Second Quarter Gross Profit And Gross Margin Improved Year Over Year
Second Quarter Fiscal Year 2025 | |
• | Net sales decreased 12.3% to $515.2 million; technology business net sales decreased 13.8% to $493.3 million; service revenues increased 46.0% to $103.7 million. |
• | Technology business gross billings decreased 5.6% to $808.2 million. |
• | Consolidated gross profit increased 2.5% to $148.0 million. |
• | Consolidated gross margin was 28.7%, compared with 24.6% last year. |
• | Net earnings decreased 4.1% to $31.3 million. |
• | Adjusted EBITDA decreased 2.7% to $52.1 million. |
• | Diluted earnings per share decreased 4.1% to $1.17. Non-GAAP diluted earnings per share decreased 2.9% to $1.36. |
First Half Fiscal Year 2025 | |
• | Net sales decreased 8.8% to $1,059.7 million; technology business net sales decreased 9.6% to $1,028.8 million; service revenues increased 31.3% to $181.9 million. |
• | Technology business gross billings decreased 3.3% to $1,641.9 million. |
• | Consolidated gross profit decreased 1.5% to $282.5 million. |
• | Consolidated gross margin increased to 26.7%, compared with 24.7% last year. |
• | Net earnings decreased 11.8% to $58.6 million. |
• | Adjusted EBITDA decreased 11.3% to $95.3 million. |
• | Diluted earnings per share decreased 12.0% to $2.19. Non-GAAP diluted earnings per share decreased 11.0% to $2.50. |
HERNDON, Va., Nov. 12, 2024 /PRNewswire/ -- ePlus inc. (NASDAQ: PLUS), a leading provider of technology and financing solutions, today announced financial results for the three months and six months ended September 30, 2024, the second quarter of its 2025 fiscal year.
Management Comment
"Our results in the second quarter reflect the ongoing evolution of the industry towards ratable and subscription revenue models and slower product sales, partially offset by the continued strength of our services-led approach," said Mark Marron, president and CEO of ePlus. "Notably, we experienced a year on year increase in gross profit and gross margin on lower gross billings and net sales, driven by higher margin services revenues, which increased 46%, and strong financing revenues.
"During the quarter, we acquired Bailiwick Services, LLC, which will help us drive core to edge computing solutions for our enterprise customers. In addition, we continue to see a shift towards services and more software and subscription-based sales as a percentage of the whole, and these are often recognized ratably or on a net basis creating a net sales headwind. On the product front, artificial intelligence (AI) continues to progress, and our customers are exploring advantages to integrate AI into various aspects of their businesses."
Mr. Marron continued, "We ended the quarter with a solid balance sheet. Our healthy cash position enabled us to fund the acquisition of Bailiwick in the quarter, with ample additional liquidity to support our capital allocation priorities as we work to deliver increased shareholder value."
Second Quarter Fiscal Year 2025 Results
For the second quarter ended September 30, 2024, as compared to the second quarter ended September 30, 2023:
Consolidated net sales decreased 12.3% to $515.2 million, from $587.6 million.
Technology business net sales decreased 13.8% to $493.3 million, from $571.9 million as lower product sales were offset by higher service revenues. Technology business gross billings decreased 5.6% to $808.2 million from $856.5 million.
Product sales declined 22.2% to $389.6 million, from $500.9 million, due to lower demand combined with a shift in mix. Product margin was 22.9%, up from 20.9% last year due to a higher proportion of third-party maintenance, software subscriptions and services sold in the current quarter, which are recorded on a net basis.
Professional service revenues increased 61.7% from last year to $61.9 million, from $ 38.3 million, due in part to the acquisition of Bailiwick Services, LLC. Gross margins remained consistent at 41.3%.
Managed service revenues increased 27.6% to $41.8 million due to ongoing growth in these offerings, including Enhanced Maintenance Support and Cloud services. Gross profit from managed services increased 21.0% from last year due to the increase in revenues. Managed service margins declined to 29.5% from 31.1%.
Financing business segment net sales increased 39.7% to $21.9 million, from $15.7 million, primarily due to increases in transactional gains. Gross profit in the financing business segment increased $7.1 million, from $13.6 million last year to $20.7 million this year, due to the increase in net sales.
Consolidated gross profit increased 2.5% to $148.0 million, from $144.4 million. Consolidated gross margin was 28.7%, compared with last year's gross margin of 24.6%.
Consolidated operating expenses were $105.3 million, up 5.8% from $99.5 million last year, primarily due to increases in salaries and benefits from additional headcount, as well as increases in acquisition-related expenses of $1.0 million. Our headcount at the end of the quarter was 2,323, up 446 from a year ago. The acquisition of Bailiwick Services LLC on August 19, 2024 added 441 employees, and Peak Resources on January 27, 2024 added 24 employees. Of the 446 additional employees, 328 were customer facing employees.
Consolidated operating income decreased 4.8% to $42.7 million and earnings before tax decreased 3.7% to $43.3 million. Other income was $0.6 million compared to $0.1 million last year, as higher interest income of $2.4 million was offset by foreign exchange losses of $1.8 million.
Our effective tax rate for the current quarter was 27.7%, slightly higher than the prior year quarter of 27.4%.
Net earnings decreased 4.1% to $31.3 million.
Adjusted EBITDA in the technology business declined 17.3% and increased 68.9% in the financing business segment, and when combined, resulted in consolidated adjusted EBITDA decreasing 2.7% to $52.1 million.
Diluted earnings per common share was $1.17 for the second quarter ended September 30, 2024, compared with $1.22 in the prior year quarter. Non-GAAP diluted earnings per common share was $1.36 for the second quarter ended September 30, 2024, compared with $1.40 last year.
First Half Fiscal Year 2025 Results
For the six months ended September 30, 2024, as compared to the six months ended September 30, 2023:
Consolidated net sales decreased 8.8% to $1,059.7 million, from $1,161.8 million.
Technology business net sales decreased 9.6% to $1,028.8 million, from $1,137.6 million due to lower product sales, offset by higher service revenues. Technology business gross billings decreased 3.3% to $1,641.9 million from $1,698.5 million.
Product sales decreased 15.2% to $846.9 million, from $999.1 million, due to declines in customer demand, as well as a shift in product mix. Gross profit from sales of product decreased 13.1% to $187.9 million due to lower sales combined with a shift in mix towards third-party maintenance and services, which are recorded on a net basis.
Professional service revenues increased 34.3% due in part to the acquisition of Bailiwick Services, LLC. Gross margins increased slightly to 41.4%, from 41.3% for the same period in the prior year.
Managed service revenues increased 27.8% to $82.7 million, from $64.7 million, due to ongoing growth in these offerings, including Enhanced Maintenance Support, Cloud and Service Desk services. Gross profit from managed services increased 25.9% to $25.2 million, from $20.0 million, due to the increase in revenues. Gross margins declined slightly to 30.4% from 30.9% last year.
Financing business segment net sales increased 28.0% to $30.9 million, from $24.2 million, due to higher transactional gains and portfolio earnings offset by lower post-contract earnings. Gross profit in the financing business segment increased $8.4 million primarily due to the increase in sales.
Consolidated gross profit decreased to $282.5 million from $286.6 million. Consolidated gross margin was 26.7%, compared with last year's gross margin of 24.7%, due to higher product margins.
Operating expenses were $204.3 million, up 4.5% from $195.4 million last year, primarily due to increases in salaries and benefits as a result of increases in personnel and acquisition related amortization and expenses from the acquisition of Bailiwick Services LLC and Peak Resources.
Consolidated operating income decreased 14.3% to $78.2 million. Earnings before tax decreased 11.7% to $80.8 million. Other income was $2.7 million compared to $0.3 million last year, as higher interest income of $4.9 million was offset by foreign exchange losses of $2.3 million.
Our effective tax rate for the current year period was 27.4%, slightly higher than last year's 27.3%.
Net earnings decreased 11.8% to $58.6 million.
Adjusted EBITDA decreased 11.3% to $95.3 million.
Diluted earnings per common share was $2.19 for the six months ended September 30, 2024, compared with $2.49 in the prior year. Non-GAAP diluted earnings per common share was $2.50 for the six months ended September 30, 2024, compared with $2.81 last year.
Balance Sheet Highlights
As of September 30, 2024, cash and cash equivalents decreased to $187.5 million from $253.0 million as of March 31, 2024, due to the acquisition of Bailiwick Services, LLC, repurchases of our common stock, and working capital needs. Inventory decreased 32.8% to $93.9 million as of September 30, 2024, compared with $139.7 million as of March 31, 2024. Total stockholders' equity as of September 30, 2024 was $947.0 million, compared with $901.8 million as of March 31, 2024. Total shares outstanding were 26.8 million as of September 30, 2024, and 27.0 million as of March 31, 2024.
Fiscal Year Guidance
Fiscal year 2025 net sales are now expected to be similar to fiscal year 2024. The adjusted EBITDA range is now expected to be $195 million to $205 million. ePlus cannot predict with reasonable certainty and without unreasonable effort, the ultimate outcome of unusual gains and losses, the occurrence of matters creating GAAP tax impacts, fluctuations in interest expense or interest income and share-based compensation, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to the ePlus' results computed in accordance with GAAP. Accordingly, ePlus is unable to provide a reconciliation of GAAP net earnings to adjusted EBITDA for the full year 2025 forecast.
Summary and Outlook
"While we've seen some softening in enterprise demand due to prior absorption of purchases and global economic uncertainty, our outlook continues to reflect our prioritized investments in key high-growth categories such as AI, security and related software and services to drive long-term sustainable growth. Our customer relationships are strong and their feedback for our AI Ignite offering reinforces our view that clients are at the early stage of adoption for these solutions. We are well positioned to serve this emerging demand, and over the longer term, our strong balance sheet supports our ability to build on the success that we have achieved over the past several years," concluded Mr. Marron.
Recent Corporate Developments/Recognitions
In the second quarter of its 2025 fiscal year, ePlus:
- Achieved renewal of the Cisco Environmental Sustainability Specialization.
- Acquired Bailiwick Services, LLC.
- Announced Storage-as-a-Service Leveraging NetApp.
Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on November 12, 2024:
Date: | November 12, 2024 |
Time: | 4:30 p.m. ET |
Audio Webcast (Live & Replay): | https://events.q4inc.com/attendee/569325154 |
Live Call: | (888) 596-4144 (toll-free/domestic) |
(646) 968-2525 (international) | |
Archived Call: | (800) 770-2030 (toll-free/domestic) |
(609) 800-9909 (international) | |
Conference ID: | 5394845# (live call and replay) |
A replay of the call will be available approximately two hours after the call through November 13, 2024. A transcript of the call will also be available on the ePlus Investor Relations website at https://www.eplus.com/investors.
About ePlus inc.
ePlus is a customer-first, services-led, and results-driven industry leader offering transformative technology solutions and services to provide the best customer outcomes. Offering a full portfolio of solutions, including artificial intelligence, security, cloud and data center, networking, and collaboration, as well as managed, consultative and professional services, ePlus works closely with organizations across many industries to successfully navigate business challenges. With a long list of industry-leading partners and more than 2,300 employees, our expertise has been honed over more than three decades, giving us specialized yet broad levels of experience and knowledge. ePlus is headquartered in Virginia, with locations in the United States, United Kingdom, Europe, and Asia-Pacific. For more information, visit www.eplus.com, call 888-482-1122, or email [email protected]. Connect with ePlus on LinkedIn, X, 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," including, among other things, statements regarding the future financial performance of ePlus. Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, exposure to fluctuation in foreign currency rates, interest rates, and inflation, including as a result of national and international political instability fostering uncertainty and volatility in the global economy, which may cause increases in our costs and wages and our ability to increase prices to our customers, negative impacts to the arrangements that have pricing commitments over the term of an agreement and/or the loss of key lenders or constricting credit markets as a result of changing interest rates, which may result in adverse changes in our results of operations and financial position; significant adverse changes in, reductions in, or loss of one or more of our larger volume customers or vendors; 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; our ability to remain secure during a cybersecurity attack or other information technology ("IT") outage, including disruptions in our, our vendors or other third party's IT systems and data and audio communication networks; 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 and appropriately providing required notice and disclosure of cybersecurity incidents when and if necessary; ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely and our ability to adequately train our personnel to prevent a cyber event; the possibility of a reduction of vendor incentives provided to us; our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel by recruiting and retaining highly skilled, competent personnel, and vendor certifications; risks relating to use or capabilities of artificial intelligence ("AI") including social and ethical risks; our ability to manage a diverse product set of solutions, including AI products and services, in highly competitive markets with a number of key vendors; changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service ("IaaS"), software as a service ("SaaS"), platform as a service ("PaaS"), and AI; 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 delay 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; our inability to identify acquisition candidates, perform sufficient due diligence prior to completing an acquisition, successfully integrate a completed acquisition, or identify an opportunity for or successfully complete a business disposition, may affect our earnings; our ability to raise capital, maintain or increase as needed our lines of credit with vendors or our floor plan facility, 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; 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 either as a result of new information, future events or otherwise, except as required by applicable U.S. securities law.
ePlus inc. AND SUBSIDIARIES | ||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||
(in thousands, except per share amounts) | ||||
September 30, 2024 | March 31, 2024 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $187,528 | $253,021 | ||
Accounts receivable-trade, net | 587,998 | 644,616 | ||
Accounts receivable-other, net | 76,102 | 46,884 | ||
Inventories | 93,857 | 139,690 | ||
Financing receivables-net, current | 136,357 | 102,600 | ||
Deferred costs | 61,874 | 59,449 | ||
Other current assets | 58,663 | 27,269 | ||
Total current assets | 1,202,379 | 1,273,529 | ||
Financing receivables and operating leases-net | 90,561 | 79,435 | ||
Deferred tax asset | 5,633 | 5,620 | ||
Property, equipment and other assets | 104,081 | 89,289 | ||
Goodwill | 203,233 | 161,503 | ||
Other intangible assets-net | 94,167 | 44,093 | ||
TOTAL ASSETS | $1,700,054 | $1,653,469 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
LIABILITIES | ||||
Current liabilities: | ||||
Accounts payable | $281,927 | $315,676 | ||
Accounts payable-floor plan | 115,660 | 105,104 | ||
Salaries and commissions payable | 45,163 | 43,696 | ||
Deferred revenue | 143,334 | 134,596 | ||
Non-recourse notes payable-current | 28,970 | 23,288 | ||
Other current liabilities | 34,868 | 34,630 | ||
Total current liabilities | 649,922 | 656,990 | ||
Non-recourse notes payable-long-term | 9,723 | 12,901 | ||
Other liabilities | 93,412 | 81,799 | ||
TOTAL LIABILITIES | 753,057 | 751,690 | ||
COMMITMENTS AND CONTINGENCIES | ||||
STOCKHOLDERS' EQUITY | ||||
Preferred stock, $0.01 per share par value; 2,000 shares | - | - | ||
Common stock, $0.01 per share par value; 50,000 shares | 276 | 274 | ||
Additional paid-in capital | 187,330 | 180,058 | ||
Treasury stock, at cost, 750 shares at September 30, 2024 and | ||||
447 shares at March 31, 2024 | (47,461) | (23,811) | ||
Retained earnings | 801,627 | 742,978 | ||
Accumulated other comprehensive income-foreign currency | ||||
translation adjustment | 5,225 | 2,280 | ||
Total Stockholders' Equity | 946,997 | 901,779 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,700,054 | $1,653,469 |
ePlus inc. AND SUBSIDIARIES | |||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(in thousands, except per share amounts) | |||||||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net sales | |||||||
Product | $411,505 | $516,609 | $877,854 | $1,023,265 | |||
Services | 103,667 | 71,002 | 181,856 | 138,521 | |||
Total | 515,172 | 587,611 | 1,059,710 | 1,161,786 | |||
Cost of sales | |||||||
Product | 301,436 | 398,234 | 661,593 | 787,138 | |||
Services | 65,745 | 45,012 | 115,645 | 88,010 | |||
Total | 367,181 | 443,246 | 777,238 | 875,148 | |||
Gross profit | 147,991 | 144,365 | 282,472 | 286,638 | |||
Selling, general, and administrative | 98,971 | 92,652 | 192,579 | 182,950 | |||
Depreciation and amortization | 5,765 | 5,630 | 10,584 | 10,422 | |||
Interest and financing costs | 537 | 1,220 | 1,122 | 2,071 | |||
Operating expenses | 105,273 | 99,502 | 204,285 | 195,443 | |||
Operating income | 42,718 | 44,863 | 78,187 | 91,195 | |||
Other income (expense), net | 579 | 117 | 2,652 | 307 | |||
Earnings before taxes | 43,297 | 44,980 | 80,839 | 91,502 | |||
Provision for income taxes | 11,987 | 12,316 | 22,190 | 24,991 | |||
Net earnings | $31,310 | $32,664 | $58,649 | $66,511 | |||
Net earnings per common share-basic | $1.18 | $1.23 | $2.20 | $2.50 | |||
Net earnings per common share-diluted | $1.17 | $1.22 | $2.19 | $2.49 | |||
Weighted average common shares outstanding-basic | 26,567 | 26,624 | 26,604 | 26,588 | |||
Weighted average common shares outstanding-diluted | 26,676 | 26,679 | 26,750 | 26,659 | |||
Technology Business | |||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | ||||||
(in thousands) | (in thousands) | ||||||||||
Net sales | |||||||||||
Product | $389,613 | $500,937 | (22.2 %) | $846,925 | $999,103 | (15.2 %) | |||||
Professional services | 61,900 | 38,270 | 61.7 % | 99,179 | 73,826 | 34.3 % | |||||
Managed services | 41,767 | 32,732 | 27.6 % | 82,677 | 64,695 | 27.8 % | |||||
Total | 493,280 | 571,939 | (13.8 %) | 1,028,781 | 1,137,624 | (9.6 %) | |||||
Gross profit | |||||||||||
Product | 89,359 | 104,749 | (14.7 %) | 187,864 | 216,140 | (13.1 %) | |||||
Professional services | 25,583 | 15,796 | 62.0 % | 41,038 | 30,520 | 34.5 % | |||||
Managed services | 12,339 | 10,194 | 21.0 % | 25,173 | 19,991 | 25.9 % | |||||
Total | 127,281 | 130,739 | (2.6 %) | 254,075 | 266,651 | (4.7 %) | |||||
Selling, general, and administrative | 94,050 | 88,593 | 6.2 % | 184,134 | 175,693 | 4.8 % | |||||
Depreciation and amortization | 5,765 | 5,602 | 2.9 % | 10,584 | 10,366 | 2.1 % | |||||
Interest and financing costs | - | 661 | (100.0 %) | - | 1,211 | (100.0 %) | |||||
Operating expenses | 99,815 | 94,856 | 5.2 % | 194,718 | 187,270 | 4.0 % | |||||
Operating income | $27,466 | $35,883 | (23.5 %) | $59,357 | $79,381 | (25.2) % | |||||
Gross billings | $808,229 | $856,495 | (5.6 %) | $1,641,937 | $1,698,465 | (3.3) % | |||||
Adjusted EBITDA | $36,804 | $44,496 | (17.3 %) | $76,305 | $95,445 | (20.1) % | |||||
Technology Business Gross Billings by Type | |||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | ||||||
(in thousands) | (in thousands) | ||||||||||
Cloud | $195,852 | $200,637 | (2.4 %) | $437,126 | $459,561 | (4.9 %) | |||||
Networking | 219,797 | 311,671 | (29.5 %) | 501,325 | 588,316 | (14.8 %) | |||||
Security | 163,565 | 143,340 | 14.1 % | 315,448 | 290,683 | 8.5 % | |||||
Collaboration | 46,717 | 51,770 | (9.8 %) | 79,693 | 73,931 | 7.8 % | |||||
Other | 72,545 | 78,571 | (7.7 %) | 117,137 | 148,332 | (21.0 %) | |||||
Product gross billings | 698,476 | 785,989 | (11.1 %) | 1,450,729 | 1,560,823 | (7.1 %) | |||||
Service gross billings | 109,752 | 70,506 | 55.7 % | 191,207 | 137,642 | 38.9 % | |||||
Total gross billings | $808,228 | $856,495 | (5.6 %) | $1,641,936 | $1,698,465 | (3.5 %) | |||||
Technology Business Net Sales by Type | |||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | ||||||
(in thousands) | (in thousands) | ||||||||||
Cloud | $121,336 | $135,068 | (10.2 %) | $258,567 | $307,112 | (15.8 %) | |||||
Networking | 186,776 | 268,636 | (30.5 %) | 421,516 | 513,824 | (18.0 %) | |||||
Security | 41,209 | 51,886 | (20.6 %) | 89,214 | 97,682 | (8.7 %) | |||||
Collaboration | 17,988 | 27,083 | (33.6 %) | 38,887 | 40,039 | (2.9 %) | |||||
Other | 22,304 | 18,264 | 22.1 % | 38,741 | 40,446 | (4.2 %) | |||||
Total product | 389,613 | 500,937 | (22.2 %) | 846,925 | 999,103 | (15.2 %) | |||||
Professional services | 61,900 | 38,270 | 61.7 % | 99,179 | 73,826 | 34.3 % | |||||
Managed services | 41,767 | 32,732 | 27.6 % | 82,677 | 64,695 | 27.8 % | |||||
Total net sales | $493,280 | $571,939 | (13.8 %) | $1,028,781 | $1,137,624 | (9.6 %) | |||||
Technology Business Net Sales by Customer End Market | |||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | ||||||
(in thousands) | (in thousands) | ||||||||||
Telecom, Media, & Entertainment | $108,870 | $124,306 | (12.4 %) | $226,423 | $265,641 | (14.8 %) | |||||
Technology | 54,988 | 110,948 | (50.4 %) | 164,094 | 184,351 | (11.0 %) | |||||
SLED | 97,687 | 94,906 | 2.9 % | 189,783 | 204,311 | (7.1 %) | |||||
Healthcare | 78,235 | 72,022 | 8.6 % | 153,515 | 158,678 | (3.3 %) | |||||
Financial Services | 34,759 | 69,885 | (50.3 %) | 84,484 | 135,575 | (37.7 %) | |||||
All other | 118,741 | 99,872 | 18.9 % | 210,482 | 189,068 | 11.3 % | |||||
Total net sales | $493,280 | $571,939 | (13.8 %) | $1,028,781 | $1,137,624 | (9.6 %) | |||||
Financing Business Segment | |||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | ||||||
(in thousands) | (in thousands) | ||||||||||
Portfolio earnings | $4,864 | $3,339 | 45.7 % | $9,025 | $6,412 | 40.8 % | |||||
Transactional gains | 14,502 | 6,949 | 108.7 % | 15,795 | 8,228 | 92.0 % | |||||
Post-contract earnings | 2,105 | 5,038 | (58.2 %) | 5,420 | 8,672 | (37.5 %) | |||||
Other | 421 | 346 | 21.7 % | 689 | 850 | (18.9 %) | |||||
Net sales | 21,892 | 15,672 | 39.7 % | 30,929 | 24,162 | 28.0 % | |||||
Gross profit | 20,710 | 13,626 | 52.0 % | 28,397 | 19,987 | 42.1 % | |||||
Selling, general, and administrative | 4,921 | 4,059 | 21.2 % | 8,445 | 7,257 | 16.4 % | |||||
Depreciation and amortization | - | 28 | (100.0 %) | - | 56 | (100.0 %) | |||||
Interest and financing costs | 537 | 559 | (3.9 %) | 1,122 | 860 | 30.5 % | |||||
Operating expenses | 5,458 | 4,646 | 17.5 % | 9,567 | 8,173 | 17.1 % | |||||
Operating income | $15,252 | $8,980 | 69.8 % | $18,830 | $11,814 | 59.4 % | |||||
Adjusted EBITDA | $15,319 | $9,072 | 68.9 % | $18,961 | $12,002 | 58.0 % | |||||
ePlus inc. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION
We included reconciliations below for the following non-GAAP financial measures: (i) Adjusted EBITDA, (ii) Adjusted EBITDA for business segments, (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 US GAAP, adjusted for the following: interest expense, depreciation and amortization, share-based compensation, acquisition and integration expenses, provision for income taxes, and other income (expense). Adjusted EBITDA presented for the technology business segments and the financing business segment is defined as operating income calculated in accordance with US 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 business segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses. As such, they are not included in the amounts added back to net earnings in the Adjusted EBITDA calculation.
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.
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(in thousands) | |||||||
Consolidated | |||||||
Net earnings | $31,310 | $32,664 | $58,649 | $66,511 | |||
Provision for income taxes | 11,987 | 12,316 | 22,190 | 24,991 | |||
Share based compensation | 2,597 | 2,414 | 5,452 | 4,619 | |||
Acquisition related expenses | 1,043 | - | 1,043 | - | |||
Interest and financing costs | - | 661 | - | 1,211 | |||
Depreciation and amortization [1] | 5,765 | 5,630 | 10,584 | 10,422 | |||
Other (income) expense, net [2] | (579) | (117) | (2,652) | (307) | |||
Adjusted EBITDA | $52,123 | $53,568 | $95,266 | $107,447 | |||
Technology Business Segments | |||||||
Operating income | $27,466 | $35,883 | $59,357 | $79,381 | |||
Share based compensation | 2,530 | 2,350 | 5,321 | 4,487 | |||
Depreciation and amortization [1] | 5,765 | 5,602 | 10,584 | 10,366 | |||
Acquisition related expenses | 1,043 | - | 1,043 | - | |||
Interest and financing costs | - | 661 | - | 1,211 | |||
Adjusted EBITDA | $36,804 | $44,496 | $76,305 | $95,445 | |||
Financing Business Segment | |||||||
Operating income | $15,252 | $8,980 | $18,830 | $11,814 | |||
Share based compensation | 67 | 64 | 131 | 132 | |||
Depreciation and amortization [1] | - | 28 | - | 56 | |||
Adjusted EBITDA | $15,319 | $9,072 | $18,961 | $12,002 | |||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(in thousands) | |||||||
GAAP: Earnings before taxes | $43,297 | $44,980 | $80,839 | $91,502 | |||
Share based compensation | 2,597 | 2,414 | 5,452 | 4,619 | |||
Acquisition related expenses | 1,043 | - | 1,043 | - | |||
Acquisition related amortization expense [3] | 4,447 | 4,023 | 8,197 | 7,492 | |||
Other (income) expense [2] | (579) | (117) | (2,652) | (307) | |||
Non-GAAP: Earnings before provision for income taxes | 50,805 | 51,300 | 92,879 | 103,306 | |||
GAAP: Provision for income taxes | 11,987 | 12,316 | 22,190 | 24,991 | |||
Share based compensation | 730 | 665 | 1,529 | 1,272 | |||
Acquisition related expenses | 293 | - | 293 | - | |||
Acquisition related amortization expense [3] | 1,246 | 1,106 | 2,293 | 2,058 | |||
Other (income) expense, net [2] | (163) | (32) | (743) | (84) | |||
Tax benefit (expense) on restricted stock | 184 | 79 | 492 | 216 | |||
Non-GAAP: Provision for income taxes | 14,277 | 14,134 | 26,054 | 28,453 | |||
Non-GAAP: Net earnings | $36,528 | $37,166 | $66,825 | $74,853 | |||
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
GAAP: Net earnings per common share - diluted | $1.17 | $1.22 | $2.19 | $2.49 | |||
Share based compensation | 0.07 | 0.07 | 0.15 | 0.13 | |||
Acquisition related expenses | 0.03 | - | 0.03 | - | |||
Acquisition related amortization expense [3] | 0.12 | 0.11 | 0.22 | 0.20 | |||
Other (income) expense, net [2] | (0.02) | - | (0.07) | - | |||
Tax benefit (expense) on restricted stock | (0.01) | - | (0.02) | (0.01) | |||
Total non-GAAP adjustments - net of tax | 0.19 | 0.18 | 0.31 | 0.32 | |||
Non-GAAP: Net earnings per common share - diluted | $1.36 | $1.40 | $2.50 | $2.81 | |||
[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. |
SOURCE EPLUS INC.
