| Acquisitions |
| | | 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 position, results of operations or cash flows upon adoption. |
| | | |
| 3. Acquisitions | | Fiscal 2025 Acquisitions |
| | | |
| | | LPF Acquisition |
| | | |
| | | On July 1, 2024, the Company completed the asset acquisition of Laundry Pro
of Florida, Inc. (“LPF”), a Florida based distributor of commercial laundry products and a provider of related technical installation
and maintenance services to the on-premise and vended laundry segments of the commercial laundry industry. The consideration paid by the
Company in connection with the acquisition consisted of $5.9 million in cash. The Company funded the acquisition with borrowings under
its credit facility. Fees and expenses related to the acquisition of LPF, consisting primarily of legal and other professional fees, were
not material and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations
for fiscal 2025. |
| | | |
| | | The acquisition of LPF was treated for accounting purposes as a purchase
of LPF using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business
Combinations (“ASC 805”), pursuant to which the consideration paid by the Company was allocated to the acquired assets and
assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration
transferred over the fair value of the net assets acquired being allocated to goodwill. The computation of the purchase price consideration
and the allocation of the consideration to the net assets acquired are presented in the following table (in thousands): |
| Allocation of purchase price consideration: | |
| |
| Inventories | |
$ | 1,672 | |
| Other assets | |
| 145 | |
| Equipment and improvements | |
| 380 | |
| Intangible assets | |
| 1,470 | |
| Accounts payable and accrued expenses | |
| (16 | ) |
| Customer deposits | |
| (156 | ) |
| Total identifiable net assets | |
| 3,495 | |
| Goodwill | |
| 2,390 | |
| Total | |
$ | 5,885 | |
| | | Intangible assets consist of $550,000 allocated
to the Laundry Pro of Florida trade name and $920,000 allocated to customer-related intangible assets. The Laundry Pro of Florida trade
name is indefinite-lived and therefore not subject to amortization. The Laundry Pro of Florida trade name will be evaluated for impairment
annually, or more frequently if an event occurs or circumstances change that indicate that it may be impaired, by comparing its fair value
to its carrying amount to determine if a write-down to fair value is required. Customer-related intangible assets are being amortized
over 10 years. |
| | | |
| | | Goodwill is attributable primarily to the assembled workforce acquired, as well as benefits from the increased scale of the Company
as a result of the acquisition. The |
| |
|
goodwill from the acquisition is deductible for income tax purposes. The financial position,
including assets and liabilities, of LPF is included in the Company’s consolidated balance sheet as of June 30, 2025 and the
results of operations of LPF since the July 1, 2024 closing date are included in the Company’s consolidated financial
statements for fiscal 2025. |
| | | ODL Acquisition |
| | | |
| | | On November 1, 2024, the Company completed the asset acquisition of O’Dell
Equipment & Supply, Inc. (“ODL”), an Indiana based distributor of commercial laundry products and a provider of related
technical installation and maintenance services to the on-premise and vended laundry segments of the commercial laundry industry. The
consideration paid by the Company in connection with the acquisition consisted of $4.6 million in cash, net of working capital adjustments.
The Company funded the acquisition with borrowings under its credit facility. Fees and expenses related to the acquisition of ODL, consisting
primarily of legal and other professional fees, were not material and are classified as selling, general and administrative expenses in
the Company’s consolidated statement of operations for fiscal 2025. |
| | | |
| | | The acquisition of ODL was treated for accounting purposes as a purchase
of ODL using the acquisition method of accounting in accordance with ASC 805, pursuant to which the consideration paid by the Company
was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date,
with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to goodwill. The computation
of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the
following table (in thousands): |
| Allocation of purchase price consideration: | |
| |
| Accounts receivable | |
$ | 409 | |
| Inventories | |
| 1,032 | |
| Equipment and improvements | |
| 183 | |
| Intangible assets | |
| 1,750 | |
| Accounts payable and accrued expenses | |
| (361 | ) |
| Customer deposits | |
| (307 | ) |
| Total identifiable net assets | |
| 2,706 | |
| Goodwill | |
| 1,894 | |
| Total | |
$ | 4,600 | |
| | | |
| | | While, as of the date of this Annual Report on Form 10-K, the Company
has finalized its assessment of certain of the assets acquired and liabilities assumed, the Company is continuing its valuation of certain
working capital adjustments, which is subject to adjustment in
accordance with the asset purchase agreement. Accordingly, the purchase price allocation set forth above reflects preliminary fair value
estimates based on preliminary work and analyses performed by management and is subject to change as additional information to assist
in determining the fair value of those assets as of the closing date is obtained during the post-closing measurement period of up to one
year. |
| | | |
| | | Intangible assets consist of $530,000 allocated to the O’Dell
Equipment & Supply trade name and $1,220,000 allocated to customer-related intangible assets. The O’Dell Equipment & Supply trade name is indefinite-lived and therefore not subject to amortization. The O’Dell Equipment & Supply trade name will be evaluated for impairment annually, or more frequently if an event occurs or circumstances change |
| | | that indicate that it may be impaired, by comparing its fair value to its carrying amount to determine if a write-down to fair value is required. Customer-related intangible assets are being amortized over 10 years. |
| | | |
| | | Goodwill is attributable primarily to the assembled workforce acquired,
as well as benefits from the increased scale of the Company as a result of the acquisition. The goodwill from the acquisition is deductible
for income tax purposes. The financial position, including assets and liabilities, of ODL is included in the Company’s consolidated
balance sheet as of June 30, 2025 and the results of operations of ODL since the November 1, 2024 closing date are included in the Company’s
consolidated financial statements for fiscal 2025. |
| | | |
| | | HMI Acquisition |
| | | |
| | | On February 1, 2025, the Company completed the asset acquisition of Haiges
Machinery, Inc. (“HMI”), an Illinois based distributor of commercial laundry products and a provider of related technical
installation and maintenance services to the on-premise and vended laundry segments of the commercial laundry industry. The consideration
paid by the Company in connection with the acquisition consisted of $2.1 million in cash, net of cash acquired. The Company funded the
acquisition with borrowings under its credit facility. Fees and expenses related to the acquisition of HMI, consisting primarily of legal
and other professional fees, were not material and are classified as selling, general and administrative expenses in the Company’s
consolidated statement of operations for fiscal 2025. |
| | | |
| | | The acquisition of HMI was treated for accounting purposes as a purchase
of HMI using the acquisition method of accounting in accordance with ASC 805, pursuant to which the consideration paid by the Company
was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date,
with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to goodwill. The computation
of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the
following table (in thousands): |
| Allocation of purchase price consideration: | |
| |
| Accounts receivable | |
$ | 219 | |
| Inventories | |
| 689 | |
| Equipment and improvements | |
| 307 | |
| Intangible assets | |
| 230 | |
| Other assets | |
| 44 | |
| Accounts payable and accrued expenses | |
| (80 | ) |
| Customer deposits | |
| (121 | ) |
| Total identifiable net assets | |
| 1,288 | |
| Goodwill | |
| 839 | |
| Total | |
$ | 2,127 | |
| |
|
|
| |
|
While, as of the date of this Annual Report on Form 10-K, the Company
has finalized its assessment of certain of the assets acquired and liabilities assumed, the Company is continuing its valuation of certain
working capital adjustments, which is subject to adjustment in accordance with the asset purchase agreement. Accordingly, the purchase price allocation set forth above reflects preliminary fair value
estimates based on preliminary work and analyses performed by management and is subject to change |
| | | as additional information to assist
in determining the fair value of those assets as of the closing date is obtained during the post-closing measurement period of up to one
year. |
| | | |
| | | Intangible assets consist of $90,000 allocated to the Haiges Machinery
trade name and $140,000 allocated to customer-related intangible assets. The Haiges Machinery trade name is indefinite-lived and therefore
not subject to amortization. The Haiges Machinery trade name will be evaluated for impairment annually, or more frequently if an event
occurs or circumstances change that indicate that it may be impaired, by comparing its fair value to its carrying amount to determine
if a write-down to fair value is required. Customer-related intangible assets are being amortized over 10 years. |
| | | |
| | | Goodwill is attributable primarily to the assembled workforce acquired,
as well as benefits from the increased scale of the Company as a result of the acquisition. The goodwill from the acquisition is deductible
for income tax purposes. The financial position, including assets and liabilities, of HMI is included in the Company’s consolidated
balance sheet as of June 30, 2025 and the results of operations of HMI since the February 1, 2025 closing date are included in the Company’s
consolidated financial statements for fiscal 2025. |
| | | |
| | | GNA Acquisition |
| | | |
| | | On April 1, 2025, the Company completed the stock acquisition of Girbau North America, Inc. (“GNA”), acquiring 100% of the voting equity interest in GNA, which is a Wisconsin based master distributor of commercial laundry products and a provider of related technical installation and maintenance services to the on-premise and vended laundry segments of the commercial laundry industry. The consideration in connection with the acquisition of $38.4 million consisted of approximately $38.0 million in cash, net of cash acquired, approximately $4.2 million in amounts payable to the seller related to post-closing working capital adjustments, and approximately $3.8 million for the effective settlement of acquirer receivables. The Company funded the acquisition with borrowings under its credit facility. Fees and expenses related to the acquisition of GNA, consisting primarily of legal and other professional fees, were approximately $300,000 and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for the year ended June 30, 2025. |
| | | |
| | | The acquisition of GNA was treated for accounting purposes as a purchase
of GNA using the acquisition method of accounting in accordance with ASC 805, pursuant to which the consideration paid by the Company
was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date,
with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to goodwill. The computation
of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the
following table (in thousands): |
| Allocation of purchase price consideration: | |
| |
| Accounts receivable | |
$ | 8,878 | |
| Inventories | |
| 15,158 | |
| Other current assets | |
| 1,209 | |
| Equipment and improvements | |
| 2,474 | |
| Intangible assets | |
| 7,700 | |
| Other assets | |
| 1,684 | |
| Accounts payable and accrued expenses | |
| (6,885 | ) |
| Customer deposits | |
| (55 | ) |
| Deferred tax liabilities | |
| (3,014 | ) |
| Total identifiable net assets | |
| 27,149 | |
| Goodwill | |
| 11,229 | |
| Total | |
$ | 38,378 | |
| | | As of the date of this Annual Report on Form 10-K, the Company is continuing
its valuation of intangible assets, deferred tax liabilities, and certain working capital adjustments, which is subject to adjustment in accordance with the stock purchase agreement. Accordingly, the
purchase price allocation set forth above reflects preliminary fair value estimates based on preliminary work and analyses performed by
management and is subject to change as additional information to assist in determining the fair value of those assets as of the closing
date is obtained during the post-closing measurement period of up to one year. |
| | | |
| | | Intangible assets consist of $7.7 million allocated to customer-related
intangible assets being amortized over 10 years. |
| | | |
| | | Goodwill is attributable primarily to the assembled workforce acquired,
as well as benefits from the increased scale of the Company as a result of the acquisition. The financial position, including assets and
liabilities, of GNA is included in the Company’s consolidated balance sheet as of June 30, 2025 and the results of operations of
GNA since the April 1, 2025 closing date are included in the Company’s consolidated financial statements for fiscal 2025. |
| | | |
| | | Fiscal 2024 Acquisitions |
| | | |
| | | On September 1, 2023, the Company completed the acquisition of ALVF,
Inc. (dba ALCO Washer Center) (“ALCO”), a Pennsylvania based distributor of commercial laundry products and a provider of
related technical, installation and maintenance services to the on-premise and vended laundry segments of the commercial laundry industry.
The consideration paid by the Company in connection with the acquisition consisted of $1,092,000 in cash and 8,621 shares of the Company’s
common stock, with an acquisition date fair value of approximately $229,000. Fees and expenses related to the acquisition, consisting
primarily of legal and other professional fees, were not material and are classified as selling, general and administrative expenses in
the Company’s consolidated statement of operations for fiscal 2024. The acquisition was treated for accounting purposes as a purchase
of ALCO using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business
Combinations (“ASC 805”), pursuant to which the consideration paid by the Company was allocated to the acquired assets and
assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration
transferred over the fair value of the net assets acquired being allocated to goodwill. The Company allocated $899,000 to goodwill, which
is expected to be amortized and deductible for tax purposes over 15 years. Goodwill is attributable primarily to the assembled workforce,
as well as the expected benefits from the increased scale of the Company as a result of the acquisition. The financial position, including
assets and liabilities, of ALCO is included in the Company’s consolidated balance sheets as of June 30, 2024 and 2025 and the results
of operations of ALCO since the September 1, 2023 closing date are included in the Company’s consolidated financial statements for
fiscal 2024 and fiscal 2025. |
| | | On June 1, 2024, the Company completed the acquisition of Signature
Services Corporation (d/b/a Ed Brown Distributors) (“EBD”), a Texas based distributor of commercial laundry products and a
provider of related technical, installation and maintenance services to the on-premise and vended laundry segments of the commercial laundry
industry. The consideration paid by the Company in connection with the acquisition consisted of $937,000 in cash. Fees and expenses related
to the acquisition, consisting primarily of legal and other professional fees, were not material and are classified as selling, general
and administrative expenses in the Company’s consolidated statement of operations for fiscal 2024. The acquisition was treated for
accounting purposes as a purchase of EBD using the acquisition method of accounting in accordance with ASC 805, pursuant to which the
consideration paid by the Company was allocated to the acquired assets and assumed liabilities, in each case, based on their respective
fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being
allocated to goodwill. The Company allocated $928,000 to goodwill, which is expected to be amortized and deductible for tax purposes over
15 years. Goodwill is attributable primarily to the assembled workforce, as well as the expected benefits from the increased scale of
the Company as a result of the acquisition. The financial position, including assets and liabilities, of EBD is included in the Company’s
consolidated balance sheets as of June 30, 2024 and 2025, and the results of operations of EBD since the June 1, 2024 closing date are
included in the Company’s consolidated financial statements for fiscal 2024 and fiscal 2025. |
| | | |
| | | Supplemental Pro Forma Results of Operations |
| | | |
| | | The following supplemental pro forma information presents the results of operations of the Company, after giving effect to the above-described acquisitions completed by the Company during fiscal 2025 and fiscal 2024. As permitted by ASC 805-10-50-2, the following supplemental pro forma information does not give effect to the acquisition of ODL because it was impracticable to provide such information for the periods presented due to the lack of availability of meaningful financial statements of ODL that comply with GAAP. |
| | | |
| | | The following supplemental pro forma information was prepared as if
the acquisitions were consummated on July 1, 2023. The supplemental pro forma information set forth below reflects
adjustments based on currently available information and assumptions made by management. While management believes the assumptions made
are reasonable under the circumstances, they may not prove to be accurate. The pro forma information set forth below is presented for
informational purposes only and is not necessarily indicative of what the actual results of operations of the Company would have been
if the acquisitions had occurred on the date assumed, nor is it indicative of future results of operations. |
| | |
For the year ended
June 30, | |
| (in thousands) | |
2025
(Unaudited) | | |
2024
(Unaudited) | |
| Revenues | |
$ | 433,485,131 | | |
$ | 423,357,744 | |
| Net income | |
| 11,133,187 | | |
| 12,537,051 | |
| | | The Company’s consolidated results of operations for fiscal 2025
include total revenue of approximately $30.8 million and total net income of approximately $2.0 million attributable to businesses acquired
during fiscal 2025 and fiscal 2024, based on the consolidated effective tax rate. These results of acquired businesses do not include
the effects of acquisition costs or interest expense associated with consideration paid for the acquisitions. |
| | | |
| | | Subsequent Acquisition |
| | | |
| | | On August 1, 2025, the Company acquired New York-based ASN Laundry
Group for total consideration of $0.6 million in cash. The Company is in the process of determining the respective fair values of the
assets acquired and liabilities assumed. The amounts for these items are subject to change as additional information to assist in determining
their respective fair values as of the closing date is obtained during the post-closing measurement period of up to one year. |
|