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 24, 2023
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
Herndon, Virginia 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, $.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 24, 2023, ePlus inc. announced by press release its results of operations for its fiscal year end and fourth quarter ended March 31, 2023. 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 24, 2023, 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 30, 2023
EXHIBIT 99.1
ePlus Reports Fourth Quarter and Fiscal Year 2023 Financial Results
| Fourth Quarter Fiscal Year 2023 | |
|---|---|
| • | Net sales increased 9.0% to $492.2 million from last year’s quarter; technology segment net sales increased 15.2% to $483.2 million; service revenues increased<br> 11.5% to $68.7 million. |
| • | Technology segment gross billings increased 17.6% to $733.1 million. |
| • | Consolidated gross profit increased 14.7% to $132.3 million. |
| • | Consolidated gross margin was 26.9%, up 140 basis points. |
| • | Net earnings increased 35.5% to $32.9 million. |
| • | Adjusted EBITDA increased 22.4% to $48.7 million. |
| • | Diluted earnings per share increased 35.2% to $1.23. Non-GAAP diluted earnings per share increased 34.7% to $1.36. |
| Fiscal Year 2023 | |
| --- | --- |
| • | Net sales increased 13.5% to $2,067.7 million; technology segment net sales increased 16.3% to $2,015.2 million; service revenues increased 9.9% to $264.4<br> million. |
| • | Technology segment gross billings increased 19.8% to $3,145.9 million. |
| • | Consolidated gross profit increased 12.3% to $517.5 million. |
| • | Consolidated gross margin was 25.0%, compared with 25.3% last year. |
| • | Net earnings increased 13.0% to $119.4 million. |
| • | Adjusted EBITDA increased 12.1% to $190.6 million. |
| • | Diluted earnings per share increased 14.0% to $4.48. Non-GAAP diluted earnings per share increased 14.4% to $5.02. |
HERNDON, VA – May 24, 2023 – 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, 2023.
Management Comment
“Our strong fourth quarter results concluded a solid fiscal year that highlighted the success of our growth strategy and our ability to meet our customers’ needs with innovative solutions despite persistent supply chain constraints,” said Mark Marron, president and chief executive officer of ePlus. “Fourth quarter net sales improved 9% and fiscal 2023 net sales advanced 13.5%, reflecting our strategic focus on serving higher-value and higher-growth end markets, such as cloud, security and collaboration. Over the past year, we invested significantly in our people to expand our service offerings and build on our market position. Even with these investments, we managed overall expenses efficiently and generated diluted earnings per share growth of 35% in the fourth quarter and 14% for fiscal 2023. I am pleased with our financial performance and proud of our team’s consistent execution to achieve these results.”
Mr. Marron continued, “Earlier this month, we announced the acquisition of certain assets and liabilities of the Network Solutions Group (NSG) business unit of CCI Systems, Inc., a leading solutions provider to broadband Service Providers. This acquisition both complements our existing solutions offerings in the telecom market and expands our customer base nationwide. We believe this strategic acquisition will drive enhanced value and performance over time.”
1
Fourth Quarter Fiscal Year 2023 Results
For the fourth quarter ended March 31, 2023, as compared to the fourth quarter of the prior fiscal year ended March 31, 2022:
Consolidated net sales increased 9.0% to $492.2 million, from $451.5 million.
Technology segment net sales increased 15.2% to $483.2 million, from $419.4 million primarily due to an increase in sales to customers in the technology and SLED end markets. Service revenues increased 11.5% to $68.7 million, from $61.6 million due to increases in professional services and managed services. Gross billings increased 17.6% to $733.1 million from $623.6 million. Gross billings is an operational metric defined as the total dollar value of customer purchases of goods and services including shipping charges during the period, net of customer returns and credit memos, sales, or other taxes.
Financing segment net sales decreased 72.1% to $9.0 million, from $32.1 million and cost of goods sold was lower by $18.6 million, both due to a decline in sales of leased equipment. Gross profit in the financing segment was lower by $4.6 million due to lower sales of leased equipment and lower transactional gains.
Consolidated gross profit increased 14.7% to $132.3 million, from $115.4 million. Consolidated gross margin was 26.9%, up from 25.5% last year due to higher margins from sales of product and services in our technology segment.
Operating expenses were $89.9 million, up 11.2% from $80.9 million last year, primarily due to increases in salaries and benefits, variable compensation stemming from higher gross profit, professional fees, software license and maintenance, and travel expenses, partially offset by changes in allowance for credit losses. Our headcount at the end of the quarter was 1,754, up 177 from a year ago, partially due to the Future Com acquisition on July 15, 2022. Of the 177 additional employees, 140 were customer facing employees, including 84 professional services and technical support personnel due to demand for our services.
Consolidated operating income increased 23.0% to $42.4 million.
Our effective tax rate for the current quarter was 22.4%, lower than the prior year quarter of 29.6%, due to lower than forecasted non-deductible expenses, increased benefits from foreign sales along with favorable state return to provision adjustments.
Net earnings increased 35.5% to $32.9 million.
Adjusted EBITDA increased 22.4% to $48.7 million.
Diluted earnings per share was $1.23, compared with $0.91 in the prior year quarter. Non-GAAP diluted earnings per share was $1.36, compared with $1.01 last year.
2
Fiscal Year 2023 Results
For the fiscal year ended March 31, 2023, as compared to the prior fiscal year ended March 31, 2022:
Consolidated net sales increased 13.5% to $2,067.7 million, from $1,821.0 million.
Technology segment net sales increased 16.3% to $2,015.2 million, from $1,733.0 million primarily due to an increase in sales to customers in the technology and SLED end markets. Service revenues increased 9.9% to $264.4 million, from $240.6 million due to increases in professional services and managed services. Gross billings was $3,145.9 million, an increase of 19.8% from $2,625.7 million.
Financing segment net sales decreased 40.4% to $52.5 million, from $88.0 million, and cost of sales was $9.4 million, 73.1% lower than the prior year, both primarily due to fewer early lease buyouts and a decline in sales of leased equipment. Gross profit in the financing segment decreased $9.8 million due to lower sales of leased equipment, transactional gains and portfolio earnings.
Consolidated gross profit increased 12.3% to $517.5 million, from $461.0 million. Consolidated gross margin was 25.0%, overall consistent with the consolidated gross margin of 25.3% last year, as higher product margins were offset by lower service margins.
Operating expenses were $351.4 million, up 12.0% from $313.7 million last year, primarily due to increases in variable compensation stemming from higher gross profit, salaries and benefits, professional fees, advertising and marketing, software license and maintenance, travel expenses, and changes in allowance for credit losses.
Consolidated operating income increased 12.8% to $166.2 million. During fiscal year 2023, we incurred foreign currency transaction losses of $5.4 million, which was partially offset by $1.9 million related to our receipt of funds resulting from our claim in a class action lawsuit.
Our effective tax rate for the current year period was 26.8%, lower than last year’s 28.1%, due to lower than forecasted non-deductible expenses, increased benefits from foreign sales along with favorable state return to provision adjustments.
Net earnings increased 13.0% to $119.4 million.
Adjusted EBITDA increased 12.1% to $190.6 million.
Diluted earnings per share was $4.48, compared with $3.93 in the prior year. Non-GAAP diluted earnings per share was $5.02, compared with $4.39 last year.
Balance Sheet Highlights
As of March 31, 2023, ePlus had cash and cash equivalents of $103.1 million, compared with $155.4 million as of March 31, 2022. Inventory, which represents equipment ordered by customers but not yet delivered, increased 56.9% to $243.3 million from March 31, 2022 due to ongoing projects with customers coupled with continued supply chain constraints. Total stockholders’ equity was $782.3 million, compared with $660.7 million as of March 31, 2022. Total shares outstanding were 26.9 million on both March 31, 2023 and March 31, 2022.
3
Summary and Outlook
“ePlus achieved solid sales and earnings growth in fiscal 2023, driven by the outstanding performance of our team, the strength of our competitive positioning and our expanded breadth of offerings. Supported by our extensive vendor network, we continued to deliver transformative solutions that enabled our more than 4,300 customers to realize their technology goals and progress on their long-term IT strategies.”
Mr. Marron concluded, “Despite an uncertain economic environment, we have a resilient business model and the capabilities to deliver cost effective technology solutions for our customers. With IT spending still focused on solutions that drive growth, continue digital transformation, generate efficiencies, and strengthen cybersecurity, we believe our portfolio is strongly aligned with our customers’ needs. We remain committed to building long-term stakeholder value through consistent execution of our growth strategy both organically and through acquisitions and generating further operational efficiencies.”
Recent Corporate Developments/Recognitions
In the month of April:
| o | Renewed Cisco Advanced Customer Experience Specialization. |
|---|---|
| o | Announced a new share repurchase program of up to one million shares. |
| --- | --- |
In the month of March:
| o | Achieved inclusion on the CRN Tech Elite 250 List for tenth year. |
|---|---|
| o | Announced the expansion of ePlus’ credit facility. |
| --- | --- |
| o | Announced the launch of ePlus Automated Virtual Assistant for Collaboration Spaces. |
| --- | --- |
In the month of February:
| o | Recognized on CRN’s 2023 Managed Service Provider 500 List in the Elite 150 category. |
|---|---|
| o | Announced Cloud Hosted Services Powered by VMware Cloud on AWS. |
| --- | --- |
Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on May 24, 2023:
| Audio Webcast (Live & Replay): https://events.q4inc.com/attendee/484026067 | |
|---|---|
| Live Call: | (888) 330-2469 (toll-free/domestic) |
| (240) 789-2740 (international) | |
| Replay: | (800) 770- 2030 (toll-free/domestic) or |
| (647) 362-9199 (international) | |
| Passcode: | 5403833 (live call and replay) |
A replay of the call will be available approximately two hours after the call through May 31, 2023. A transcript of the call will also be available on the ePlus Investor Relations website at https://www.eplus.com/investors.
4
About ePlus inc.
ePlus has an unwavering and relentless focus on leveraging technology to create inspired and transformative business outcomes for its customers. Offering a robust portfolio of solutions, as well as a full set of consultative and managed services across the technology spectrum, ePlus has proudly achieved more than 30 years of success in the business, carrying customers forward through adversity, rapidly changing environments, and other obstacles. ePlus is a trusted advisor, bringing expertise, credentials, talent and a thorough understanding of innovative technologies, spanning security, cloud, data center, networking, collaboration and emerging solutions, to organizations across all industry segments. With complete lifecycle management services and flexible payment solutions, ePlus’ more than 1,700 associates are focused on cultivating positive customer experiences and are dedicated to their craft, harnessing new knowledge while applying decades of proven experience. ePlus is headquartered in Virginia, with offices in the United States, UK, Europe, and Asia‐Pacific. For more information, visit www.eplus.com, call 888-482-1122, or email info@eplus.com. Connect with ePlus on LinkedIn, Twitter, Facebook, 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, ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely; 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 our ability to increase prices to our customers which may result in adverse changes in our gross profit; the possibility of a 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; our ability to identify acquisition candidates, or perform sufficient due diligence prior to completing an acquisition, or failure to integrate a completed acquisition may affect our earnings; supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling customer orders, or increase our need for working capital, or completing professional services, or purchasing IT products or services needed to support our internal infrastructure or operations, resulting in an adverse impact on our financial results; significant adverse changes in, reductions in, or loss of 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 or the effect of those changes on our common stock price; our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration and other key strategies; our ability to secure our own and our customers’ electronic and other confidential information, while maintaining compliance with evolving data privacy and regulatory laws and regulations; our ability to remain secure during a cybersecurity attack, including both disruptions in our or our vendors’ IT systems and data and audio communication networks; our reliance on third parties to perform some of our service obligations to our customers, and the reliance on a small number of key vendors in our supply chain with whom we do not have long-term supply agreements, guaranteed price agreements, or assurance of stock availability; 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; 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
5
| ePlus inc. AND SUBSIDIARIES | ||
|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except per share amounts) | ||
| March 31, 2023 | March 31, 2022 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $103,093 | $155,378 |
| Accounts receivable—trade, net | 504,122 | 430,380 |
| Accounts receivable—other, net | 55,508 | 48,673 |
| Inventories | 243,286 | 155,060 |
| Financing receivables—net, current | 89,829 | 61,492 |
| Deferred costs | 44,191 | 32,555 |
| Other current assets | 55,101 | 13,944 |
| Total current assets | 1,095,130 | 897,482 |
| Financing receivables and operating leases—net | 84,417 | 64,292 |
| Deferred tax asset | 3,682 | 5,050 |
| Property, equipment and other assets | 70,447 | 45,586 |
| Goodwill | 136,105 | 126,543 |
| Other intangible assets—net | 25,045 | 27,250 |
| TOTAL ASSETS | $1,414,826 | $1,166,203 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| LIABILITIES | ||
| Current liabilities: | ||
| Accounts payable | $220,159 | $136,161 |
| Accounts payable—floor plan | 134,615 | 145,323 |
| Salaries and commissions payable | 37,336 | 39,602 |
| Deferred revenue | 114,028 | 86,469 |
| Recourse notes payable—current | 5,997 | 7,316 |
| Non-recourse notes payable—current | 24,819 | 17,070 |
| Other current liabilities | 24,372 | 28,095 |
| Total current liabilities | 561,326 | 460,036 |
| Recourse notes payable—long-term | - | 5,792 |
| Non-recourse notes payable—long-term | 9,522 | 4,108 |
| Deferred tax liability | 715 | - |
| Other liabilities | 60,998 | 35,529 |
| TOTAL LIABILITIES | 632,561 | 505,465 |
| COMMITMENTS AND CONTINGENCIES | ||
| STOCKHOLDERS' EQUITY | ||
| Preferred stock, $0.01 per share par value; 2,000 shares<br><br> <br>authorized; none outstanding | - | - |
| Common stock, $0.01 per share par value; 50,000 shares<br><br> <br>authorized; 26,905 outstanding at March 31,<br> 2023 and<br><br> <br>26,886 outstanding at March 31, 2022 | 272 | 270 |
| Additional paid-in capital | 167,303 | 159,480 |
| Treasury stock, at cost, 261 shares at March 31, 2023 and<br><br> <br>130 shares at March 31, 2022 | (14,080) | (6,734) |
| Retained earnings | 627,202 | 507,846 |
| Accumulated other comprehensive income—foreign currency<br><br> <br>translation adjustment | 1,568 | (124) |
| Total Stockholders' Equity | 782,265 | 660,738 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,414,826 | $1,166,203 |
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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, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Net sales | ||||
| Product | $423,462 | $389,870 | $1,803,275 | $1,580,394 |
| Services | 68,715 | 61,649 | 264,443 | 240,625 |
| Total | 492,177 | 451,519 | 2,067,718 | 1,821,019 |
| Cost of sales | ||||
| Product | 317,148 | 296,277 | 1,379,500 | 1,210,943 |
| Services | 42,704 | 39,891 | 170,694 | 149,094 |
| Total | 359,852 | 336,168 | 1,550,194 | 1,360,037 |
| Gross profit | 132,325 | 115,351 | 517,524 | 460,982 |
| Selling, general, and administrative | 85,319 | 76,964 | 333,520 | 297,117 |
| Depreciation and amortization | 3,322 | 3,270 | 13,709 | 14,646 |
| Interest and financing costs | 1,270 | 641 | 4,133 | 1,903 |
| Operating expenses | 89,911 | 80,875 | 351,362 | 313,666 |
| Operating income | 42,414 | 34,476 | 166,162 | 147,316 |
| Other income (expense), net | (76) | (55) | (3,188) | (432) |
| Earnings before taxes | 42,338 | 34,421 | 162,974 | 146,884 |
| Provision for income taxes | 9,484 | 10,176 | 43,618 | 41,284 |
| Net earnings | $32,854 | $24,245 | $119,356 | $105,600 |
| Net earnings per common share—basic | $1.24 | $0.91 | $4.49 | $3.96 |
| Net earnings per common share—diluted | $1.23 | $0.91 | $4.48 | $3.93 |
| Weighted average common shares outstanding—basic | 26,593 | 26,553 | 26,569 | 26,638 |
| Weighted average common shares outstanding—diluted | 26,702 | 26,703 | 26,654 | 26,866 |
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| Technology Segment | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, | Year Ended March 31, | |||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| (in thousands) | (in thousands) | |||||
| Net sales | ||||||
| Product | $414,493 | $357,753 | 15.9% | $1,750,802 | $1,492,411 | 17.3% |
| Services | 68,715 | 61,649 | 11.5% | 264,443 | 240,625 | 9.9% |
| Total | 483,208 | 419,402 | 15.2% | 2,015,245 | 1,733,036 | 16.3% |
| Cost of sales | ||||||
| Product | 315,794 | 276,352 | 14.3% | 1,370,061 | 1,175,789 | 16.5% |
| Services | 42,704 | 39,891 | 7.1% | 170,694 | 149,094 | 14.5% |
| Total | 358,498 | 316,243 | 13.4% | 1,540,755 | 1,324,883 | 16.3% |
| Gross profit | 124,710 | 103,159 | 20.9% | 474,490 | 408,153 | 16.3% |
| Selling, general, and administrative | 82,738 | 73,321 | 12.8% | 317,885 | 283,690 | 12.1% |
| Depreciation and amortization | 3,294 | 3,243 | 1.6% | 13,598 | 14,535 | (6.4%) |
| Interest and financing costs | 780 | 235 | 231.9% | 2,897 | 928 | 212.2% |
| Operating expenses | 86,812 | 76,799 | 13.0% | 334,380 | 299,153 | 11.8% |
| Operating income | $37,898 | $26,360 | 43.8% | $140,110 | $109,000 | 28.5% |
| Gross billings | $733,085 | $623,558 | 17.6% | $3,145,888 | $2,625,749 | 19.8% |
| Adjusted EBITDA | $44,049 | $31,542 | 39.7% | $164,184 | $131,353 | 25.0% |
| Technology Segment Net Sales by Customer End Market | ||||||
| --- | --- | --- | --- | |||
| Year Ended March 31, | ||||||
| 2023 | 2022 | Change | ||||
| (in thousands) | ||||||
| Telecom, Media & Entertainment | $532,921 | $502,408 | 6.1% | |||
| Technology | 393,594 | 250,485 | 57.1% | |||
| SLED | 290,624 | 241,769 | 20.2% | |||
| Healthcare | 274,936 | 270,481 | 1.6% | |||
| Financial Services | 156,257 | 155,160 | 0.7% | |||
| All others | 366,913 | 312,733 | 17.3% | |||
| Total | $2,015,245 | $1,733,036 | 16.3% |
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| Financing Segment | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, | Year Ended March 31, | |||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| (in thousands) | (in thousands) | |||||
| Net sales | $8,969 | $32,117 | (72.1%) | $52,473 | $87,983 | (40.4%) |
| Cost of sales | 1,354 | 19,925 | (93.2%) | 9,439 | 35,154 | (73.1%) |
| Gross profit | 7,615 | 12,192 | (37.5%) | 43,034 | 52,829 | (18.5%) |
| Selling, general, and administrative | 2,581 | 3,643 | (29.2%) | 15,635 | 13,427 | 16.4% |
| Depreciation and amortization | 28 | 27 | 3.7% | 111 | 111 | 0.0% |
| Interest and financing costs | 490 | 406 | 20.7% | 1,236 | 975 | 26.8% |
| Operating expenses | 3,099 | 4,076 | (24.0%) | 16,982 | 14,513 | 17.0% |
| Operating income | $4,516 | 8,116 | (44.4%) | $26,052 | $38,316 | (32.0%) |
| Adjusted EBITDA | $4,610 | 8,198 | (43.8%) | $26,408 | $38,651 | (31.7%) |
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ePlus inc. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION
We included reconciliations below for the following non-GAAP financial measures: (i) Adjusted EBITDA, (ii) Segment Adjusted EBITDA, (iii) non-GAAP Net Earnings and (iv) non-GAAP Net Earnings per Common Share - Diluted.
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.
We use the above non-GAAP financial measures as supplemental measures of our performance to gain insight into our operating performance and performance trends. We believe that such non-GAAP financial measures provide management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that such non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results.
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 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, | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| (in thousands) | ||||
| Consolidated | ||||
| Net earnings | $32,854 | $24,245 | $119,356 | $105,600 |
| Provision for income taxes | 9,484 | 10,176 | 43,618 | 41,284 |
| Depreciation and amortization [1] | 3,322 | 3,270 | 13,709 | 14,646 |
| Share based compensation | 2,143 | 1,759 | 7,824 | 7,114 |
| Interest and financing costs | 780 | 235 | 2,897 | 928 |
| Other expense, net [2] | 76 | 55 | 3,188 | 432 |
| Adjusted EBITDA | $48,659 | $39,740 | $190,592 | $170,004 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | ||
| (in thousands) | ||||
| Technology Segment | ||||
| Operating income | $37,898 | $26,360 | 140,110 | $109,000 |
| Depreciation and amortization [1] | 3,294 | 3,243 | 13,598 | 14,535 |
| Share based compensation | 2,077 | 1,704 | 7,579 | 6,890 |
| Interest and financing costs | 780 | 235 | 2,897 | 928 |
| Adjusted EBITDA | $44,049 | $31,542 | 164,184 | $131,353 |
All values are in US Dollars.
| Financing Segment | ||||
|---|---|---|---|---|
| Operating income | $4,516 | $8,116 | $26,052 | $38,316 |
| Depreciation and amortization [1] | 28 | 27 | 111 | 111 |
| Share based compensation | 66 | 55 | 245 | 224 |
| Adjusted EBITDA | $4,610 | $8,198 | $26,408 | $38,651 |
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| Three Months Ended March 31, | Year Ended March 31, | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| (in thousands) | ||||
| GAAP: Earnings before taxes | $42,338 | $34,421 | $162,974 | $146,884 |
| Share based compensation | 2,143 | $1,759 | 7,824 | 7,114 |
| Acquisition related amortization expense [3] | 2,229 | 2,218 | 9,411 | 10,072 |
| Other expense, net [2] | 76 | 55 | 3,188 | 432 |
| Non-GAAP: Earnings before provision for income taxes | 46,786 | 38,453 | 183,397 | 164,502 |
| GAAP: Provision for income taxes | 9,484 | 10,176 | 43,618 | 41,284 |
| Share based compensation | 480 | 520 | 2,104 | 2,014 |
| Acquisition related amortization expense [3] | 497 | 647 | 2,527 | 2,803 |
| Other expense, net [2] | 17 | 16 | 950 | 120 |
| Tax benefit (expense) on restricted stock | - | - | 267 | 317 |
| Non-GAAP: Provision for income taxes | 10,478 | 11,359 | 49,466 | 46,538 |
| Non-GAAP: Net earnings | $36,308 | $27,094 | $133,931 | $117,964 |
| Three Months Ended March 31, | Year Ended March 31, | |||
| --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |
| GAAP: Net earnings per common share – diluted | $1.23 | $0.91 | $4.48 | $3.93 |
| Share based compensation | 0.07 | 0.05 | 0.21 | 0.20 |
| Acquisition related amortization expense [3] | 0.06 | 0.05 | 0.26 | 0.26 |
| Other expense, net [2] | - | - | 0.08 | 0.01 |
| Tax benefit (expense) on restricted stock | - | - | (0.01) | (0.01) |
| Total non-GAAP adjustments – net of tax | 0.13 | 0.10 | 0.54 | 0.46 |
| Non-GAAP: Net earnings per common share – diluted | $1.36 | $1.01 | $5.02 | $4.39 |
| [1] Amount consists of depreciation and amortization for assets used internally. | ||||
| --- | ||||
| [2] Legal settlement, interest income and foreign currency transaction gains and losses. | ||||
| [3] Amount consists of amortization of intangible assets from acquired businesses. |
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