A family of Dallas-area electronics processors enjoyed surging revenues and profits from the device resale business last year while the commodities recycling business grew at a slower rate.
The annual financial filing from Envela Corporation provides a window into how COVID-19 affected the bottom line for electronics recycling and resale businesses.
“We finished the year with strong financial results and continued service improvement, notwithstanding the challenges of a pandemic,” John Loftus, Envela’s chairman and CEO, stated in a press release.
A publicly traded company, Envela owns the Dallas Gold and Silver Exchange (DGSE) subsidiary, which buys and sells jewelry and other luxury goods, and the Echo Consolidated Holdings Group (ECHG) subsidiary, an umbrella company for used electronics processors. Under ECHG are three Carrollton, Texas-based companies: e-scrap recycling firm Echo Environmental Holdings, ITAD service provider ITAD USA, and device remarketing company Teladvance.
Resale versus recycling markets
According to the annual report released March 23, the ECHG subsidiary brought in $28.3 million in revenue in 2020, up from $14.5 million the year before. In terms of gross profit, ECHG brought in $12.7 million in 2020, up from $7.3 million in 2019.(The revenue and profit numbers above were impacted by acquisitions that occured in 2019: The assets of Echo Environmental and ITAD USA were purchased on May 20, 2019, and Teladvance was acquired on Aug. 2, 2019. As a result, the 2019 numbers don’t represent a full year with all of three companies under the current ownership.)
The financial report also breaks out numbers from the resale and recycling businesses, providing a picture of one company’s profitability in those markets. During the COVID-19 pandemic, processors have reported strong demand and rising prices for used electronics that employees and students can use to work and study from home.
ECHG’s resale revenue totaled $19.4 million in 2020, up from $8.7 million in 2019. The 2020 number was 69% of ECHG’s revenue, up from 60% the year before.
ECHG’s recycled materials sales revenue totaled $8.9 million in 2020, up from $5.8 million the year before. In 2020, commodity sales made up 31% of ECHG’s revenue, down from 40% the year before.
By the numbers
The following is a look at key full-year and fourth-quarter 2020 numbers from Echo Consolidated Holdings Group, a Dallas-area family of electronics recycling and reuse businesses.
- 2020 total revenue: $28.3 million (up 95% from 2019)
- 2020 total gross profit: $12.7 million (up 74%)
- 2020 resale revenue: $19.4 million (up 123%)
- 2020 recycling revenue: $8.9 million (up 53%)
- 4Q total revenue: $5.9 million (flat year over year)
- 4Q total gross profit: $3.1 million (flat)
- 4Q resale revenue: $3.8 million (up 6%)
- 4Q recycling revenue: $2.1 million (down 9%)
Resale gross profit was $9.5 million, up from $4.7 million, or up 102%. Recycling gross profit was $3.2 million, up from $2.6 million in 2019, or up 23%.
Last week, Envela also released fourth-quarter 2020 numbers. Because the 2019 acquisitions occurred before the fourth quarter of that year, comparing the fourth quarters of 2019 and 2020 provides an apples-to-apples comparison.
ECHG’s revenue in the fourth quarter of 2020 was $5.9 million, which was flat year over year. Resale revenue during the quarter was $3.8 million, up 6% year over year. Recycling revenue was $2.1 million, down 9% year over year.
ECHG’s gross profit in the fourth quarter of 2020 was $3.1 million, flat year over year. Resale profit was $2.5 million, up 4%, and recycling gross profit was $600,000, down 14%.
Full company picture
Envela’s overall company revenue in 2020 was $113.9 million, up from $82 million from 2019, or up 39%. The ECHG subsidiary accounted for nearly 25% of total company revenue in 2020, up from less than 18% the year before.
Envela’s consolidated gross profit was $23.1 million in 2020, up from $16.3 million in 2019, or up 42%. Its net income was $6.4 million, up from $2.8 million in 2019.
Again, the full-year numbers above are affected by acquisitions that occurred midway through 2019. The annual report includes a pro forma estimate of what the revenue and net income may have looked like in 2019 had the current companies been owned by Envela for the entire year. The pro forma estimates revenues of $87.9 million and net income of $1.9 million for 2019.
In February 2020, ECHG announced a plan to acquire CExchange, which provides in-store and online phone trade-in services for major electronics retailers. ECHG agreed to lend $1.5 million to CExchange with warrant and call-option agreements to acquire all of CExchange’s equity interests. In November, the loan was increased to $2.1 million. The annual report indicates ECHG hasn’t yet exercised its option to convert that loan into an acquisition of CExchange.
The annual financial report also noted that Envela received a $1.67 million Paycheck Protection Program (PPP) loan through the Small Business Administration in 2020. It was one of many electronics recycling and reuse processors to receive PPP assistance during the pandemic-related shutdowns.
