8-K
EPLUS INC (PLUS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 25, 2022
ePlus inc.
(Exact name of registrant as specified in its charter)
| DE | 001-34167 | 54-1817218 |
|---|---|---|
| (State or other jurisdiction <br><br> of incorporation) | (Commission <br><br> File Number) | (IRS Employer <br><br> Identification No.) |
13595 Dulles Technology Drive
Herndon, VA 20171-3413
(Address of principal executive offices, including zip code)
(703) 984-8400
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | PLUS | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On May 25, 2022, ePlus inc. announced by press release its results of operations for its fiscal year end and fourth quarter ended March 31, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) The following exhibits are filed as part of this report:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated May 25, 2022, issued by ePlus inc. |
| 104 | Cover Page Interactive Date File (embedded within the Inline XBRL document) |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ePlus inc. |
|---|
| By: /s/ Elaine D. Marion |
| Elaine D. Marion |
| Chief Financial Officer |
Date: May 31, 2022
EXHIBIT 99.1
ePlus Reports Fourth Quarter and Fiscal Year 2022 Financial Results
--Robust Sales Growth Drives Significant Gains in Operating Income and Earnings--
| Fourth Quarter Fiscal Year 2022 | |
|---|---|
| • | Net sales increased 28.1% to $451.5 million; technology segment net sales increased 26.4% to $419.4 million; service revenues increased 16.6% to $61.6<br> million. |
| • | Adjusted gross billings increased 20.8% to $638.5 million. |
| • | Consolidated gross profit increased 17.8% to $115.4 million. |
| • | Consolidated gross margin was 25.5% compared to 27.8% in last year’s quarter. |
| • | Net earnings increased 55.9% to $24.2 million. |
| • | Adjusted EBITDA increased 34.4% to $39.7 million. |
| • | Diluted earnings per share increased 56.9% to $0.91. Non-GAAP diluted earnings per share increased 42.3% to $1.01. |
| Fiscal Year 2022 | |
| --- | --- |
| • | Net sales increased 16.1% to $1,821.0 million; technology segment net sales increased 14.9% to $1,733.0 million; service revenues increased 19.0% to<br> $240.6 million. |
| • | Adjusted gross billings increased 15.8% to $2,620.6 million. |
| • | Consolidated gross profit increased 17.1% to $461.0 million. |
| • | Consolidated gross margin was 25.3%, an increase of 20 basis points. |
| • | Net earnings increased 41.9% to $105.6 million. |
| • | Adjusted EBITDA increased 32.6% to $170.0 million. |
| • | Diluted earnings per share increased 41.9% to $3.93. Non-GAAP diluted earnings per share increased 37.6% to $4.39. |
HERNDON, VA – May 25, 2022 – ePlus inc. (NASDAQ: PLUS), a leading provider of technology and financing solutions, today announced financial results for the three months and fiscal year ended March 31, 2022.
Management Comment
“Fiscal 2022 marked a highly successful year for ePlus, as we generated strong financial results while investing in our people and capabilities to enhance long-term growth,” said Mark Marron, president and chief executive officer of ePlus. “Reflecting broad-based growth in our technology segment, fourth quarter net sales rose 28% to nearly $452 million, capping off an outstanding year in which consolidated net sales grew 16% to $1.8 billion. Our results again demonstrated the scalability and operating leverage in our business, as diluted earnings per share increased nearly 57% in the fourth quarter and over 40% for fiscal 2022.”
Mr. Marron continued, “Our wide range of capabilities, providing both services and solutions, empowers our customers to accelerate their digital transformation and harness the power of technology to drive innovation. We continue to experience strong demand for cloud infrastructure, cybersecurity and networking, where our expertise and strategic partnerships enable us to deliver integrated and agile solutions in these rapidly evolving, high-growth markets.”
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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.
Fourth Quarter Fiscal 2022 Results
For the fourth quarter ended March 31, 2022, as compared to the fourth quarter ended March 31, 2021:
Consolidated net sales increased 28.1% to $451.5 million, from $352.6 million.
Technology segment net sales increased 26.4% to $419.4 million, from $331.8 million due to higher sales of product and services. Service revenues increased 16.6% to $61.6 million, from $52.9 million due to increases in professional services and managed services. Adjusted gross billings increased 20.8% to $638.5 million from $528.6 million.
Financing segment net sales increased 54.4% to $32.1 million, from $20.8 million mainly due to higher post-contract revenue from early lease buyouts.
Consolidated gross profit increased 17.8% to $115.4 million, from $97.9 million. Consolidated gross margin was 25.5%, down from 27.8% last year, primarily due to lower margins from our financing segment combined with lower service margins, partially offset by higher product margin in our technology segment. The decrease in margins from our financing segment was due to a large early lease buyout in the current quarter, while the decline in service margins was due to an increase in both internal and third-party costs.
Operating expenses were $80.9 million, up 8.9% from $74.3 million last year, primarily due to increases in variable compensation stemming from higher gross profit, and higher salaries and benefits. Our headcount at the end of the quarter was 1,577, up 17 from a year ago.
Consolidated operating income increased 46.1% to $34.5 million.
Our effective tax rate for the current quarter was 29.6%, lower than the prior year quarter of 32.6%, due to higher non-deductible compensation in the prior year.
Net earnings increased 55.9% to $24.2 million.
Adjusted EBITDA increased 34.4% to $39.7 million, from $29.6 million.
Diluted earnings per share was $0.91, compared with $0.58 in the prior year quarter. Non-GAAP diluted earnings per share was $1.01, compared with $0.71 last year.
Fiscal Year 2022 Results
For the fiscal year ended March 31, 2022, as compared to the fiscal year ended March 31, 2021:
Consolidated net sales increased 16.1% to $1,821.0 million, from $1,568.3 million.
Technology segment net sales increased 14.9% to $1,733.0 million, from $1,508.0 million due to higher sales of product and services. Service revenues increased 19.0% to $240.6 million, from $202.2 million due to increases in professional services and managed services. Adjusted gross billings was $2,620.6 million, an increase of 15.8% from $2,263.9 million.
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Financing segment net sales increased 45.7% to $88.0 million, from $60.4 million, primarily due to higher proceeds from sales of equipment, including early lease buyouts as well as sales of equipment at the end of the lease term.
Consolidated gross profit increased 17.1% to $461.0 million, from $393.6 million. Consolidated gross margin was 25.3%, up from 25.1% last year, due to higher product margin and a higher proportion of sales recorded on a net basis in our technology segment.
Operating expenses were $313.7 million, up 9.2% from $287.2 million last year, primarily due to increases in variable compensation stemming from higher gross profit, higher healthcare costs, software license and maintenance, and travel expenses, as well as higher depreciation and amortization due to the acquisition of SMP on December 31, 2020.
Consolidated operating income increased 38.5% to $147.3 million.
Our effective tax rate for the current year period was 28.1%, lower than last year of 30.4% due to prior year’s unfavorable adjustments to the federal benefit from state taxes and non-deductible executive compensation.
Net earnings increased 41.9% to $105.6 million.
Adjusted EBITDA increased 32.6% to $170.0 million, from $128.2 million.
Diluted earnings per share was $3.93, compared with $2.77 in the prior year. Non-GAAP diluted earnings per share was $4.39, compared with $3.19 last year.
Balance Sheet Highlights
As of March 31, 2022, ePlus had cash and cash equivalents of $155.4 million, compared with $129.6 million as of March 31, 2021. Inventory, which represents equipment ordered by customers but not yet delivered, increased 121.6% from March 31, 2021, and 5.0% sequentially, due to ongoing projects with customers coupled with some impact from continued supply chain constraints. Total stockholders’ equity was $660.7 million, compared with $562.4 million as of March 31, 2021. Total shares outstanding were 26.9 million on March 31, 2022 and 27.0 million on March 31, 2021.
Summary and Outlook
“We enter fiscal 2023 with solid momentum, supported by the strength of our backlog and healthy market fundamentals as enterprise technology investments remain a top priority. We continue to successfully execute on our growth strategy, expanding our market share by strengthening our relationships with existing customers and leveraging our expertise and capabilities across the technology stack to capture new business opportunities.
Mr. Marron concluded, “We believe the outlook for IT spending in 2022 remains favorable, positioning ePlus for continued growth. Against this backdrop, lead times are extending for certain technologies, which we anticipate will serve to extend project implementations throughout the year. To navigate this environment, we continue to work closely with our extensive roster of technology partners to deliver timely, innovative solutions that solve our customers’ complex IT challenges.”
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Recent Corporate Developments/Recognitions
| • | In the month of March, ePlus: | |
|---|---|---|
| o | Announced the commencement of its 2022 Girls Re-Imagining Tomorrow Program, which introduces school-aged girls to technology-based<br> careers with an emphasis on cybersecurity and artificial intelligence. | |
| o | Was named to the CRN 2022 Tech Elite 250 list for the ninth year. | |
| o | Announced a stock repurchase program with the authorization to purchase up to one million shares. | |
| o | Announced it earned multiple attestations for controls surrounding its Managed Services Center, Cloud Hosted Services, Services<br> Desk, Warehousing Operations and OneSource family of products. | |
| • | In the month of February: | |
| o | Was recognized on CRN’s 2022 Managed Service Provider (MSP) 500 List in the Elite 150 category for the fifth consecutive year. |
Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on May 25, 2022:
| Audio Webcast (Live & Replay): https://events.q4inc.com/attendee/586961564 | |
|---|---|
| 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 and be available through June 1, 2022.
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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 COVID-19 pandemic and the efficacy of vaccine roll-outs, which could materially adversely affect our financial condition and results of operations and has resulted worldwide in governmental authorities imposing numerous unprecedented measures to try 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 exposure to fluctuation in foreign currency rates, interest rates, and inflation, including increases in our costs and price increases to our customers which may result in adverse changes in our gross profit; reduction of vendor incentives provided to us; significant and rapid inflation may cause price, wage, and interest rate increases, as well as increases in operating costs which may impact the arrangements that have pricing commitments over the term of the agreement; 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’ IT systems and data and audio communication networks; supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling orders, or completing professional services, resulting in an adverse impact on our financial results; 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 larger 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; 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 attack; future growth rates in our core businesses; the impact of competition in our markets; domestic and international economic regulations uncertainty (e.g., tariffs, sanctions, and trade agreements); 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 and software 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.
Contact:
Kleyton Parkhurst, SVP
ePlus inc.
kparkhurst@eplus.com
703-984-8150
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| ePlus inc. AND SUBSIDIARIES | ||
|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except per share amounts) | ||
| March 31, 2022 | March 31, 2021 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $155,378 | $129,562 |
| Accounts receivable—trade, net | 430,380 | 391,567 |
| Accounts receivable—other, net | 48,673 | 41,053 |
| Inventories | 155,060 | 69,963 |
| Financing receivables—net, current | 61,492 | 106,272 |
| Deferred costs | 32,555 | 28,201 |
| Other current assets | 13,944 | 10,976 |
| Total current assets | 897,482 | 777,594 |
| Financing receivables and operating leases—net | 64,292 | 90,165 |
| Deferred tax asset—net | 5,050 | 1,468 |
| Property, equipment and other assets | 45,586 | 42,289 |
| Goodwill | 126,543 | 126,645 |
| Other intangible assets—net | 27,250 | 38,614 |
| TOTAL ASSETS | $1,166,203 | $1,076,775 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| LIABILITIES | ||
| Current liabilities: | ||
| Accounts payable | $136,161 | $165,162 |
| Accounts payable—floor plan | 145,323 | 98,653 |
| Salaries and commissions payable | 39,602 | 36,839 |
| Deferred revenue | 86,469 | 72,802 |
| Recourse notes payable—current | 7,316 | 5,450 |
| Non-recourse notes payable—current | 17,070 | 50,397 |
| Other current liabilities | 28,095 | 30,061 |
| Total current liabilities | 460,036 | 459,364 |
| Non-recourse notes payable—long term | 5,792 | 12,658 |
| Deferred tax liability—net | 4,108 | 5,664 |
| Other liabilities | 35,529 | 36,679 |
| TOTAL LIABILITIES | 505,465 | 514,365 |
| COMMITMENTS AND CONTINGENCIES | ||
| STOCKHOLDERS' EQUITY | ||
| Preferred stock, $.01 per share par value; 2,000 shares authorized;<br><br> <br>none outstanding | - | - |
| Common stock, $.01 per share par value; 50,000 shares<br><br> <br>authorized; 26,886 outstanding at March 31, 2022 and<br><br> <br>27,006<br> outstanding at March 31, 2021 | 270 | 145 |
| Additional paid-in capital | 159,480 | 152,366 |
| Treasury stock, at<br> cost, 130 shares at March 31, 2022 and<br><br> 1,987 shares at March 31, 2021 | (6,734) | (75,372) |
| Retained earnings | 507,846 | 484,616 |
| Accumulated other comprehensive income—foreign currency<br><br> <br>translation adjustment | (124) | 655 |
| Total Stockholders' Equity | 660,738 | 562,410 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,166,203 | $1,076,775 |
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| ePlus inc. AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share amounts) | ||||
| Three Months Ended March 31, | Year Ended March 31, | |||
| 2022 | 2021 | 2022 | 2021 | |
| Net sales | ||||
| Product | $389,870 | $299,750 | $1,580,394 | $1,366,158 |
| Services | 61,649 | 52,857 | 240,625 | 202,165 |
| Total | 451,519 | 352,607 | 1,821,019 | 1,568,323 |
| Cost of sales | ||||
| Product | 296,277 | 222,566 | 1,210,943 | 1,049,677 |
| Services | 39,891 | 32,157 | 149,094 | 125,092 |
| Total | 336,168 | 254,723 | 1,360,037 | 1,174,769 |
| Gross profit | 115,351 | 97,884 | 460,982 | 393,554 |
| Selling, general, and administrative | 76,964 | 69,517 | 297,117 | 271,263 |
| Depreciation and amortization | 3,270 | 3,951 | 14,646 | 13,951 |
| Interest and financing costs | 641 | 826 | 1,903 | 2,005 |
| Operating expenses | 80,875 | 74,294 | 313,666 | 287,219 |
| Operating income | 34,476 | 23,590 | 147,316 | 106,335 |
| Other income (expense) | (55) | (524) | (432) | 571 |
| Earnings before taxes | 34,421 | 23,066 | 146,884 | 106,906 |
| Provision for income taxes | 10,176 | 7,513 | 41,284 | 32,509 |
| Net earnings | $24,245 | $15,553 | $105,600 | $74,397 |
| Net earnings per common share—basic | $0.91 | $0.58 | $3.96 | $2.79 |
| Net earnings per common share—diluted | $0.91 | $0.58 | $3.93 | $2.77 |
| Weighted average common shares outstanding—basic | 26,553 | 26,646 | 26,638 | 26,674 |
| Weighted average common shares outstanding—diluted | 26,703 | 26,832 | 26,866 | 26,834 |
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| Technology Segment | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, | Year Ended March 31, | |||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | |
| (in thousands) | (in thousands) | |||||
| Net sales | ||||||
| Product | $357,753 | $278,944 | 28.3% | $1,492,411 | $1,305,789 | 14.3% |
| Services | 61,649 | 52,857 | 16.6% | 240,625 | 202,165 | 19.0% |
| Total | 419,402 | 331,801 | 26.4% | 1,733,036 | 1,507,954 | 14.9% |
| Cost of sales | ||||||
| Product | 276,352 | 215,768 | 28.1% | 1,175,789 | 1,036,627 | 13.4% |
| Services | 39,891 | 32,157 | 24.1% | 149,094 | 125,092 | 19.2% |
| Total | 316,243 | 247,925 | 27.6% | 1,324,883 | 1,161,719 | 14.0% |
| Gross profit | 103,159 | 83,876 | 23.0% | 408,153 | 346,235 | 17.9% |
| Selling, general, and administrative | 73,321 | 65,691 | 11.6% | 283,690 | 256,210 | 10.7% |
| Depreciation and amortization | 3,243 | 3,923 | (17.3%) | 14,535 | 13,839 | 5.0% |
| Interest and financing costs | 235 | 255 | (7.8%) | 928 | 521 | 78.1% |
| Operating expenses | 76,799 | 69,869 | 9.9% | 299,153 | 270,570 | 10.6% |
| Operating income | $26,360 | $14,007 | 88.2% | $109,000 | $75,665 | 44.1% |
| Adjusted gross billings | $638,452 | $528,582 | 20.8% | $2,620,614 | $2,263,865 | 15.8% |
| Adjusted EBITDA | $31,542 | $19,907 | 58.4% | $131,353 | $97,219 | 35.1% |
| Technology Segment Net Sales by Customer End Market | ||||||
| --- | --- | --- | --- | |||
| Twelve Months Ended March 31, | ||||||
| 2022 | 2021 | Change | ||||
| Telecom, Media, & Entertainment | 29% | 25% | 4% | |||
| Healthcare | 16% | 13% | 3% | |||
| Technology | 14% | 17% | (3%) | |||
| SLED | 14% | 16% | (2%) | |||
| Financial Services | 9% | 13% | (4%) | |||
| All others | 18% | 16% | 2% | |||
| Total | 100% | 100% | ||||
| Financing Segment | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended March 31, | Year Ended March 31, | |||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | |
| (in thousands) | (in thousands) | |||||
| Net sales | $32,117 | $20,806 | 54.4% | $87,983 | $60,369 | 45.7% |
| Cost of sales | 19,925 | 6,798 | 193.1% | 35,154 | 13,050 | 169.4% |
| Gross profit | 12,192 | 14,008 | (13.0%) | 52,829 | 47,319 | 11.6% |
| Selling, general, and administrative | 3,643 | 3,826 | (4.8%) | 13,427 | 15,053 | (10.8%) |
| Depreciation and amortization | 27 | 28 | (3.6%) | 111 | 112 | (0.9%) |
| Interest and financing costs | 406 | 571 | (28.9%) | 975 | 1,484 | (34.3%) |
| Operating expenses | 4,076 | 4,425 | (7.9%) | 14,513 | 16,649 | (12.8%) |
| Operating income | 8,116 | $9,583 | (15.3%) | $38,316 | $30,670 | 24.9% |
| Adjusted EBITDA | 8,198 | $9,668 | (15.2%) | $38,651 | $31,026 | 24.6% |
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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.
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| Three Months Ended March 31, | Year Ended March 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| (in thousands) | ||||
| Technology segment net sales | $419,402 | $331,801 | $1,733,036 | $1,507,954 |
| Costs incurred related to sales of third-party<br><br> <br>maintenance, software assurance and<br><br> <br>subscription / SaaS licenses, and services | 219,050 | 196,781 | 887,578 | 755,911 |
| Adjusted gross billings | $638,452 | $528,582 | $2,620,614 | $2,263,865 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2022 | 2021 | 2022 | 2021 | |
| (in thousands) | ||||
| Consolidated | ||||
| Net earnings | $24,245 | $15,553 | $105,600 | $74,397 |
| Provision for income taxes | 10,176 | 7,513 | 41,284 | 32,509 |
| Depreciation and amortization [1] | 3,270 | 3,951 | 14,646 | 13,951 |
| Share based compensation | 1,759 | 1,740 | 7,114 | 7,167 |
| Acquisition and integration expense | - | 39 | - | 271 |
| Interest and financing costs | 235 | 255 | 928 | 521 |
| Other (income) expense [2] | 55 | 524 | 432 | (571) |
| Adjusted EBITDA | $39,740 | $29,575 | $170,004 | $128,245 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2022 | 2021 | 2022 | ||
| (in thousands) | ||||
| Technology Segment | ||||
| Operating income | $26,360 | $14,007 | 109,000 | $75,665 |
| Depreciation and amortization [1] | 3,243 | 3,923 | 14,535 | 13,839 |
| Share based compensation | 1,704 | 1,683 | 6,890 | 6,923 |
| Acquisition and integration expense | - | 39 | - | 271 |
| Interest and financing costs | 235 | 255 | 928 | 521 |
| Adjusted EBITDA | $31,542 | $19,907 | 131,353 | $97,219 |
All values are in US Dollars.
| Financing Segment | ||||
|---|---|---|---|---|
| Operating income | $8,116 | $9,583 | $38,316 | $30,670 |
| Depreciation and amortization [1] | 27 | 28 | 111 | 112 |
| Share based compensation | 55 | 57 | 224 | 244 |
| Adjusted EBITDA | $8,198 | $9,668 | $38,651 | $31,026 |
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| Three Months Ended March 31, | Year Ended March 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| (in thousands) | ||||
| GAAP: Earnings before taxes | $34,421 | $23,066 | $146,884 | $106,906 |
| Share based compensation | $1,759 | 1,740 | 7,114 | 7,167 |
| Acquisition and integration expense | - | 39 | - | 271 |
| Acquisition related amortization expense [3] | 2,218 | 2,730 | 10,072 | 9,116 |
| Other (income) expense [2] | 55 | 524 | 432 | (571) |
| Non-GAAP: Earnings before taxes | 38,453 | 28,099 | 164,502 | 122,889 |
| GAAP: Provision for income taxes | 10,176 | 7,513 | 41,284 | 32,509 |
| Share based compensation | 520 | 567 | 2,014 | 2,188 |
| Acquisition and integration expense | - | 13 | - | 78 |
| Acquisition related amortization expense [3] | 647 | 874 | 2,803 | 2,730 |
| Other (income) expense [2] | 16 | 171 | 120 | (143) |
| Tax benefit on restricted stock | - | - | 317 | (40) |
| Non-GAAP: Provision for income taxes | 11,359 | 9,138 | 46,538 | 37,322 |
| Non-GAAP: Net earnings | $27,094 | $18,961 | $117,964 | $85,567 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2022 | 2021 | 2022 | 2021 | |
| GAAP: Net earnings per common share – diluted | $0.91 | $0.58 | $3.93 | $2.77 |
| Share based compensation | 0.05 | 0.05 | 0.20 | 0.19 |
| Acquisition and integration expense | - | - | - | 0.01 |
| Acquisition related amortization expense [3] | 0.05 | 0.07 | 0.26 | 0.24 |
| Other (income) expense [2] | - | 0.01 | 0.01 | (0.02) |
| Tax benefit on restricted stock | - | - | (0.01) | - |
| Total non-GAAP adjustments – net of tax | 0.10 | 0.13 | 0.46 | 0.42 |
| Non-GAAP: Net earnings per common share – diluted | $1.01 | $0.71 | $4.39 | $3.19 |
| [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. |
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