Home + About Us + Press Releases + Press Releases Details
 


Back to List

ePlus Reports Third Quarter and First Nine Months Financial Results



 


--Double-Digit Growth in Sales, Gross Profit and Operating Income--



HERNDON, Va., Feb. 3, 2022 /PRNewswire/ --

 

Third Quarter Fiscal Year 2022

  • Net sales increased 15.7% to $494.8 million; technology segment net sales increased 14.8% to $477.0 million; service revenues increased 20.0% to $62.5 million.
  • Adjusted gross billings increased 16.5% to $685.0 million.
  • Gross profit increased 19.3% to $117.1 million.
  • Gross margin was 23.7%, an increase of 70 basis points.
  • Net earnings increased 22.1% to $26.4 million.
  • Adjusted EBITDA increased 21.5% to $41.8 million.
  • Diluted earnings per share increased 21.0% to $0.98. Non-GAAP diluted earnings per share increased 23.6% to $1.10.

First Nine Months Fiscal Year 2022

  • Net sales increased 12.6% to $1,369.5 million; technology segment net sales increased 11.7% to $1,313.6 million; service revenues increased 19.9% to $179.0 million.
  • Adjusted gross billings increased 14.2% to $1,982.2 million.
  • Gross profit increased 16.9% to $345.6 million.
  • Gross margin was 25.2%, an increase of 90 basis points.
  • Net earnings increased 38.3% to $81.4 million.
  • Adjusted EBITDA increased 32.0% to $130.3 million.
  • Diluted earnings per share increased 37.7% to $3.03. Non-GAAP diluted earnings per share increased 36.3% to $3.38.

ePlus inc. (NASDAQ:  PLUS), a leading provider of technology and financing solutions, today announced financial results for the three and nine months ended December 31, 2021.

Management Comment

"ePlus delivered strong third quarter financial results, driven by consistent execution from our team and continued strong demand for our services and solutions, which enable our customers to accelerate their digital transformation strategies," said Mark Marron, president and chief executive officer of ePlus. "Net sales increased 15.7% to $494.8 million, reflecting broad-based demand and market share gains in our technology segment as well as solid growth in our financing business. The strength and scalability of our business model is evident in our financial performance, which included a 50-basis point year-over-year improvement in operating margins and a 23% gain in operating income, significantly outpacing revenue growth."

Mr. Marron continued, "Our strong financial performance in the third quarter and year to date reflects the successful execution of our growth strategy, as we leverage our deep expertise and widespread capabilities to deliver cost-effective and agile solutions across the technology stack. In addition, we continue to benefit from our focus on higher-margin and faster-growing areas, including cloud, networking and security, where we provide a suite of comprehensive products and services that address our customers' most complex IT challenges."

Prior Period Reclassifications Due to Stock Split

Reclassifications of prior period amounts related to number of shares and per share amounts have been made to conform to the current period presentation due to the December 13, 2021, two-for-one, stock split.    

Third Quarter Fiscal 2022 Results

For the third quarter ended December 31, 2021 as compared to the third quarter ended December 31, 2020:

Consolidated net sales increased 15.7% to $494.8 million, from $427.6 million.

Technology segment net sales increased 14.8% to $477.0 million, from $415.6 million due to higher sales of product and services. Service revenues increased 20.0% to $62.5 million, from $52.1 million due to increases in professional services and managed services.  Adjusted gross billings increased 16.5% to $685.0 million from $587.8 million. 

Financing segment net sales increased 48.4% to $17.9 million, from $12.0 million due to higher post-contract earnings from several early buyouts of assets under lease. 

Consolidated gross profit increased 19.3% to $117.1 million, from $98.2 million. Consolidated gross margin was 23.7%, up from 23.0% last year, due to higher product and services margins in our technology segment and a larger proportion of sales recorded on a net basis.

Operating expenses were $81.0 million, up 17.6% from $68.9 million last year, primarily due to increases in variable compensation stemming from higher gross profit, as well as higher salaries and benefits.  Our headcount at the end of the quarter was 1,554, down 32 from a year ago in the third quarter which included 102 employees added on Dec. 31, 2020 from the SMP acquisition.

Consolidated operating income increased 23.3% to $36.1 million.

Our effective tax rate for the current quarter was 26.4%, lower than the prior year quarter of 28.1%, due to an adjustment to the prior year tax return related to foreign taxes.

Net earnings increased 22.1% to $26.4 million.

Adjusted EBITDA increased 21.5% to $41.8 million, from $34.4 million.

Diluted earnings per share was $0.98, compared with $0.81 in the prior year quarter. Non-GAAP diluted earnings per share was $1.10, compared with $0.89 last year.

First Nine Months Fiscal Year 2022 Results

For the nine months ended December 31, 2021 as compared to the nine months ended December 31, 2020:

Consolidated net sales increased 12.6% to $1,369.5 million, from $1,215.7 million.

Technology segment net sales increased 11.7% to $1,313.6 million, from $1,176.2 million due to higher sales of product and services. Service revenues increased 19.9% to $179.0 million, from $149.3 million due to increases in professional services and managed services.  Adjusted gross billings was $1,982.2 million, an increase of 14.2% from $1,735.3 million. 

Financing segment net sales increased 41.2% to $55.9 million, from $39.6 million, due to higher post-contract earnings and higher transactional gains.

Consolidated gross profit increased 16.9% to $345.6 million, from $295.7 million. Consolidated gross margin was 25.2%, up from 24.3% last year, due to higher services margins and a higher proportion of sales recorded on a net basis in our technology segment.

Operating expenses were $232.8 million, up 9.3% from $212.9 million last year, primarily due to increases in variable compensation stemming from higher gross profit, higher healthcare costs, software license and maintenance expenses, and higher depreciation and amortization due to the acquisition of SMP.

Consolidated operating income increased 36.4% to $112.8 million.

Our effective tax rate for the current year period was 27.7%, lower than last year of 29.8% due to an adjustment in the prior year related to the federal benefit from state taxes.

Net earnings increased 38.3% to $81.4 million.

Adjusted EBITDA increased 32.0% to $130.3 million, from $98.7 million.

Diluted earnings per share was $3.03, compared with $2.20 in the prior year. Non-GAAP diluted earnings per share was $3.38, compared with $2.48 last year.

Balance Sheet Highlights

As of December 31, 2021, ePlus had cash and cash equivalents of $105.6 million, compared with $129.6 million as of March 31, 2021 due to additional working capital needs in our technology segment, and the repurchase of stock.  Inventory, which represents equipment ordered by customers but not yet delivered, increased 111.2% from March 31, 2021, and 9.8% sequentially, due to ongoing projects with customers coupled with some impact from continued supply chain constraints.  Total stockholders' equity was $639.3 million, compared with $562.4 million as of March 31, 2021.  Total shares outstanding were 27.0 million on December 31, 2021 and March 31, 2021.

Summary and Outlook

"Supported by our talented and dedicated global team, our extensive network of vendor relationships and our differentiated business model serving the entire IT lifecycle, ePlus is positioned for continued growth. In today's dynamic market, ePlus remains an essential partner for our customers as they rapidly adapt their IT infrastructure to build a more connected, secure and collaborative environment that aligns with their long-term business objectives.

Mr. Marron concluded, "We continue to invest in our people and in our capabilities to ensure that we remain at the forefront, providing expert advice, value-added services and innovative solutions for our customers. Our strong balance sheet offers the flexibility to pursue strategic acquisitions that will strengthen our market position, expand our capabilities and enhance our growth prospects."

Recent Corporate Developments/Recognitions

In the month of December:

  • Announced the unveiling of a networking strategy called READI to help organizations implement foundational software-defined technologies and solutions that transform and modernize their enterprise network infrastructures.
  • Honored with the Social Impact Partner of the Year Award for the Americas at the Cisco Partner Summit 2021

In the month of November:

  • Announced the successful achievement of Cloud Management and Automation VMware Master Services Competency.
  • Rang the NASDAQ closing bell in celebration of its 25th listing anniversary.

Conference Call Information

ePlus will hold a conference call and audio webcast at 4:30 p.m. ET on February 3, 2022:

Audio Webcast (Live & Replay):  https://events.q4inc.com/attendee/793714691  

Live Call: (888) 330-2469 (toll-free/domestic)
(240) 789-2740 (international)
Replay: (800) 770- 2030 (toll-free/domestic)
(647) 362-9199 (international)
Passcode: 5403833 (live call and replay)

The replay of this webcast will be available approximately two hours after the call concludes through February 10, 2022.

About ePlus inc.

ePlus is a leading consultative technology solutions provider that helps customers imagine, implement, and achieve more from their technology. With the highest certifications from top technology partners and lifecycle services expertise across key areas including security, cloud, data center, collaboration, networking, and emerging technologies, ePlus transforms IT from a cost center to a business enabler.  Founded in 1990, ePlus has more than 1,500 associates serving a diverse set of customers in the U.S., Europe, and Asia-Pac.  The Company is headquartered at 13595 Dulles Technology Drive, Herndon, VA, 20171.  For more information, visit www.eplus.com, call 888-482-1122, or email info@eplus.com.  Connect with ePlus on Facebook, LinkedIn, Twitter and Instagram.

ePlus, Where Technology Means More®.

ePlus® and ePlus products referenced herein are either registered trademarks or trademarks of ePlus inc. in the United States and/or other countries.  The names of other companies and products mentioned herein may be the trademarks of their respective owners.

Forward-looking statements

Statements in this press release that are not historical facts may be deemed to be "forward-looking statements."  Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, the duration and impact of the ongoing COVID-19 pandemic, which could materially adversely affect our financial condition and results of operations and has resulted worldwide in governmental authorities imposing numerous unprecedented measures and court opinions regarding the legality thereof to contain the virus that has impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners; national and international political instability fostering uncertainty and volatility in the global economy including an economic downturn, significant and rapid inflation, an increase in tariffs or adverse changes to trade agreements, exposure to fluctuation in foreign currency rates, interest rates and pressure on prices; supply constraints of certain IT products, including constraints caused by shortages in semiconductors and other components; inflation of both wages and product costs; reduction of vendor incentive programs; and restrictions on our access to capital necessary to fund our operations; our ability to successfully perform due diligence and integrate acquired businesses; disruptions or a security breach in our or our vendors' or suppliers' IT systems and data and audio communication networks, supply chains or other systems; the possibility of goodwill impairment charges in the future; significant adverse changes in, reductions in, or losses of relationships with one or more of our largest volume customers or vendors; a possible decrease in the capital spending budgets of our customers or a decrease in purchases from us; our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, or obtain debt for our financing transactions; uncertainty regarding the phase out of LIBOR may negatively affect our operating results; the demand for and acceptance of, our products and services; our ability to adapt our services to meet changes in market developments; our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration and other key strategies; the creditworthiness of our customers and our ability to reserve adequately for credit losses; our ability to secure our own and our customers' electronic and other confidential information and remain secure during a cyber-security or ransomware attack; future growth rates in our core businesses; our dependence on continued innovation in hardware, software and services offerings by our vendors, availability of these products from our vendors and our ability to partner with them; our reliance on third parties to perform some of our service obligations to our customers; the possibility of defects in our products or catalog content data; our ability to adapt to changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service, software as a service and platform as a service; our ability to realize our investment in leased equipment; maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel and vendor certifications; and other risks or uncertainties detailed in our reports filed with the Securities and Exchange Commission.  All information set forth in this press release is current as of the date of this release and ePlus undertakes no duty or obligation to update this information.

 

ePlus inc. AND SUBSIDIARIES





UNAUDITED CONSOLIDATED BALANCE SHEETS





(in thousands, except per share amounts)












December 31, 2021


March 31, 2021

ASSETS










Current assets:





Cash and cash equivalents


$105,566


$129,562

Accounts receivable—trade, net


520,629


391,567

Accounts receivable—other, net


40.818


41,053

Inventories


147,739


69,963

Financing receivables—net, current


98,183


106,272

Deferred costs


34,684


28,201

Other current assets


12,932


10,976

Total current assets


960,551


777,594






Financing receivables and operating leases—net


90,026


90,165

Deferred tax asset—net


1,972


1,468

Property, equipment and other assets


46,215


42,289

Goodwill


126,604


126,645

Other intangible assets—net


29,778


38,614

TOTAL ASSETS


$1,255,146


$1,076,775






LIABILITIES AND STOCKHOLDERS' EQUITY










LIABILITIES










Current liabilities:





Accounts payable


$162,670


$165,162

Accounts payable—floor plan


157,667


98,653

Salaries and commissions payable


39,184


36,839

Deferred revenue


93,319


72,802

Recourse notes payable—current


51,104


5,450

Non-recourse notes payable—current


37,245


50,397

Other current liabilities


26,224


30,061

Total current liabilities


567,413


459,364






Recourse notes payable—long term


7,689


12,658

Non-recourse notes payable—long term


6,340


5,664

Other liabilities


34,408


36,679

TOTAL LIABILITIES 


615,850


514,365






COMMITMENTS AND CONTINGENCIES










STOCKHOLDERS' EQUITY





Preferred stock, $.01 per share par value; 2,000 shares authorized; none outstanding


-


-

Common stock, $.01 per share par value; 50,000 shares authorized; 26,966 outstanding at December 31, 2021 and 27,006 outstanding at March 31, 2021


270


145

Additional paid-in capital


157,721


152,366

Treasury stock, at cost, 50 shares at December 31, 2021 and 1,987 shares at March 31, 2021


(2,592)


(75,372)

Retained earnings


483,601


484,616

Accumulated other comprehensive income—foreign currency translation adjustment


296


655

Total Stockholders' Equity


639,296


562,410

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$1,255,146


$1,076,775

 


ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)



Three Months Ended December 31,


Nine Months Ended December 31,


2021


2020


2021


2020









Net sales








     Product

$432,307


$375,512


$1,190,524


$1,066,408

     Services

62,527


52,092


178,976


149,308

          Total

494,834


427,604


1,369,500


1,215,716









Cost of sales








     Product

339,810


297,514


914,666


827,111

     Services

37,907


31,939


109,203


92,935

          Total

377,717


329,453


1,023,869


920,046









Gross profit

117,117


98,151


345,631


295,670









Selling, general, and administrative

76,874


65,390


220,153


201,746

Depreciation and amortization

3,597


3,143


11,376


10,000

Interest and financing costs

561


355


1,262


1,179

Operating expenses

81,032


68,888


232,791


212,925









Operating income

36,085


29,263


112,840


82,745









Other income (expense)

(175)


813


(377)


1,095









Earnings before taxes

35,910


30,076


112,463


83,840









Provision for income taxes

9,486


8,438


31,108


24,996









Net earnings

$26,424


$21,638


$81,355


$58,844









Net earnings per common share—basic

$0.99


$0.81


$3.05


$2.21

Net earnings per common share—diluted

$0.98


$0.81


$3.03


$2.20









Weighted average common shares outstanding—basic

26,668


26,664


26,666


26,684

Weighted average common shares outstanding—diluted

26,930


26,756


26,887


26,804

 

 

Technology Segment



Three Months Ended December 31,




Nine Months Ended December 31,



2021


2020


Change


2021


2020


Change


(in thousands)



(in thousands)














Net sales











    Product

$414,448


$363,478


14.0%


$1,134,658


$1,026,845


10.5%

    Services

62,527


52,092


20.0%


178,976


149,308


19.9%

          Total

476,975


415,570


14.8%


1,313,634


1,176,153


11.7%













Cost of sales












     Product

334,585


295,310


13.3%


899,437


820,859


9.6%

     Services

37,907


31,939


18.7%


109,203


92,935


17.5%

          Total

372,492


327,249


13.8%


1,008,640


913,794


10.4%













Gross profit

104,483


88,321


18.3%


304,994


262,359


16.3%













Selling, general, and administrative

73,413


62,377


17.7%


210,369


190,519


10.4%

Depreciation and amortization

3,569


3,115


14.6%


11,292


9,916


13.9%

Interest and financing costs

335


-


nm


693


266


160.5%

Operating expenses

77,317


65,492


18.1%


222,354


200,701


10.8%













Operating income

$27,166


$22,829


19.0%


$82,640


$61,658


34.0%

Adjusted gross billings

$685,031


$587,825


16.5%


$1,982,162


$1,735,283


14.2%

Adjusted EBITDA

$32,794


$27,876


17.6%


$99,811


$77,312


29.1%

 

 

Technology Segment Net Sales by Customer End Market



Twelve Months Ended December 31,




2021


2020


Change







Telecom, Media, & Entertainment

29%


23%


6%

Healthcare

16%


14%


2%

SLED

15%


16%


(1%)

Technology

15%


18%


(3%)

Financial Services 

9%


13%


(4%)

All others

16%


16%


-

Total

100%


100%



 

 

Financing Segment


Three Months Ended December 31,




Nine Months Ended December 31,





2021


2020


Change


2021


2020


Change



(in thousands)




(in thousands)

















Net sales

$17,859


$12,034


48.4%


$55,866


$39,563


41.2%


Cost of sales

5,225


2,204


137.1%


15,229


6,252


143.6%


Gross profit

12,634


9,830


28.5%


40,637


33,311


22.0%















Selling, general, and administrative

3,461


3,013


14.9%


9,784


11,227


(12.9%)


Depreciation and amortization

28


28


0.0%


84


84


0.0%


Interest and financing costs

226


355


(36.3%)


569


913


(37.7%)


Operating expenses

3,715


3,396


9.4%


10,437


12,224


(14.6%)















Operating income

$8,919


$6,434


38.6%


$30,200


$21,087


43.2%


Adjusted EBITDA

$9,003


$6,519


38.1%


$30,453


$21,358


42.6%


ePlus inc. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION

We included reconciliations below for the following non-GAAP information: (i) Adjusted Gross Billings, (ii) Adjusted EBITDA, (iii) Segment Adjusted EBITDA, (iv) non-GAAP Net Earnings and (v) non-GAAP Net Earnings per Common Share - Diluted.

We define adjusted gross billings as our technology segment net sales calculated in accordance with GAAP, adjusted to exclude the costs incurred related to sales of third-party maintenance, software assurance and subscription/SaaS licenses, and services.   

We define adjusted EBITDA as net earnings calculated in accordance with GAAP, adjusted for the following: interest expense, depreciation and amortization, share based compensation, acquisition and integration expense, provision for income taxes, and other income (expense). Segment adjusted EBITDA is defined as operating income calculated in accordance with GAAP, adjusted for interest expense, share based compensation, acquisition and integration expenses, and depreciation and amortization. We consider the interest on notes payable from our financing segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses. 

Non-GAAP net earnings and non-GAAP net earnings per common share – diluted are based on net earnings calculated in accordance with GAAP, adjusted to exclude other income (expense), share based compensation, and acquisition related amortization expense, and the related tax effects.

Our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies, including companies in our industry, might calculate non-GAAP adjusted gross billings, adjusted EBITDA, non-GAAP net earnings and non-GAAP net earnings per common share or similarly titled measures differently, which may reduce their usefulness as comparative measures.


Three Months Ended December 31,


Nine Months Ended December 31,


2021


2020


2021


2020


(in thousands)









Technology segment net sales

$476,975


$415,570


$1,313,634


$1,176,153

Costs incurred related to sales of third-party maintenance, software assurance and subscription / SaaS licenses, and services

208,056


172,255


668,528


559,130

Adjusted gross billings

$685,031


$587,825


$1,982,162


$1,735,283



Three Months Ended December 31,


Nine Months Ended December 31,


2021


2020


2021


2020


(in thousands)

Consolidated








Net earnings

$26,424


$21,638


$81,355


$58,844

Provision for income taxes

9,486


8,438


31,108


24,996

Depreciation and amortization [1]

3,597


3,143


11,376


10,000

Share based compensation

1,780


1,756


5,355


5,427

Acquisition and integration expense

-


233


-


232

Interest and financing costs

335


-


693


266

Other (income) expense [2]

175


(813)


377


(1,095)

Adjusted EBITDA

$41,797


$34,395


$130,264


$98,670










Three Months Ended December 31,


Nine Months Ended December 31,


2021


2020


2021


2020


(in thousands)

Technology Segment








Operating income

$27,166


$22,829


$82,640


$61,658

Depreciation and amortization [1]

3,569


3,115


11,292


9,916

Share based compensation

1,724


1,699


5,186


5,240

Acquisition and integration expense

-


233


-


232

Interest and financing costs

335


-


693


266

Adjusted EBITDA

$32,794


$27,876


$99,811


$77,312

















Financing Segment








Operating income

$8,919


$6,434


$30,200


$21,087

Depreciation and amortization [1]

28


28


84


84

Share based compensation

56


57


169


187

Adjusted EBITDA

$9,003


$6,519


$30,453


$21,358










Three Months Ended December 31,


Nine Months Ended December 31,


2021


2020


2021


2020


(in thousands)

GAAP: Earnings before taxes

$35,910


$30,076


$112,463


$83,840

Share based compensation

1,780


1,756


5,355


5,427

Acquisition and integration expense

-


233


-


232

Acquisition related amortization expense [3]

2,497


1,986


7,854


6,386

Other (income) expense [2]

175


(813)


377


(1,095)

Non-GAAP: Earnings before taxes

40,362


33,238


126,049


94,790









GAAP: Provision for income taxes

9,486


8,438


31,108


24,996

Share based compensation

470


493


1,494


1,621

Acquisition and integration expense

-


65


-


65

Acquisition related amortization expense [3]

649


541


2,156


1,856

Other (income) expense [2]

46


(228)


104


(314)

Tax benefit (expense) on restricted stock

-


-


317


(40)

Non-GAAP: Provision for income taxes

10,651


9,309


35,179


28,184









Non-GAAP: Net earnings

$29,711


$23,929


$90,870


$66,606










Three Months Ended December 31,


Nine Months Ended December 31,


2021


2020


2021


2020









GAAP: Net earnings per common share – diluted

$0.98


$0.81


$3.03


$2.20









Share based compensation

0.05


0.05


0.14


0.14

Acquisition related amortization expense [3]

0.07


0.05


0.21


0.16

Other (income) expense [2]

-


(0.02)


0.01


(0.02)

Tax benefit (expense) on restricted stock

-


-


(0.01)


-

Total non-GAAP adjustments – net of tax

$0.12


$0.08


$0.35


$0.28









Non-GAAP: Net earnings per common share – diluted

$1.10


$0.89


$3.38


$2.48


[1] Amount consists of depreciation and amortization for assets used internally.

[2] Interest income and foreign currency transaction gains and losses.

[3] Amount consists of amortization of intangible assets from acquired businesses.

 




 




Contact

Kley Parkhurst, SVP
ePlus inc.
kparkhurst@eplus.com 
703-984-8150

Ready to learn more?

Preparation and success go hand in hand.
Connect with us or use the form.
+1 888-482-1122