Financial Performance - For the three months ended September 30, 2024, the consolidated Adjusted EBITDA was $2,435,251, compared to $2,287,902 for the same period in 2023, reflecting an increase of approximately 6.4%[157] - Adjusted EBITDA for the nine months ended September 30, 2024, was $7,390,368, compared to $8,191,994 for the same period in 2023, indicating a decrease of approximately 9.8%[158] - Consolidated sales increased by $10,023,073, or 27.2%, to $46,899,559 for the three months ended September 30, 2024, compared to $36,876,486 in the same period of Fiscal 2023[165] - Consolidated sales decreased by $5,727,554, or 4.2%, to $132,054,341 for the nine months ended September 30, 2024, compared to $137,781,895 in the same period of Fiscal 2023[209] - Net income decreased by $22,454, or 1.3%, to $1,685,039 for the three months ended September 30, 2024[202] - Net income for the nine months ended September 30, 2024, was $5,156,757, compared to $5,837,519 in the same period of Fiscal 2023[209] Segment Performance - The consumer segment focuses on expanding locations throughout the U.S. and evaluating complementary product and service offerings[152] - The commercial segment aims for growth through both organic expansion and acquisitions, enhancing management and operating systems to support this strategy[153] - Consumer segment sales rose by $6,875,398, or 25.6%, to $33,756,600, driven by increased revenue from wholesale channels and online business[167] - Commercial segment sales increased by $3,147,675, or 31.5%, to $13,142,959, attributed to strong performance in the ITAD business[168] - Consumer segment sales decreased by $9,254,388, or 9%, to $93,972,645, primarily due to softness in demand for bullion and inventory carry issues[211] - Commercial segment sales increased by $3,526,834, or 10.2%, to $38,081,696, driven by strong performance in personal technology assets and ITAD business growth[212] Cost and Expenses - Cost of goods sold increased by $8,293,116, or 30.6%, to $35,435,320, compared to $27,142,204 in the same period of Fiscal 2023[169] - Selling, general and administrative expenses rose by $1,582,608, or 21.3%, to $9,028,988, reflecting operational costs from new store openings[179] - Selling, general and administrative expenses increased by $2,069,775, or 8.7%, to $25,784,012, reflecting operational costs from new store openings[224] - Total operating expenses increased to $26,904,623, representing 20.3% of consolidated sales, up from 18.0% in the previous year[224] Margins - Gross margin improved by $1,729,957, or 17.8%, to $11,464,239, with a gross margin percentage of 24.4%[175] - Consumer segment gross margin increased by $327,052, or 9.1%, to $3,916,315, with a gross margin percentage of 11.6%[176] - Commercial segment gross margin increased by $1,402,905, or 22.8%, to $7,547,924, with a gross margin percentage of 57.4%[177] - Gross margin increased by $1,268,149, or 4.0%, to $33,174,380, with a gross margin percentage of 25.1% compared to 23.2% in the prior year[220] - Consumer segment gross margin decreased by $182,040, or 1.6%, to $11,486,833, impacted by decreased sales and cost of goods sold[221] - Commercial segment gross margin increased by $1,450,189, or 7.2%, to $21,687,547, benefiting from increased sales and cost management[222] Cash Flow and Liquidity - The total cash as of September 30, 2024, was $17,752,199, a slight decrease from $17,853,853 on December 31, 2023, while debt obligations decreased from $14,933,491 to $13,841,785, resulting in a net cash increase from $2,920,362 to $3,910,414[160] - Net cash provided by operating activities increased by $2,979,773, or 85.9%, to $6,449,764 for the nine months ended September 30, 2024[249] - Cash flows from operations increased by $2,979,773, or 85.9%, to $6,449,764 for the nine months ended September 30, 2024, compared to $3,469,991 in the same period of Fiscal 2023[250] - Cash flows used in investing activities rose by $2,175,355, or 200.4%, to $3,260,717 during the nine months ended September 30, 2024, compared to $1,085,362 in the same period of Fiscal 2023[251] - Cash flows used in financing activities increased by $1,041,492, or 46.3%, to $3,290,701 for the nine months ended September 30, 2024, compared to $2,249,209 in the same period of Fiscal 2023[252] - The company has no amounts drawn from its line of credit as of September 30, 2024, relying primarily on cash generated from operating activities for liquidity[253] Other Financial Metrics - Other income increased by $147,914, or 76.9%, to $340,351 for the three months ended September 30, 2024[187] - Other income increased by $247,428, or 44.4%, to $804,296 for the nine months ended September 30, 2024[233] - Basic and diluted earnings per share remained at $0.06 for the three months ended September 30, 2024[205] - Basic and diluted earnings per share decreased by $0.02, or 9.1%, to $0.20 for the nine months ended September 30, 2024[248] - Interest expense decreased by $11,027, or 9.4%, to $106,139 for the three months ended September 30, 2024[194] - Interest expense decreased by $12,784, or 3.7%, to $336,134 for the nine months ended September 30, 2024[239] Economic Environment - The company operates in a challenging economic environment characterized by high interest rates and inflation, which may impact consumer spending and demand for resale technology assets[144] Capital Expenditures and Investments - Capital expenditures in Fiscal 2024 are focused on growth, maintenance, and enhancements to the enterprise resource planning system, funded mainly through operating cash flow[254] - The company does not have any off-balance sheet arrangements that materially affect its financial condition or operations[256] - As a smaller reporting company, the company is not required to disclose certain market risk information[257]
Envela (ELA) - 2024 Q3 - Quarterly Report