EVI 10-K & 10-Q changes, risk factors and insider trading

Risks Related to the Company’sCommercial and Industrial Laundry Distribution and Service Business and Operations

The market for qualified employees is highly competitive, particularly in light of recent labor shortages.competitive. The Company may be unable to continue to attract and retain qualified personnel. In addition, increases in labor costs have resulted in, and may continue to result in, increases in the Company’s operating expenses. If labor market disruptions occur and/or labor cost increases continue, the Company’s sales or service team could be short staffed and would be more costly to retain, and the Company’s ability to meet its customers’ demands or expectations could be adversely impacted, any of which could materially adversely affect the Company’s business and results of operations.

The Company faces risks associated with environmental and other regulation.regulations.

TheAs described above, the Company’s business and operations are subject to federal, state, local and foreign environmental and other laws and regulations, including environmental laws governing the discharge of pollutants, the use, handling, generation, storagestorage, transportation, release, and disposal of hazardous materials, substances, and wastes and the cleanupinvestigation and remediation of contaminated sites. As a public company, the Company will also be subject to any rules and regulations of the SEC and any applicable securities exchange concerning environmental and other social issues, which may result in increased costs and compliance efforts. The Company is also subject to rules and regulations with respect to its contracts and dealings with government facilities. The Company may not remain in compliance with all applicable laws and regulations and could be required to incur significant costs as a result of violations of, liabilities under, or efforts to comply with, applicable laws and regulations. In addition, violations may have other adverse implications for the Company, including negative public relations and potential litigation. Further, the Company may incur significant compliance costs in the event of changes to applicable laws and regulations.

DuringIn therecent firstyears, half of 2025, the U.S. government announcedhas enacted numerous changes to its trade policy, including changes to existing trade agreements and the use of tariffs to enforce trade policy. The tariffs impact various jurisdictions from where the Company sources its products. While the tariffs have not to date had a significant impact on the Company’s results, the trade policies are subject to change with limited or no advance notice and itcertain tariffs have been struck down by the United States Supreme Court. It is uncertain what, if any, impact tariffs or other trade policiespolicies, including judicial decisions with respect thereto, may have on the Company in the future, including on its ability to purchase products sourced internationally or the prices thereof. The tariffsTariffs could significantly increase the cost of the Company’s products and/or limit the availability of those products. TheWhile the Company planshas attempted to addressmitigate the riskrisks and uncertainties relating to tariffs through supplier negotiations and increasing selling prices. However,prices, there is no assurance that any such efforts will be successful. If the Company’s efforts are unsuccessful, its gross profit and other results could be negatively impacted. Without limiting the generality of the foregoing, there is no assurance that the Company will be able to successfully increase its sales prices in order to offset any increase in the prices of the products it purchases, andFurther, price increases may result in reduced customer demand. The actual impact of tariffs is subject to a number of factors, including the duration of such tariffs, changes to the countries included in the scope of tariffs, changes to amounts, potential retaliatory tariffs imposed by other countries, judicial decisions with respect to tariffs, and other variables, as well as the success of any actions taken by the Company in connection therewith.

The outbreak of a pandemic or public health crisis may adversely impact the Company. In addition, the occurrence of other unexpected events, including natural disasters, civil unrest, geopolitical conflicts (including the current conflict betweenin Ukraine and Russia as well as the conflict in the Middle East) and/or terrorist activities could adversely affect the Company’s operations and financial performance, including that the escalation of any conflicts or the expansion of any conflicts to impact additional regions could heighten many of the other risk factors included in this Item 1A.

The Company is party, as borrower, to a syndicated credit agreement (the “Credit Agreement”) in the maximum aggregate principal amount of up to $150 million, with an accordion feature to increase the revolving credit facility by up to $50 million for a total of $200 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $7.5 million and for the issuance of standby letters of credit of up to a sublimit of $15 million. The maturity date of the Credit Agreement is March 26, 2030. The Company had $53.0$51.0 million of outstanding borrowings under the Credit Agreement as of June 30, 2025.2026.

In addition, while businesses acquired during the fiscal year covered by the applicable Annual Report on Form 10-K are permitted to be excluded from the scope of management’s report on internal control over financial reporting and the related auditor attestation for such Annual Report on Form 10-K (as is the case with the exclusion of the businesses acquired by the Company in fiscal 2025 from the scope of management’s report on internal control over financial reporting and the related auditor attestation for this Report),10-K, the Company will face challenges and be required to incur expenses in connection with, and devote significant management time to, the internal control over financial reporting of acquired businesses. There is no assurance that any issues, deficiencies, significant deficiencies or material weaknesses in internal controls identified at acquired businesses will be remedied in a timely or cost-efficient manner or at all.

The Company’s growth strategy includes the pursuit of organic growth initiatives and a “buy-and-build” growth strategy. The Company’s “buy-and-build” growth strategy includes (i) the consideration and pursuit of acquisitions and other strategic transactions which management believes may complement the Company’s existing business or otherwise offer growth opportunities for, or benefit, the Company and (ii) the implementation of 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 additional 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. See “Buy-and-Build Growth Strategy” below for information regarding business acquisitions consummated during the fiscal year ended June 30, 2024 (“fiscal 2024”) and the fiscal year ended June 30, 2025 (“fiscal 2025”), as welland as an acquisition consummated subsequent tothe fiscal 2025year year-end.ended June 30, 2026 (“fiscal 2026”).

TheAs of June 30, 2026, the Company reportsreported its results of operations through a single operating and reportable segment.

Total revenues for fiscal 2025 2026 increased by 10%15% compared to fiscal 2024.2025. The increase was attributable to revenues generated by businesses acquired by the Company during fiscal 2025 as well as price increases established throughout the Company’s product lines and service offerings aimed at maintaining or increasing margins to cover incremental product and operating cost increases.2026.

Net income for fiscal 20252026 increased by 33%3% from fiscal 2024.2025. The increase in net income was primarily attributable to increases in revenue (as described above) and gross margin, partially offset by increases in selling, general, and administrative expenses.expenses, interest expense, and income taxes.

During fiscal 2025, the Company acquired Florida-based Laundry Pro of Florida, Inc., Indiana-based O’Dell Equipment & Supply, Inc., Illinois-based Haiges Machinery, Inc., and Wisconsin-based Girbau North America, Inc. The total consideration for these transactions was $51.0 million, consisting of $50.6 $54.8 million in cash, net of cash acquired, $4.2 million in amounts payable to a seller as of June 30, 2025 related to post-closing working capital adjustments, and the settlement of acquirer receivables of $3.8 million.

The companies acquired companiesduring fiscal 2026 and 2025 generally distribute commercial, industrial, and vended laundry products and provide installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. Acquisitions are generally effected by the Company through an existing or newly-formed subsidiary which acquires (whether by an asset purchase, stock purchase or merger) and operates the acquired business following the transaction. The Company, indirectly through its subsidiary, also assumes 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.

InAs additionpreviously todescribed, the foregoing, on AugustSeptember 1, 2025,2026, the Company acquired NewSudsies, York-basedwhich ASNmarked Laundrythe GroupCompany's forentry into the consumer garment care service industry. The total consideration ofpaid $0.6in the transaction was $37.4 million in cash.cash, which is subject to post-closing adjustments. The financial position, including assets and liabilities, and results of operations of ASN Laundry GroupSudsies following the AugustSeptember 1, 20252026 closing date of the acquisition will be included in the Company’s consolidated financial statements commencing in the quarter ending September 30, 2025. 2026.

The Company’s total assets increased decreased from $230.7 million at June 30, 2024 to $307.0 million at June 30, 2025.2025 to $304.5 million at June 30, 2026. The increasedecrease in total assets was primarily attributable to thea assetsdecrease ofin the businesses acquired during fiscal 2025, including accounts receivable, inventory, intangiblecurrent assets, partially offset by an increase in equipment and improvements and goodwill. The Company’s total liabilities increaseddecreased from $94.1 million at June 30, 2024 to $163.6 million at June 30, 2025,2025 to $154.4 million at June 30, 2026, primarily due to increasesdecreases in payablesaccounts relatedpayable, tocustomer acquired businessesdeposits, and long-term debt used to acquire such businesses.debt.

The Company had approximately $6.8 million of cash at June 30, 2026 compared to $8.9 million of cash at June 30, 2025 compared to $4.6 million of cash at June 30, 2024.2025. The increasedecrease in cash was primarily due to cash generated fromconsideration operationspaid in connection with business acquisitions, capital expenditures, a dividend payment, and borrowingsoptional payments on the Company’s credit facility, offset in part by cash considerationgenerated paidfrom in connection with the Company’s business acquisitions during fiscal 2025 and capital expenditures, as well the timing of optional payments on the Company’s credit facility.operations. The Company’s primary sources of cash are sales of products and services, and borrowings under its credit facility. The Company’s primary uses of cash are purchases of the products sold by the Company, employee related costs, and the cash consideration paid in connection with business acquisitions.

For fiscal 2025,2026, operating activities provided cash of approximately $21.3$20.6 million compared to cash provided by operating activities of approximately $32.7$21.3 million in fiscal 2024. 2025. The $11.4$0.7 million decrease in cash provided by operating activities was primarily attributable to an increase in accounts receivable, offset in part by increasesdecreases in accounts payable, accrued expenses, and netcustomer income.deposits, offset in part by decreases in accounts receivable and increases in depreciation and amortization, and provision for deferred income taxes.

Investing activities used cash of approximately $14.3 million during fiscal 2026 compared to approximately $51.8 million during fiscal 2025 compared to approximately $6.8 million in fiscal 2024.2025. The $45.0$37.5 million increasedecrease in cash used by investing activities is due primarily to a greater amount of cash consideration paid in connection with business acquisitions in fiscal 2025 as compared to fiscal 2024.2026.

Financing activities used cash of approximately $8.4 million in fiscal 2026 compared to cash provided cash by financing activities of approximately $34.8 million in fiscal 20252025. comparedThe to cash used by financing activities of approximately $27.2$43.2 million in fiscal 2024. The $62.0 million increasedecrease in cash provided by financing activities was attributable primarily to an increase in borrowings under the Company’s credit facility to fund the Company’s acquisitions in fiscal 2025.

The Company is party, as borrower, to a syndicated credit agreement (the “Credit Agreement”). PriorThe toCredit theAgreement amendment described below, the agreement allowedallows for borrowings in the maximum aggregate principal amount of up to $100$150 million, with an accordion feature to increase the revolving credit facility by up to $40$50 million for a total of $140 million. On March 26, 2025, the Company amended the Credit Agreement to increase the maximum aggregate principal amount from $100 million to $150 million and increase the accordion feature from $40 million to $50 million, for a total of $200 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $7.5 million and for the issuance of standby letters of credit. The amendment increased the sublimit for swingline loans from $5 million to $7.5 million and the sublimit for standby letters of credit fromof $10 millionup to a sublimit of $15 million. In addition, as part of the amendment, theThe maturity date of the Credit Agreement was extended from May 6, 2027 tois March 26, 2030. As of June 30, 2025,2026, $56.1$52.2 million was available to borrow under the revolving credit facility.

Pursuant to the terms of the Credit Agreement, in connection with the discontinuation of the Bloomberg Short-Term Bank Yield Index rate (the “BSBY rate”), during October 2024, the BSBY rate was replaced as the reference rate under the Credit Agreement by the Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment ranging from a minimum of 0.11% to a maximum of 0.43%. As a result, borrowingsBorrowings (other than swingline loans) under the Credit Agreement bear interest, at a rate, at the Company’s election at the time of borrowing, equal to (a) the Secured Overnight Financing Rate (“SOFR”) plus 0.11% to 0.43%, plus an additional adjustment margin that ranges between 1.25% and 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) SOFR plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. Swingline loans generally bear interest at the Base Rate plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. As of June 30, 2026, the Company had approximately $51.0 million of outstanding borrowings under the Credit Agreement, which accrued interest at a weighted average rate of 5.24%.

Revenues for fiscal 20252026 increased by approximately $36.3$56.7 million (10%15%) from fiscal 2024.2025. The increase was primarily attributable to revenues generated by businesses acquired by the Company during fiscal 2025 as well as price increases established throughout the Company’s product lines and servicefiscal offerings aimed at maintaining or increasing margins to cover incremental product and operating cost increases.2026.

Interest expense, net remained flatincreased by approximately $1.2 million (44%) in fiscal 20252026 compared to fiscal 20242025 as increases in the average outstanding debt balances were higher in fiscal 2026, partially offset by decreases in the effective interest rate incurred on outstanding borrowings.

The Company’s effective income tax rate was 32.0%34.5% for fiscal 20252026 compared to 36.4%32.0% in fiscal 2024.2025. The decreaseincrease in the effective income tax rate in fiscal 2025 2026 is attributable to aan decreaseincrease in the net impact of permanent book-tax differences resulting primarily from nondeductible compensation andcompensation, higherpartially netoffset income.by decreases in the Company's taxable presence in the jurisdictions where the Company operates.

Inflation did not have a significant effect on the Company’s results during fiscal 20252026 or fiscal 2024.2025. However, the Company faces risks relating to inflation, including the current inflationary trend,inflation and other price increases (including due to the imposition of tariffs), which may have an adverse impact on the market for the Company’s products and services, including that there is no assurance that the Company will be able to effectively increase the price of its products and services to offset increased costs.

On November 1, 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in November 2023. Base rent for the initial term was $36,000 per month. Base rent for the first renewal term is $40,000 per month. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $480,000 and $464,000 during fiscal 20252026 and fiscal 2024, respectively.2025.

On November 3, 2020, the Company’s wholly-owned subsidiary, 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. The lease had an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. The Company exercised its option to renew this lease for the first three-year renewal term, which commenced in November 2023. Base rent for the initial term was $11,000 per month. Base rent for the first year of the renewal term was $12,500 per month. Base rent for the second year of the renewal term is $12,750 per month. Base rent for the third year of the renewal term is $13,000 per month. 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. Payments under this lease totaled approximately $152,000 $155,000 and $150,000$152,000 during fiscal 20252026 and fiscal 2024,2025, respectively.

Revenue primarily consists of revenues from the sale or leasing of commercial and industrial laundry and dry cleaning equipment and steam and hot water boilers manufactured by others; the sale of related replacement parts and accessories; and the provision of installation and maintenance services. The Company generates revenue primarily from the sale of equipment and parts to customers. Therefore, the majority of the Company’s contracts are short-term in nature and have a single performance obligation (to deliver products), and the Company’s performance obligation is satisfied when control of the product is transferred to the customer. Other contracts contain a combination of equipment sales and services expected to be performed in the near-term, which services are distinct and accounted for as separate performance obligations. Judgment may be required by management to identify the distinct performance obligations within each contract. Revenue is recognized on these contracts when control transfers to the Company’s customers via shipment of products or provision of services and the Company has the right to receive consideration for these products and services. Additionally, fromFrom time to time, the Company enters into longer-termed contracts which provide for the sale of equipment by the Company and the provision by the Company of related installation and construction services. The installation on these types of contracts is usually completed within six to twelve months. The Company recognizes a portion of its revenue over time using the cost-to-cost measure of progress, which measures a contract’s progress toward completion based on the ratio of actual contract costs incurred to date to the Company’s estimated costs at completion adjusted for uninstalled materials, as necessary. Significant judgment may be required by management in the cost estimation process for these contracts, which is based on the knowledge and experience of the Company’s project managers, subcontractors and financial professionals. Changes in job performance and job conditions are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and the Company’s revenue recognition. The determination of the total estimated cost and progress toward completion requires management to make significant estimates and assumptions. Total estimated costs to complete projects include various costs such as direct labor, material and subcontract costs. Changes in these estimates can have a significant impact on the revenue recognized each period. From time to time, the Company also enters into maintenance and service contracts. These longer-term contracts, maintenance and service contracts have a single performance obligation where revenue is recognized over time using the cost-to-cost measure of progress, which best depicts the continuous transfer of control of goods or services to the customer.

The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit's carrying value is compared to its fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss. This step compares the current implied goodwill in the reporting unit to its carrying amount. If the carrying amount of the goodwill exceeds the implied goodwill, an impairment is recorded for the excess. The identification and measurement of goodwill impairment involves the estimation of the fair value of the reporting unit and involves uncertainty because management must use judgment in determining appropriate assumptions to be used in the measurement of fair value. The Company performed its annual impairment test onin Aprilthe 1,fourth 2025quarter of fiscal 2026 and determined there was no impairment.

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,” “could,” “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 andor suppliers are located; economic uncertainty, including as it relates to governmental measures such as thetariffs, impositionlegislation ofand tariffsjudicial decisions with respect thereto, and their effect on global trading markets, the availability and pricing of products, credit markets, industry conditions, economic conditions generally or otherwise on the Company and its business, costs and results; industry conditions and trends; credit market volatility; risks related to supply chain delays and disruptions and their impact on the Company’s business and results, including the Company’s ability to deliver products and services to its customers on a timely basis; risks relating to inflation, and other price increases (including due to the imposition of tariffs), and their impact on the Company’s business, costs and results (including that, if desired, the Company may not be able to successfully increase the price of its products and services to offset such costs, in whole or in part, and that price increases may result in reduced demand for the Company’s products and services); risks related to labor shortages and increases in the costs of labor, and the impact thereof on the Company, including its ability to deliver products, provide services or otherwise meet customers’ expectations; risks related to interest rate increases, including the impact thereof on the cost of the Company’s indebtedness and the Company’s ability to raise capital if deemed necessary or advisable; risks associated with international relations and international hostilities, including any escalation or worsening thereof, and thetheir impact thereof on economic conditions; 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 transactions, integration risks, risks related to indebtedness incurred by the Company in connection with the financing of acquisitions and other strategic transactions, 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 or other strategic transactions (or for other purposes), 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, the risk that the contemplated acquisition pursuant to the asset purchase agreement entered into on January 30, 2026 may not be consummated when expected, or at all, and risks related to the accounting for acquisitions; 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 efforts 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; risks 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 expand; risks related to the Company’s indebtedness; the availability, terms and deployment of debt and equity capital if needed for expansion or otherwise; risks of cybersecurity threats or incidents, including the potential misappropriation or use of assets or confidential information, corruption of data or operational disruptions; 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, and the risk that inventory management initiatives may not be successful; the relative value of the United States dollar to currencies in the countries in which the Company’s customers, suppliers and competitors are located, including, in particular, that a weaker U.S. dollar would result in increased costs, which in turn would negatively affect the Company’s operating results; risks relating to the recognition of revenue, including the amount and timing thereof (including potential delays resulting from, among other circumstances, delays in installation (including due to delays in construction or the preparation of the customer’s facilities) 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 their impact 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 enterprise resource planning system and field service platform, and other investments, initiatives and expenses, may not result in the benefits anticipated; the Company’s exposure with respect to its cash balances in depositary accounts in excess of the $250,000 in maximum Federal Deposit Insurance Corporation (“FDIC“) insurance coverage; dividends may not be paid in the future; and other economic, competitive, governmental, technological and other risks and factors discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including, without limitation, in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025. 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. 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, revise 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.

In addition to its pursuit of organic growth initiatives, the Company’s growth strategy includes 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 “build” component of the 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. As described in greater detail in Note 4 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, onas Augustof 1,the 2025,date of this filing, the Company acquiredhas completed two acquisitions during the fiscal year ending June 30, 2026: New York-based ASN Laundry Group.Group was acquired on August 1, 2025 and Ohio-based Belenky was acquired on February 28, 2026. The financial position, including assets and liabilities, of ASN Laundry Group,Group isand Belenky are included in the Company’s consolidated balance sheet as of DecemberMarch 31, 20252026, and the results of operations of ASN Laundry Group,Group and Belenky subsequent to the August 1, 2025respective closing datedates of the acquisitions are included in the Company’s consolidated financial statements for the three and sixnine months ended DecemberMarch 31, 2025.2026.

SixNine and Three-Month PeriodPeriods Ended DecemberMarch 31, 20252026 Compared to the SixNine and Three-Month PeriodPeriods Ended DecemberMarch 31, 20242025

Revenues for the sixnine and three-month periods ended DecemberMarch 31, 20252026 increased $37.2$44.8 million, or 20%,16%, and $22.6$7.6 million, or 24%,8%, respectively, compared to the same periods of the prior fiscal year. The increases in revenue were primarily attributable to revenues generated by businesses acquired during the fiscal year ended June 30, 2025, as well as price increases established throughout the Company's product lines and service offerings aimed at maintaining or increasing margins to cover incremental product and operating costs.

Gross profit for the sixnine and three-month periods ended DecemberMarch 31, 20252026 increased $13.0$17.8 million, or 23%,21%, and $8.0$4.8 million, or 29%,17%, respectively, compared to the same periodperiods of the prior fiscal year. The increases were primarily the result of the increased revenues described above. Gross margins increased from 30.3%30.2% for the six-monthnine-month period ended DecemberMarch 31, 20242025 to 31.1%31.5% for the six-monthnine-month period ended DecemberMarch 31, 20252026 and from 29.7%30.0% for the three-month period ended DecemberMarch 31, 20242025 to 30.8%32.5% for the three-month period ended DecemberMarch 31, 2025,2026, in each case primarily due to changes in product and customer mix.

Operating expenses increased $12.6$17.4 million, or 26%,23%, and $6.1$4.8 million, or 24%,19%, for the sixnine and three-month periods ended DecemberMarch 31, 20252026, respectively, compared to the same periodperiods of the prior fiscal year. The increases are 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 during the periods, (c) increases in salary, professional, stock compensation, insurance, depreciation, amortization, and technology costs, and (d) with respect to the sixnine months ended DecemberMarch 31, 2025,2026, approximately $550,000 in expenses related to the Company’s participation at the industry’s largest North American exposition during such period.

Interest expense for the sixnine and three-month periods ended DecemberMarch 31, 20252026 was $2.0$3.0 million and $1.1$1.0 million, respectively, compared to $1.2$1.7 million and $0.7$0.6 million for the sixnine and three-month periods ended DecemberMarch 31, 2024,2025, respectively. The increases in interest expense were attributable primarily to increases in the average outstanding borrowings, partially offset by decreases in the effective interest rate incurred on outstanding borrowings.

The Company’s effective tax rate was 27.4%30.1% and 25.1%42.1% for the sixnine and three-month periods ended DecemberMarch 31, 2025,2026, respectively, compared to 30.0%32.0% and 34.4%39.1% for the sixnine and three-month periods ended DecemberMarch 31, 2024,2025, respectively. The decreasesdecrease in the effective tax rate arefor the nine-month comparable period is attributable to decreases in the Company's taxable presence in the jurisdictions where the Company operates partially offset by an increase in the net impact of permanent book-tax differences resulting primarily from nondeductible compensation. The increase in the effective tax rate for the three-month comparable period is attributable to an increase in the net impact of the permanent book-tax differences resulting primarily from nondeductible compensation partially offset by decreases in the Company's taxable presence in the jurisdictions where the Company operates.

Net income for the sixnine and three-month periods ended DecemberMarch 31, 20252026 was $4.2$5.0 million and $2.4$0.8 million, respectively, compared to net income of $4.4$5.4 million and $1.1$1.0 million for the sixnine and three-month periods ended DecemberMarch 31, 2024,2025, respectively. The increasedecreases in net income for the nine-month and three-month periodperiods waswere attributable primarily to the increaseincreases in operating expenses and interest expenses, partially offset by the increases in revenues and gross margin, partially offset by the increase in operating expenses, in each case as described in further detail above.

The Company’s total assets increased from $307.0 million at June 30, 2025 to $315.6$318.2 million at DecemberMarch 31, 2025.2026. The increase in total assets was primarily attributable to an increase in current assets, including inventory and other current assets, partially offset by a decrease in accounts receivable and cash. The Company’s total liabilities increased from $163.6 million at June 30, 2025 to $171.7$172.2 million at DecemberMarch 31, 2025.2026. This increase was primarily the result of an increase in accountslong-term payable,debt accrued expenses,and contract liabilities, and long-term debt, partially offset by a decrease in customer deposits.

For the six-monthnine-month period ended DecemberMarch 31, 2025,2026, cash decreased by approximately $4.6$4.5 million compared to aan decreaseincrease of approximately $0.7$1.4 million during the six-monthnine-month period ended DecemberMarch 31, 2024.2025. The Company’s primary sources of cash are product and service sales and borrowings under the Company’s credit facility. The Company’s primary uses of cash are purchases of the products sold by the Company, employee related costs, and the cash consideration paid in connection with business acquisitions.

Working capital increased from $50.6 million at June 30, 2025 to $56.1$57.7 million at DecemberMarch 31, 2025,2026, primarily reflecting increases in inventory and other current assets, and decreases in customer deposits. The increase in working capital was partially offset by increases in accounts payable and contract liabilities, and decreases in accounts receivable and cash.

The following table summarizes the Company’s cash flow activity for the sixnine months ended DecemberMarch 31, 20252026 and 20242025 (in thousands):

For the sixnine months ended DecemberMarch 31, 2025,2026, operating activities provided cash of $5.1$7.2 million compared to $2.2$11.3 million of cash provided by operating activities during the sixnine months ended DecemberMarch 31, 2024.2025. This $2.9$4.1 million increasedecrease in cash provided by operating activities was primarily attributable to changes in working capital and an increase in non-cash expenses such as depreciation and amortization, and stock compensation. The changes in working capital include increases in cash provided by operating activities from changes in accounts receivable, accountsvendor payable,deposits, and contract liabilities, partially offset by decreases from changes in inventoryinventory, accounts payable, and customer deposits.

For the sixnine months ended DecemberMarch 31, 2025,2026, investing activities used cash of $8.3$12.4 million compared to $12.6$15.7 million of cash used by investing activities during the sixnine months ended DecemberMarch 31, 2024.2025. This $4.3$3.3 million decrease in cash used by investing activities was primarily attributable to a decrease in cash paid in connection with business acquisitions.

For the sixnine months ended DecemberMarch 31, 2025,2026, financing activities usedprovided cash of $1.4$0.6 million compared to $9.8$5.8 million of cash provided by financing activities during the sixnine months ended DecemberMarch 31, 2024.2025. This $11.2$5.2 million increasedecrease in cash usedprovided by financing activities was primarily attributable to a decrease in net borrowings to fund acquisitions and investments.

Borrowings (other than swingline loans) under the Credit Agreement bear interest, at a rate, at the Company’s election at the time of borrowing, equal to (a) the Secured Overnight Financing Rate (“SOFR”) plus 0.11% to 0.43%, plus an additional adjustment margin that ranges between 1.25% and 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) SOFR plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. Swingline loans generally bear interest at the Base Rate plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. As of DecemberMarch 31, 2025,2026, the Company had approximately $58.0$60.0 million of outstanding borrowings under the Credit Agreement, which accrued interest at a weighted average rate of 5.14%.5.04%.

The Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The 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. At DecemberMarch 31, 2025,2026, the Company was in compliance with its covenants under the Credit Agreement and $43.0$36.3 million was available to borrow under the revolving credit facility.

Inflation did not have a significant effect on the Company’s results during any of the reported periods. However, the Company faces risks relating to inflation and other price increases (including due to the imposition of tariffs), including that there is no assurance that the Company will be able to effectively increase the price of its products and services to offset increased costs and any such increase may have an adverse impact on the market for the Company’s products and services.

On October 10, 2016, the Company’s wholly-owned subsidiary, 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 employee 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. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in October 2021, and the second three-year renewal term, which commenced in October 2024. Base rent for the first renewal term was $19,000 per month. Base rent for the second renewal term is $21,000 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 $126,000$189,000 and $118,000$181,000 during the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, and $63,000 andduring $61,000each duringof the three months ended DecemberMarch 31, 20252026 and 2024, respectively.2025.

On November 1, 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in November 2023. Base rent for the initial term was $36,000 per month. Base rent for the first renewal term is $40,000 per month. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $240,000$360,000 during each of the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, and approximately $120,000 during each of the three months ended DecemberMarch 31, 20252026 and 2024, respectively.2025.

On November 3, 2020, the Company’s wholly-owned subsidiary, 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. The lease had an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. The Company exercised its option to renew this lease for the first three-year renewal term, which commenced in November 2023. Base rent for the first year of the renewal term was $12,500 per month. Base rent for the second year of the renewal term was $12,750 per month. Base rent for the third year of the renewal term is $13,000 per month. 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. Payments under this lease totaled approximately $77,000$116,000 and $76,000$114,000 during the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, and approximately $39,000 and $38,000 during the three months ended DecemberMarch 31, 20252026 and 2024.2025, respectively.