Envela Reports Second Quarter 2021 Financial Results

Rhea-AI Summary

Envela Corporation (NYSE American: ELA) reported a remarkable 280% increase in net income to $2.2 million for Q2 2021, compared to $566,000 in Q2 2020. Total revenue rose to $33.7 million, up from $20.5 million year-over-year. The DGSE subsidiary contributed $23.0 million to revenue, with strong demand in resale and recycled materials. ECHG also saw growth, generating $10.7 million. Consolidated gross profit improved to $7.1 million, reflecting effective execution across both business segments.

Positive

• Net income surged 280% to $2.2 million year-over-year.
• Total revenue increased to $33.7 million, compared to $20.5 million in Q2 2020.
• DGSE revenue rose to $23.0 million, driven by robust resale performance.
• ECHG revenue improved to $10.7 million, indicating organic growth.

Negative

• None.

Quarterly Net Income Up 280% Year-over-Year to $2.2 Million

DALLAS, TX / ACCESSWIRE / 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
ELA@gatewayir.com

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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FAQ

What were Envela's earnings results for Q2 2021?

Envela reported a net income of $2.2 million, a 280% increase compared to the same quarter last year.

How much revenue did Envela generate in the second quarter of 2021?

Envela generated total revenue of $33.7 million in Q2 2021.

What is the future outlook for Envela Corporation as of Q2 2021?

Management expressed confidence in current growth strategies, expecting encouraging financial results.