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 20, 2021
ePlus inc.
ePlus inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34167 | 54-1817218 |
|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
13595 Dulles Technology Drive, Herndon, Virginia 20171-3413
(Address, including zip code, of principal executive offices)
(703) 984-8400
(Registrant’s telephone number, including area code)
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 Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value | 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 20, 2021, ePlus inc. announced by press release its results of operations for its fiscal year end and fourth quarter ended March 31, 2021. 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 20, 2021, issued by ePlus inc. |
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 24, 2021
EXHIBIT 99.1
ePlus Reports Fourth Quarter and Fiscal Year 2021 Financial Results
--Strong Earnings Performance Demonstrates Resilience of Business Model--
| Fourth Quarter Fiscal Year 2021 | |
|---|---|
| • | Net sales decreased 3.8% to $352.6 million; technology segment net sales decreased 6.1% to $331.8 million; service revenues increased 8.2% to $52.9<br> million. |
| • | Adjusted gross billings increased 2.8% to $528.6 million. |
| • | Consolidated gross profit increased 6.6% to $97.9 million. |
| • | Consolidated gross margin was 27.8%, an increase of 270 basis points. |
| • | Net earnings increased 17.4% to $15.6 million. |
| • | Adjusted EBITDA increased 25.7% to $29.6 million. |
| • | Diluted earnings per share increased 17.2% to $1.16. Non-GAAP diluted earnings per share increased 13.7% to $1.41. |
| Fiscal Year 2021 | |
| --- | --- |
| • | Net sales decreased 1.3% to $1,568.3 million; technology segment net sales decreased 1.4% to $1,508.0 million; service revenues increased 4.7% to<br> $202.2 million. |
| • | Adjusted gross billings increased 1.6% to $2,263.9 million. |
| • | Consolidated gross profit increased 0.6% to $393.6 million. |
| • | Consolidated gross margin was 25.1%, an increase of 50 basis points. |
| • | Net earnings increased 7.7% to $74.4 million. |
| • | Adjusted EBITDA increased 7.4% to $128.2 million. |
| • | Diluted earnings per share increased 7.6% to $5.54. Non-GAAP diluted earnings per share increased 4.1% to $6.38. |
HERNDON, VA – May 20, 2021 – 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, 2021.
Management Comment
“Our fourth quarter earnings performance reflected continued progress driving profitable growth from our IT solutions, particularly in the areas of security, cloud/data center, collaboration and annuity services, coupled with a steady focus on managing our cost structure. In the fourth quarter, gross profit increased 6.6%, and we realized an strong gross profit margin of 27.8%, our highest ever, due to growth in services revenue, increased product margins, and a high gross to net conversion. Our improved margins and lower costs drove operating income up 31.9% in the quarter and 11.6% for the year. EPS increased 17.2%, to $1.16, and adjusted EBITDA grew 25.7%, reflecting the strength and resilience of our business model,” said Mark Marron, President and Chief Executive Officer.
“In what was an unprecedented year, I am extremely proud of the entire ePlus team for responding with agility and unwavering commitment to support our customers’ evolving needs for integrated technology solutions. For fiscal 2021, lower net sales were due, in part, to the industry’s continuing conversion to the XaaS revenue model and revenues recorded on a net basis. We grew our services revenue, a key focus area that offers enhanced visibility due to our annuity-quality services offerings. Importantly, we recorded substantive increases in operating income, adjusted EBITDA, and earnings per share.”
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Fourth Quarter Fiscal 2021 Results
For the fourth quarter ended March 31, 2021 as compared to the fourth quarter of the prior fiscal year ended March 31, 2020:
Consolidated net sales decreased 3.8% to $352.6 million, from $366.5 million.
Technology segment net sales decreased 6.1% to $331.8 million, from $353.3 million due to lower product sales. Service revenues increased 8.2% to $52.9 million, from $48.9 million due to an increase in managed services. Adjusted gross billings increased 2.8% to $528.6 million from $514.1 million.
Financing segment net sales increased 57.4% to $20.8 million, from $13.2 million due to an increase from sales of off lease equipment.
Consolidated gross profit increased 6.6% to $97.9 million, from $91.8 million. Consolidated gross margin was 27.8%, up from 25.1% last year, due to higher product margin in our technology segment as well as higher service margins.
Operating expenses were $74.3 million, up 0.5% from $73.9 million last year, primarily due to increases in variable compensation stemming from higher gross profit, partially offset by lower travel expenses and changes in reserve for credit losses. Our headcount at the end of the quarter was 1,560, down 19 from a year ago.
Consolidated operating income increased 31.9% to $23.6 million.
Our effective tax rate for the current quarter was 32.6%, higher than the prior year quarter of 24.9%, primarily due to an increase of non-deductible compensation.
Net earnings increased 17.4% to $15.6 million.
Adjusted EBITDA increased 25.7% to $29.6 million, from $23.5 million.
Diluted earnings per share was $1.16, compared with $0.99 in the prior year quarter. Non-GAAP diluted earnings per share was $1.41, compared with $1.24 last year.
Fiscal Year 2021 Results
For the fiscal year ended March 31, 2021 as compared to the prior fiscal year ended March 31, 2020:
Consolidated net sales decreased 1.3% to $1,568.3 million, from $1,588.4 million.
Technology segment net sales decreased 1.4% to $1,508.0 million, from $1,530.1 million due to a larger portion of our sales that were recognized on a net basis. Service revenues increased 4.7% to $202.2 million, from $193.1 million primarily due to an increase in managed services. Adjusted gross billings was $2,263.9 million, an increase of 1.6% from $2,227.9 million.
Financing segment net sales increased 3.6% to $60.4 million, from $58.3 million, primarily due to an increase in proceeds from sales of off lease equipment.
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Consolidated gross profit increased 0.6% to $393.6 million, from $391.2 million. Consolidated gross margin was 25.1%, up from 24.6% last year, due to higher product margin in our technology segment as well as higher service margins.
Operating expenses were $287.2 million, down 2.9% from $295.9 million last year, primarily due to a decrease in travel, advertising & marketing, acquisition related expenses, and healthcare cost.
Consolidated operating income increased 11.6% to $106.3 million.
Our effective tax rate for the current fiscal year was 30.4%, higher than last year of 28.0%, primarily due to an adjustment to the federal benefit from state taxes.
Net earnings increased 7.7% to $74.4 million.
Adjusted EBITDA increased 7.4% to $128.2 million, from $119.4 million.
Diluted earnings per share was $5.54, compared with $5.15 in the prior year. Non-GAAP diluted earnings per share was $6.38, compared with $6.13 last year.
Balance Sheet Highlights
As of March 31, 2021, ePlus had cash and cash equivalents of $129.6 million, compared with $86.2 million as of March 31, 2020. Inventory, which represents equipment ordered by customers but not yet delivered, increased 39.2% due to ongoing projects. Total shareholders’ equity was $562.4 million, compared with $486.1 million as of March 31, 2020. Total shares outstanding were 13.5 million on March 31, 2021 and March 31, 2020.
Summary and Outlook
“Fiscal 2021 was a very successful and productive year for ePlus, as we strengthened our capabilities both organically and through acquisitions, while generating growth in adjusted gross billings, margins and earnings. Although component shortages may delay some near-term revenue, as the market continues to evolve, we expect to see accelerated demand for collaboration, remote work solutions, security, and cloud services. We remain positive in our outlook for fiscal 2022 as ePlus continues to focus on the high growth areas that are critical to our customers’ digital transformation initiatives.”
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Recent Corporate Developments/Recognitions
| • | In the month of April: | |
|---|---|---|
| o | Achieved VMware Cloud on AWS VMware Master Services Competency. | |
| o | ePlus will plant 10,000 trees through One Tree Planted, a non-profit organization dedicated to making it easier for individuals and<br> businesses to give back to the environment, create a healthier climate, protect biodiversity, and help reforestation efforts. | |
| • | In the month of March: | |
| o | CRN^®^, a brand of The Channel Company, recognized ePlus with a place on its 2021 Tech Elite 250 list. | |
| o | Board of directors authorized the Company to repurchase up to 500,000 shares of ePlus’ outstanding common stock over a 12-month<br> period commencing May 28, 2021. | |
| o | CRN^®^, a brand of The Channel Company, named ePlus to its 2021 Managed Service Provider (MSP) 500 list in the Elite 150 category. | |
| • | In the month of February: | |
| o | Achieved Amazon Web Services (AWS) Storage Competency status. | |
| o | Implemented a cloud-based Cisco call center solution that helped clear the way for Rowan University in New Jersey to become one of<br> only four of the initial COVID vaccine distribution centers in the state. | |
| o | IGXGlobal UK Limited, its London-based subsidiary, renewed its Cisco Gold Certified Partner designation in the UK. |
Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on May 20, 2021:
| Webcast (Live & Replay): | |
|---|---|
| https://event.on24.com/wcc/r/3082272/D1D0303B8D92F5555E6FA9690D2FDDDC | |
| Live Call: | (833) 714-0957 (toll-free/domestic)<br><br> <br>(778) 560-2893 (international) |
| Replay: | (800) 585-8367 (toll-free/domestic) or<br><br> <br>(416) 621-4642 (international) |
| Passcode: | 1655478 (live call and replay) |
The replay of this webcast will be available approximately two hours after the call through May 27, 2021.
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.
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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, 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 an economic downturn, an increase in tariffs or adverse changes to trade agreements, exposure to fluctuation in foreign currency rates, interest rates and downward pressure on prices; 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; the impact of competition in our markets; 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.
Contact:
Kleyton Parkhurst, SVP
ePlus inc.
kparkhurst@eplus.com
703-984-8150
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| ePlus inc. AND<br> SUBSIDIARIES | ||
|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except per share amounts) | ||
| March 31, 2021 | March 31, 2020 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $129,562 | $86,231 |
| Accounts receivable—trade, net | 391,567 | 374,998 |
| Accounts receivable—other, net | 41,053 | 36,570 |
| Inventories | 69,963 | 50,268 |
| Financing receivables—net, current | 106,272 | 70,169 |
| Deferred costs | 28,201 | 22,306 |
| Other current assets | 10,976 | 9,256 |
| Total current assets | 777,594 | 649,798 |
| Financing receivables and operating leases—net | 90,165 | 74,158 |
| Deferred tax asset--net | 1,468 | - |
| Property, equipment and other assets | 42,289 | 32,596 |
| Goodwill | 126,645 | 118,097 |
| Other intangible assets—net | 38,614 | 34,464 |
| TOTAL ASSETS | $1,076,775 | $909,113 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| LIABILITIES | ||
| Current liabilities: | ||
| Accounts payable | $165,162 | $82,919 |
| Accounts payable—floor plan | 98,653 | 127,416 |
| Salaries and commissions payable | 36,839 | 30,952 |
| Deferred revenue | 72,802 | 55,480 |
| Recourse notes payable—current | 5,450 | 37,256 |
| Non-recourse notes payable—current | 50,397 | 29,630 |
| Other current liabilities | 30,061 | 22,986 |
| Total current liabilities | 459,364 | 386,639 |
| Recourse notes payable—long term | 12,658 | - |
| Non-recourse notes payable—long term | 5,664 | 5,872 |
| Deferred tax liability—net | - | 2,730 |
| Other liabilities | 36,679 | 27,727 |
| TOTAL LIABILITIES | 514,365 | 422,968 |
| 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; 25,000 shares<br><br> <br>authorized; 13,503<br><br> outstanding at March 31, 2021 and<br><br> <br>13,500<br> outstanding at March 31, 2020 | 145 | 144 |
| Additional paid-in capital | 152,366 | 145,197 |
| Treasury stock, at cost, 993 shares at March 31, 2021 and<br><br> <br>896 shares at March 31, 2020 | (75,372) | (68,424) |
| Retained earnings | 484,616 | 410,219 |
| Accumulated other comprehensive income—foreign currency<br><br> <br>translation adjustment | 655 | (991) |
| Total Stockholders' Equity | 562,410 | 486,145 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,076,775 | $909,113 |
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| ePlus inc. AND<br> SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share amounts) | ||||
| Three Months Ended March 31, | Year Ended March 31, | |||
| 2021 | 2020 | 2021 | 2020 | |
| Net sales | ||||
| Product | $299,750 | $317,621 | $1,366,158 | $1,395,288 |
| Services | 52,857 | 48,855 | 202,165 | 193,116 |
| Total | 352,607 | 366,476 | 1,568,323 | 1,588,404 |
| Cost of sales | ||||
| Product | 222,566 | 244,638 | 1,049,677 | 1,076,773 |
| Services | 32,157 | 30,013 | 125,092 | 120,440 |
| Total | 254,723 | 274,651 | 1,174,769 | 1,197,213 |
| Gross profit | 97,884 | 91,825 | 393,554 | 391,191 |
| Selling, general, and administrative | 69,517 | 69,782 | 271,263 | 279,182 |
| Depreciation and amortization | 3,951 | 3,489 | 13,951 | 14,156 |
| Interest and financing costs | 826 | 676 | 2,005 | 2,574 |
| Operating expenses | 74,294 | 73,947 | 287,219 | 295,912 |
| Operating income | 23,590 | 17,878 | 106,335 | 95,279 |
| Other income (expense) | (524) | (232) | 571 | 680 |
| Earnings before taxes | 23,066 | 17,646 | 106,906 | 95,959 |
| Provision for income taxes | 7,513 | 4,400 | 32,509 | 26,877 |
| Net earnings | $15,553 | $13,246 | $74,397 | $69,082 |
| Net earnings per common share—basic | $1.17 | $0.99 | $5.58 | $5.18 |
| Net earnings per common share—diluted | $1.16 | $0.99 | $5.54 | $5.15 |
| Weighted average common shares outstanding—basic | 13,323 | 13,318 | 13,337 | 13,327 |
| Weighted average common shares outstanding—diluted | 13,416 | 13,390 | 13,417 | 13,415 |
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| Technology Segment | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, | Year Ended March 31, | |||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | |
| (in thousands) | (in thousands) | |||||
| Net sales | ||||||
| Product | $278,944 | $304,402 | (8.4%) | $1,305,789 | $1,337,022 | (2.3%) |
| Services | 52,857 | 48,855 | 8.2% | 202,165 | 193,116 | 4.7% |
| Total | 331,801 | 353,257 | (6.1%) | 1,507,954 | 1,530,138 | (1.4%) |
| Cost of sales | ||||||
| Product | 215,768 | 243,601 | (11.4%) | 1,036,627 | 1,069,110 | (3.0%) |
| Services | 32,157 | 30,013 | 7.1% | 125,092 | 120,440 | 3.9% |
| Total | 247,925 | 273,614 | (9.4%) | 1,161,719 | 1,189,550 | (2.3%) |
| Gross profit | 83,876 | 79,643 | 5.3% | 346,235 | 340,588 | 1.7% |
| Selling, general, and administrative | 65,691 | 66,508 | (1.2%) | 256,210 | 264,123 | (3.0%) |
| Depreciation and amortization | 3,923 | 3,461 | 13.3% | 13,839 | 14,016 | (1.3%) |
| Interest and financing costs | 255 | 294 | (13.3%) | 521 | 294 | 77.2% |
| Operating expenses | 69,869 | 70,263 | (0.6%) | 270,570 | 278,433 | (2.8%) |
| Operating income | $14,007 | $9,380 | 49.3% | $75,665 | $62,155 | 21.7% |
| Adjusted gross billings | $528,582 | $514,130 | 2.8% | $2,263,865 | $2,227,885 | 1.6% |
| Adjusted EBITDA | $19,907 | $14,945 | 33.2% | $97,219 | $85,840 | 13.3% |
| Technology Segment Net Sales by Customer End Market | ||||||
| --- | --- | --- | --- | |||
| Twelve Months Ended March 31, | ||||||
| 2021 | 2020 | Change | ||||
| Telecom, Media, & Entertainment | 25% | 19% | 6% | |||
| Technology | 17% | 21% | (4%) | |||
| SLED | 16% | 16% | - | |||
| Healthcare | 13% | 15% | (2%) | |||
| Financial Services | 13% | 13% | - | |||
| All others | 16% | 16% | - | |||
| Total | 100% | 100% | ||||
| Financing Segment | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended March 31, | Year Ended March 31, | |||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | |
| (in thousands) | (in thousands) | |||||
| Net sales | $20,806 | $13,219 | 57.4% | $60,369 | $58,266 | 3.6% |
| Cost of sales | 6,798 | 1,037 | 555.5% | 13,050 | 7,663 | 70.3% |
| Gross profit | 14,008 | 12,182 | 15.0% | 47,319 | 50,603 | (6.5%) |
| Selling, general, and administrative | 3,826 | 3,274 | 16.9% | 15,053 | 15,059 | (0.0%) |
| Depreciation and amortization | 28 | 28 | 0.0% | 112 | 140 | (20.0%) |
| Interest and financing costs | 571 | 382 | 49.5% | 1,484 | 2,280 | (34.9%) |
| Operating expenses | 4,425 | 3,684 | 20.1% | 16,649 | 17,479 | (4.7%) |
| Operating income | $9,583 | $8,498 | 12.8% | $30,670 | $33,124 | (7.4%) |
| Adjusted EBITDA | $9,668 | $8,586 | 12.6% | $31,026 | $33,519 | (7.4%) |
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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, | |||
|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |
| (in thousands) | ||||
| Technology segment net sales | $331,801 | $353,257 | $1,507,954 | $1,530,138 |
| Costs incurred related to sales of third-party<br><br> <br>maintenance, software assurance and<br><br> <br>subscription / SaaS licenses, and services | 196,781 | 160,873 | 755,911 | 697,747 |
| Adjusted gross billings | $528,582 | $514,130 | $2,263,865 | $2,227,885 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2021 | 2020 | 2021 | 2020 | |
| (in thousands) | ||||
| Consolidated | ||||
| Net earnings | $15,553 | $13,246 | $74,397 | $69,082 |
| Provision for income taxes | 7,513 | 4,400 | 32,509 | 26,877 |
| Depreciation and amortization [1] | 3,951 | 3,489 | 13,951 | 14,156 |
| Share based compensation | 1,740 | 1,933 | 7,167 | 7,954 |
| Acquisition and integration expense | 39 | (63) | 271 | 1,676 |
| Interest and financing costs | 255 | 294 | 521 | 294 |
| Other (income) expense [2] | 524 | 232 | (571) | (680) |
| Adjusted EBITDA | $29,575 | $23,531 | 128,245 | $119,359 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2021 | 2020 | 2021 | ||
| (in thousands) | ||||
| Technology Segment | ||||
| Operating income | $14,007 | $9,380 | 75,665 | $62,155 |
| Depreciation and amortization [1] | 3,923 | 3,461 | 13,839 | 14,016 |
| Share based compensation | 1,683 | 1,873 | 6,923 | 7,699 |
| Acquisition and integration expense | 39 | (63) | 271 | 1,676 |
| Interest and financing costs | 255 | 294 | 521 | 294 |
| Adjusted EBITDA | $19,907 | $14,945 | 97,219 | $85,840 |
All values are in US Dollars.
| Financing Segment | ||||
|---|---|---|---|---|
| Operating income | $9,583 | $8,498 | $30,670 | $33,124 |
| Depreciation and amortization [1] | 28 | 28 | 112 | 140 |
| Share based compensation | 57 | 60 | 244 | 255 |
| Adjusted EBITDA | $9,668 | $8,586 | $31,026 | $33,519 |
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| Three Months Ended March 31, | Year Ended March 31, | |||
|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |
| (in thousands) | ||||
| GAAP: Earnings before taxes | $23,066 | $17,646 | $106,906 | $95,959 |
| Share based compensation | 1,740 | 1,933 | 7,167 | 7,954 |
| Acquisition and integration expense | 39 | (63) | 271 | 1,676 |
| Acquisition related amortization expense [3] | 2,730 | 2,264 | 9,116 | 9,217 |
| Other (income) expense [2] | 524 | 232 | (571) | (680) |
| Non-GAAP: Earnings before taxes | 28,099 | 22,012 | 122,889 | 114,126 |
| GAAP: Provision for income taxes | 7,513 | 4,400 | 32,509 | 26,877 |
| Share based compensation | 567 | 482 | 2,188 | 2,218 |
| Acquisition and integration expense | 13 | (16) | 78 | 490 |
| Acquisition related amortization expense [3] | 874 | 549 | 2,730 | 2,487 |
| Other (income) expense [2] | 171 | 58 | (143) | (200) |
| Tax benefit on restricted stock | - | - | (40) | 87 |
| Non-GAAP: Provision for income taxes | 9,138 | 5,473 | 37,322 | 31,959 |
| Non-GAAP: Net earnings | $18,961 | $16,539 | $85,567 | $82,167 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2021 | 2020 | 2021 | 2020 | |
| GAAP: Net earnings per common share – diluted | $1.16 | $0.99 | $5.54 | $5.15 |
| Share based compensation | 0.09 | 0.11 | 0.38 | 0.43 |
| Acquisition and integration expense | - | - | 0.01 | 0.09 |
| Acquisition related amortization expense [3] | 0.13 | 0.13 | 0.48 | 0.51 |
| Other (income) expense [2] | 0.03 | 0.01 | (0.03) | (0.04) |
| Tax benefit on restricted stock | - | - | - | (0.01) |
| Total non-GAAP adjustments – net of tax | $0.25 | $0.25 | $0.84 | $0.98 |
| Non-GAAP: Net earnings per common share – diluted | $1.41 | $1.24 | $6.38 | $6.13 |
| [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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