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): February 3, 2022
ePlus inc.
(Exact name of registrant as specified in its charter)
| Delaware | 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<br><br> <br>Herndon, Virginia | 20171-3413 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip code) |
Registrant's telephone number, including area code (703) 984-8400
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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, $.01 par value | PLUS | Nasdaq Global Select Market |
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))
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 February 3, 2022, ePlus inc. announced by press release its results of operations for its three and nine months ended December 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 February 3, 2022, issued by ePlus inc. |
| 104 | Cover Page Interactive Data 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: February 8, 2022
EXHIBIT 99.1
ePlus Reports Third Quarter and First Nine Months Financial Results
--Double-Digit Growth in Sales, Gross Profit and Operating Income--
| 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<br> $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%<br> 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. |
HERNDON, VA – February 3, 2022 – 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.”
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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.
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.
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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.
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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: | |
|---|---|---|
| o | Announced the unveiling of a networking strategy called READI to help organizations implement foundational software-defined technologies and<br> solutions that transform and modernize their enterprise network infrastructures. | |
| o | Honored with the Social Impact Partner of the Year Award for the Americas at the Cisco Partner Summit 2021 | |
| • | In the month of November: | |
| o | Announced the successful achievement of Cloud Management and Automation VMware Master Services Competency. | |
| o | Rang the NASDAQ closing bell in celebration of its 25^th^ 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 (too-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.
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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 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.
Contact:
Kleyton Parkhurst, SVP
ePlus inc.
kparkhurst@eplus.com
703-984-8150
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| ePlus inc. AND<br> 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;<br><br> <br>none outstanding | - | - |
| Common stock, $.01 per share par value; 50,000 shares<br><br> <br>authorized; 26,966 outstanding at December 31, 2021 and<br><br> <br>27,006<br> 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<br><br> <br>1,987 shares at March 31, 2021 | (2,592) | (75,372) |
| Retained earnings | 483,601 | 484,616 |
| Accumulated other comprehensive income—foreign currency<br><br> <br>translation adjustment | 296 | 655 |
| Total Stockholders' Equity | 639,296 | 562,410 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,255,146 | $1,076,775 |
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| ePlus inc. AND<br> 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 |
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| 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% |
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| 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% |
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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.
| 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<br><br> <br>maintenance, software assurance and<br><br> <br>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 |
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| 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 | ||
| (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 |
All values are in US Dollars.
| 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 |
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| 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 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 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. |
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