Financial Performance - For the three months ended March 31, 2024, consolidated sales were $39,857,780, a decrease from $49,809,532 in the same period of 2023, representing a decline of approximately 20%[137] - Adjusted EBITDA for the three months ended March 31, 2024, was $2,683,708, compared to $3,504,599 for the same period in 2023, indicating a decrease of approximately 23.5%[133] - Operating income for the consolidated entity was $2,340,143, which is a decrease from $3,150,248 in the prior year, reflecting a decline of approximately 25.7%[137] - Consolidated sales decreased by $9,951,752, or 20.0%, to $39,857,780 for the three months ended March 31, 2024, compared to $49,809,532 in the same period in 2023[140] - Net income decreased by $618,778, or 24.5%, to $1,907,539 for the three months ended March 31, 2024, compared to $2,526,317 in the same period in 2023[176] - Earnings per share decreased by $0.02, or 22.2%, to $0.07 for the three months ended March 31, 2024, compared to $0.09 in the same period in 2023[179] Segment Performance - The consumer segment's sales were $28,226,017, while the commercial segment generated $11,631,763 in sales for the quarter ended March 31, 2024[137] - Consumer segment sales fell by $8,478,380, or 23.1%, to $28,226,017, primarily due to inventory allocation for new Arizona stores[141] - Commercial segment sales decreased by $1,473,372, or 11.2%, to $11,631,763, attributed to lower demand for reuse hard drives[142] - Net income in the consumer segment decreased by $1,048,408, or 92.2%, to $88,476 for the three months ended March 31, 2024, compared to $1,136,884 in the same period in 2023[177] - Net income in the commercial segment increased by $429,630, or 30.9%, to $1,819,063 for the three months ended March 31, 2024, compared to $1,389,433 in the same period in 2023[177] Expenses and Costs - The gross margin for the consumer segment was $3,549,189, accounting for 25.9% of sales, while the commercial segment's gross margin was $6,771,495, representing 58.1% of its sales[137] - Selling, general, and administrative expenses increased to $7,636,976, representing 19.2% of consolidated sales, compared to 15.9% in the same quarter of 2023[137] - Cost of goods sold decreased by $8,862,534, or 23.1%, to $29,537,096, reflecting a reduction in sales volume[144] - Gross margin declined by $1,089,218, or 9.5%, to $10,320,684, with a gross margin percentage of 25.9%[149] - Selling, general and administrative expenses decreased by $268,327, or 3.4%, to $7,636,976, with a percentage of consolidated sales at 19.2%[153] Cash Flow and Financial Position - The company reported a net cash position of $5,162,145 as of March 31, 2024, an increase from $2,920,362 at the end of 2023[136] - Cash flows provided by operating activities increased by $867,696, or 29.7%, to $3,791,721 for the three months ended March 31, 2024, compared to $2,924,025 in the same period in 2023[181] - Cash used in investing activities totaled $(644,792) for the three months ended March 31, 2024, compared to $569,522 in the same period in 2023, a change of $(1,214,314)[182] - Cash used in financing activities increased by $(906,108) to $(1,216,915) for the three months ended March 31, 2024, compared to $(310,807) in the same period in 2023[183] - The company does not anticipate the need to fund operations via the line of credit and has no amounts drawn as of March 31, 2024[184] Strategic Plans - The company plans to expand its consumer segment by opening new locations throughout the U.S. and evaluating complementary product offerings[127] - The commercial segment aims for growth through both organic expansion and acquisitions, supported by enhancements in management and operating systems[128] Economic Conditions - The company continues to monitor economic conditions, including high interest rates and inflation, which may impact consumer spending and demand for its services[120] Other Income and Expenses - Other income increased by $27,749, or 13.2%, to $238,528, driven by improved cash flow management in the commercial segment[163] - Interest expense rose by $3,790, or 3.2%, to $120,854, reflecting increased borrowing costs[170] - The consumer segment's selling, general and administrative expenses increased by $855,465, or 35.7%, due to costs associated with opening new stores[155] - The commercial segment's other income increased by $43,278, or 23.1%, to $230,523, attributed to improved cash flow from accounts receivable management[166] - Interest expense in the consumer segment increased by $4,783, or 8.0%, to $64,401 for the three months ended March 31, 2024, compared to $59,618 in the same period in 2023[171] - Income tax expense decreased by $167,368, or 23.3%, to $550,278 for the three months ended March 31, 2024, compared to $717,646 in the same period in 2023[174]
Envela (ELA) - 2024 Q1 - Quarterly Report