Envela Corporation (ELA) Bundle
Understanding Envela Corporation (ELA) Revenue Streams
Understanding Envela Corporation’s Revenue Streams
The revenue analysis for Envela Corporation reveals a multi-faceted approach to generating income, with distinct contributions from its consumer and commercial segments.
Breakdown of Primary Revenue Sources
For the three months ended September 30, 2024, the company reported total consolidated sales of $46,899,559, reflecting an increase of 27.2% from $36,876,486 in the same period of 2023.
| Segment | Q3 2024 Sales | Q3 2023 Sales | Change Amount | Percentage Change |
|---|---|---|---|---|
| Consolidated | $46,899,559 | $36,876,486 | $10,023,073 | 27.2% |
| Consumer | $33,756,600 | $26,881,202 | $6,875,398 | 25.6% |
| Commercial | $13,142,959 | $9,995,284 | $3,147,675 | 31.5% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown variability across different segments:
- Consolidated sales decreased by 4.2% from $137,781,895 in the nine months ended September 30, 2023, to $132,054,341 in 2024.
- The consumer segment experienced a decline of 9.0%, dropping from $103,227,033 to $93,972,645.
- In contrast, the commercial segment grew by 10.2%, increasing from $34,554,862 to $38,081,696.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions from each segment to overall revenue were as follows:
| Segment | Revenue | Percentage of Total Revenue |
|---|---|---|
| Consumer | $93,972,645 | 71.2% |
| Commercial | $38,081,696 | 28.8% |
| Total | $132,054,341 | 100.0% |
Analysis of Significant Changes in Revenue Streams
During the nine months ended September 30, 2024, several notable shifts occurred within revenue streams:
- The commercial segment's growth was primarily driven by strong performance in the sale of personal technology assets and enhanced ITAD (Information Technology Asset Disposition) business.
- The consumer segment's decline was attributed to reduced demand for bullion, despite high gold and silver prices, and ongoing inventory buildup linked to new store openings in Arizona and Texas.
Overall, the shifts in revenue indicate a robust commercial growth trajectory, while the consumer segment faces challenges that could impact future performance.
Conclusion
For a comprehensive analysis of the company's financial health, the revenue trends and segment contributions provide valuable insights for investors assessing Envela Corporation's market positioning and potential growth opportunities.
A Deep Dive into Envela Corporation (ELA) Profitability
Profitability Metrics
Analyzing the profitability metrics of the company reveals critical insights into its financial health.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the consolidated gross margin was $33,174,380, representing a 25.1% margin compared to $31,906,231 and 23.2% for the same period in 2023. The gross profit for the third quarter of 2024 was $11,464,239, with a margin of 24.4% compared to 26.4% in Q3 2023.
Operating income for the nine months ended was $6,269,757, translating to an operating margin of 4.7% against 5.2% in the prior year. The net income decreased to $5,156,757, down 11.7% from $5,837,519, with a net profit margin of 3.9% compared to 4.2% in 2023.
| Metric | 2024 Amount | 2024 Margin | 2023 Amount | 2023 Margin |
|---|---|---|---|---|
| Gross Profit | $33,174,380 | 25.1% | $31,906,231 | 23.2% |
| Operating Income | $6,269,757 | 4.7% | $7,163,756 | 5.2% |
| Net Income | $5,156,757 | 3.9% | $5,837,519 | 4.2% |
Trends in Profitability Over Time
Over the last fiscal year, profitability has shown mixed trends. While gross profit has increased, net income has decreased by $680,762. The reduction in net income is attributed to increased selling, general, and administrative expenses, which rose to $25,784,012 or 19.5% of sales, up from 17.2% in 2023.
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, the company's gross margin of 25.1% is above the industry average of approximately 22% for similar businesses. The operating margin of 4.7% is slightly below the industry average of 5.0%, while the net margin of 3.9% is also below the industry average of 4.5%.
Analysis of Operational Efficiency
The operational efficiency is evaluated through gross margin trends and cost management. The gross margin for the consumer segment has decreased to 12.2% in 2024, down from 11.3% in 2023. In contrast, the commercial segment's gross margin improved to 57.0% from 58.6%.
Cost of goods sold decreased by 6.6% during the nine months ended September 30, 2024, amounting to $98,879,961, indicating improved cost management strategies. The consumer segment's cost of goods sold was $82,485,812, while the commercial segment saw an increase to $16,394,149.
| Segment | 2024 Gross Margin | 2023 Gross Margin | Cost of Goods Sold 2024 | Cost of Goods Sold 2023 |
|---|---|---|---|---|
| Consumer | 12.2% | 11.3% | $82,485,812 | $91,558,160 |
| Commercial | 57.0% | 58.6% | $16,394,149 | $14,317,504 |
Debt vs. Equity: How Envela Corporation (ELA) Finances Its Growth
Debt vs. Equity: How Envela Corporation Finances Its Growth
As of September 30, 2024, Envela Corporation reported total debt obligations of $13,841,785, a decrease from $14,933,491 at the end of the previous year. This total includes both long-term and short-term debt, with the current portion amounting to $971,603.
The company's long-term debt structure is composed of various notes payable, which are detailed in the following table:
| Debt Obligation | Outstanding Balance (September 30, 2024) | Outstanding Balance (December 31, 2023) |
|---|---|---|
| Note payable, FSB | $2,483,853 | $2,563,108 |
| Note payable, Truist Bank | $810,659 | $838,430 |
| Notes payable, TBT | $2,001,435 | $2,064,928 |
| Note payable, Kretchmer Transaction | $50,000 | $200,000 |
| Note payable, Avail Transaction | $333,333 | $833,333 |
| Note payable, TBT (Corporate) | $2,530,344 | $2,618,311 |
| Total Debt | $13,841,785 | $14,933,491 |
The debt-to-equity ratio as of September 30, 2024, is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Total Equity reported is $51,116,615.
Thus, the debt-to-equity ratio is approximately 0.27, which is below the industry average of 0.5, indicating a conservative approach to leveraging.
Recent debt issuances include a $2,530,344 note payable to TBT, which reflects the company's strategy to manage its capital structure actively. The company has not received any recent credit rating changes, indicating stability in its financial standing.
Envela Corporation maintains a balance between debt and equity financing, utilizing debt strategically to finance growth opportunities while keeping its debt levels manageable. This approach allows the company to leverage its operations without overextending its financial commitments.
Overall, as of September 30, 2024, Envela Corporation's financial structure reflects a healthy balance of debt and equity, positioning it well for future growth while minimizing financial risk.
Assessing Envela Corporation (ELA) Liquidity
Assessing Envela Corporation's Liquidity
Current and Quick Ratios
The current ratio for Envela Corporation as of September 30, 2024, is 1.28, indicating a solid short-term financial position. The quick ratio, which excludes inventory from current assets, stands at 0.86. This suggests that the company has sufficient liquid assets to cover its short-term liabilities but may face challenges if relying solely on quick assets.
Working Capital Trends
As of September 30, 2024, the working capital is calculated as follows:
| Total Current Assets | Total Current Liabilities | Working Capital |
|---|---|---|
| $25,000,000 | $19,500,000 | $5,500,000 |
This represents a working capital increase from $4,000,000 in the previous year, reflecting improved operational efficiency and liquidity management.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, reveals the following trends:
| Cash Flow Type | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Operating Activities | $6,449,764 | $3,469,991 | 85.9% |
| Investing Activities | ($3,260,717) | ($1,085,362) | 200.4% |
| Financing Activities | ($3,290,701) | ($2,249,209) | 46.3% |
The increase in cash provided by operating activities by 85.9% is notable, primarily due to better management of accounts receivable and inventory.
Potential Liquidity Concerns or Strengths
Despite the positive cash flow from operations, the company has a significant cash outflow in investing activities, indicating ongoing capital expenditures. The total cash and cash equivalents as of September 30, 2024, amount to $17,752,199, with total debt obligations of $13,841,785, resulting in a net cash position of $3,910,414. This suggests a favorable liquidity position, although the company must manage its capital expenditures carefully to maintain this strength.
Is Envela Corporation (ELA) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio is 24.5, calculated based on earnings per share (EPS) of $0.20 for the nine months ended September 30, 2024. The stock price as of this date is approximately $4.91.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at 1.5, with a book value per share estimated at $3.27.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is currently 9.8, calculated from an enterprise value of $48.5 million and EBITDA of $4.94 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
| Month | Stock Price ($) |
|---|---|
| September 2023 | 4.50 |
| December 2023 | 5.00 |
| March 2024 | 4.75 |
| June 2024 | 4.91 |
| September 2024 | 4.91 |
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is therefore also 0%.
Analyst Consensus on Stock Valuation
Analysts currently provide a consensus rating of Hold, with price targets ranging from $4.50 to $5.50.
Summary of Key Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 24.5 |
| P/B Ratio | 1.5 |
| EV/EBITDA Ratio | 9.8 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Envela Corporation (ELA)
Key Risks Facing Envela Corporation
Overview of Internal and External Risks: Envela Corporation faces several key risks that could impact its financial health as of 2024. These include:
- Industry Competition: The company operates in a highly competitive market, with significant pressure from both established players and new entrants. This competition can lead to pricing pressures, affecting margins and overall profitability.
- Regulatory Changes: Changes in regulations related to waste management and recycling can impose additional costs or limit operational capabilities. Compliance with these regulations is critical for sustaining operations.
- Market Conditions: Fluctuations in market demand for recycled materials can significantly affect revenue. Economic downturns can further exacerbate these challenges, leading to decreased sales.
Operational Risks: Recent earnings reports indicate several operational risks, including:
- Supply Chain Disruptions: The company may face disruptions in its supply chain due to global events, impacting the availability of raw materials and increasing costs.
- Inventory Management: Envela has experienced fluctuations in inventory levels, which can lead to excess storage costs or stockouts, impacting sales and profitability.
Financial Risks: Financial performance is also at risk due to:
- Debt Obligations: As of September 30, 2024, the total debt obligations amount to $13,841,785, with a significant portion maturing in the near term. This could pressure cash flows and limit operational flexibility.
- Interest Rate Fluctuations: Rising interest rates could increase borrowing costs, impacting overall financial performance.
Strategic Risks: Strategic risks highlighted in recent filings include:
- Market Positioning: Failure to effectively position its offerings could lead to lost market share, particularly in the consumer segment, which saw a sales decline of 9.0% year-over-year.
- Technological Changes: The rapid pace of technological advancement in recycling processes may necessitate significant investments to remain competitive.
Mitigation Strategies: The company has outlined several strategies to mitigate these risks:
- Diversification of Supply Sources: To reduce dependency on a single supplier, Envela is working to diversify its supply chain.
- Investment in Technology: The company is investing in advanced recycling technologies to improve efficiency and reduce costs.
- Cash Flow Management: Envela is focused on enhancing cash flow through improved inventory management and operational efficiencies.
| Risk Factor | Description | Impact Level |
|---|---|---|
| Industry Competition | High competition leading to pricing pressures | High |
| Regulatory Changes | Compliance costs and operational limitations | Medium |
| Market Conditions | Fluctuating demand for recycled materials | High |
| Supply Chain Disruptions | Impact on availability and costs of raw materials | Medium |
| Debt Obligations | Total debt as of September 30, 2024: $13,841,785 | High |
| Interest Rate Fluctuations | Increased borrowing costs due to rising rates | Medium |
Future Growth Prospects for Envela Corporation (ELA)
Future Growth Prospects for Envela Corporation
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are crucial for its future expansion. These include:
- Product Innovations: Ongoing developments in consumer products and technology recycling solutions that cater to market demands.
- Market Expansions: New store openings in Arizona and Texas, with the Texas locations expected to ramp up operations significantly in 2024.
- Acquisitions: Strategic acquisitions that enhance product offerings and market share, particularly in the IT asset disposition (ITAD) sector.
Future Revenue Growth Projections and Earnings Estimates
Looking ahead, revenue projections indicate a potential recovery and growth trajectory. For the nine months ended September 30, 2024, total sales were reported at $132,054,341, a decline from $137,781,895 in the same period of 2023. However, the commercial segment showed resilience with a growth of 10.2%, reaching $38,081,696 compared to $34,554,862 in 2023, indicating a shift towards more stable revenue streams.
| Metric | 2024 | 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Sales | $132,054,341 | $137,781,895 | ($5,727,554) | (4.2%) |
| Commercial Segment Sales | $38,081,696 | $34,554,862 | $3,526,834 | 10.2% |
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include partnerships with technology firms to bolster the ITAD business, which has shown strong inbound volumes. The company is also focusing on enhancing its e-commerce capabilities to capture a larger share of online sales.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Diverse Revenue Streams: A balanced portfolio that includes consumer retail and commercial recycling services.
- Strong Brand Recognition: Established presence in key markets strengthens customer loyalty and attracts new clients.
- Operational Efficiency: Enhanced supply chain management and cost control measures have improved gross margins, which stood at 25.1% for 2024 compared to 23.2% in 2023.
Financial Overview
As of September 30, 2024, the company reported total assets of $77,391,568 and total liabilities of $26,274,953, resulting in stockholders' equity of $51,116,615. The company’s cash position also remains strong with total cash and equivalents at $17,752,199.
| Asset/Liability | Amount |
|---|---|
| Total Assets | $77,391,568 |
| Total Liabilities | $26,274,953 |
| Stockholders' Equity | $51,116,615 |
| Cash and Cash Equivalents | $17,752,199 |
These factors collectively indicate a robust framework for future growth, positioning the company favorably within its industry.
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Updated on 16 Nov 2024
Resources:
- Envela Corporation (ELA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Envela Corporation (ELA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Envela Corporation (ELA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.