Over the first several months of this year, the device-resale business was lucrative for a Dallas-area group of electronics processors. End-of-life recycling is a different story.
Publicly traded company Envela recently posted its financial results for the first quarter of 2021. The filing shows that year-over-year surges in the resale revenues and profits boosted the company’s financial performance, helping it overcome declines in the recycling business.
Envela owns the Echo Consolidated Holdings Group (ECHG), an umbrella company for e-scrap recycling firm Echo Environmental, ITAD service provider ITAD USA, and device remarketing company Teladvance. All three companies are based in Carrollton, Texas. (Envela also owns Dallas Gold and Silver Exchange, or DGSE, a group of companies that buy and sell jewelry and other luxury goods.)
ECHG reported $6.6 million in sales revenue during the first quarter, up 20% year over year. The company’s net income was $1.1 million, up 34%.
The resale versus recycling business
The quarterly filing breaks out ECHG’s electronics reuse versus recycling revenues and profits. For device resale, it reported $4.7 million in revenue (up 34% year over year) and $2.6 million in gross profit (up 84%) during the first quarter. That gave the reuse business a gross profit margin of 55%, up from 40% during the first quarter of 2020.For recycling, the company reported $1.8 million in revenue (down 5%) and $884,000 in gross profit (down 42%). Those numbers gave the recycling business a gross profit margin of 48% during the first quarter, down from 78% in the year-ago period.
The resale revenue boost and recycling slump was a continuation of trends ECHG experienced during the fourth quarter of 2020.
In the latest quarterly report, company executives primarily attributed the resale revenue increase to “the increased line of products for the ECHG companies.” They attributed the recycling revenue decrease primarily to “to the continuing lag of electronic waste being released as the country is working its way through the pandemic.”
By the numbers
The following is a look at key first-quarter 2021 numbers from Echo Consolidated Holdings Group, a Dallas-area family of electronics recycling and reuse businesses, compared with the first quarter of 2020.
- Total sales revenue: $6.6 million (up 20%)
- Net income: $1.1 million (up 34%)
- Resale revenue: $4.7 million (up 34%)
- Resale gross profit: $2.6 million (up 84%)
- Recycling revenue: $1.8 million (down 5%)
- Recycling gross profit: $884,000 (down 42%)
But Envela sees market conditions for recycling improving.
“As the country is heading back to offices, schools and government buildings from the loosening of restrictions of the COVID-19 pandemic, we are seeing an increase in recycled electronic materials being released for recycling or disposal,” according to the report.
Overall company performance
Envela reported consolidated sales revenue of $25.5 million during the first quarter, down 1%, and net income of $2 million, up 71%.
In a press release, John Loftus, chairman and CEO of Envela, noted that the company’s profits came despite last year’s power outages in Texas triggered by cold temperatures.
“Envela delivered another period of solid profits in the first quarter of 2021 despite a historic Texas winter freeze and associated power outages that temporarily impacted our operations,” he stated. “Our ability to address these issues expeditiously reflects the Company’s operational acumen and business resiliency. Envela’s business continues to benefit from several growth drivers, including accelerated sustainability trends and an increasing supply of used electronics. Overall, we remain confident in our ability to drive profitable growth through 2021 and beyond.”
