Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
EVI > SEC Filings for EVI > Form 10-Q on 12-Nov-2013All Recent SEC Filings

Show all filings for ENVIROSTAR, INC.

Form 10-Q for ENVIROSTAR, INC.


12-Nov-2013

Quarterly Report


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

Overview

Total revenues for the first quarter of fiscal 2014, increased by 30.4% over the same period of fiscal 2013. The increase in sales covered both equipment sales which increased by 40.7% and spare parts sales which increased by 14.6%. Foreign sales for the first quarter of fiscal 2014 increased by 70.4% when compared the first quarter of fiscal 2013. Net earnings for the first quarter of fiscal 2014 increased by 180.4% over the same period of fiscal 2013.

The Company's cash increased to $8,363,053 at June 30, 2013, mostly due to an increase of $1,016,825 in customer's deposits associated with new orders.

Inventories increased by 16.4% during the first quarter of fiscal 2014 to support the increased orders.

Liquidity and Capital Resources

During the first quarter of fiscal 2014, cash increased by $2,418,793 compared
to an increase of $3,870,059 during the same period of fiscal 2013. The
following summarizes the Company's Condensed Consolidated Statement of Cash
Flows.

                                   Three Months Ended September 30,
                                     2013                    2012
                                  (Unaudited)             (Unaudited)
Net cash provided (used) by:
Operating activities           $       2,423,525       $       3,893,599
Investing activities                      (4,732 )               (23,540 )
Net increase in cash           $       2,418,793       $       3,870,059

For the three months ended September 30, 2013, operating activities provided cash of $2,423,525 compared to $3,893,599 of cash provided during the same period of fiscal 2013. The increase in cash provided by operating activities during the first quarter of fiscal 2014 was primarily due to an increase in customer deposits of $1,016,825 associated with new orders, and an increase of $1,224,526 in accounts payable and accrued expenses on purchases made but not yet paid for. In addition, cash was provided by the Company's net earnings of $425,771 and non-cash expenses for depreciation and amortization of $14,170. Other increases in cash was provided by a decrease of $772,746 in accounts and trade notes receivable as payments were received on heavy shipments made during the quarter, an increase of $98,466 in income taxes payable and a decrease of $47,481 in other assets. These increases in cash were offset by a decrease of $874,949 in accrued employee expenses as sales commissions and year-end bonuses were paid during the quarter. Cash was also used to increase inventories by $325,933 to support new orders. All other changes in cash were of a minor nature due to ordinary fluctuations in business activities.

For the three months ended September 30, 2012, operating activities provided cash of $3,893,599 compared to $115,855 of cash used during the same period of fiscal 2012. The increase in cash is primarily attributed to an increase of $3,928,877 in customer deposits associated with a number of large orders received by the Company during the first quarter of fiscal 2013. In addition, $1,716,995 of cash was provided by an increase in accounts payable and accrued expenses, representing equipment received and shipped but not yet paid for. Additional cash was provided by the Company's net earnings of $151,839 and non-cash expenses for depreciation and amortization of $14,771. Offsetting these increases in cash was an increase in accounts and trade notes receivables which used cash of $1,025,202 reflecting heavy shipments in September 2012, which were not yet due for payment. Other assets used cash of $539,078 mostly for prepayments to vendors for specialized equipment on order. In addition, cash of $254,056 was used to decrease accrued employee expenses as year-end bonuses were paid out during the first quarter of fiscal 2013. An increase in inventories used cash of $199,460 to support current orders. Also, $103,855 of cash was provided by an increase in income taxes payable as tax deposits were made after the quarter ended. Other factors affecting cash in the normal course of business was a benefit of $8,671 for deferred income taxes, an $8,730 decrease in leases and mortgages receivables and a decrease of $5,001 in unearned income.

-11-

Index

Investing activities used cash of $4,732 and $23,540 during the first quarters of fiscal 2014 and 2013, respectively, for capital expenditures.

There were no financing activities during the first quarters of fiscal 2014 and 2013.

Effective November 1, 2013, the Company's existing $2,250,000 revolving line of credit facility was extended to November 1, 2014. The Company's obligations under the credit facility are guaranteed by the Company's subsidiaries and collateralized by substantially all of the Company's and its subsidiaries' assets. No amounts were outstanding under this facility at September 30, 2013 or June 30, 2013, nor were there any amounts outstanding at any time during fiscal 2013 or the first quarter of fiscal 2014.

The Company believes that its existing cash, cash equivalents and net cash from operations will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve months and to meet its long-term liquidity needs.

Off-Balance Sheet Financing

The Company has no off-balance sheet financing arrangements within the meaning
of Item 303(a)(4) of Regulation S-K.

Results of Operations

Revenues

                                                                                 Three Months Ended September 30,
                                                                                   2013                    2012
                                                                                (Unaudited)             (Unaudited)            %
Net sales                                                                    $       8,327,206       $       6,458,651        +28.9%
Development fees, franchise and license fees, commissions and other income             166,024                  54,463       +204.8%
Total revenues                                                               $       8,493,230       $       6,513,114        +30.4%

Net sales for the three month period ended September 30, 2013 increased by $1,868,555 (28.9%) from the same period of fiscal 2013. The increase in sales was primarily attributed to an improvement in equipment sales, which increased by 40.7% and spare parts sales, which increased by 14.6%. Foreign sales also increased by 70.4% during the first quarter of fiscal 2014 when compared to the first quarter of fiscal 2013.

Revenues of development fees, franchise and license fees, commissions and other income increased by $111,561 (204.8%) primarily due to commissions paid to the Company for sales made by a supplier on a direct sale to a customer in the Company's territory.

-12-

Index

Operating expenses

                                                  Three Months Ended September 30,
                                                      2013                  2012
                                                  (Unaudited)           (Unaudited)
As a percentage of net sales:
Cost of sales                                            76.8 %                 79.2 %
As a percentage of revenues:
Selling, general and administrative expenses             16.6 %                 17.7 %
Total expenses                                           92.0 %                 96.3 %

Costs of goods sold, expressed as a percentage of sales, decreased to 76.8% in the first quarter of fiscal 2014 from 79.2% for the same period of fiscal 2013. The improved margins were attributable to a better product mix.

Selling, general and administrative expenses increased by $256,952 (22.2%) in the first quarter of fiscal 2014 over the first quarter of fiscal 2013, mostly due to increased commission expenses associated with increased sales. As a percentage of revenues, selling, general and administrative expenses improved to 16.6% from 17.7% for the same comparable periods due to the absorption of these expenses over higher revenues.

Interest income decreased by $3,398 (73.9%) in the first quarter of fiscal 2014 from the same period of fiscal 2013, primarily due to lower interest rates and a reduction in average outstanding cash balances.

The Company's effective income tax rate for the first quarter of fiscal 2014 decreased to 37.8% from 38.5% for the same period of fiscal 2013. The slight variation reflects changes in permanent and temporary adjustments to taxable income.

Inflation

Inflation has not had a significant effect on the Company's operations during any of the reported periods.

Transactions with Related Parties

The Company leases warehouse and office space under an operating lease from the Sheila Steiner Revocable Trust. The trustees of this trust are Sheila Steiner, and her son, Michael S. Steiner. Michael S. Steiner, is Chairman of the Board of Directors, President and a director of the Company. Michael Steiner, individually, is also a principal shareholder of the Company.

The lease was for an original three year term which commenced on November 1, 2005, with two three-year renewal options in favor of the Company. The Company has exercised the second renewal option, extending the lease until October 31, 2014. The lease provides for annual rent increases commencing November 1, 2006 of 3% over the rent in the prior year. The Company bears the cost of real estate taxes, utilities, maintenance, repairs and insurance. The Company believes that the terms of the lease are comparable to terms that would be obtained from an unaffiliated third party for similar property in a similar locale. Rental expense under this lease was approximately $31,100 and $30,200 in the first three months of fiscal 2014 and 2013, respectively.

-13-

Index

Critical Accounting Policies

The accounting policies that the Company has identified as critical to its business operations and to an understanding of the Company's results of operations remain unchanged from those described in the Management's Discussion an 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, 2013. The Company makes estimates and assumptions that affect the reported amount of assets and liabilities, contingent assets and liabilities, and the reported amounts of revenues and expenses during the reported period. Therefore, there can be no assurance that the actual results will not differ from those estimates.

Adopted Accounting Guidance

Management believes the impact of issued standards and updates, which are not yet effective, will not have a material impact on the Company's consolidated financial position, results of operations or cash flows upon adoption

Forward Looking Statements

Certain statements in this Report are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Report, words such as "may," "should," "seek," "believe," "expect," anticipate," "estimate," "project," "intend," "strategy" and similar expressions are intended to identify forward looking statements regarding events, conditions and financial trends that may affect the Company's future plans, operations, business strategies, operating results and financial position. 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:
general economic and business conditions in the United States and other countries in which the Company's customers and suppliers are located; industry conditions and trends; technology changes; competition and other factors which may affect prices which the Company may charge for its products and its profit margins; the availability and cost of the 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; changes in, or the failure to comply with, government regulation, principally environmental regulations; the Company's ability to implement changes in its business strategies and development plans; and the availability, terms and deployment of debt and equity capital if needed for expansion. These and certain other factors are discussed in this Report and from time to time in other Company reports filed with the Securities and Exchange Commission. The Company does not assume an obligation to update the factors discussed in this Report or such other reports.

-14-

Index

  Add EVI to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for EVI - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.