Envela Reports First Quarter 2021 Financial Results

May 5, 2021

Quarterly Net Income Up 71% Year-over-Year to $2.0 Million

DALLAS, TX / May 5, 2021 / Envela Corporation (NYSE American:ELA) (“Envela” or the “Company”), today reported financial results for its first quarter ended March 31, 2021.

Management Commentary

“Envela delivered another period of solid profits in the first quarter of 2021 despite a historic Texas winter freeze and associated power outages that temporarily impacted our operations,” said John Loftus, Chairman and CEO of Envela. “Our ability to address these issues expeditiously reflects the Company’s operational acumen and business resiliency. Envela’s business continues to benefit from several growth drivers, including accelerated sustainability trends and an increasing supply of used electronics. Overall, we remain confident in our ability to drive profitable growth through 2021 and beyond.”

First Quarter 2021 Financial Results

Total revenue for the first quarter of 2021 was $25.5 million compared to $25.8 million in the same year-ago period.

Revenue related to continuing operations of the Company’s DGSE subsidiary for the first quarter of 2021 was $18.9 million (74% of total revenue), compared to $20.4 million in the same year-ago period. DGSE’s resale revenue, including bullion, jewelry, watches, and rare coins, was $17.3 million (92% of DGSE total sales), compared to $18.5 million (91% of DGSE total sales) in the same year-ago period. DGSE’s recycled-material sales were $1.6 million (8% of DGSE total sales), compared to $1.8 million (9% of DGSE total sales) in the same year-ago period.

Revenue related to the Company’s ECHG subsidiary for the first quarter of 2021 was $6.6 million (26% of total revenue), compared to $5.5 million in the same year-ago period. ECHG’s resale revenue was $4.7 million (72% of ECHG total sales), compared to $3.5 million (65% of ECHG total sales) in the same year-ago period. ECHG’s recycled-material sales were $1.8 million (28% of ECHG total sales), compared to $1.9 million (35% of ECHG total sales) in the same year-ago period.

Consolidated gross profit for the first quarter of 2021 was $6.3 million, compared to $5.3 million in the same year-ago period.

  • DGSE’s gross profit was $2.8 million, compared to $2.4 million in the same year-ago period.
    • DGSE’s resale gross profit was $2.5 million, compared to $2.0 million in the same year-ago period.
    • DGSE’s recycled-materials gross profit was $0.4 million, compared to $0.3 million in the same year-ago period.
  • ECHG’s gross profit was $3.5 million, compared to $2.9 million in the same year-ago period.
    • Resale gross profit was $2.6 million, compared to $1.4 million in the same year-ago period.
    • Recycled-material gross profit was $0.9 million, compared to $1.5 million in the same year-ago period.

Net income for the first quarter of 2021 was $2.0 million, or $0.07 per basic and diluted share, compared to $1.2 million, or $0.04 per basic and diluted share, in the same year-ago period.

About Envela

Envela and its subsidiaries engage in diverse business activities within the recommerce sector. These include recommercializing luxury hard assets, consumer electronics and IT equipment; and end-of-life recycling solutions. Envela assesses its inventory of recommerce purchases for their potential to be refurbished and resold as whole goods, or to be recycled for component parts or precious-metal value. Envela also offers comprehensive recycling solutions for a variety of other companies seeking responsibly to dispose of end-of-life products. Envela operates primarily via two recommerce business segments. Through DGSE, LLC the Company recommercializes luxury hard assets via Dallas Gold and Silver Exchange, Charleston Gold & Diamond Exchange, and Bullion Express brands (collectively, “DGSE”). Through ECHG, LLC, the Company operates Echo Environmental Holdings, ITAD USA Holdings, and Teladvance (collectively, “ECHG”), which recommercialize primarily consumer electronics and IT equipment, and provide end-of-life recycling services for various companies across many industries. Envela conducts its recommerce operations at retail and wholesale levels, through distributors, resellers, dedicated stores and online. The Company also owns and operates other businesses and brands engaged in a variety of activities, as identified herein. Envela is a Nevada corporation, headquartered in Dallas, Texas.

Additional information about Envela is available at its investor-relations site, Envela.com.

Forward-Looking Statements

This press release includes statements that may constitute “forward-looking” statements, including statements regarding the potential future success of the Company, its business lines and strategies. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, market conditions and other risks detailed in the Company’s periodic report filings with the Securities and Exchange Commission. By making these statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release except as required by law.

Investor Relations Contact:

Matt Glover and John Yi
Gateway Investor Relations

1-949-574-3860

[email protected]

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (Unaudited)
Three Months Ended March 31,
2021 2020
Revenue:
Sales
$ 25,490,441 $ 25,829,143
Cost of goods sold
19,186,177 20,527,863
Gross margin
6,304,264 5,301,280
Expenses:
Selling, General & Administrative Expenses
4,153,229 3,825,200
Depreciation and Amortization
204,912 179,729
Total operating expenses
4,358,141 4,004,929
Operating income
1,946,123 1,296,351
Other income, net
271,941 41,690
Interest expense
179,022 145,315
Income before income taxes
2,039,042 1,192,726
Income tax expense
30,770 18,577
Net income
$ 2,008,272 $ 1,174,149
Basic earnings per share:
Net income
$ 0.07 $ 0.04
Diluted earnings per share:
Net income
$ 0.07 $ 0.04
Weighted average shares outstanding:
Basic
26,924,631 26,924,381
Diluted
26,939,631 26,939,631

The accompanying notes to the 10-Q filed with the SEC on May 5, 2021, are an integral part of these condensed consolidated financial statements.

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,
2021 2020
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$ 8,396,997 $ 9,218,036
Trade receivables, net of allowances
3,184,473 2,846,619
Notes receivable
123,472
Inventories
11,630,383 10,006,897
Current right-of-use assets from operating leases
1,057,511 1,157,077
Prepaid expenses
858,299 281,719
Total current assets
25,251,135 23,510,348
Notes receivable, less current portion
2,100,000 2,100,000
Property and equipment, net
6,984,653 6,888,601
Goodwill
1,367,109 1,367,109
Intangible assets, net
2,892,073 2,992,473
Operating lease right-of-use assets
3,344,732 3,522,923
Other long-term assets
297,638 197,638
Total assets
$ 42,237,340 $ 40,579,092
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable-Trade
$ 1,192,454 $ 1,510,697
Notes payable, related party
311,067 307,032
Notes payable
1,825,487 1,813,425
Current operating lease liabilities
1,054,599 1,148,309
Accrued expenses
922,159 844,324
Customer deposits and other liabilities
689,592 428,976
Total current liabilities
5,995,358 6,052,763
Notes payable, related party, less current portion
8,976,922 9,052,810
Notes payable, less current portion
4,188,357 4,240,658
Long-term operating lease liabilities, less current portion
3,489,989 3,654,419
Total liabilities
22,650,626 23,000,650
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized;
no shares issued and outstanding
Common stock, $0.01 par value; 60,000,000 shares authorized;
26,924,631 shares issued and outstanding
269,246 269,246
Additional paid-in capital
40,173,000 40,173,000
Accumulated deficit
(20,855,532 ) (22,863,804 )
Total stockholders’ equity
19,586,714 17,578,442
Total liabilities and stockholders’ equity
$ 42,237,340 $ 40,579,092

The accompanying notes to the 10-Q filed with the SEC on May 5, 2021, are an integral part of these condensed consolidated financial statements.

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,
2021 2020
(Unaudited) (Unaudited)
Operations
Net income
$ 2,008,272 $ 1,174,149
Depreciation, amortization, and other
204,912 179,729
Bad debt expense
6,249
Changes in operating assets and liabilities:
Trade receivables
(344,103 ) 525,519
Inventories
(1,623,485 ) 111,931
Prepaid expenses
(576,578 ) (163,312 )
Other assets
(100,000 ) 5,120
Accounts payable and accrued expenses
(240,410 ) (647,804 )
Operating leases
19,616 (34,907 )
Customer deposits and other liabilities
260,615 (118,710 )
Net cash provided by (used in) operations
(384,912 ) 1,031,715
Investing
Investment in note receivable
(123,472 ) (1,500,000 )
Purchase of property and equipment
(200,563 ) (29,046 )
Net cash used in investing
(324,035 ) (1,529,046 )
Financing
Payments on notes payable, related party
(71,853 ) (69,404 )
Payments on notes payable
(40,239 )
Net cash used in financing
(112,092 ) (69,404 )
Net change in cash and cash equivalents
(821,039 ) (566,735 )
Cash and cash equivalents, beginning of period
9,218,036 4,510,660
Cash and cash equivalents, end of period
$ 8,396,997 $ 3,943,925
Supplemental Disclosures
Cash paid during the period for:
Interest
$ 179,082 $ 121,718
Income taxes
$ $

The accompanying notes to the 10-Q filed with the SEC on May 5, 2021, are an integral part of these condensed consolidated financial statements.

SOURCE: Envela Corporation

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