Second Quarter Fiscal Year 2017
- Net sales increased 10.5% to $371.5 million; technology segment net sales increased 11.3% to $362.7 million.
- Adjusted gross billings of product and services increased 13.0% to $487.3 million.
- Gross margin on sales of product and services expanded 80 basis points to 20.2%; consolidated gross margin increased 70 basis points to 22.1%.
- Net earnings increased 7.0% to $16.8 million.
- Adjusted EBITDA increased 7.4% to $29.9 million.
- Diluted earnings per share increased 12.6% to $2.42. Non-GAAP diluted earnings per share increased 12.8% to $2.47.
First Half Fiscal Year 2017
- Net sales increased 10.5% to $670.0 million; technology segment net sales increased 11.4% to $654.2 million.
- Adjusted gross billings of product and services increased 15.9% to $884.8 million.
- Gross margin on sales of product and services expanded 80 basis points to 20.5%; consolidated gross margin increased 70 basis points to 22.3%.
- Net earnings increased 12.1% to $27.4 million.
- Adjusted EBITDA increased 11.4% to $49.2 million.
- Diluted earnings per share increased 16.7% to $3.91. Non-GAAP diluted earnings per share increased 16.3% to $4.00.
HERNDON, Va., Nov. 03, 2016 (GLOBE NEWSWIRE) -- ePlus inc. (NASDAQ:PLUS), a leading provider of technology solutions, today announced financial results for the three and six months ended September 30, 2016.
Management Comment
“Our strong fiscal second quarter and year-to-date performance was driven by the effective execution of our long-term strategy to grow organically and through acquisitions, serve the current needs of our expanding customer base, and continue to invest in the development of new solutions to capture future opportunities,” said Mark P. Marron, Chief Executive Officer and President of ePlus inc. “We are particularly pleased by the double digit growth in both net sales and in adjusted gross billings of products and services, and by the 80 basis points of gross margin expansion on sales of product and services achieved in the second quarter. Our quarterly gross margin performance reflects an increase in gross profit from products and services and continued strong sales of third party maintenance and software assurance contracts.”
“While our end markets continue to be very competitive, we remain committed to our strategy to achieve long term growth. Steady investment in our solution sets such as Cloud Aggregated Services and hyperconverged solutions provides us with a solid platform for long-term organic growth through both new customer acquisition and expanding the percentage of IT spend we capture at our existing customers.”
Second Quarter Fiscal 2017 Results
For the second quarter ended September 30, 2016 as compared to the second quarter of the prior fiscal year ended September 30, 2015:
Consolidated net sales rose 10.5% to $371.5 million, from $336.3 million.
Technology segment net sales rose 11.3% to $362.7 million, from $326.0 million.
Adjusted gross billings of product and services increased 13.0% to $487.3 million. Adjusted gross billings are sales of product and services adjusted to exclude the costs incurred of applicable third-party software assurance, maintenance, and services.
Financing segment net sales decreased 15.1% to $8.7 million, from $10.3 million due to lower portfolio earnings and transactional gains.
Consolidated gross profit rose 13.9% to $81.9 million, from $71.9 million.
Consolidated operating income rose 5.8% to $28.2 million, from $26.7 million.
During the second quarter of fiscal 2017, we received $0.4 million related to the dynamic random access memory (“DRAM”) class action lawsuit, which claimed that manufacturers fixed the price for DRAM (a memory part that is sold as part of electronic devices), which was included in other income.
Net earnings rose 7.0% to $16.8 million, inclusive of non-operating income of $0.4 million relating to the Company’s claim in the class action lawsuit mentioned above.
Adjusted EBITDA rose 7.4% to $29.9 million, from $27.9 million.
Diluted earnings per share was $2.42, compared with $2.15 in the second quarter of fiscal 2016. Non-GAAP diluted earnings per share was $2.47, compared with $2.19 last year. Non-GAAP diluted earnings per share is based on net earnings calculated in accordance with GAAP, adjusted to exclude other income and acquisition related amortization expense, net of taxes and a tax benefit of $0.1 million recognized in the current quarter, related to the adoption of the share-based compensation accounting standard.
First Half Fiscal 2017 Results
For the six months ended September 30, 2016 as compared to the six months ended September 30, 2015:
Consolidated net sales rose 10.5% to $670.0 million, from $606.2 million.
Technology segment net sales rose 11.4% to $654.2 million, from $587.5 million.
Adjusted gross billings of product and services increased 15.9% to $884.8 million.
Financing segment net sales decreased 15.4% to $15.8 million, from $18.7 million due to lower portfolio earnings and transactional gains.
Consolidated gross profit rose 14.2% to $149.6 million, from $131.1 million.
Consolidated operating income rose 9.5% to $45.7 million, from $41.7 million.
During the second quarter of fiscal 2017, we received $0.4 million related to the DRAM class action lawsuit, which claimed that manufacturers fixed the price for DRAM (a memory part that is sold as part of electronic devices).
Net earnings rose 12.1% to $27.4 million, inclusive of non-operating income of $0.4 million relating to the Company’s claim in the class action lawsuit mentioned above. Our effective tax rate for the first half of fiscal 2017 was 40.4%, which includes a tax benefit of $0.5 million, or $0.07 per diluted share, related to the adoption of the new share-based compensation accounting standard.
Adjusted EBITDA rose 11.4% to $49.2 million, from $44.1 million.
Diluted earnings per share was $3.91, compared with $3.35 in the first half of fiscal 2016. Non-GAAP diluted earnings per share was $4.00, compared with $3.44 last year. Non-GAAP diluted earnings per share is based on net earnings calculated in accordance with GAAP, adjusted to exclude other income and acquisition related amortization expense, net of taxes and the tax benefit of $0.5 million recognized in fiscal 2017.
Balance Sheet Highlights
As of September 30, 2016, ePlus had cash and cash equivalents of $48.0 million, compared with $94.8 million as of March 31, 2016. The decrease is primarily the result of investments made in our financing portfolio, working capital required for the growth in our technology segment, an increase in committed inventory to $80.5 million, and 328,481 shares bought under our share repurchase plan. Our cash conversion cycle remained consistent with prior periods. Total stockholders' equity was $319.7 million and total shares outstanding were 7.1 million, compared with $318.9 million and shares outstanding of 7.4 million on March 31, 2016.
Summary and Outlook
“Our continued investment in growing customer facing headcount, increasing our services offerings and capabilities, and delivering advanced technology solutions are particularly valuable in our efforts to penetrate the Fortune 500. We have diverse solutions offerings which target the most critical IT needs of our customers, a strong balance sheet, and a competitive, entrepreneurial culture which helps drive results. While overall industry growth continues to remain modest, based on our financial position, operational expertise and growing customer base, we believe we are well positioned to grow ahead of the overall market in 2017,” Mr. Marron continued.
Results of Operations – Three Months Ended September 30, 2016
The Company's operations are conducted through two business segments. The technology segment includes sales of information technology products, third-party software, third-party maintenance contracts, advanced professional services and managed services, and the Company's proprietary software to commercial entities and state and local governments. The financing segment consists of the financing of equipment, software, and related services to commercial entities, state and local governments, and federal government contractors.
Technology Segment
The results of operations for the technology segment for the three months ended September 30, 2016 and 2015 were as follows (dollars in thousands):
| Three Months Ended September 30, | ||||||||||||||||
| 2016 | 2015 | Change | ||||||||||||||
| Sales of product and services | $ | 361,227 | $ | 324,259 | $ | 36,968 | 11.4 | % | ||||||||
| Fee and other income | 1,488 | 1,721 | (233 | ) | (13.5 | %) | ||||||||||
| Net sales | 362,715 | 325,980 | 36,735 | 11.3 | % | |||||||||||
| Cost of sales, product and services | 288,204 | 261,208 | 26,996 | 10.3 | % | |||||||||||
| Gross profit | 74,511 | 64,772 | 9,739 | 15.0 | % | |||||||||||
| Professional and other fees | 1,425 | 1,305 | 120 | 9.2 | % | |||||||||||
| Salaries and benefits | 40,182 | 33,476 | 6,706 | 20.0 | % | |||||||||||
| General and administrative | 6,695 | 6,126 | 569 | 9.3 | % | |||||||||||
| Depreciation and amortization | 1,721 | 1,196 | 525 | 43.9 | % | |||||||||||
| Interest and financing costs | - | 22 | (22 | ) | (100.0 | %) | ||||||||||
| Operating expenses | 50,023 | 42,125 | 7,898 | 18.7 | % | |||||||||||
| Operating income | $ | 24,488 | $ | 22,647 | $ | 1,841 | 8.1 | % | ||||||||
| Adjusted EBITDA | $ | 26,209 | $ | 23,843 | $ | 2,366 | 9.9 | % | ||||||||
Net sales rose 11.3% to $362.7 million, from $326.0 million in the second quarter of fiscal 2016.
Adjusted gross billings of products and services grew 13.0% to $487.3 million, from $431.1 million in the second quarter of fiscal 2016. The increase in net sales and adjusted gross billings of products and services was a result of an increase in demand for products and services from our largest corporate customers.
Gross margin on sales of product and services was 20.2%, up from 19.4% in the second quarter of fiscal 2016. The increase in gross margin was due to shifts in our product revenue mix as we sold products with higher margins and a higher proportion of third party software assurance, maintenance and services, which are presented on a net basis, and an increase in gross profit from services.
Operating expenses rose 18.7% to $50.0 million, from $42.1 million in the second quarter of fiscal 2016, reflecting increased amortization expenses associated with the acquisition of IGX in December 2015 and increased salaries and benefits due to increased variable compensation and a 10.8% increase in personnel to 1,047 from 945. The position additions included 95 sales and engineering positions due to internal growth and the acquisition of IGX, with the remaining additions being administrative hires.
Segment operating income was $24.5 million, up 8.1% from $22.6 million in the second quarter of fiscal 2016. Adjusted EBITDA increased 9.9% to $26.2 million for the quarter, from $23.8 million in the second quarter of fiscal 2016.
Financing Segment
The results of operations for the financing segment for the three months ended September 30, 2016 and 2015 were as follows (dollars in thousands):
| Three Months Ended September 30, | ||||||||||||||||
| 2016 | 2015 | Change | ||||||||||||||
| Financing revenue | $ | 8,722 | $ | 10,279 | $ | (1,557 | ) | (15.1 | %) | |||||||
| Fee and other income | 25 | 27 | (2 | ) | (7.4 | %) | ||||||||||
| Net sales | 8,747 | 10,306 | (1,559 | ) | (15.1 | %) | ||||||||||
| Direct lease costs | 1,325 | 3,157 | (1,832 | ) | (58.0 | %) | ||||||||||
| Gross profit | 7,422 | 7,149 | 273 | 3.8 | % | |||||||||||
| Professional and other fees | 310 | 208 | 102 | 49.0 | % | |||||||||||
| Salaries and benefits | 2,114 | 2,264 | (150 | ) | (6.6 | %) | ||||||||||
| General and administrative | 881 | 259 | 622 | 240.2 | % | |||||||||||
| Depreciation and amortization | 2 | 4 | (2 | ) | (50.0 | %) | ||||||||||
| Interest and financing costs | 400 | 400 | - | - | ||||||||||||
| Operating expenses | 3,707 | 3,135 | 572 | 18.2 | % | |||||||||||
| Operating income | $ | 3,715 | $ | 4,014 | $ | (299 | ) | (7.4 | %) | |||||||
| Adjusted EBITDA | $ | 3,717 | $ | 4,018 | $ | (301 | ) | (7.5 | %) | |||||||
Net sales were $8.7 million, compared with $10.3 million in the second quarter of fiscal 2016, as a result of lower portfolio earnings and transactional gains, which was offset by higher post-contract earnings. Direct lease costs decreased $1.8 million or 58.0% due to a lower depreciation expense from operating leases.
Operating expenses were up 18.2% over the previous year period, mainly due to higher reserve for credit losses necessitated by an expansion of the financing portfolio. Segment operating income and adjusted EBITDA both decreased to $3.7 million from $4.0 million in the second quarter of fiscal 2016.
Results of Operations – Six Months Ended September 30, 2016
Technology Segment
The results of operations for the technology segment for the six months ended September 30, 2016 and 2015 were as follows (dollars in thousands):
| Six Months Ended September 30, | ||||||||||||||||
| 2016 | 2015 | Change | ||||||||||||||
| Sales of product and services | $ | 651,408 | $ | 583,955 | $ | 67,453 | 11.6 | % | ||||||||
| Fee and other income | 2,764 | 3,532 | (768 | ) | (21.7 | %) | ||||||||||
| Net sales | 654,172 | 587,487 | 66,685 | 11.4 | % | |||||||||||
| Cost of sales, product and services | 518,051 | 468,926 | 49,125 | 10.5 | % | |||||||||||
| Gross profit | 136,121 | 118,561 | 17,560 | 14.8 | % | |||||||||||
| Professional and other fees | 2,922 | 2,567 | 335 | 13.8 | % | |||||||||||
| Salaries and benefits | 77,667 | 66,428 | 11,239 | 16.9 | % | |||||||||||
| General and administrative | 12,926 | 11,451 | 1,475 | 12.9 | % | |||||||||||
| Depreciation and amortization | 3,492 | 2,400 | 1,092 | 45.5 | % | |||||||||||
| Interest and financing costs | - | 41 | (41 | ) | (100.0 | %) | ||||||||||
| Operating expenses | 97,007 | 82,887 | 14,120 | 17.0 | % | |||||||||||
| Operating Income | $ | 39,114 | $ | 35,674 | $ | 3,440 | 9.6 | % | ||||||||
| Adjusted EBITDA | $ | 42,606 | $ | 38,074 | $ | 4,532 | 11.9 | % | ||||||||
Net sales rose 11.4% to $654.2 million, from $587.5 million in the first half of fiscal 2016.
Adjusted gross billings grew 15.9% to $884.8 million, from $763.4 million in the first half of fiscal 2016. The increase in net sales and adjusted gross billings of products and services was a result of an increase in demand for products and services from our largest corporate and SLED customers.
Gross margin on sales of product and services was 20.5%, up from 19.7% in the first half of fiscal 2016. The increase in gross margin was due to shifts in our product revenue mix as we sold a higher proportion of third party software assurance, maintenance and services, which are presented on a net basis.
Operating expenses rose 17.0% to $97.0 million, from $82.9 million in the first half of fiscal 2016, reflecting increased amortization expenses associated with the acquisition of IGX in December 2015 and increased salaries and benefits due to increased variable compensation and a 10.8% increase in personnel to 1,047 from 945.
Segment operating income was $39.1 million, up 9.6% from $35.7 million in the first half of fiscal 2016. Adjusted EBITDA increased 11.9% to $42.6 million, from $38.1 million in the first half of fiscal 2016.
The Company maintained its balanced portfolio of customer-end markets. The breakdown of net sales by customer-end market for the twelve months ended September 30, 2016 and 2015 were as follows:
| Twelve Months Ended September 30, | ||||||||||||
| 2016 | 2015 | Change | ||||||||||
| Technology | 23 | % | 21 | % | 2 | % | ||||||
| State & Local Government & Educational Institutions | 22 | % | 23 | % | (1 | %) | ||||||
| Telecom, Media, and Entertainment | 15 | % | 17 | % | (2 | %) | ||||||
| Financial Services | 12 | % | 10 | % | 2 | % | ||||||
| Healthcare | 10 | % | 10 | % | - | |||||||
| Other | 18 | % | 19 | % | (1 | %) | ||||||
| Total | 100 | % | 100 | % | ||||||||
Financing Segment
The results of operations for the financing segment for the six months ended September 30, 2016 and 2015 were as follows (dollars in thousands):
| Six Months Ended September 30, | ||||||||||||||||
| 2016 | 2015 | Change | ||||||||||||||
| Financing revenue | $ | 15,709 | $ | 18,625 | $ | (2,916 | ) | (15.7 | %) | |||||||
| Fee and other income | 84 | 40 | 44 | 110.0 | % | |||||||||||
| Net sales | 15,793 | 18,665 | (2,872 | ) | (15.4 | %) | ||||||||||
| Direct lease costs | 2,317 | 6,175 | (3,858 | ) | (62.5 | %) | ||||||||||
| Gross profit | 13,476 | 12,490 | 986 | 7.9 | % | |||||||||||
| Professional and other fees | 599 | 464 | 135 | 29.1 | % | |||||||||||
| Salaries and benefits | 4,427 | 4,526 | (99 | ) | (2.2 | %) | ||||||||||
| General and administrative | 1,120 | 505 | 615 | 121.8 | % | |||||||||||
| Depreciation and amortization | 6 | 8 | (2 | ) | (25.0 | %) | ||||||||||
| Interest and financing costs | 749 | 934 | (185 | ) | (19.8 | %) | ||||||||||
| Operating expenses | 6,901 | 6,437 | 464 | 7.2 | % | |||||||||||
| Operating income | $ | 6,575 | $ | 6,053 | $ | 522 | 8.6 | % | ||||||||
| Adjusted EBITDA | $ | 6,581 | $ | 6,061 | $ | 520 | 8.6 | % | ||||||||
Net sales were $15.8 million, compared with $18.7 million in the first half of fiscal 2016, as a result of lower portfolio earnings and transactional gains, which was offset by higher post-contract earnings. Direct lease costs decreased $3.9 million or 62.5% due to a lower depreciation expense from operating leases.
Operating expenses were up 7.2% over the previous year, mainly due to higher reserve for credit losses, offset by lower interest expenses. Segment operating income and adjusted EBITDA both increased to $6.6 million from $6.1 million in the first half of fiscal 2016.
Recent Corporate Developments
- On October 18, 2016, ePlus announced the addition of its Cloud Aggregated Services, a new suite of cloud services from the company that addresses changing market trends in customer experience and engagement models.
- On October 11, 2016, ePlus announced that businesses which need secure WAN transport for cloud environments and branch locations can tap ePlus’ new Intelligent Branch solution, which is ideal for organizations with 10 or more branches.
- On October 4, 2016, ePlus announced its Business Transformation group, which is charged with the design and development of ePlus-branded solutions that address current business challenges and fast moving, emerging technologies.
- On August 19, 2016, ePlus announced that its board of directors has authorized the Company to repurchase up to 500,000 shares of ePlus outstanding common stock over a 12-month period commencing August 19, 2016.
- On August 9, 2016, ePlus announced that it has extended its Managed Services platform with an upgraded dashboard, featuring new functionality that provides global trending data, mapping and managed data aggregation.
Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on November 3, 2016:
| Date: | Thursday, November 3, 2016 | |
| Time: | 4:30 p.m. ET | |
| Live Call: | (877) 870-9226, domestic, (973) 890-8320, international | |
| Replay: | (855) 859-2056, domestic, (404) 537-3406, international | |
| Passcode: | 87077452 (live and replay) | |
| Webcast: | http://www.eplus.com/investors (live and replay) |
The replay of this webcast will be available approximately two hours after the call and be available through November 11, 2016.
About ePlus inc.
ePlus is a leading integrator of technology solutions. ePlus enables organizations to optimize their IT infrastructure and supply chain processes by delivering complex information technology solutions, which may include managed and professional services and products from top manufacturers, flexible financing, and proprietary software. Founded in 1990, ePlus has more than 1,000 associates serving commercial, state, municipal, and education customers nationally and in the UK. The Company is headquartered in Herndon, VA. For more information, visit www.eplus.com, call 888-482-1122, or email info@eplus.com. Connect with ePlus on Facebook at www.facebook.com/ePlusinc and on Twitter at www.twitter.com/ePlus.
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, possible adverse effects resulting from financial market disruption and fluctuations in foreign currency rates, and general slowdown of the U.S. economy such as our current and potential customers' delaying or reducing technology purchases or put downward pressure on prices, increasing credit risk associated with our customers and vendors, reduction of vendor incentive programs, the possibility of additional goodwill impairment charges, and restrictions on our access to capital necessary to fund our operations; significant adverse changes in, reductions in, or losses of relationships with major customers or vendors; our ability to implement comprehensive plans to achieve customer account coverage, cost containment, asset rationalization, systems integration and other key strategies; our ability to secure our electronic and other confidential information or that of our customers or partners; changes to our senior management team and/or failure to implement succession plans; 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 adapt to changes in the IT industry and/or rapid change in product standards; our ability to hire and retain sufficient personnel; our ability to realize our investment in leased equipment; our ability to consummate and integrate acquisitions; the creditworthiness of our customers; our ability to raise capital and obtain non-recourse financing for our transactions; our ability to reserve adequately for credit losses; the impact of competition in our markets; the possibility of defects in our products or catalog content data; 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.
| ePlus inc. AND SUBSIDIARIES | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (except per share data) | ||||||||||
| As of September 30, 2016 | As of March 31, 2016 | |||||||||
| ASSETS | (amounts in thousands) | |||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 48,035 | $ | 94,766 | ||||||
| Accounts receivable—trade, net | 292,486 | 234,628 | ||||||||
| Accounts receivable—other, net | 34,873 | 41,771 | ||||||||
| Inventories—net | 80,502 | 33,343 | ||||||||
| Financing receivables—net, current | 78,616 | 56,448 | ||||||||
| Deferred costs | 4,084 | 6,371 | ||||||||
| Other current assets | 7,403 | 10,649 | ||||||||
| Total current assets | 545,999 | 477,976 | ||||||||
| Financing receivables and operating leases—net | 72,106 | 75,906 | ||||||||
| Property, equipment and other assets | 11,092 | 8,644 | ||||||||
| Goodwill and other intangible assets—net | 51,697 | 54,154 | ||||||||
| TOTAL ASSETS | $ | 680,894 | $ | 616,680 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| LIABILITIES | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 90,268 | $ | 76,780 | ||||||
| Accounts payable—floor plan | 150,096 | 121,893 | ||||||||
| Salaries and commissions payable | 15,197 | 14,981 | ||||||||
| Deferred revenue | 20,844 | 18,344 | ||||||||
| Recourse notes payable—current | 1,950 | 2,288 | ||||||||
| Non-recourse notes payable—current | 43,796 | 26,042 | ||||||||
| Other current liabilities | 18,925 | 13,118 | ||||||||
| Total current liabilities | 341,076 | 273,446 | ||||||||
| Recourse notes payable—long term | 667 | 1,054 | ||||||||
| Non-recourse notes payable—long term | 10,980 | 18,038 | ||||||||
| Deferred tax liability—net | 2,991 | 3,001 | ||||||||
| Other liabilities | 5,477 | 2,263 | ||||||||
| TOTAL LIABILITIES | 361,191 | 297,802 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||
| Preferred stock, $.01 per share par value; 2,000 shares authorized; none issued or outstanding | - | - | ||||||||
| Common stock, $.01 per share par value; 25,000 shares authorized; 13,310 issued and 7,080 outstanding at September 30, 2016 and 13,237 issued and 7,365 outstanding at March 31, 2016 | 133 | 132 | ||||||||
| Additional paid-in capital | 120,414 | 117,511 | ||||||||
| Treasury stock, at cost, 6,230 and 5,872 shares, at September 30, 2016 and March 31, 2016, respectively | (158,948 | ) | (129,518 | ) | ||||||
| Retained earnings | 358,670 | 331,224 | ||||||||
| Accumulated other comprehensive income—foreign currency translation adjustment | (566 | ) | (471 | ) | ||||||
| Total Stockholders' Equity | 319,703 | 318,878 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 680,894 | $ | 616,680 | ||||||
| ePlus inc. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
| (amounts in thousands, except per share data) | ||||||||||||||||||||||||||
| Net sales | $ | 371,462 | $ | 336,286 | $ | 669,965 | $ | 606,152 | ||||||||||||||||||
| Cost of sales | 289,529 | 264,365 | 520,368 | 475,101 | ||||||||||||||||||||||
| Gross profit | 81,933 | 71,921 | 149,597 | 131,051 | ||||||||||||||||||||||
| Professional and other fees | 1,735 | 1,513 | 3,521 | 3,031 | ||||||||||||||||||||||
| Salaries and benefits | 42,296 | 35,740 | 82,094 | 70,954 | ||||||||||||||||||||||
| General and administrative expenses | 7,576 | 6,385 | 14,046 | 11,956 | ||||||||||||||||||||||
| Depreciation and amortization | 1,723 | 1,200 | 3,498 | 2,408 | ||||||||||||||||||||||
| Interest and financing costs | 400 | 422 | 749 | 975 | ||||||||||||||||||||||
| Operating expenses | 53,730 | 45,260 | 103,908 | 89,324 | ||||||||||||||||||||||
| OPERATING INCOME | 28,203 | 26,661 | 45,689 | 41,727 | ||||||||||||||||||||||
| Other income | 380 | - | 380 | - | ||||||||||||||||||||||
| EARNINGS BEFORE PROVISION FOR INCOME TAXES | 28,583 | 26,661 | 46,069 | 41,727 | ||||||||||||||||||||||
| PROVISION FOR INCOME TAXES | 11,808 | 10,982 | 18,623 | 17,234 | ||||||||||||||||||||||
| NET EARNINGS | $ | 16,775 | $ | 15,679 | $ | 27,446 | $ | 24,493 | ||||||||||||||||||
| NET EARNINGS PER COMMON SHARE—BASIC | $ | 2.43 | $ | 2.16 | $ | 3.94 | $ | 3.38 | ||||||||||||||||||
| NET EARNINGS PER COMMON SHARE—DILUTED | $ | 2.42 | $ | 2.15 | $ | 3.91 | $ | 3.35 | ||||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING— | ||||||||||||||||||||||||||
| BASIC | 6,909 | 7,274 | 6,971 | 7,249 | ||||||||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING— | ||||||||||||||||||||||||||
| DILUTED | 6,942 | 7,297 | 7,027 | 7,310 | ||||||||||||||||||||||
| ePlus inc. AND SUBSIDIARIES | |||||||||||||||||||
| RECONCILIATION OF NON-GAAP INFORMATION | |||||||||||||||||||
| We included reconciliations below for the following non-GAAP information: (i) Adjusted Gross Billings of Product and Services, (ii) Adjusted EBITDA, (iii) Adjusted EBITDA Margin and (iv) non-GAAP Net Earnings per Common Share - Diluted. We define adjusted gross billings of product and services as our sales of product and services calculated in accordance with GAAP, adjusted to exclude the costs incurred related to sales of third-party software assurance, maintenance and services. We define Adjusted EBITDA as net earnings calculated in accordance with GAAP, adjusted for the following: interest expense, depreciation and amortization, provision for income taxes, and other income. 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. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. Non-GAAP net earnings per common share are based on net earnings calculated in accordance with GAAP, adjusted to exclude other income and acquisition related amortization expense, and the related effects on income taxes. 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, | ||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||
| GAAP: Sales of product and services | $ | 361,227 | $ | 324,259 | $ | 651,408 | $ | 583,955 | |||||||||||
| Plus: Costs incurred related to sales of | |||||||||||||||||||
| third party software assurance, | 126,081 | 106,837 | 233,373 | 179,449 | |||||||||||||||
| maintenance and services | |||||||||||||||||||
| Non-GAAP adjusted gross billings of | $ | 487,308 | $ | 431,096 | $ | 884,781 | $ | 763,404 | |||||||||||
| product and services | |||||||||||||||||||
| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||
| GAAP: Net earnings | $ | 16,775 | $ | 15,679 | $ | 27,446 | $ | 24,493 | |||||||||||
| Plus: Provision for income taxes | 11,808 | 10,982 | 18,623 | 17,234 | |||||||||||||||
| Plus: Depreciation and amortization [1] | 1,723 | 1,200 | 3,498 | 2,408 | |||||||||||||||
| Less: Other income [2] | (380 | ) | - | (380 | ) | - | |||||||||||||
| Non-GAAP: Adjusted EBITDA | $ | 29,926 | $ | 27,861 | $ | 49,187 | $ | 44,135 | |||||||||||
| Non-GAAP: Adjusted EBITDA margin | 8.1 | % | 8.3 | % | 7.3 | % | 7.3 | % | |||||||||||
| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||
| Technology Segment | |||||||||||||||||||
| Operating income | $ | 24,488 | $ | 22,647 | $ | 39,114 | $ | 35,674 | |||||||||||
| Plus: Depreciation and amortization [1] | 1,721 | 1,196 | 3,492 | 2,400 | |||||||||||||||
| Adjusted EBITDA | $ | 26,209 | $ | 23,843 | $ | 42,606 | $ | 38,074 | |||||||||||
| Financing Segment | |||||||||||||||||||
| Operating income | $ | 3,715 | $ | 4,014 | $ | 6,575 | $ | 6,053 | |||||||||||
| Plus: Depreciation and amortization [1] | 2 | 4 | 6 | 8 | |||||||||||||||
| Adjusted EBITDA | $ | 3,717 | $ | 4.02 | $ | 6,581 | $ | 6,061 | |||||||||||
| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| (amounts in thousands, except per share data) | |||||||||||||||||||
| GAAP: Earnings before provision for income taxes | $ | 28,583 | $ | 26,661 | $ | 46,069 | $ | 41,727 | |||||||||||
| Plus: Acquisition related amortization expense [3] | 974 | 545 | 2,063 | 1,113 | |||||||||||||||
| Less: Other income [2] | (380 | ) | - | (380 | ) | - | |||||||||||||
| Non-GAAP: Earnings before provision for income taxes | 29,177 | 27,206 | 47,752 | 42,840 | |||||||||||||||
| Non-GAAP: Provision for income taxes [4] | 12,047 | 11,206 | 19,663 | 17,694 | |||||||||||||||
| Non-GAAP: Net earnings | $ | 17,130 | $ | 16,000 | $ | 28,089 | $ | 25,146 | |||||||||||
| GAAP net earnings per common share – diluted | $ | 2.42 | $ | 2.15 | $ | 3.91 | $ | 3.35 | |||||||||||
| Non-GAAP net earnings per common share – diluted | $ | 2.47 | $ | 2.19 | $ | 4.00 | $ | 3.44 | |||||||||||
| [1] Amount consists of depreciation and amortization for assets used internally. | |||||||||||||||||||
| [2] Gain on a class action claim during the three and six months ended September 30, 2016. | |||||||||||||||||||
| [3] Amount consists of amortization of intangible assets from acquired businesses. | |||||||||||||||||||
| [4] Non-GAAP provision for income taxes is calculated based on the effective tax rate for the non-GAAP adjustments. For comparative purposes, the non-GAAP provision for income taxes for the three and six months ended September 30, 2016 excludes the tax benefit of $0.1 million and $0.5 million, respectively, associated with adopting the stock-based compensation accounting standard. | |||||||||||||||||||