ECHG posted soaring profits for 2022, attributing the rise to growing margins and a significant acquisition.| Andrii Yalanskyi/Shutterstock
A family of southwestern U.S. ITAD and e-scrap businesses dramatically increased profit margins last year, both in reuse and recycling.
Echo Consolidated Holdings Group (ECHG) reported an overall gross profit margin of 55.4% in 2022, up from 42.1% in 2021, according to the annual financial report from parent company Envela Corporation.
ECHG is made up of the following companies: e-scrap processor Echo Environmental, ITAD companies Avail Recovery Solutions and ITAD USA, device reseller Teladvance, and mobile phone trade-in firm CExchange. All are based in Carrollton, Texas, except for Avail Recovery Solutions, which is located in Chandler, Ariz.
ECHG’s overall revenues and gross profits surged in 2022, but much of that was driven by the acquisitions of Avail Recovery Solutions in October 2021 and CExchange in June 2021. ECHG recorded revenue of $51.6 million in 2022, up 17% from the year before. Its gross profit was $28.6 million, up 54% from the prior year.
Gross margins also increased. The resale gross profit margin was 55.7% in 2022, up from 44.8% the year before. And the e-scrap recycling margin was 54.7% in 2022, up from 34.5% in 2021.
The following are additional financial details, broken out by business line:
Used electronics resale business: ECHG’s used device resale business brought in $39.7 million in revenue in 2022, up 22% from the year before. For the increase in revenue, the company pointed to “the economy beginning to stabilize during Fiscal 2022 from the COVID-19 pandemic.” The reuse gross profit was $22.1 million, up 52%. For explanation, Envela pointed to the greater sales revenue and a higher profit margin in that business.
E-scrap commodities business: ECHG’s e-scrap recycling business brought in $11.8 million in revenue in 2022, up 1%. Envela cited “the increase in recycled-material revenue is primarily due to the increase of down-stream recycling activity beginning to come back from the COVID-19 pandemic.” The company’s e-scrap recycling gross profit was $6.5 million, up 60% from 2021. To explain the huge increase, Envela cited the jump in the margin percentage, from 34.5% in 2021 to 54.7% in 2022.
One stock market analyst noted that much of ECHG’s revenue growth came from its acquisition of Avail Recovery Technologies, which has annual sales of about $10 million.
ECHG is one of two operating segments of publicly traded company Envela, which is based in Irving, Texas. The other is Dallas Gold and Silver Exchange (DGSE), which has companies involved with buying and selling jewelry, gems, precious metals and other luxury goods. In terms of revenue, DGSE is a much larger business, recording revenues of $131.1 million in 2021. But it’s not nearly as profitable as the electronics processing side, which posted a gross profit of $16.2 million.
Overall, Envela brought in revenue of $182.7 million in 2022, up 30% and a record for the company.
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