842”), which, among other things, requires lessees to recognize substantially all leases on their balance sheets and disclose certain additional key information about leasing arrangements. The standard established a right-of-use model that requires a lessee to recognize a right-of-use asset and liability on the balance sheet for all leases with a term longer than 12 months. Leases are required to be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The Company adopted this standard effective July 1, 2019 using the modified retrospective transition approach, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption without restatement of prior periods.

The Company made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, the Company, as permitted by Topic 842, recognizes the lease payments under its short-term leases in profit or loss on a straight-line basis over the lease term. The Company elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and right-of-use liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, certain of the Company’s leases do not provide a readily determinable implicit rate. For such leases, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses instruments with similar characteristics when calculating its incremental borrowing rates.

The Company has options to extend certain of its operating leases for additional periods of time and the right to terminate several of its operating leases prior to its contractual expiration, in each case, subject to the terms and conditions of the lease. The lease term consists of the non-cancellable period of the lease and the periods covered by Company options to extend the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain residual value guarantees. The Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.

As of September 30, 2021, the Company had 27 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2021 and 2030. Rent expense consists of monthly rental payments under the terms of the Company’s lease agreements recognized on a straight-line basis.

The following table provides details of the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of September 30, 2021. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)
2022 (remainder of)	$	1,878
2023		2,182
2024		1,303
2025		834
2026		603
Thereafter		1,692
Total minimum lease payments	$	8,492
Less: amounts representing interest		601
Present value of minimum lease payments	$	7,891
Less: current portion		2,293
Long-term portion	$	5,598

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

The table below presents additional information related to the Company’s operating leases (in thousands):

	Three months ended September 30,
		2021		2020
Operating lease cost
Operating lease cost (1)	$	621	$	474
Short-term lease cost (1)		-		12
Variable lease cost (1)		35		116
Total lease cost	$	656	$	602

(1) Expenses are classified within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

The table below presents lease-related terms and discount rates as of September 30, 2021:

	September 30, 2021
Weighted average remaining lease terms
Operating leases	5.1 years
Weighted average discount rate
Operating leases	2.9%

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for the three months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30, 2021
		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:	$	621	$	474
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	610	$	1,928

Company as Lessor

The Company derives a portion of its revenue from equipment leasing arrangements. Such arrangements provide for monthly payments covering the equipment provided, maintenance, and interest. These arrangements meet the criteria to be accounted for as sales type leases. Accordingly, revenue from the provision of the equipment is recognized upon delivery of the equipment and its acceptance by the customer. Upon the recognition of such revenue, an asset is established for the investment in sales type leases. Maintenance revenue and interest are recognized monthly over the lease term.

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

The future minimum lease payments receivable for sales type leases are as follows (in thousands):

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2022 (remainder of)	$	2,470	$	1,489	$	981
2023		2,639		1,549		1,090
2024		2,055		1,135		920
2025		1,448		746		702
2026		928		412		516
Thereafter		629		279		350
					$	4,559*
* Excludes residual values of $2.4 million.

The total net investments in sales type leases, including stated residual values, as of September 30, 2021 and June 30, 2021 was $7.0 million and $6.7 million, respectively. The current portion of $1.5 million and $0.9 million is included in other current assets in the consolidated balance sheets as of September 30, 2021 and June 30, 2021, respectively, and the long term portion of $5.5 million and $5.8 million is included in other assets in the consolidated balance sheets as of September 30, 2021 and June 30, 2021, respectively.

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Income Taxes

3 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note (7) – Income Taxes: Income taxes are recorded in the Company’s quarterly financial statements based on the Company’s estimated annual effective income tax rate, subject to adjustment for discrete events, should they occur.

As of September 30, 2021 and June 30, 2021, the Company had net deferred tax liabilities of approximately $4.0 million and $4.2 million, respectively. Consistent with the guidance of the FASB regarding accounting for income taxes, the Company regularly estimates its ability to recover deferred tax assets and establishes a valuation allowance against deferred tax assets to reduce the balance to amounts expected to be recoverable. This evaluation includes the consideration of several factors, including an estimate of the likelihood of generating sufficient taxable income in future periods over which temporary differences reverse, the expected reversal of deferred tax liabilities, past and projected taxable income, and available tax planning strategies. As of September 30, 2021, management believed that it was more-likely-than-not that the results of future operations will generate sufficient taxable income to realize the net amount of the Company’s deferred tax assets over the periods during which temporary differences reverse.

The Company follows ASC Topic 740-10-25, “Accounting for Uncertainty in Income Taxes” (“ASC 740”). ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. During the three months ended September 30, 2021 and 2020, the Company’s accounting for income taxes in accordance with this standard did not result in any adjustment to the Company’s provision for income taxes.

As of September 30, 2021, the Company was subject to potential federal and state tax examinations for the tax years 2018 through 2021.

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Equity Plans

3 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Equity Plans

Note (8) – Equity Plans:

Equity Incentive Plan

In November 2015, the Company’s stockholders approved the Company’s 2015 Equity Incentive Plan (the “Plan”). During December 2020, the Company’s stockholders approved an amendment to the Plan to

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

increase the number of shares of the Company’s common stock authorized for issuance pursuant to awards granted under the Plan to 3,000,000 shares. The fair value of awards granted under the Plan is expensed on a straight-line basis over the vesting period of the awards. Share-based compensation expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

During the three months ended September 30, 2021, restricted stock awards of a total of 10,303 shares were granted under the Plan. During the three months ended September 30, 2021, no restricted stock units were granted under the Plan. During the three months ended September 30, 2021, restricted stock units of a total of 8,327 shares were forfeited and returned to the Plan. There were no restricted stock awards forfeited during the three months ended September 30, 2021. There were no restricted stock awards or units granted of forfeited under the Plan during the three months ended September 30, 2020.

For the three months ended September 30, 2021 and 2020, non-cash share-based compensation expense related to awards (inclusive of restricted stock awards and restricted stock units) granted under the Plan totaled $479,000 and $578,000, respectively.

As of September 30, 2021, the Company had $14.8 million and $6.7 million of total unrecognized compensation expense related to restricted stock awards and restricted stock units, respectively, granted under the Plan, which is expected to be recognized over the weighted-average period of 17.1 years and 10.9 years, respectively.

The following is a summary of non-vested restricted stock activity as of and for the three months ended September 30, 2021:

	Restricted Stock Awards				Restricted Stock Units
	Shares		Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Non-vested awards or units outstanding at June 30, 2021		919,259	$	19.59		253,913		$	30.92
Granted		10,303		24.75		-			-
Vested		-		-		-			-
Forfeited		-		-		(8,327	)		33.50
Non-vested awards or units outstanding at September 30, 2021		929,562	$	19.65		245,586		$	30.84

Employee Stock Purchase Plan

The Company’s employee stock purchase plan provides for six-month offering periods ending on December 31 and June 30 of each year. No shares were issued under the Company’s employee stock purchase plan during the three months ended September 30, 2021 or 2020.

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Transactions with Related Parties

3 Months Ended

Sep. 30, 2021

Related Party Transactions [Abstract]

Transactions with Related Parties

Note (9) – Transactions with Related Parties: Certain of the Company’s subsidiaries lease warehouse and office space from one or more of the principals or former principals of those subsidiaries. These leases include the following:

During October 2016, the Company’s wholly-owned subsidiary, Western State Design, Inc. (“Western State Design”), entered into a lease agreement pursuant to which it leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack, a director and Executive Vice President, Corporate

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

Strategy of the Company, and Tom Marks, Executive Vice President, Business Development and President of the West Region of the Company. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Monthly base rental payments were $12,000 during the initial term of the lease. The Company has exercised its option to renew the lease for the first three-year renewal term, which commenced in October 2021. Base rent for the first renewal term is $19,000 per month. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $36,000 during each of the three months ended September 30, 2021 and 2020.

During October 2017, the Company’s wholly-owned subsidiary, Tri-State Technical Services, LLC (“Tri-State”), entered into lease agreements pursuant to which it leases a total of 81,000 square feet of warehouse and office space from an affiliate of Matt Stephenson, President of Tri-State. Monthly base rental payments total $21,000 during the initial terms of the leases. In addition to base rent, Tri-State is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $63,000 during each of the three months ended September 30, 2021 and 2020.

During February 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, LLC (“AAdvantage”), entered into a lease agreement pursuant to which it leases a total of 5,000 square feet of warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Monthly base rental payments are $4,000 during the initial term of this lease. In addition, during November 2018, AAdvantage entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti. Monthly base rental payments under this lease were $26,000 initially. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space and, in connection therewith, monthly base rental payments under this lease increased to $36,000. In addition to base rent, AAdvantage is responsible under each of these leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $120,000 during each of the three months ended September 30, 2021 and 2020.

During September 2018, the Company’s wholly-owned subsidiary, Scott Equipment, LLC (“Scott Equipment”), entered into lease agreements pursuant to which it leases a total of 18,000 square feet of warehouse and office space from an affiliate of Scott Martin, former President of Scott Equipment. Monthly base rental payments total $11,000 during the initial terms of the leases. In addition to base rent, Scott Equipment is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $35,000 during each of the three months ended September 30, 2021 and 2020.

During February 2019, the Company’s wholly-owned subsidiary, PAC Industries, LLC (“PAC Industries”), entered into two lease agreements pursuant to which it leases a total of 29,500 square feet of warehouse and office space from an affiliate of Frank Costabile, former President of PAC Industries, and Rocco Costabile, former Director of Finance of PAC Industries. Monthly base rental payments total $15,000 during the initial terms of the leases. In addition to base rent, PAC Industries is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of four years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $46,000 and $45,000 during the three months ended September 30, 2021 and 2020, respectively.

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EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

During November 2020, the Company’s wholly-owned subsidiary, Yankee Equipment Systems, LLC (“Yankee Equipment Systems”), entered into a lease agreement pursuant to which it leases a total of 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli, President of Yankee Equipment Systems. Monthly base rental payments are $11,000 during the initial term of the lease. In addition to base rent, Yankee Equipment Systems is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. Payments under this lease totaled approximately $35,000 during the three months ended September 30, 2021.

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Commitments and Contingencies

3 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note (10) – Commitments and Contingencies: In the ordinary course of business, certain of the Company’s contracts require the Company to provide performance and payment bonds related to projects in process. These bonds are intended to provide a guarantee to the customer that the Company will perform under the terms of the contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under the contract or pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company is required to reimburse the surety for expenses or outlays it incurs. At September 30, 2021 and June 30, 2021, no such performance or payment bonds were outstanding.

The Company may from time to time become subject to litigation and other legal proceedings. Litigation and other legal proceedings may require the Company to incur significant expenses, including those relating to legal and other professional fees. In addition, litigation and other legal proceedings are inherently uncertain, and adverse outcomes in litigation or other legal proceedings could adversely affect the Company’s financial condition, cash flows, and operating results.

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Goodwill

3 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Note (11) – Goodwill: The changes in the carrying amount of goodwill are as follows (in thousands):

Balance at June 30, 2021	$	63,881
Working capital adjustments (1)		14
Balance at September 30, 2021	$	63,895

⁽¹⁾ Represents working capital adjustments related to business acquisitions consummated by the Company during the fiscal year ended June 30, 2021.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Significant Accounting Policies

Note (2) – Summary of Significant Accounting Policies: There have been no changes to the Company’s significant accounting policies from those described in Note 1 to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

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Earnings Per Share (Tables)

3 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share

Note (4) – Earnings Per Share: The Company computes earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of the Company’s common stock subject to unvested restricted stock awards and restricted stock units are considered participating securities because they contain a non-forfeitable right to cash dividends (in the case of restricted stock awards) or dividend equivalents (in the case of restricted stock units) paid prior to vesting or forfeiture, if any, irrespective of whether the awards or units ultimately vest. Basic and diluted earnings per share for the three months ended September 30, 2021 and 2020 are computed as follows (in thousands, except per share data):

	For the three months ended September 30,
	2021 (Unaudited)		2020 (Unaudited)
Net income	$	2,019	$	518
Less: distributed and undistributed income allocated to unvested restricted common stock		176		42
Net income allocated to EVI Industries, Inc. shareholders	$	1,843	$	476
Weighted average shares outstanding used in basic earnings per share		12,278		11,935
Dilutive common share equivalents		381		344
Weighted average shares outstanding used in diluted earnings per share		12,659		12,279
Basic earnings per share	$	0.15	$	0.04
Diluted earnings per share	$	0.15	$	0.04

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Debt (Tables)

3 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Schedule of Long-term debt

Note (5) – Debt: Long-term debt as of September 30, 2021 and June 30, 2021 are as follows (in thousands):

	September 30, 2021			June 30, 2021
Revolving Line of Credit	$	20,000		$	12,000
Less: unamortized discount and deferred financing costs		(114	)		(127	)
Total long-term debt, net	$	19,886		$	11,873

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Leases (Tables)

3 Months Ended

Sep. 30, 2021

Lessee Disclosure [Abstract]

Schedule of Maturities of Operating Lease Liabilities

The following table provides details of the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of September 30, 2021. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)
2022 (remainder of)	$	1,878
2023		2,182
2024		1,303
2025		834
2026		603
Thereafter		1,692
Total minimum lease payments	$	8,492
Less: amounts representing interest		601
Present value of minimum lease payments	$	7,891
Less: current portion		2,293
Long-term portion	$	5,598

Schedule of Operating Leases

The table below presents additional information related to the Company’s operating leases (in thousands):

	Three months ended September 30,
		2021		2020
Operating lease cost
Operating lease cost (1)	$	621	$	474
Short-term lease cost (1)		-		12
Variable lease cost (1)		35		116
Total lease cost	$	656	$	602

(1) Expenses are classified within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

The table below presents lease-related terms and discount rates as of September 30, 2021:

	September 30, 2021
Weighted average remaining lease terms
Operating leases	5.1 years
Weighted average discount rate
Operating leases	2.9%

Schedule of Supplemental Cash Flow Information Related to Company's Long-Term Operating Lease Liabilities

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for the three months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30, 2021
		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:	$	621	$	474
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	610	$	1,928

Schedule of Minimum future rental commitments

The future minimum lease payments receivable for sales type leases are as follows (in thousands):

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2022 (remainder of)	$	2,470	$	1,489	$	981
2023		2,639		1,549		1,090
2024		2,055		1,135		920
2025		1,448		746		702
2026		928		412		516
Thereafter		629		279		350
					$	4,559*
* Excludes residual values of $2.4 million.

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Equity Plans (Tables)

3 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Non-vested Restricted Stock Activity

The following is a summary of non-vested restricted stock activity as of and for the three months ended September 30, 2021:

	Restricted Stock Awards				Restricted Stock Units
	Shares		Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Non-vested awards or units outstanding at June 30, 2021		919,259	$	19.59		253,913		$	30.92
Granted		10,303		24.75		-			-
Vested		-		-		-			-
Forfeited		-		-		(8,327	)		33.50
Non-vested awards or units outstanding at September 30, 2021		929,562	$	19.65		245,586		$	30.84

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Goodwill (Tables)

3 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Carrying Amount of Goodwill

Balance at June 30, 2021	$	63,881
Working capital adjustments (1)		14
Balance at September 30, 2021	$	63,895

⁽¹⁾ Represents working capital adjustments related to business acquisitions consummated by the Company during the fiscal year ended June 30, 2021.

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Earnings Per Share (Narrative) (Details) - shares	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Restricted Stock Awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities outstanding	1,175,163	1,042,830
Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities outstanding	1,175,163	1,042,830

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Earnings Per Share (Schedule of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Net income	$ 2,019	$ 518
Less: distributed and undistributed income allocated to unvested restricted common stock	176	42
Net income allocated to EVI Industries, Inc. shareholders	$ 1,843	$ 476
Weighted average shares outstanding used in basic earnings per share	12,278	11,935
Dilutive common share equivalents	381	344
Weighted average shares outstanding used in diluted earnings per share	12,659	12,279
Basic earnings per share	$ 0.15	$ 0.04
Diluted earnings per share	$ 0.15	$ 0.04

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Debt (Narrative) (Details) - USD ($) $ in Millions		3 Months Ended
	Nov. 02, 2018	Sep. 30, 2021
Credit facility [Member]
Debt Instrument [Line Items]
Revolving line of credit facility maximum borrowing capacity	$ 100.0
Revolving line of credit facility amount outstanding	$ 40.0
Debt outstanding		$ 5.0
Basis of variable interest rate		LIBOR plus a margin that ranges from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans bear interest calculated at the Base Rate plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio.
Expiration date		Nov. 02, 2023
Credit facility term	5 years	5 years
Amount available for borrowing under the revolving line of credit facility		$ 27.5
Credit facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Revolving line of credit facility maximum borrowing capacity	$ 140.0
Revolving line of credit [Member]
Debt Instrument [Line Items]
Debt outstanding		$ 10.0

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Debt (Schedule of Long-term debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021
Debt Disclosure [Abstract]
Revolving Line of Credit	$ 20,000	$ 12,000
Less: unamortized discount and deferred financing costs	(114)	(127)
Total long-term debt, net	$ 19,886	$ 11,873

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Leases (Narrative) (Details) $ in Millions	Sep. 30, 2021 USD ($) Facilities	Jun. 30, 2021 USD ($)
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Number of facilities financed under operating leases | Facilities	27
Residual values	$ 2.4
Total net investment in sales type leases	7.0	$ 6.7
Current portion Sales type leases	1.5	0.9
Long term portion sales type leases	$ 5.5	$ 5.8
Minimum [Member]
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Lease term	3 years
Maximum [Member]
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Lease term	10 years

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Leases (Schedule of Maturities of Operating Lease Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021
Operating leases
2022 (remainder of)	$ 1,878
2023	2,182
2024	1,303
2025	834
2026	603
Thereafter	1,692
Total minimum lease payments	8,492
Less: amounts representing interest	601
Present value of minimum lease payments	7,891
Less: current portion	2,293	$ 2,131
Long-term portion	$ 5,598	$ 5,567

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Leases (Schedule of Operating Leases) (Details) - USD ($) $ in Thousands		3 Months Ended
		Sep. 30, 2021	Sep. 30, 2020
Operating lease cost
Operating lease cost	[1]	$ 621	$ 474
Short-term lease cost	[1]		12
Variable lease cost	[1]	35	116
Total lease cost		$ 656	$ 602
Other information
Weighted average remaining lease terms - operating leases		5 years 1 month 6 days
Weighted average discount rate - operating leases		2.90%

[1] Expenses are classified within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

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Leases (Schedule of Supplemental Cash Flow Information Related to Company's Long-Term Operating Lease Liabilities) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Cash paid for amounts included in the measurement of lease liabilities:	$ 621	$ 474
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$ 610	$ 1,928

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Leases (Schedule of Future Minimum Lease Payments Receivable) (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
2022 (remainder of)	$ 981
2023	1,090
2024	920
2025	702
2026	516
Thereafter	350
Future minimum lease payments receivable	4,559	[1]
Total Minimum Lease Payments Receivable [Member]
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
2022 (remainder of)	2,470
2023	2,639
2024	2,055
2025	1,448
2026	928
Thereafter	629
Amortization of Unearned Income [Member]
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
2022 (remainder of)	1,489
2023	1,549
2024	1,135
2025	746
2026	412
Thereafter	$ 279

[1] Excludes residual values of $2.4 million.

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Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Deferred tax liabilities, net	$ 4,046	$ 4,208

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Equity Plans (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under 2015 Equity Incentive Plan	3,000,000
Non-cash share-based compensation expense	$ 479	$ 578
Restricted Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value of restricted stock	10,303
Unrecognized compensation expense, net of estimated forfeitures, related to non-vested restricted stock	$ 14,800
Weighted-average period	17 years 1 month 6 days
Number of stock Forfeited
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value of restricted stock
Unrecognized compensation expense, net of estimated forfeitures, related to non-vested restricted stock	$ 6,700
Weighted-average period	10 years 10 months 24 days
Number of stock Forfeited	8,327
Restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value of restricted stock
Number of stock Forfeited

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Equity Plans (Schedule of Non-vested Restricted Stock Activity) (Details) - $ / shares	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Restricted Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested awards or units outstanding at June 30, 2021	919,259
Granted	10,303
Vested
Forfeited
Non-vested awards or units outstanding at September 30, 2021	929,562
Weighted-Average Grant Date Fair Value June 30, 2021	$ 19.59
Granted	24.75
Vested
Forfeited
Weighted-Average Grant Date Fair Value September 30, 2021	$ 19.65
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested awards or units outstanding at June 30, 2021	253,913
Granted
Vested
Forfeited	(8,327)
Non-vested awards or units outstanding at September 30, 2021	245,586
Weighted-Average Grant Date Fair Value June 30, 2021	$ 30.92
Granted
Vested
Forfeited	33.50
Weighted-Average Grant Date Fair Value September 30, 2021	$ 30.84

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Transactions with Related Parties (Details)	1 Months Ended	3 Months Ended
	Jan. 04, 2019 USD ($)	Sep. 30, 2021 USD ($) ft²	Sep. 30, 2020 USD ($)
Dennis Mack and Tom Marks [Member] | Western State Design [Member]
Related Party Transaction [Line Items]
Original lease term		5 years
Area of lease | ft²		17,600
Lease start date		Oct. 31, 2016
Annual rent payment, year one		$ 12,000
Monthly base rent		19,000
Rental expense		$ 36,000	$ 36,000
Matt Stephenson [Member] | Tri-State [Member]
Related Party Transaction [Line Items]
Original lease term		5 years
Area of lease | ft²		81,000
Lease start date		Oct. 31, 2017
Annual rent payment, year one		$ 21,000
Rental expense		63,000	63,000
Mike Zuffinetti [Member]
Related Party Transaction [Line Items]
Original lease term	5 years
Rental expense	$ 36,000	$ 26,000
Mike Zuffinetti [Member] | AAdvantage [Member]
Related Party Transaction [Line Items]
Original lease term		5 years
Area of lease | ft²		5,000
Lease start date		Feb. 28, 2018
Annual rent payment, year one		$ 4,000
Rental expense		$ 120,000	120,000
Scott Martin [Member] | Scott Equipment [Member]
Related Party Transaction [Line Items]
Original lease term		5 years
Area of lease | ft²		18,000
Lease start date		Sep. 30, 2018
Annual rent payment, year one		$ 11,000
Rental expense		$ 35,000	35,000
Frank Costabile [Member] | PAC Industries Inc. [Member]
Related Party Transaction [Line Items]
Original lease term		4 years
Area of lease | ft²		29,500
Lease start date		Feb. 28, 2019
Annual rent payment, year one		$ 15,000
Rental expense		$ 46,000	$ 45,000
Peter Limoncelli [Member] | Yankee Equipment Systems [Member]
Related Party Transaction [Line Items]
Original lease term		3 years
Area of lease | ft²		12,500
Lease start date		Nov. 30, 2020
Annual rent payment, year one		$ 11,000
Rental expense		$ 35,000

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Goodwill (Schedule of Carrying Amount of Goodwill) (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Balance at June 30, 2021	$ 63,881
Working capital adjustments	14	[1]
Balance at September 30, 2021	$ 63,895

[1] Represents working capital adjustments related to business acquisitions consummated by the Company during the fiscal year ended June 30, 2021.