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Envela Reports First Quarter 2021 Financial Results

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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