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Segment Information
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment Information

During the first quarter of fiscal 2020, Envela revised the way it views and reports 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, in each case for either resale or recycling. Envela continues to report its revenue and operating expenses based on its DGSE and ECHG operating segments, and as in the first three quarters of fiscal year 2020, disaggregated 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 three locations throughout the Dallas/Fort Worth Metroplex, with two new locations expected to open during the fourth quarter of 2020, Charleston Gold and Diamond Exchange, with one location in Charleston, South Carolina and Bullion Express.

 

The ECHG segment includes Echo, ITAD and Teladvance. These three companies focus on reusing and recycling electronics. Echo and ITAD were acquired by the Company on May 20, 2019, and Teladvance was acquired on August 2, 2019, and therefore the results of operations may not be comparable for the three and nine months ending September 30, 2019 and September 30, 2020.

 

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 and ECHG’s financial results of operations for the three months ending September 30, 2020:

 

   For The Three Months Ended
   September 30, 2020
   DGSE  ECHG  Consolidated
          
Revenue:               
Sales  $28,137,174   $10,673,710   $38,810,884 
Cost of goods sold   24,704,214    6,943,273    31,647,487 
                
     Gross profit   3,432,960    3,730,437    7,163,397 
                
Expenses:               
Selling, general and administrative expenses   1,703,394    2,166,279    3,869,673 
Depreciation and amortization   79,190    100,592    179,782 
                
    1,782,584    2,266,871    4,049,455 
                
     Operating income (loss)   1,650,376    1,463,566    3,113,942 
                
Other (income) expense:               
     Other income, net   (1,208)   (25,746)   (26,954)
     Interest expense   53,931    101,868    155,799 
                
Income (loss) before income taxes   1,597,653    1,387,444    2,985,097 
                
Income tax expense   167    106    273 
                
               Net income (loss)  $1,597,486   $1,387,338   $2,984,824 

 

The following separates DGSE and ECHG’s financial results of operations for the nine months ended September 30, 2020:

 

   For The Nine Months Ended
   September 30, 2020
   DGSE  ECHG  Consolidated
          
Revenue:               
Sales  $62,849,787   $22,335,847   $85,185,634 
Cost of goods sold   55,437,880    12,811,819    68,249,699 
                
     Gross profit   7,411,907    9,524,028    16,935,935 
                
Expenses:               
Selling, general and administrative expenses   5,121,568    6,189,975    11,311,543 
Depreciation and amortization   235,471    303,746    539,217 
                
    5,357,039    6,493,721    11,850,760 
                
     Operating income   2,054,868    3,030,307    5,085,175 
                
Other (income) expense:               
     Other income, net   (37,654)   (82,856)   (120,510)
     Interest expense   142,824    302,587    445,411 
                
Income before income taxes   1,949,698    2,810,576    4,760,274 
                
Income tax expense   12,714    22,413    35,127 
                
               Net income  $1,936,984   $2,788,163   $4,725,147