DALLAS, TX / ACCESSWIRE / May 8, 2024 / Envela Corporation (NYSE American:ELA) ("Envela" or the "Company"), today reported financial results for its first quarter ended March 31, 2024. The Company reported quarterly revenue of $39.9 million and quarterly earnings per diluted share of $0.07.
Management Commentary
"I am immensely proud of our teams throughout the Company for their resourcefulness, passion, and steadfast dedication to our customers. Despite challenging economic conditions impacting consumer discretionary spending, we are well-positioned to continue executing on our strategic initiatives. The Company's capital position demonstrates the strength of our business model and allows us to not only manage a fluctuating market, but also to continue our drive toward enhancing shareholder value via our share-purchase program, future store openings, and expanding our partnerships with leading retailers and technology companies," said John Loftus, Envela's CEO.
Consumer Division
"In the first quarter of 2024, we achieved solid results despite a continued downturn in the precious-metals bullion market and a higher level of operating costs from our significant investments in expansion. Last year, we announced plans to double our store count by the end of 2024. Over the past fifteen months, we've been transforming our consumer division and setting the foundation for what we anticipate will be the most significant retail expansion in our history. During the quarter, we have continued to make considerable progress on our store-expansion strategy and remain on track to grow our footprint to 14 stores by year's end. Opening three new stores in Arizona reflects the commencement of this strategy, aimed at meeting customers' preference for visiting physical stores for personalized advice before selling their luxury pre-owned items" remarked Loftus.
"While aggressively investing in expansion has put some pressure on short-term results, it positions us to capitalize on long-term opportunities afforded by developing a national presence over the next several years," added Loftus.
Commercial Division
"In the first quarter of 2024, we achieved a significant milestone in our enterprise-resource planning initiative, reduced operational expense, and improved liquidity, setting the stage for expansion. Our investments in people, processes, and systems will continue to enhance productivity, enhance our ability to serve and attract clients, and expand opportunities. Committed to the circular economy, we are focused on enhancing operational efficiencies and relentlessly pursuing innovative strategies to assist our client partners in prolonging products' lifespans. We're proud to contribute to tech-sector circularity and global decarbonization efforts by enabling the repurposing, reuse, and recycling of end-of-life assets and parts," added Loftus.
"This period was marked by robust performance in the Commercial Division, driven by favorable revenue trends within the diversity of our client base that continues to drive meaningful growth opportunities. We are optimistic about underlying business trends and growth opportunities that lie ahead," concluded Loftus.
First Quarter 2024 Financial Highlights
Envela will report more complete earnings in its Form 10-Q.
First Quarter 2024 Consolidated Operating Highlights
First quarter revenue was $39.9 million compared to $49.8 million in the first quarter of 2023.
In spite of the decreased revenue, first quarter gross margin improved to 25.9% of quarterly revenue, compared to 22.9% in the first quarter last year.
First quarter selling, general and administrative expenses were $7.6 million compared to $7.9 million in the first quarter last year. The company continued human capital investment in anticipation of its near-term store growth strategy in the Phoenix market, but was offset by continued expense rationalization within our Commercial Division.
First quarter operating income decreased to $2.3 million, or 5.9% of revenue, compared to $3.2 million, or 6.3% of revenue for the first quarter of 2023.
First quarter net income was $1.9 million, or $0.07 per basic and diluted share, compared to $2.5 million or $0.09 per basic and diluted shared in the first quarter of 2023.
First quarter EBITDA was $2.7 million or 6.7% of revenue, compared to $3.5 million or 7.0% of revenue in the first quarter of 2023.
Cash and cash equivalents decreased to $19.8 million at March 31, 2024, compared to $20.4 million at March 31, 2023.
Total stockholders' equity grew to $49.3 million at March 31, 2024, compared to $45.8 million at March 31, 2023.
First Quarter Consumer Division Operating Highlights
Consumer Division revenue was $28.2 million for the first quarter of 2024, a decrease of 23.1% compared to revenue of $36.7 million. Macroeconomic conditions impacting consumer discretionary spend continue challenge segment results. Despite these headwinds revenue has improved over the prior two quarters and we are anticipating further upward momentum as we relieve our inventory build that occurred in anticipation our Phoenix store openings.
Consumer Division gross margin increased to 12.6% in the first quarter of 2024 compared to 10.9% in the prior-year quarter, reflecting product mix and a focus on higher margin sales.
Operating expenses increased 34.1% to $3.3 million in the first quarter of 2024 compared to $2.5 million in the prior-year quarter, primarily reflecting increased personnel to support the long-term growth of the business.
Consumer Division pre-tax operating income in the first quarter of 2024 was $204 thousand, a decrease of 86.3% compared to $1.5 million in the prior-year quarter. The resulting consumer pre-tax operating margin was 0.7% for the first quarter of 2024, decreasing from the 4.1% margin for the prior-year quarter.
First Quarter Commercial Division Operating Highlights
Commercial Division revenue was $11.6 million for the first quarter of 2024, a decrease from revenue of $13.1 million in the prior-year quarter. Despite the shortfall in revenue compared to the prior-year quarter, revenues have been trending upwards over the prior three quarters, reflecting Envela's growing partnerships with leading technology and electronics companies, as well as a range of local businesses.
Commercial Division gross margin increased to 58.2% in the first quarter of 2024 compared to 56.7% in the prior-year quarter.
Operating expenses decreased 19.6% to $4.6 million in the first quarter of 2024 compared to $5.8 million in the prior-year quarter. We continue to focus on the alignment of operating expenses with margin generation.
Commercial Division pre-tax operating income in the first quarter of 2024 was $2.1 million, an increase of 28.7% compared to $1.7 million in the prior-year quarter. The resulting pre-tax operating margin was 18.4% for the first quarter of 2024, increasing from a 12.7% margin for the prior-year quarter.
Balance Sheet, Cash Flow and Liquidity
Cash and cash equivalents increased to $19.8 million from $17.9 million at December 31, 2023
The Company reduced its long-term debt to $14.6 million at March 31, 2024 compared to $14.9 million at December 31, 2023
Total shareholders' equity increased to $49.3 million at March 31, 2023 compared to $48.3 million at December 31, 2023
For the quarter ended March 31, 2024, consolidated operating cash flows totaled $3.8 million
Working capital at March 31, 2024 increased to $49.3 million from $48.3 million at December 31, 2023
Share Repurchase Program
During the quarter ended March 31, 2024, the Company repurchased 201,340 shares of common stock at a cost of $905 thousand. Since the beginning of the share repurchase program in March of 2023, Envela has spent more than $3.1 million to purchase 617,313 shares of common stock under the 1,000,000 share repurchase program authorized through March 31, 2026.
About Envela
Envela a leading provider of re-commerce services at the forefront of the circular economy. The company is comprised of primarily two key business segments: Consumer and Commercial. The Consumer segment operates retail stores and online sites that offer premium brands and luxury hard assets, while the Commercial segment provides personalized re-commerce solutions to meet the needs of various clients, including Fortune 500 companies. We execute with passion and meticulous attention to detail, focusing on our strengths rather than trying to be everything to everyone.
Cautionary Statement Regarding Forward-Looking Information
This press release contains statements that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995's safe harbor provisions, including statements regarding future events and developments; potential expansions, purchases and acquisitions; potential future success of business lines and strategies; and management's expectations, beliefs, plans, estimates and projections relating to the future. Words such as "believes," "anticipates," "plans," "may," "intends," "will," "should," "expects" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on management's then current views and assumptions and, as a result, are subject to certain risks and uncertainties, which could cause the Company's actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, risks described more fully in Item 1A in the Company's Annual Report on Form 10-K, which are expressly incorporated herein by reference, and other factors as may periodically be described in the Company's filings with the SEC. 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.
