Envela Reports First Quarter 2021 Financial Results

Rhea-AI Summary

Envela Corporation (NYSE American: ELA) reported a 71% increase in net income year-over-year, reaching $2.0 million for Q1 2021. Despite challenges from a Texas winter freeze, total revenue for the quarter was $25.5 million, slightly down from $25.8 million in Q1 2020. Revenue from its DGSE subsidiary fell to $18.9 million while ECHG saw growth, generating $6.6 million, an increase from $5.5 million a year earlier. Consolidated gross profit improved to $6.3 million, up from $5.3 million. Earnings per share increased to $0.07, compared to $0.04 in the previous year.

Positive

• Net income surged 71% to $2.0 million.
• Consolidated gross profit rose to $6.3 million, an increase from $5.3 million.
• ECHG revenue increased to $6.6 million, up from $5.5 million.

Negative

• Total revenue decreased slightly to $25.5 million from $25.8 million.
• Revenue from DGSE subsidiary declined to $18.9 million from $20.4 million.
• Recycled-material gross profit for ECHG fell to $0.9 million from $1.5 million.

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

DALLAS, TX / ACCESSWIRE / 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

ELA@gatewayir.com

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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FAQ

What were Envela's earnings for Q1 2021?

Envela reported earnings of $2.0 million or $0.07 per share for Q1 2021.

How did Envela's revenue change in Q1 2021?

Envela's total revenue for Q1 2021 was $25.5 million, slightly down from $25.8 million in the same period last year.

What contributed to Envela's net income increase in Q1 2021?

Envela's net income increased by 71% due to improved operational performance and growth in the ECHG subsidiary.

What challenges did Envela face in Q1 2021?

Envela faced operational challenges due to a historic Texas winter freeze.

How did the DGSE subsidiary perform in Q1 2021?

DGSE subsidiary's revenue declined to $18.9 million from $20.4 million year-over-year.