Investment Research report

Envirostar Inc.

NYSE/MKT: EVI
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Taking Out the Dirty Laundry
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Research Overview

INDEX:
S&P 500
Sector:
Industrials
Position:
Short
Date:
Oct 3, 2017

After conducting a forensic financial and accounting review, Spruce Point believes Envirostar Inc (NYSE/MKT: EVI), a commercial and industrial laundry and dry-cleaning equipment company, is one of the worst and most speculative roll-up stories we have ever seen. Based on our investigation, we estimate a 40% to 80% downside risk.

The report highlights several key concerns with the company, including:

  • We believe EVI’s roll-up strategy is ineffective and is leading to declining financial metrics that put a covenant breach at risk
  • Evidence on how the valuation is completely disconnected from peer valuations and the financial contribution from recent deals
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