Contact:
Kleyton Parkhurst, SVP
ePlus inc.
kparkhurst@eplus.com
703-984-8150
ePlus inc. AND
SUBSIDIARIES |
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UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
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(in thousands, except per shares
amounts) |
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September 30, 2018 | March 31, 2018 | ||
ASSETS | (as adjusted) |
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Current assets: | |||
Cash and cash equivalents | $75,647 | $118,198 | |
Accounts receivable—trade, net | 292,045 | 268,287 | |
Accounts receivable—other, net | 40,312 | 28,401 | |
Inventories | 56,606 | 39,855 | |
Financing receivables—net, current | 86,253 | 69,936 | |
Deferred costs | 16,211 | 16,589 | |
Other current assets | 10,716 | 23,625 | |
Total current assets | 577,790 | 564,891 | |
Financing receivables and operating leases—net | 79,119 | 68,511 | |
Property, equipment and other assets | 18,037 | 19,143 | |
Goodwill | 76,445 | 76,624 | |
Other intangible assets—net | 23,805 | 26,302 | |
TOTAL ASSETS | 775,196 | 755,471 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
LIABILITIES | |||
Current liabilities: | |||
Accounts payable | $92,830 | $106,933 | |
Accounts payable—floor plan | 120,771 | 112,109 | |
Salaries and commissions payable | 17,596 | 19,801 | |
Deferred revenue | 35,860 | 35,648 | |
Recourse notes payable—current | - | 1,343 | |
Non-recourse notes payable—current | 52,630 | 40,863 | |
Other current liabilities | 20,698 | 33,370 | |
Total current liabilities | 340,385 | 350,067 | |
Non-recourse notes payable—long term | 12,656 | 10,072 | |
Deferred tax liability—net | 1,644 | 1,662 | |
Other liabilities | 21,234 | 21,067 | |
TOTAL LIABILITIES | 375,919 | 382,868 | |
COMMITMENTS AND CONTINGENCIES | |||
STOCKHOLDERS' EQUITY | |||
Preferred stock, $.01 per share par value; 2,000 shares authorized; none outstanding | - | - | |
Common stock, $.01 per share par value; 25,000 shares authorized; 13,727 outstanding at September 30, 2018 and 13,761 outstanding at March 31, 2018 | 143 | 142 | |
Additional paid-in capital | 133,561 | 130,000 | |
Treasury stock, at cost, 578 shares at September 30, 2018 and 467 shares at March 31, 2018 | (45,380) | (36,016) | |
Retained earnings | 311,221 | 277,945 | |
Accumulated other comprehensive income—foreign currency translation adjustment | (268) | 532 | |
Total Stockholders' Equity | 399,277 | 372,603 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $775,196 | $755,471 |
ePlus inc. AND
SUBSIDIARIES |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS |
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(in thousands, except per share
amounts) |
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Three Months Ended |
Six Months Ended |
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September 30, |
September 30, |
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2018 | 2017 | 2018 | 2017 | ||||
(as adjusted) | (as adjusted) | ||||||
Net sales | $345,043 | $371,363 | $701,575 | $744,719 | |||
Cost of sales | 259,543 | 283,792 | 535,372 | 579,555 | |||
Gross profit | 85,500 | 87,571 | 166,203 | 165,164 | |||
Selling, general, and administrative expenses | 57,705 | 56,340 | 114,671 | 111,004 | |||
Depreciation and amortization | 2,741 | 2,129 | 5,531 | 4,192 | |||
Interest and financing costs | 484 | 274 | 960 | 633 | |||
Operating expenses | 60,930 | 58,743 | 121,162 | 115,829 | |||
Operating income | 24,570 | 28,828 | 45,041 | 49,335 | |||
Other income (expense) | 322 | (141) | 419 | 130 | |||
Earnings before taxes | 24,892 | 28,687 | 45,460 | 49,465 | |||
Provision for income taxes | 6,889 | 11,466 | 12,184 | 18,821 | |||
Net earnings | $18,003 | $17,221 | $33,276 | $30,644 | |||
Net earnings per common share—basic | $1.33 | $1.24 | $2.47 | $2.21 | |||
Net earnings per common share—diluted | $1.33 | $1.23 | $2.45 | $2.19 | |||
Weighted average common shares outstanding—basic | 13,494 | 13,879 | 13,464 | 13,843 | |||
Weighted average common shares outstanding—diluted | 13,586 | 14,008 | 13,597 | 14,021 |
Technology
Segment |
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Three Months Ended September 30, |
Six Months Ended September 30, |
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2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||
(in thousands) |
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Net sales | $334,768 | $358,678 | (6.7%) | $681,632 | $721,577 | (5.5%) | |||||
Cost of sales | 257,813 | 281,829 | (8.5%) | 531,894 | 575,095 | (7.5%) | |||||
Gross profit | 76,955 | 76,849 | 0.1% | 149,738 | 146,482 | 2.2% | |||||
Selling, general, and administrative expenses | 55,138 | 53,503 | 3.1% | 109,592 | 105,004 | 4.4% | |||||
Depreciation and amortization | 2,740 | 2,128 | 28.8% | 5,529 | 4,190 | 32.0% | |||||
Operating expenses | 57,878 | 55,631 | 4.0% | 115,121 | 109,194 | 5.4% | |||||
Operating income | $19,077 | $21,218 | (10.1%) | $34,617 | $37,288 | (7.2%) | |||||
Key Business Metrics | |||||||||||
Adjusted gross billings | $485,856 | $504,500 | (3.7%) | $968,157 | $992,004 | (2.4%) | |||||
Adjusted EBITDA | $24,284 | $25,613 | (5.2%) | $44,625 | $45,499 | (1.9%) |
Technology Segment Net Sales by Customer End Market | |||||
Twelve Months Ended September 30, | |||||
2018 | 2017 | Change | |||
Technology |
23% | 24% | (1%) | ||
State & Local Government & Educational Institutions | 17% | 18% | (1%) | ||
Telecom, Media, and Entertainment | 13% | 15% | (2%) | ||
Financial Services | 15% | 14% | 1% | ||
​Healthcare | 15% | 12% | 3% | ||
​All others | 17% | 17% | - | ||
Total | 100% | 100% |
Financing
Segment |
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Three Months Ended September 30, |
Six Months Ended September 30, |
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2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||
(in thousands) |
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Net sales | 10,275 | 12,685 | (19.0%) | 19,943 | 23,142 | (13.8%) | |||||
Cost of sales | 1,730 | 1,963 | (11.9%) | 3,478 | 4,460 | (22.0%) | |||||
Gross profit | 8,545 | 10,722 | (20.3%) | 16,465 | 18,682 | (11.9%) | |||||
Selling, general, and administrative expenses | 2,567 | 2,837 | (9.5%) | 5,079 | 6,000 | (15.4%) | |||||
Depreciation and amortization | 1 | 1 | 0.0% | 2 | 2 | 0.0% | |||||
Interest and financing costs | 484 | 274 | 76.6% | 960 | 633 | 51.7% | |||||
Operating expenses | 3,052 | 3,112 | (1.9%) | 6,041 | 6,635 | (9.0%) | |||||
Operating income | $5,493 | $7,610 | (27.8%) | $10,424 | $12,047 | (13.5%) | |||||
Key Business Metrics | |||||||||||
Adjusted EBITDA | $5,596 | $7,706 | (27.4%) | $10,625 | $12,227 | (13.1%) |
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, and (iv) 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. The presentation of adjusted gross billings has been updated from prior period presentations to align with net sales within our technology segment.
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 expenses, provision for income taxes, and other income. 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 per common share are based on net earnings calculated in accordance with GAAP, adjusted to exclude other income, share based compensation, and acquisition and integration expenses, and the related tax effects. The presentation of non-GAAP net earnings and non-GAAP net earnings per common share – diluted have been changed from prior period presentations to adjust our tax expense assuming a statutory income tax rate of 21.0% for U.S. operations. .
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 similar non-GAAP Adjusted Gross Billings, Adjusted EBITDA, and non-GAAP Net Earnings per Common Share - Diluted or similarly titled measures differently, which may reduce their usefulness as comparative measures.
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
(in thousands) | |||||||
Technology segment net sales | $334,768 | $358,678 | $681,632 | $721,577 | |||
Costs incurred related to sales of third party maintenance, software assurance and subscription/Saas licenses, and services | |||||||
151,088 | 145,822 | 286,525 | 270,427 | ||||
Adjusted gross billings | $485,856 | $504,500 | $968,157 | $992,004 | |||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
(in thousands) | |||||||
Consolidated | |||||||
Net earnings | $18,003 | $17,221 | $33,276 | $30,644 | |||
Provision for income taxes | 6,889 | 11,466 | 12,184 | 18,821 | |||
Depreciation and amortization [1] | 2,741 | 2,129 | 5,531 | 4,192 | |||
Share based compensation | 1,868 | 1,673 | 3,561 | 3,180 | |||
Acquisition related expenses | 701 | 689 | 1,117 | 1,019 | |||
Other (income) expense [2] | (322) | 141 | (419) | (130) | |||
Adjusted EBITDA | $29,880 | $33,319 | $55,250 | $57,726 | |||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
(in thousands) | |||||||
Technology Segment | |||||||
Operating income | $19,077 | $21,218 | $34,617 | $37,288 | |||
Depreciation and amortization [1] | 2,740 | 2,128 | 5,529 | 4,190 | |||
Share based compensation | 1,766 | 1,578 | 3,362 | 3,002 | |||
Acquisition and integration expenses | 701 | 689 | 1,117 | 1,019 | |||
Segment Adjusted EBITDA | $24,284 | $25,613 | $44,625 | $45,499 | |||
Financing Segment | |||||||
Operating income | $5,493 | $7,610 | $10,424 | $12,047 | |||
Depreciation and amortization [1] | 1 | 1 | 2 | 2 | |||
Share based compensation | 102 | 95 | 199 | 178 | |||
Segment Adjusted EBITDA | $5,596 | $7,706 | $10,625 | $12,227 |
Three Months Ended September 30, |
Six Months Ended September 30, |
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2018 | 2017 | 2018 | 2017 | ||||
(in thousands, except per share data) | |||||||
GAAP: Earnings before taxes | $24,892 | $28,687 | $45,460 | $49,465 | |||
Share based compensation | 1,868 | 1,673 | 3,561 | 3,180 | |||
Acquisition related expenses | 701 | 689 | 1,117 | 1,019 | |||
Acquisition related amortization expense [3] | 1,719 | 1,186 | 3,483 | 2,307 | |||
Other (income) expense [2] | (322) | 141 | (419) | (130) | |||
Non-GAAP: Earnings before taxes | 28,858 | 32,376 | 53,202 | 55,841 | |||
GAAP: Provision for income taxes | 6,889 | 11,466 | 12,184 | 18,821 | |||
Share based compensation | 525 | 483 | 1,008 | 918 | |||
Acquisition related expenses | 197 | 199 | 316 | 294 | |||
Acquisition related amortization expense [3] | 455 | 309 | 929 | 600 | |||
Other (income) expense [2] | (90) | 41 | (118) | (37) | |||
Adjustment to US federal tax rate to 21% | - | (3,792) | - | (6,514) | |||
Tax benefit on restricted stock | 103 | 189 | 672 | 1,444 | |||
Non-GAAP: Provision for income taxes | 8,079 | 8,895 | 14,991 | 15,526 | |||
Non-GAAP: Net earnings | $20,779 | $23,481 | $38,221 | $40,315 | |||
GAAP: Net earnings per common share – diluted | $1.33 | $1.23 | $2.45 | $2.19 | |||
Non-GAAP: Net earnings per common share – diluted | $1.53 | $1.68 | $2.81 | $2.88 |
[1] Amount consists of depreciation and amortization for assets used internally, including acquisition related amortization expense. |
[2] Interest income and foreign currency transaction gains and losses. |
[3] Amount consists of amortization of intangible assets from acquired businesses. |