Envela Reports Second Quarter 2022 Financial Results

Quarterly Net Income Up 78.7% Year-over-Year to $3.85 Million

DALLAS, TX / ACCESSWIRE / August 3, 2022 / Envela Corporation (NYSE American:ELA) ("Envela" or the "Company"), the North American re-commerce leader, today reported financial results for its second quarter ended June 30, 2022.

Management Commentary

"This quarter's record performance is a testament to the hard work and relentless focus of our team despite formidable inflationary pressures and other significant global headwinds. The results also reflect the continued fruits of our disciplined financial approach and recent business initiatives designed to expand our customer base and grow sales," said John Loftus, Chairman and CEO of Envela. "Our customers continued to shop this quarter­-despite the increased macroeconomic pressures on consumer spending-demonstrating the unique value that our authenticated re-commerce marketplace offers consumers."

Envela Corporation, Wednesday, August 3, 2022, Press release picture

Second Quarter 2022 Financial Results

Total revenue for the second quarter of 2022 was $42.6 million compared to $33.7 million in the same year-ago period.

Revenue related to continuing operations of the Company's DGSE subsidiary for the second quarter of 2022 was $30.3 million (71.2% of total revenue), compared to $23.0 million in the same year-ago period. DGSE's resale revenue, including bullion, jewelry, watches, and rare coins, was $28.2 million (92.8% of DGSE total sales), compared to $20.9 million (90.8% of DGSE total sales) in the same year-ago period. DGSE's recycled-material sales were $2.2 million (7.2% of DGSE total sales), compared to $2.1 million (9.2% of DGSE total sales) in the same year-ago period.

Revenue related to the Company's ECHG subsidiary for the Second quarter of 2022 was $12.3 million (28.8% of total revenue), compared to $10.7 million in the same year-ago period. ECHG's resale revenue was $9.1 million (74% of ECHG total sales), compared to $8.5 million (80% of ECHG total sales) in the same year-ago period. ECHG's recycled-material sales were $3.2 million (26% of ECHG total sales), compared to $2.1 million (20% of ECHG total sales) in the same year-ago period.

Consolidated gross profit for the second quarter of 2022 was $11.5 million, compared to $7.1 million in the same year-ago period.

• DGSE's gross profit was $4.2 million, compared to $3.1 million in the same year-ago period.

  • DGSE's resale gross profit was $3.7 million, compared to $2.7 million in the same year-ago period.

  • DGSE's recycled-materials gross profit was $0.5 million, compared to $0.4 million in the same year-ago period.

• ECHG's gross profit was $7.3 million, compared to $4.0 million in the same year-ago period.

  • Resale gross profit was $5.6 million, compared to $3.0 million in the same year-ago period.

  • Recycled-material gross profit was $1.7 million, compared to $1.0 million in the same year-ago period.

Net income for the second quarter of 2022 was $3.85 million, or $0.14 per basic and diluted share, compared to $2.15 million, or $0.08 per basic and diluted share, in the same year-ago period.

About Envela

Envela is the North American re-commerce leader, enabling a better world through the circular economy. It empowers buyers and sellers to extend the useful lives of specialty and durable goods, and to seizes retail, recycling, and reverse-logistics supply-chain opportunities. This financially benefits consumers and manufacturers alike. Envela operates primarily via two re-commerce business segments, DGSE and ECHG. DGSE (Envela's B2C portfolio) operates retail stores and online sites offering luxury hard assets and precious metals, including gold, silver, and diamonds. ECHG (Envela's B2B portfolio) re-commercializes consumer electronics and IT equipment, and also provides end-of-life recycling services for products in a variety of industries. Envela conducts its re-commerce operations at retail and wholesale levels, through distributors, resellers, dedicated stores, and online. Holdings in all of Envela's business units have recognized multiple years of growth.

At Envela we Reuse, Recycle, and Reimagine. To learn more, visit Envela.com and follow us on Twitter, Instagram, Facebook and LinkedIn.

Forward-Looking Statements

This press release includes statements that may constitute "forward-looking" statements, including statements regarding acquisitions, and the potential future success of 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:

Investor Relations
1901 Gateway Drive | Irving, TX 75038
investorrelations@envela.com

Envela Corporation
Condensed Consolidated Statements of Operations

		Three Months Ended June 30,								Six Months Ended June 30,
(Unaudited)		2022				2021				2022				2021
Revenue:
Sales		$	42,639,718			$	33,724,006			$	90,054,816			$	59,214,447
Cost of goods sold			31,161,718				26,596,116				68,865,782				45,782,293
Gross margin			11,478,000				7,127,890				21,189,034				13,432,154
Expenses:
Selling, General & Administrative Expenses			7,083,903				4,831,225				13,643,658				8,984,454
Depreciation and Amortization			279,516				216,219				571,463				421,131
Total operating expenses			7,363,419				5,047,444				14,215,121				9,405,585
Operating income			4,114,581				2,080,446				6,973,913				4,026,569
Other income (expense), net			(95,429	)			283,055				(154,005	)			554,996
Interest expense			121,042				177,704				244,281				356,726
Income before income taxes			3,898,110				2,185,797				6,575,627				4,224,839
Income tax expense			50,252				32,685				80,544				63,455
Net income		$	3,847,858			$	2,153,112			$	6,495,083			$	4,161,384
Basic earnings per share:
Net income		$	0.14			$	0.08			$	0.24			$	0.15
Diluted earnings per share:
Net income		$	0.14			$	0.08			$	0.24			$	0.15
Weighted average shares outstanding:
Basic			26,924,631				26,924,381				26,924,631				26,924,381
Diluted			26,939,631				26,939,631				26,939,631				26,939,631

These financials are to be viewed with Form 10-Q and accompanying notes filed with the Securities and Exchange Commission on August 3, 2022. The accompanying notes to Form 10-Q are an integral part of these consolidated financial statements.

Envela Corporation
Condensed Consolidated Balance Sheets

	June 30,				December 31,
	2022				2021
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	13,935,476			$	10,138,148
Trade receivables, net of allowances		5,688,882				7,166,533
Inventories		17,804,096				14,048,436
Current right-of-use assets from operating leases		1,649,034				1,604,736
Prepaid expenses		1,420,656				439,038
Other current assets		265,866				969,624
Total current assets		40,764,010				34,366,515
Property and equipment, net		9,662,401				9,806,188
Goodwill		6,357,453				6,140,465
Intangible assets, net		2,800,495				3,024,245
Operating lease right-of-use assets		5,039,806				5,692,141
Other assets		186,761				237,761
Total assets	$	64,810,926			$	59,267,315
Liabilities and stockholders' equity
Current liabilities:
Accounts payable-trade	$	3,303,090			$	2,488,396
Line of credit		-				1,700,000
Notes payable		1,241,480				1,065,794
Current operating lease liabilities		1,631,270				1,573,824
Accrued expenses		1,741,794				1,789,366
Customer deposits and other liabilities		2,198,587				1,179,224
Total current liabilities		10,116,221				9,796,604
Notes payable, less current portion		15,350,254				15,970,337
Long-term operating lease liabilities, less current portion		5,222,051				5,873,057
Total liabilities		30,688,526				31,639,998
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		(6,319,846	)			(12,814,929	)
Total stockholders' equity		34,122,400				27,627,317
Total liabilities and stockholders' equity	$	64,810,926			$	59,267,315

These financials are to be viewed with Form 10-Q and accompanying notes filed with the Securities and Exchange Commission on August 3, 2022. The accompanying notes to Form 10-Q are an integral part of these consolidated financial statements.

Envela Corporation
Condensed Consolidated Statement of Cash Flows

For the Six Months Ended June 30,		2022				2021
		(Unaudited)				(Unaudited)
Operations
Net income		$	6,495,083			$	4,161,384
Adjustments to reconcile net income to net cash provided by operations:
Depreciation, amortization, and other			571,463				421,131
Bad debt expense			25,000				6,249
Changes in operating assets and liabilities:
Trade receivables			1,452,651				(3,365,999	)
Inventories			(3,755,662	)			(2,579,991	)
Prepaid expenses			(981,616	)			(169,373	)
Other assets			754,759				(146,042	)
Accounts payable and accrued expenses			767,122				1,574,520
Operating leases			14,478				20,493
Customer deposits and other liabilities			1,019,363				341,260
Net cash provided by operations			6,362,641				263,632
Investing
Investment in note receivable			-				(654,958	)
Purchase of property and equipment			(203,929	)			(484,594	)
Acquisition of CExchange assets and liabilities, net of cash acquired			-				13,136
Adjustment to the purchase price of the Avail Transaction			(216,988	)			-
Net cash used in investing			(420,917	)			(1,126,416	)
Financing
Payments on notes payable, related party			-				(144,787	)
Payments on notes payable			(444,396	)			(79,353	)
Payments on line of credit			(1,700,000	)			-
Net cash used in financing			(2,144,396	)			(224,140	)
Net change in cash and cash equivalents			3,797,328				(1,086,924	)
Cash and cash equivalents, beginning of period			10,138,148				9,218,036
Cash and cash equivalents, end of period		$	13,935,476			$	8,131,112
Supplemental Disclosures
Cash paid during the period for:
Interest		$	252,431			$	359,253
Income taxes		$	98,000			$	56,900
Non cash activites:
Acquisition of CExchange assets and liabilities		$	-			$	1,555,892

These financials are to be viewed with Form 10-Q and accompanying notes filed with the Securities and Exchange Commission on August 3, 2022. The accompanying notes to Form 10-Q are an integral part of these consolidated financial statements.

SOURCE: Envela Corporation

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