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Business overview: A guide to EnviroStar’s 2 subsidiaries

Samuel Madden, CFA of Interactive Buyside

Equity research: Does EnviroStar present a good investment? (Part 2 of 7)

(Continued from Part 1)

Business description

EnviroStar has two wholly owned subsidiaries, Steiner-Atlantic Corp. (“Steiner”) and DRYCLEAN USA License Corp (“Dryclean USA”).

  • Steiner does three things. First, it sells and distributes a broad line of commercial and industrial laundry and dry-cleaning equipment. Second, it supplies maintenance parts and provides maintenance services. Third, it designs and plans “turn-key” laundry systems (for institutional and mom-and-pop shops). Specific products sold by Steiner include washers and dryers, tunnel systems, coin-operated machines, commercial dry-cleaning machines, and boiler products. Suggested prices for most of the company’s equipment range from approximately $5,000 to $1,000,000. The useful life of standalone commercial laundry equipment is generally seven to 14 years. The products and parts sold by the company and the maintenance services provided by the company accounted for approximately 99% of revenues.
  • DRYCLEAN USA franchises and licenses dry-cleaning stores in the United States, the Caribbean, and Latin America. DRYCLEAN USA has nearly 400 locations and generates approximately $200 thousand in royalties per year.

The company has approximately 1,700 customers in the United States (with a significant concentration in South Florida), the Caribbean, and Latin America. These customers include laundry plants, hotels, motels, cruise lines, hospitals, hospital combines, nursing homes, government institutions, distributors, and specialized users. In FY 2003, the company reported 500 customers, which implies a customer growth rate of 12.7% per annum.

EnviroStar is headquartered in Miami, Florida, and listed on the NYSE MKT under the ticker EVI. The company has 28 full-time employees. The company has a fiscal year that ends June 30.


Steiner-Atlantic Corp. (“Steiner”) was originally founded in 1960 by William Kalman (“Bill”) Steiner. Bill was born in Chicago and held part-time jobs throughout high school, then worked his way through college to earn his accounting degree. He moved to Miami in 1959. Steiner Corp. initially operated as a distributor of dry-cleaning systems and boilers, and as a rebuilder of laundry, dry-cleaning, and boiler equipment. Steiner expanded in 1972, when it began distributing institutional laundry equipment to hotels, motels, and hospitals. In 1980, Steiner began importing dry-cleaning systems from an English manufacturer, and four years later, Steiner developed a relationship with an Italian manufacturer of dry cleaning systems.

Michael Steiner, Bill’s son, became president and CEO of the company in 1988. In 1990, Steiner established its own branded product line with the introduction of an updated dry-cleaning system under the Aero-Tech label—substantially all of which is currently manufactured exclusively for Steiner in Italy. Bill constantly sought to improve dry-cleaning machinery in order to make the industry more environmentally friendly. Steiner is the holder of several patents for environmentally safe dry-cleaning equipment and processes.

EnviroStar became public through a reverse merger. On November 1, 1998, Steiner merged with Metro-Tel Corp. (“Metro-Tel”), a manufacturer and seller of telephone test and customer premise equipment. At the time, Metro-Tel was a marginally profitable business and the industry faced significant headwinds. Metro-Telhired Slusser Associates, Inc. (“Slusser”), an investment bank, evaluated strategic alternatives. Slusser had assisted Steiner in exploring strategic alternatives from 1994 through 1995.

Metro-Tel’s Board approved the merger because, according to the proxy filing, it was “unable to locate an alternative merger partner which would offer the company and its stockholders a better opportunity for increasing stockholder value over the long-term than that of merging with Steiner.” The Steiner family owned 69.0% of the company post-merger. Based on an interview with a former major investor of the company, the reason EnviroStar remains a public entity despite significant public company costs is because it is a source of competitive strength when EnviroStar competes for business with certain larger customers.

The company changed its name to DRYCLEAN USA, Inc. on November 7, 1999, to reflect a change in the primary nature of its consolidated operations. On July 31, 2002, the company sold substantially all of the operating assets of Metro-Tel. On December 1, 2009, the company changed its name to EnviroStar, Inc.

The Market Realist Take

In 1Q 2014, net earnings increased by 180.4%, to $425,771 or $0.06 per share, compared to $151,839 or $0.02 per share during 1Q 2013. EVI said fiscal 2014 has started with a solid backlog for delivery during the current fiscal year. The results of the first quarter were in line with the company’s expectations for a successful year. Plus, as a result high levels of cash, EVI’s Board of Directors declared a $0.40-per-share special dividend, payable on December 12, 2013.

Continue to Part 3

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