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Segment Information
 3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
Segment Information

During the first quarter of fiscal 2020, Envela revised the way it views its financial information to align more closely with the Company’s strategy to engage in diverse recommerce activities through two principle business units—DGSE and ECHG. DGSE buys hard assets, and ECHG buys consumer electronics and IT equipment, all for either resale or recycling. Envela will continue to report its revenue and operating expenses based on its DGSE and ECHG operating segments, and beginning in fiscal year 2020, Envela will disaggregate its revenue, within the operating segments, based on its resale and recycle presentation basis. The Company’s historical disaggregation of revenue has been recast to conform to our current presentation.

 

The DGSE segment includes Dallas Gold and Silver Exchange, having four locations throughout the Dallas/Ft Worth Metroplex, and Charleston Gold and Diamond Exchange, with one location in Charleston, South Carolina. 

 

The ECHG segment includes Echo Environmental Holdings, ITAD USA Holdings and Teladvance. These three companies focus on reusing and recycling electronics. Echo and ITAD were added to the Company on May 20, 2019, and Teladvance was added on August 2, 2019, therefore there is not a comparison for the three months ending March 31, 2019.

 

We allocate a portion of certain corporate costs and expenses, including information technology, to our business segments that is included in Selling, General and Administrative (“SG&A”) expenses. Our management team evaluates each segment’s operating performance and allocates resources based on each segment’s profits. Allocation amounts are generally agreed upon by management, and may differ from arms-length allocations.  

 

The following separates DGSE’s and ECHG’s financial results of operations for the three months ending March 31, 2020:

 

   For The Three Months Ended
   March 31, 2020
   DGSE  ECHG  Consolidated
          
Revenue:               
Sales  $20,363,584   $5,465,559   $25,829,143 
Cost of goods sold   17,999,402    2,528,461    20,527,863 
                
     Gross profit   2,364,182    2,937,098    5,301,280 
                
Expenses:               
Selling, general and administrative expenses   1,873,006    1,952,194    3,825,200 
Depreciation and amortization   77,041    102,688    179,729 
                
    1,950,047    2,054,882    4,004,929 
                
     Operating income   414,135    882,216    1,296,351 
                
Other (income) expense:               
     Other (income) expense, net   (27,368)   (14,322)   (41,690)
     Interest expense   44,793    100,522    145,315 
                
Income before income taxes   396,710    796,016    1,192,726 
                
Income tax expense   8,285    10,292    18,577 
                
               Net income  $388,425   $785,724   $1,174,149