Quarterly Net Income Up 280% Year-over-Year to $2.2 Million
DALLAS, TX / August 4, 2021 / Envela Corporation (NYSE American:ELA) (“Envela” or the “Company”), today reported financial results for its second quarter ended June 30, 2021.
Management Commentary
“We concluded the second quarter with solid top-line and bottom-line results across both the ECHG and DGSE segments of our business thanks to our team’s ability to execute,” said John Loftus, Chairman and CEO of Envela. “In parallel to our organic growth strategy, we also plan to expand through our active M&A approach, especially within ECHG, as we intend to acquire accretive businesses that are additive to our value proposition. Moreover, we are focused on further enhancing our broader ESG initiatives across all fronts of our business and are committed to being an organization that gives investors the opportunity to invest in a sustainable and socially responsible company. As we enter into the final few months of the year, we are confident that our current growth strategies for both segments of the business will materialize into encouraging financial results for Envela.”
Second Quarter 2021 Financial Results
Total revenue for the second quarter of 2021 was $33.7 million compared to $20.5 million in the same year-ago period.
Revenue related to continuing operations of the Company’s DGSE subsidiary for the second quarter of 2021 was $23.0 million (68% of total revenue), compared to $14.3 million (70% of total revenue) in the same year-ago period. DGSE’s resale revenue, including bullion, jewelry, watches, and rare coins, was $20.9 million (91% of DGSE total sales), compared to $13.4 million (94% of DGSE total sales) in the same year-ago period. DGSE’s recycled-material sales were $2.1 million (9% of DGSE total sales), compared to $927,000 (6% of DGSE total sales) in the same year-ago period.
Revenue related to the Company’s ECHG subsidiary for the second quarter of 2021 was $10.7 million (32% of total revenue), compared to $6.2 million (30% of total revenue) in the same year-ago period. ECHG’s resale revenue was $8.6 million (80% of ECHG total sales), compared to $4.3 million (69% of ECHG total sales) in the same year-ago period. ECHG’s recycled-material sales were $2.1 million (20% of ECHG total sales), compared to $1.9 million (31% of ECHG total sales) in the same year-ago period.
Consolidated gross profit for the second quarter of 2021 was $7.1 million, compared to $4.5 million in the same year-ago period.
- DGSE’s gross profit was $3.1 million, compared to $1.6 million in the same year-ago period.
- DGSE’s resale gross profit was $2.7 million, compared to $1.4 million in the same year-ago period.
- DGSE’s recycled-materials gross profit was $418,000, compared to $170,000 in the same year-ago period.
- ECHG’s gross profit was $4.0 million, compared to $2.9 million in the same year-ago period.
- Resale gross profit was $3.0 million, compared to $2.0 million in the same year-ago period.
- Recycled-material gross profit was $1.0 million, compared to $834,000 in the same year-ago period.
Net income for the second quarter of 2021 was $2.2 million, or $0.08 per basic and diluted share, compared to $566,000, or $0.02 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
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
|
(Unaudited)
|
2021 | 2020 | 2021 | 2020 | ||||||||||||
| Revenue: | ||||||||||||||||
|
Sales
|
$ | 33,724,006 | $ | 20,545,607 | $ | 59,214,447 | $ | 46,374,750 | ||||||||
|
Cost of goods sold
|
26,596,116 | 16,074,349 | 45,782,293 | 36,602,212 | ||||||||||||
|
Gross margin
|
7,127,890 | 4,471,258 | 13,432,154 | 9,772,538 | ||||||||||||
|
Expenses:
|
||||||||||||||||
|
Selling, General & Administrative Expenses
|
4,831,225 | 3,616,670 | 8,984,454 | 7,441,870 | ||||||||||||
|
Depreciation and Amortization
|
216,219 | 179,706 | 421,131 | 359,435 | ||||||||||||
|
Total operating expenses
|
5,047,444 | 3,796,376 | 9,405,585 | 7,801,305 | ||||||||||||
|
Operating income
|
2,080,446 | 674,882 | 4,026,569 | 1,971,233 | ||||||||||||
|
Other income, net
|
283,055 | 51,866 | 554,996 | 93,556 | ||||||||||||
|
Interest expense
|
177,704 | 144,297 | 356,726 | 289,612 | ||||||||||||
|
Income before income taxes
|
2,185,797 | 582,451 | 4,224,839 | 1,775,177 | ||||||||||||
|
Income tax expense
|
32,685 | 16,277 | 63,455 | 34,854 | ||||||||||||
|
Net income
|
$ | 2,153,112 | $ | 566,174 | $ | 4,161,384 | $ | 1,740,323 | ||||||||
|
Basic earnings per share:
|
||||||||||||||||
|
Net income
|
$ | 0.08 | $ | 0.02 | $ | 0.15 | $ | 0.06 | ||||||||
|
Diluted earnings per share:
|
||||||||||||||||
|
Net income
|
$ | 0.08 | $ | 0.02 | $ | 0.15 | $ | 0.06 | ||||||||
|
Weighted average shares outstanding:
|
||||||||||||||||
|
Basic
|
26,924,631 | 26,924,381 | 26,924,631 | 26,924,381 | ||||||||||||
|
Diluted
|
26,939,631 | 26,924,381 | 26,939,631 | 26,924,381 | ||||||||||||
ENVELA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
|
Cash and cash equivalents
|
$ | 8,131,112 | $ | 9,218,036 | ||||
|
Trade receivables, net of allowances
|
6,244,445 | 2,846,619 | ||||||
|
Notes receivable
|
1,254,958 | – | ||||||
|
Inventories
|
12,586,889 | 10,006,897 | ||||||
|
Current right-of-use assets from operating leases
|
962,907 | 1,157,077 | ||||||
|
Prepaid expenses
|
453,688 | 281,719 | ||||||
|
Total current assets
|
29,633,999 | 23,510,348 | ||||||
|
Notes receivable, less current portion
|
– | 2,100,000 | ||||||
|
Property and equipment, net
|
7,183,559 | 6,888,601 | ||||||
|
Goodwill
|
3,258,586 | 1,367,109 | ||||||
|
Intangible assets, net
|
2,791,673 | 2,992,473 | ||||||
|
Operating lease right-of-use assets
|
3,124,608 | 3,522,923 | ||||||
|
Other long-term assets
|
343,680 | 197,638 | ||||||
|
Total assets
|
$ | 46,336,105 | $ | 40,579,092 | ||||
|
Liabilities and stockholders’ equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable-Trade
|
$ | 3,612,320 | $ | 1,510,697 | ||||
|
Notes payable, related party
|
315,672 | 307,032 | ||||||
|
Notes payable
|
1,832,646 | 1,813,425 | ||||||
|
Current operating lease liabilities
|
961,873 | 1,148,309 | ||||||
|
Accrued expenses
|
793,202 | 844,324 | ||||||
|
Customer deposits and other liabilities
|
770,236 | 428,976 | ||||||
|
Total current liabilities
|
8,285,949 | 6,052,763 | ||||||
|
Notes payable, related party, less current portion
|
8,899,383 | 9,052,810 | ||||||
|
Notes payable, less current portion
|
4,142,084 | 4,240,658 | ||||||
|
Long-term operating lease liabilities, less current portion
|
3,268,863 | 3,654,419 | ||||||
|
Total liabilities
|
24,596,279 | 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
|
(18,702,420 | ) | (22,863,804 | ) | ||||
|
Total stockholders’ equity
|
21,739,826 | 17,578,442 | ||||||
|
Total liabilities and stockholders’ equity
|
$ | 46,336,105 | $ | 40,579,092 | ||||
ENVELA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the Six Months Ended June 30,
|
2021 | 2020 | |||||
| (Unaudited) | (Unaudited) | ||||||
| Operations | |||||||
|
Net income
|
$ | 4,161,384 | $ | 1,740,323 | |||
|
Adjustments to reconcile net income to net cash provided by operations:
|
|||||||
|
Depreciation, amortization, and other
|
421,131 | 359,435 | |||||
|
Bad debt expense
|
6,249 | – | |||||
|
Changes in operating assets and liabilities:
|
|||||||
|
Trade receivables
|
(3,365,999 | ) | 140,228 | ||||
|
Inventories
|
(2,579,991 | ) | 145,381 | ||||
|
Prepaid expenses
|
(169,373 | ) | (1,269,517 | ) | |||
|
Other assets
|
(146,042 | ) | (95,695 | ) | |||
|
Accounts payable and accrued expenses
|
1,574,520 | (831,398 | ) | ||||
|
Operating leases
|
20,493 | (16,782 | ) | ||||
|
Customer deposits and other liabilities
|
341,260 | 369,511 | |||||
|
Net cash provided by operations
|
263,632 | 541,486 | |||||
|
Investing
|
|||||||
|
Investment in note receivable
|
(654,958 | ) | (1,500,000 | ) | |||
|
Purchase of property and equipment
|
(484,594 | ) | (29,046 | ) | |||
|
Acquisition of CExchange assets and liabilities, net of cash acquired
|
13,136 | – | |||||
|
Net cash used in investing
|
(1,126,416 | ) | (1,529,046 | ) | |||
|
Financing
|
|||||||
|
Payments on notes payable, related party
|
(144,787 | ) | (138,683 | ) | |||
|
Payments on notes payable
|
(79,353 | ) | – | ||||
|
Proceeds from Paycheck Protection Program Note
|
– | 1,668,200 | |||||
|
Net cash provided by (used in) financing
|
(224,140 | ) | 1,529,517 | ||||
|
Net change in cash and cash equivalents
|
(1,086,924 | ) | 541,957 | ||||
|
Cash and cash equivalents, beginning of period
|
9,218,036 | 4,510,660 | |||||
|
Cash and cash equivalents, end of period
|
$ | 8,131,112 | $ | 5,052,617 | |||
|
Supplemental Disclosures
|
|||||||
|
Cash paid during the period for:
|
|||||||
|
Interest
|
$ | 359,253 | $ | 291,845 | |||
|
Income taxes
|
$ | 56,900 | $ | – | |||
|
Non cash activities:
|
|||||||
|
Acquisition of CExchange assets and liabilities
|
$ | 1,555,892 | $ | – | |||
SOURCE: Envela Corporation
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