Envela Corporation
03/26/2025 | Press release | Distributed by Public on 03/26/2025 14:50
Annual Report for Fiscal Year Ending 12-31, 2024 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Risks and Uncertainties that May Affect Future Results
The following discussion of our financial condition and results of operations should be read together with our financial statements and related notes and other financial information included in this Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in the section titled "Risk Factors." Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Refer to Cautionary Note Regarding Forward-Looking Statements on page 4 for further details.
Introduction
This section includes a discussion of our operations for the years ended December 31, 2024, and December 31, 2023. The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our financial condition and results of operations.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP"). The preparation of these financial statements requires our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. References to fiscal years herein are denoted with the word "Fiscal" and the associated year.
See Note 3 - Accounting Policies and Estimates for further details.
Economic Conditions
The U.S. and other world economies are currently experiencing high interest rates and high levels of inflation, coupled with commodity price risk, mainly associated with variations in the market price of precious metals and diamonds which have the potential to impact consumer discretionary spending behavior. Furthermore, adverse macroeconomic conditions can also impact demand for resale technology assets.
As to counterbalance economic cycles that impact market selling prices and/or underlying operating costs we adjust the inbound purchase price of commodity-based products, luxury hard assets, and resale technology.
We continuously monitor our inventory positions and associated working capital to respond to market conditions and to meet seasonal business cycles and expansionary plans. These economic cycles may from time to time require the business to utilize its line of credit or seek additional capital.
There can be no assurance that the measures we have adopted will be successful in mitigating the aforementioned risks.
Our Business
Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the recommerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Significant business activities within our reportable segments are detailed below:
Consumer Segment
Our consumer segment primarily operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, including pre-owned fine jewelry, diamonds and gemstones, luxury watches, along with secondary market bullion. We incorporate recycled diamonds and gemstones into our new designs meaning they were previously set and unset, producing a low-carbon and ethical origin product. The Company caters to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry at accessible prices. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.
Commercial Segment
Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the ITAD industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. The Company offers services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role in supporting a circular economy through responsible reuse and recycling of electronic devices.
Segment Activities
The Company believes it is well-positioned to take advantage of its overall capital structure.
Consumer Segment
Our strategy is to expand the number of locations we operate by opening new locations throughout the U.S. Likewise, we continue to evaluate opportunities related to complementary product and service offerings for our stores and online business.
Commercial Segment
Our strategy is to expand both organically and through acquisitions. The Company has taken considerable steps to bolster its management team and operating systems to position itself for growth. Our production facilities are capable of managing the expansion of existing relationships and consolidation of acquisition targets within relative geographic proximity into our existing facilities.
Changes in Disclosure of Results of Operations
The Company previously disaggregated revenue and gross margin by resale and recycle for each segment within the results of operations. The Company's revenue and gross margin are now comprised of more diverse revenue and gross margin streams associated with service offerings and as such to continue reporting under the prior disclosure methodology would be less representative of how the business operates. The Company believes that this change has no material impact on the interpretation of our results of operations.
Non-U.S. GAAP Financial Measures
Within this management discussion and analysis, we use supplemental measures of our performance, which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with U.S. GAAP. We believe that providing these non-U.S. GAAP financial measures adds a meaningful presentation of our operating and financial performance. See the reconciliation of net income to adjusted earnings before interest, tax, depreciation, and amortization ("Adjusted EBITDA") and Net Cash, in Non-U.S. GAAP Financial Measures below.
Adjusted EBITDA
Adjusted EBITDA is defined as the sum of net income (loss) of the Company, adjusted for additions (deductions) of interest expense, other (income) expense, income tax expense (benefit), and depreciation and amortization. Adjusted EBITDA is a key performance measure that management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our strategies and for planning purposes.
The following table provides a reconciliation of net income to Adjusted EBITDA for the years ended December 31, 2024 and 2023:
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Year Ended December 31, |
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2024 |
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2023 |
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Consumer |
Commercial |
Consolidated |
Consumer |
Commercial |
Consolidated |
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Adjusted EBITDA Reconciliation: |
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Net income |
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$ |
16,341 |
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$ |
6,740,718 |
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$ |
6,757,059 |
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$ |
3,646,747 |
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$ |
3,500,705 |
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$ |
7,147,452 |
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Addition (deduction): |
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Depreciation and amortization |
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524,510 |
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1,027,264 |
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1,551,774 |
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325,227 |
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1,036,837 |
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1,362,064 |
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Other income |
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(104,561) |
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(933,121) |
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(1,037,682) |
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(83,806) |
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(643,976) |
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(727,782) |
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Interest expense |
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228,792 |
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218,591 |
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447,383 |
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192,393 |
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270,808 |
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463,201 |
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Income tax expense |
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4,818 |
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1,987,303 |
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1,992,121 |
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927,157 |
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946,761 |
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1,873,918 |
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$ |
669,900 |
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$ |
9,040,755 |
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$ |
9,710,655 |
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$ |
5,007,718 |
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$ |
5,111,135 |
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$ |
10,118,853 |
Net Cash
Net Cash is defined as the difference between (i) cash and cash equivalents and (ii) the sum of debt obligations. We believe that presenting Net Cash is useful to investors as a measure of our liquidity and leverage profile, as cash and cash equivalents can be used, among other things, to repay indebtedness.
The following table depicts the Company's Net Cash:
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December 31, |
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December 31, |
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2024 |
2023 |
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Total cash |
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$ |
20,609,003 |
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$ |
17,853,853 |
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Less: debt obligations |
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(13,522,179) |
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(14,933,491) |
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$ |
7,086,824 |
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$ |
2,920,362 |
Results of Operations
The results of operations should be read in conjunction with our financial statements and notes included elsewhere in the Annual Report. Prior year comparisons for 2023 and 2022, are included in "Part II. Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal years ended December 31, 2023 and 2022, which was filed with the SEC on March 21, 2024.
Any reference in this Annual Report to a "year-over-year" change is to the relevant comparison between activity from each twelve-month period ended December 31, 2024 and 2023.
Comparison of the Years Ended December 31, 2024 and 2023
The following table depicts our disaggregated consolidated statements of income for the years ended December 31, 2024 and 2023:
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Year Ended December 31, |
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2024 |
2023 |
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Consumer |
Commercial |
Consolidated |
% of Sales (1) |
Consumer |
Commercial |
Consolidated |
% of Sales (1) |
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Sales |
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$ |
130,469,468 |
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$ |
49,906,761 |
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$ |
180,376,229 |
100.0 |
% |
$ |
129,413,669 |
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$ |
45,850,157 |
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$ |
175,263,826 |
100.0 |
% |
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Cost of goods sold |
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114,587,598 |
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21,472,844 |
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136,060,442 |
75.4 |
% |
113,765,111 |
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19,842,185 |
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133,607,296 |
76.2 |
% |
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Gross margin |
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15,881,870 |
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28,433,917 |
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44,315,787 |
24.6 |
% |
15,648,558 |
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26,007,972 |
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41,656,530 |
23.8 |
% |
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Expenses: |
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Selling, general and administrative |
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15,211,970 |
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19,393,162 |
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34,605,132 |
19.2 |
% |
10,640,840 |
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20,896,837 |
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31,537,677 |
18.0 |
% |
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Depreciation and amortization |
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524,510 |
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1,027,264 |
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1,551,774 |
0.9 |
% |
325,227 |
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1,036,837 |
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1,362,064 |
0.8 |
% |
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Total operating expenses |
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15,736,480 |
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20,420,426 |
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36,156,906 |
20.1 |
% |
10,966,067 |
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21,933,674 |
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32,899,741 |
18.8 |
% |
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Operating income |
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145,390 |
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8,013,491 |
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8,158,881 |
4.5 |
% |
4,682,491 |
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4,074,298 |
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8,756,789 |
5.0 |
% |
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Other income (expense): |
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Other income |
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104,561 |
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933,121 |
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1,037,682 |
0.6 |
% |
83,806 |
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643,976 |
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727,782 |
0.4 |
% |
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Interest expense |
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(228,792) |
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(218,591) |
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(447,383) |
(0.2) |
% |
(192,393) |
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(270,808) |
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(463,201) |
(0.3) |
% |
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Income before income taxes |
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21,159 |
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8,728,021 |
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8,749,180 |
4.9 |
% |
4,573,904 |
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4,447,466 |
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9,021,370 |
5.1 |
% |
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Income tax expense |
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(4,818) |
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(1,987,303) |
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(1,992,121) |
(1.1) |
% |
(927,157) |
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(946,761) |
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(1,873,918) |
(1.1) |
% |
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Net income |
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$ |
16,341 |
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$ |
6,740,718 |
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$ |
6,757,059 |
3.8 |
% |
$ |
3,646,747 |
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$ |
3,500,705 |
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$ |
7,147,452 |
4.1 |
% |
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| (1) | The "% of Sales" figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, the percentages presented may not add up precisely to the totals provided. |
The individual segments reported the following for the years ended December 31, 2024 and 2023:
Sales
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Year Ended December 31, |
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Change |
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2024 |
2023 |
Amount |
% |
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Consolidated |
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$ |
180,376,229 |
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$ |
175,263,826 |
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$ |
5,112,403 |
2.9 |
% |
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% of consolidated sales |
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100.0 |
% |
100.0 |
% |
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Consumer |
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$ |
130,469,468 |
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$ |
129,413,669 |
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$ |
1,055,799 |
0.8 |
% |
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% of consumer sales |
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100.0 |
% |
100.0 |
% |
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Commercial |
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$ |
49,906,761 |
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$ |
45,850,157 |
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$ |
4,056,604 |
8.8 |
% |
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% of commercial sales |
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100.0 |
% |
100.0 |
% |
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Consolidated
Sales increased by $5,112,403, or 2.9%, during the year ended December 31, 2024, to $180,376,229, as compared to $175,263,826 during the same period in Fiscal 2023.
Consumer Segment
Sales in the consumer segment increased by $1,055,799, or 0.8%, during the year ended December 31, 2024, to $130,469,468, as compared to $129,413,669 during the same period in Fiscal 2023. The change was primarily attributed to stronger sales of scrap grade precious metals inventory which were more pronounced in the third and fourth quarters of Fiscal 2024, which was offset by softer market conditions for bullion that was most prevalent in the first and second quarters of Fiscal 2024; which also impacted store performance. Our sales of scrap grade precious metals were favorably impacted by exceptional inbound material flow from our in-store buying programs. While Fiscal 2024 produced favorable movements in the spot price of gold it was not sufficient to offset the impact of lower bullion demand.
Commercial Segment
Sales in the commercial segment increased by $4,056,604, or 8.8%, during the year ended December 31, 2024, to $49,906,761, as compared to $45,850,157 during the same period in Fiscal 2023. The change was primarily attributed to the favorable performance from almost all of our verticals with the most significant being the sale of personal technology assets and sales generated through our ITAD business. While the sales of electronic scrap grades and associated recoveries were strong through to the third quarter of Fiscal 2024 they dropped off in the fourth quarter resulting in relative parity to Fiscal 2023. Electronic scrap grade sales were primarily impacted by inbound material flows from a single customer's shipping schedule in the fourth quarter of Fiscal 2024.
Cost of Goods Sold
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Year Ended December 31, |
Change |
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2024 |
2023 |
Amount |
% |
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Consolidated |
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$ |
136,060,442 |
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$ |
133,607,296 |
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$ |
2,453,146 |
1.8 |
% |
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% of consolidated sales |
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75.4 |
% |
76.2 |
% |
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Consumer |
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$ |
114,587,598 |
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$ |
113,765,111 |
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$ |
822,487 |
0.7 |
% |
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% of consumer sales |
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87.8 |
% |
87.9 |
% |
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Commercial |
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$ |
21,472,844 |
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$ |
19,842,185 |
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$ |
1,630,659 |
8.2 |
% |
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% of commercial sales |
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43.0 |
% |
43.3 |
% |
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Consolidated
Cost of goods sold increased by $2,453,146, or 1.8%, during the year ended December 31, 2024, to $136,060,442, as compared to $133,607,296 during the same period in Fiscal 2023.
Consumer Segment
Cost of goods sold in the consumer segment increased by $822,487, or 0.7%, during the year ended December 31, 2024, to $114,587,598, as compared to $113,765,111 during the same period in Fiscal 2023. The change was primarily attributed to the aforementioned increase in sales attributed to lower margin scrap grade precious metals, which were more pronounced in the third and fourth quarters of Fiscal 2024. These sales allowed the consumer segment to reduce its inventory position from an intra-year high of $27,866,050 as of September 30, 2024 to $23,973,333 as of December 31, 2024.
Cost of goods sold as a percent of sales was 87.8% during the year ended December 31, 2024, as compared to 87.9% during the year ended December 31, 2023. The change was primarily attributed to the product mix, as the relief of inventory associated with lower margin scrap grade precious metals and bullion was almost fully offset by higher margin luxury goods.
Commercial Segment
Cost of goods sold in the commercial segment increased by $1,630,659, or 8.2%, during the year ended December 31, 2024, to $21,472,844, as compared to $19,842,185 during the same period in Fiscal 2023. The change was primarily attributed to the relief of inventory associated with lower margin electronic scrap grades and revenue sharing, ITAD settlements, and incrementally from the relief of inventory associated with personal technology assets. Our ITAD business had a strong fourth quarter in Fiscal 2024 resulting in this vertical having a greater impact on cost of goods sold than was evident through the nine months ended September 30, 2024.
Cost of goods sold as a percent of sales was 43.0% during the year ended December 31, 2024, as compared to 43.3% during the year ended December 31, 2023. The change was primarily attributed to the product mix that was relieved during the fourth quarter of Fiscal 2024 as our costs of goods sold as a percent of sales for the nine months ended September 30, 2024 had been unfavorable to the same period in Fiscal 2023. In the fourth quarter of 2024 the commercial segment experienced stronger margins on the sale of personal technology assets that moved its cost of goods sold as a percent of sales into a favorable variance for the year ended December 31, 2024.
Gross Margin
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Year Ended December 31, |
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Change |
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2024 |
2023 |
Amount |
% |
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Consolidated |
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$ |
44,315,787 |
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$ |
41,656,530 |
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$ |
2,659,257 |
6.4 |
% |
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% of consolidated sales |
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24.6 |
% |
23.8 |
% |
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Consumer |
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$ |
15,881,870 |
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$ |
15,648,558 |
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$ |
233,312 |
1.5 |
% |
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% of consumer sales |
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12.2 |
% |
12.1 |
% |
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Commercial |
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$ |
28,433,917 |
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$ |
26,007,972 |
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$ |
2,425,945 |
9.3 |
% |
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% of commercial sales |
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57.0 |
% |
56.7 |
% |
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Consolidated
Gross margin increased by $2,659,257, or 6.4%, during the year ended December 31, 2024, to $44,315,787, as compared to $41,656,530 during the same period in Fiscal 2023.
Consumer Segment
Gross margin in the consumer segment increased by $233,312, or 1.5%, during the year ended December 31, 2024, to $15,881,870, as compared to $15,648,558 during the same period in Fiscal 2023. The net impact of the aforementioned increase in sales of $1,055,799 and increase in cost of goods sold of $822,487 resulted in the $233,312 increase in gross margin.
Commercial Segment
Gross margin in the commercial segment increased by $2,425,945, or 9.3%, during the year ended December 31, 2024, to $28,433,917, as compared to $26,007,972 during the same period in Fiscal 2023. The net impact of the aforementioned increase in sales of $4,056,604 and increase in cost of goods sold of $1,630,659 resulted in the $2,425,945 increase in gross margin.
Selling, General and Administrative
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|
|
|
|
|
Year Ended December 31, |
|
Change |
||||||||
|
|
2024 |
2023 |
Amount |
% |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
34,605,132 |
|
$ |
31,537,677 |
|
$ |
3,067,455 |
9.7 |
% |
|
|
% of consolidated sales |
|
19.2 |
% |
18.0 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
$ |
15,211,970 |
|
$ |
10,640,840 |
|
$ |
4,571,130 |
43.0 |
% |
|
|
% of consumer sales |
|
11.7 |
% |
8.2 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
19,393,162 |
|
$ |
20,896,837 |
|
$ |
(1,503,675) |
(7.2) |
% |
|
|
% of commercial sales |
|
38.9 |
% |
45.6 |
% |
|
||||||
Consolidated
Selling, general and administrative expense increased by $3,067,455, or 9.7%, during the year ended December 31, 2024, to $34,605,132, as compared to $31,537,677 during the same period in Fiscal 2023.
Consumer Segment
Selling, general and administrative expense in the consumer segment increased by $4,571,130, or 43.0%, during the year ended December 31, 2024, to $15,211,970, as compared to $10,640,840 during the same period in Fiscal 2023. The change was primarily attributed to incurring operational cost structures from our new Arizona and Texas stores along with travel costs associated with preparing those stores for opening. However, travel costs consecutively declined in both the third and fourth quarters of Fiscal 2024. During the year, processes and procedures were developed to create efficiencies in rolling out new stores in geographically dispersed locations that can be utilized in future store openings.
Commercial Segment
Selling, general and administrative expense in the commercial segment decreased by $1,503,675, or 7.2%, during the year ended December 31, 2024, to $19,393,162, as compared to $20,896,837 during the same period in Fiscal 2023. The change was primarily attributed to the operational focus on human capital costs and processing efficiencies at our production facilities during Fiscal 2024. Albeit, we did experience some intra-year increases in human capital costs associated with overall higher processing volumes and associated with a new retail returns client, the spend correlated to an increase in gross margin.
Depreciation and Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Change |
||||||||
|
|
2024 |
2023 |
Amount |
% |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
1,551,774 |
|
$ |
1,362,064 |
|
$ |
189,710 |
13.9 |
% |
|
|
% of consolidated sales |
|
0.9 |
% |
0.8 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
$ |
524,510 |
|
$ |
325,227 |
|
$ |
199,283 |
61.3 |
% |
|
|
% of consumer sales |
|
0.4 |
% |
0.3 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
1,027,264 |
|
$ |
1,036,837 |
|
$ |
(9,573) |
(0.9) |
% |
|
|
% of commercial sales |
|
2.1 |
% |
2.3 |
% |
|
||||||
Consolidated
Depreciation and amortization expense increased by $189,710, or 13.9%, during the year ended December 31, 2024, to $1,551,774, as compared to $1,362,064 during the same period in Fiscal 2023.
Consumer Segment
Depreciation and amortization expense in the consumer segment increased by $199,283, or 61.3%, during the year ended December 31, 2024, to $524,510, as compared to $325,227 during the same period in Fiscal 2023. The change was primarily attributed to our Arizona and Texas stores that were placed into service as well as the depreciation and amortization expense related to the assets acquired in the Scottsdale Transaction.
Commercial Segment
Depreciation and amortization expense in the commercial segment decreased by $9,573, or 0.9%, during the year ended December 31, 2024, to $1,027,264, as compared to $1,036,837 during the same period in Fiscal 2023. There was no material impact from assets capitalized or reaching maturity in each comparative period and, as such, no discussion point.
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Change |
||||||||
|
|
2024 |
2023 |
Amount |
% |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
1,037,682 |
|
$ |
727,782 |
|
$ |
309,900 |
|
42.6 |
% |
|
% of consolidated sales |
|
0.6 |
% |
0.4 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
$ |
104,561 |
|
$ |
83,806 |
|
$ |
20,755 |
24.8 |
% |
|
|
% of consumer sales |
|
0.1 |
% |
0.1 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
933,121 |
|
$ |
643,976 |
|
$ |
289,145 |
44.9 |
% |
|
|
% of commercial sales |
|
1.9 |
% |
1.4 |
% |
|
||||||
Consolidated
Other income increased by $309,900, or 42.6%, during the year ended December 31, 2024, to $1,037,682, as compared to $727,782 during the same period in Fiscal 2023.
Consumer Segment
Other income in the consumer segment increased by $20,755, or 24.8%, during the year ended December 31, 2024, to $104,561, as compared to $83,806 during the same period in Fiscal 2023. The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to the Company's corporate headquarters, and the Employee Retention Tax Credit ("ERTC"), and to the consumer segment's higher working capital requirements from the aforementioned launching of our Arizona and Texas stores which has decreased the excess cash flow available to sweep into an interest-bearing account. The impact on interest income is referenced below.
Interest income comprised $2,304 and $77,936 of other income during the years ended December 31, 2024, and December 31, 2023, respectively.
Commercial Segment
Other income in the commercial segment increased by $289,145, or 44.9%, during the year ended December 31, 2024, to $933,121, as compared to $643,976 during the same period in Fiscal 2023. The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to the Company's corporate headquarters, the ERTC, and to the continued focus on reducing working capital which has increased the excess cash flow available to sweep into an interest-bearing account. The impact on interest income is referenced below.
Interest income comprised $753,315 and $455,665 of other income during the years ended December 31, 2024, and December 31, 2023, respectively.
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Change |
||||||||
|
|
2024 |
2023 |
Amount |
% |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
(447,383) |
|
$ |
(463,201) |
|
$ |
15,818 |
|
(3.4) |
% |
|
% of consolidated sales |
|
(0.2) |
% |
(0.3) |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
$ |
(228,792) |
|
$ |
(192,393) |
|
$ |
(36,399) |
18.9 |
% |
|
|
% of consumer sales |
|
(0.2) |
% |
(0.1) |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
(218,591) |
|
$ |
(270,808) |
|
$ |
52,217 |
(19.3) |
% |
|
|
% of commercial sales |
|
(0.4) |
% |
(0.6) |
% |
|
||||||
Consolidated
Interest expense decreased by $15,818, or 3.4%, during the year ended December 31, 2024, to $447,383, as compared to $463,201 during the same period in Fiscal 2023.
Consumer Segment
Interest expense in the consumer segment increased by $36,399, or 18.9%, during the year ended December 31, 2024, to $228,792, as compared to $192,393 during the same period in Fiscal 2023. The change was primarily attributed to the impact of the allocation of corporate interest expense.
Commercial Segment
Interest expense in the commercial segment decreased by $52,217, or 19.3%, during the year ended December 31, 2024, to $218,591, as compared to $270,808 during the same period in Fiscal 2023. The change was primarily attributed to the impact of the allocation of corporate interest expense.
Income Tax Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Change |
||||||||
|
|
|
2024 |
|
2023 |
|
Amount |
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
$ |
(1,992,121) |
$ |
(1,873,918) |
$ |
(118,203) |
6.3 |
% |
||||
|
% of consolidated sales |
|
(1.1) |
% |
(1.1) |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
$ |
(4,818) |
|
$ |
(927,157) |
|
$ |
922,339 |
(99.5) |
% |
|
|
% of consumer sales |
|
0.0 |
% |
(0.7) |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
(1,987,303) |
|
$ |
(946,761) |
|
$ |
(1,040,542) |
109.9 |
% |
|
|
% of commercial sales |
|
(4.0) |
% |
(2.1) |
% |
|
||||||
Consolidated
Income tax expense, for both segments, for the year ended December 31, 2024, was $1,992,121, an increase of $118,203, as compared to income tax expense of $1,873,918 for the year ended December 31, 2023. Currently, the Company has a deferred tax asset reflecting a future tax benefit that the Company expects to receive. The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income. The effective income tax rate was 22.8% and 20.8% for the years ended December 31, 2024 and 2023, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company's case for the increase for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Change |
||||||||
|
|
|
2024 |
|
2023 |
|
Amount |
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
$ |
6,757,059 |
$ |
7,147,452 |
$ |
(390,393) |
(5.5) |
% |
||||
|
% of consolidated sales |
|
3.7 |
% |
4.1 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
$ |
16,341 |
|
$ |
3,646,747 |
|
$ |
(3,630,406) |
(99.6) |
% |
|
|
% of consumer sales |
|
0.0 |
% |
2.8 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
6,740,718 |
|
$ |
3,500,705 |
|
$ |
3,240,013 |
92.6 |
% |
|
|
% of commercial sales |
|
13.5 |
% |
7.6 |
% |
|
||||||
Consolidated
Net income decreased by $390,393, or 5.5%, during the year ended December 31, 2024 to $6,757,059, as compared to $7,147,452 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of Years Ended December 31, 2024 and 2023 for further details.
Consumer Segment
Net income decreased in the consumer segment by $3,630,406, or 99.6%, during the year ended December 31, 2024 to $16,341, as compared to $3,646,747 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of Years Ended December 31, 2024 and 2023 for further details.
Commercial Segment
Net income increased in the commercial segment by $3,240,013, or 92.6%, during the year ended December 31, 2024 to $6,740,718, as compared to $3,500,705 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of Years Ended December 31, 2024 and 2023 for further details.
Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Change |
|
||||||||
|
|
|
2024 |
|
2023 |
|
Amount |
|
% |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
$ |
0.26 |
$ |
0.27 |
$ |
(0.01) |
(3.7) |
% |
|||||
Consolidated
Basic and diluted earnings per share attributable to holders of our Common Stock decreased by $0.01, or 3.7%, during the year ended December 31, 2024 to $0.26, as compared to $0.27 during the same period in Fiscal 2023.
Liquidity and Capital Resources
The following table summarizes the Company's consolidated statements of cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Change |
||||||||
|
|
|
2024 |
|
2023 |
|
Amount |
|
% |
||||
|
Net cash provided by (used in): |
|
|
|
|
||||||||
|
Operating activities |
|
$ |
10,190,640 |
|
$ |
5,842,708 |
|
$ |
4,347,932 |
74.4 |
% |
|
|
Investing activities |
|
(3,760,404) |
|
(1,759,861) |
|
|
(2,000,543) |
113.7 |
% |
|||
|
Financing activities |
|
(3,675,086) |
|
(3,398,963) |
|
(276,123) |
8.1 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
$ |
2,755,150 |
|
$ |
683,884 |
|
$ |
2,071,266 |
302.9 |
% |
|
Operating Activities
Cash flows provided by operations increased by $4,347,932, or 74.4%, during the year ended December 31, 2024, to $10,190,640, as compared to $5,842,708 during the same period in Fiscal 2023. The increase in cash provided by operations for the year ended December 31, 2024, was primarily attributed to the impacts of a decrease in net income, an increase in depreciation and amortization, a decrease in non-cash charges relating to deferred taxes, an increase in non-cash lease expense, a decrease accounts receivable associated with the settlement of a large SOW with a recurring customer, an increased inventory position associated with the expansion of the consumer business, an increase in accrued expenses primarily associated with our payroll accrual and unvouchered payments related to estimated settlement liabilities for inbound ITAD customers, and an increase in other liabilities associated with customer deposits and gift cards.
Investing Activities
Cash flows (used in) investing activities increased by $2,000,543, or 113.7%, during the year ended December 31, 2024, to $3,760,404, as compared to $1,759,861 during the same period in Fiscal 2023. The increase in cash (used in) investing activities during the year ended December 31, 2024, was primarily attributed to the purchase of property and equipment, including real estate associated with one of our Arizona stores, the build-out of our Arizona and Texas stores, the purchase of production assets within our commercial recycling business, and the continued development of intangible assets associated with our enterprise resource planning system.
Financing Activities
Cash flows (used in) financing activities increased by $276,123, or 8.1%, during the year ended December 31, 2024, to $3,675,086, as compared to $3,398,963 during the same period in Fiscal 2023. The increase in cash (used in) financing activities during the year ended December 31, 2024, was primarily due to our share buyback plan as principal payments on debt were in relative parity.
Capital Resources
Although the Company has access to a line of credit our primary source of liquidity and capital resources currently consists of cash generated from our operating activities. We do not anticipate the need to fund our operations via the line of credit and we do not have any amounts drawn as of December 31, 2024. We have historically renewed, extended, or replaced short-term debt as it matures, and management believes that we will be able to continue to do so in the near future.
Capital Expenditures
We regularly identify growth opportunities and business optimizations that require capital deployment. The Company continuously monitors its deployment of capital and primarily funds capital expenditures through cash flow from operating activities. Where appropriate the Company may use debt financing on select projects. When this occurs, the Company further evaluates future cash flows of the project to ensure the debt tenure and pay-back period are in alignment as well as the appropriateness of the rate of return.
Consumer Segment
In Fiscal 2024, the consumer segment primarily expended capital in relation to store expansion. In Fiscal 2025, we will look to optimize the performance of our new retail stores along with identifying new market opportunities. The Company believes it has the liquidity and capital resources to fund capital outlays of the aforementioned.
Commercial Segment
In Fiscal 2024, the commercial segment primarily expended capital in relation to production assets and was the primary beneficiary of our capital spend associated with our enterprise resource planning system. In Fiscal 2025, we will look to identify opportunities for growth of service offerings, evaluate expansion, and maintain our production assets. The Company believes it has the liquidity and capital resources to fund capital outlays of the aforementioned.
Contractual Obligations
The following table summarizes future contractual obligations related to debt and leases as of December 31, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
2026 |
2027 |
2028 |
2029 |
Thereafter |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Notes payable(1) |
$ |
3,591,351 |
$ |
7,787,491 |
$ |
115,797 |
$ |
119,983 |
$ |
124,749 |
$ |
1,782,808 |
|||||
|
Interest payments on notes payable(2) |
$ |
414,161 |
$ |
295,673 |
$ |
78,047 |
$ |
73,862 |
$ |
69,095 |
$ |
82,153 |
|||||
|
Operating leases(3) |
$ |
2,225,848 |
$ |
1,425,780 |
$ |
686,575 |
$ |
417,959 |
$ |
298,552 |
$ |
96,240 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,231,360 |
|
$ |
9,508,944 |
|
$ |
880,419 |
|
$ |
611,804 |
|
$ |
492,396 |
|
$ |
1,961,201 |
| (1) | Notes payable includes the principal amount of borrowings outstanding under the Company's debt facilities. |
| (2) | Interest payments on notes payable are based on interest rates in effect as of December 31, 2024. As contractual interest rates and the amount of notes payable outstanding in variable in certain cases, actual cash payments may differ from the amounts provided. |
| (3) | Operating lease payments reflect those embedded in the measurement of our operating lease liabilities and thus, include lease payments for the remaining non-cancellable period of the lease together with periods covered by renewal (or termination) options which we are reasonably certain to exercise (or not exercise). These operating lease payments do not include certain tax, insurance, and maintenance costs, which are also required contractual obligations under some of our operating leases, but are generally not fixed and can fluctuate year to year. |
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our shareholders.
Envela Corporation published this content on March 26, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on March 26, 2025 at 20:50 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]