HERNDON, VA – August 6, 2012 – ePlus inc. (Nasdaq NGM: PLUS – news), a leading provider of technology solutions, today announced financial results for its first quarter of fiscal year 2013, which ended June 30, 2012. Total revenues for the quarter increased $65.8 million, or 36.8%, to $244.7 million, as compared to $178.9 million recorded in the prior fiscal year’s first quarter. Net earnings increased 117.7% to $8.1 million, as compared to $3.7 million in the prior year’s quarter. Fully diluted earnings per share increased 131.8% to $1.02 per share from $0.44 per share.
“We are very pleased with our financial results for the quarter,” stated Phillip G. Norton, chairman, president and CEO of ePlus. “We experienced organic revenue growth as our advanced technology solutions continue to resonate with customers. The investments we’ve made over the past two years, including four acquisitions and geographic expansion into new markets, are helping to produce these very favorable results. Our focus on building technology solutions for the cloud, data center, collaboration, managed services and security, are helping to drive revenue and maintain our gross margin, which increased to 17.0% as compared to 16.9% the prior year.”
As of June 30, 2012, the Company had $59.1 million of cash and cash equivalents and short term investments, as compared to $41.2 million on March 31, 2012. During the quarter, the Company increased the sales of certain financial assets as part of its working capital and portfolio management process which generated additional cash and cash equivalents. As of June 30, 2012, the Company had total shareholders’ equity of $227.4 million and 8.1 million shares outstanding, as compared to $219.6 million and 8.0 million shares, respectively, as of March 31, 2012.
Results of Operations
We manage our business in two segments, the technology sales business segment and the financing business segment. The technology sales business segment sells information technology equipment and software and related services primarily to corporate customers on a nationwide basis, and also provides Internet-based business-to-business supply chain management solutions for information technology and other operating resources. The financing business segment offers lease-financing solutions to corporations and governmental entities nationwide.
Technology Sales Business Segment
| · | Total revenues increased 38.0% to $236.3 million compared to $171.2 million in the quarter ended June 30, 2011. The increase in revenues was due to increases in customer demand, particularly from Fortune 100 companies, and investments we made over the last twelve months to improve our product and service offerings and expand our geographical footprint. |
| · | Total costs and expenses were $225.4 million compared to $167.2 million in the same quarter last year, an increase of 34.8%. The increase in costs and expenses was primarily driven by increases in cost of sales, products and services, which was consistent with the increase in sales of products and services. In addition, salaries and benefits increased as a result of our investment in sales and support personnel and strategic acquisitions. |
| · | Gross margin on sales of products and services was 17.0% and 16.9% during the quarters ended June 30, 2012 and 2011, respectively. The change in gross margin was primarily affected by the amount of vendor incentives earned during the period. |
| · | Segment earnings before tax increased $6.8 million to $10.8 million. |
Financing Business Segment
| · | Total revenues increased 10.1% to $8.4 million, as compared to $7.7 million in the quarter ended June 30, 2011, due to an increase in the net gain on sales of financial assets. |
| · | Total costs and expenses increased 5.5% to $5.7 million, due to increases in direct lease costs and professional and other fees. |
| · | Segment earnings before tax were $2.7 million compared to $2.3 million for the same quarter prior year. |
Restatement
On May 31, 2012, the Company announced that it would restate its consolidated financial statements for the fiscal years ended March 31, 2010 and 2011, and the quarterly financial statements for the three quarters ended June 30, September 30, and December 31, 2011, and all of the quarters in the fiscal year ended March 31, 2011. The restatement has had no effect on the Company’s previously reported earnings, earnings per share, or consolidated statements of cash flows. The restated results for the three months ended June 30, 2011 are presented in this release. A more detailed description of the restatement was included in the annual report on Form 10-K for the fiscal year ended March 31, 2012 filed with the Securities and Exchange Commission.
Conference Call Information
The Company will host a conference call on Tuesday, August 7, at 2:00 p.m. Eastern Time to review and discuss the Company’s results for the first quarter of fiscal year 2013. The call can be accessed live over the phone by dialing (877) 870-9226, or for international callers, (973) 890-8320. Passcode 16481419. A live webcast will be available via the Company’s investor relations Web site at http://www.eplus.com/investors.
A replay will be available shortly after the call and can be accessed by dialing (855) 859-2056, or for international callers, (404) 537-3406. Passcode 16481419. The replay will be available until August 14, 2012, and the webcast will also remain available for replay via the Company’s investor relations page of its Web site.
About ePlus inc.
ePlus is a leading provider of technology solutions. ePlus enables organizations to optimize their IT infrastructure and supply chain processes by delivering world-class IT products from top manufacturers, managed and professional services, flexible lease financing, proprietary software, and patented business methods and systems. Founded in 1990, ePlus has more than 800 associates serving federal, state, municipal, and commercial customers nationally. The Company is headquartered in Herndon, VA. For more information, visit http://www.eplus.com/, call 888-482-1122, or email info@eplus.com.
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 the recent financial crisis in the credit markets and general slowdown of the U.S. economy such as our current and potential customers delaying or reducing technology purchases, 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; our ability to design, improve or remediate, as necessary, internal controls to address identified issues; 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 protect our intellectual property; 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 |
| | As of June 30, 2012 | | As of March 31, 2012 |
| ASSETS | (amounts in thousands) |
| | | | |
| Cash and cash equivalents | $ 55,359 | | $ 33,778 |
| Short-term investments | 3,692 | | 7,396 |
| Accounts receivable—net | 189,666 | | 174,599 |
| Notes receivable—net | 14,283 | | 24,337 |
| Inventories—net | 23,997 | | 23,514 |
| Investment in leases and leased equipment—net | 103,140 | | 115,974 |
| Property and equipment—net | 2,116 | | 2,086 |
| Other assets | 25,997 | | 23,560 |
| Goodwill | 28,580 | | 28,444 |
| TOTAL ASSETS | $ 446,830 | | $ 433,688 |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| | | | |
| LIABILITIES | | | |
| | | | |
| Accounts payable—equipment | $ 6,804 | | $ 17,268 |
| Accounts payable—trade | 25,076 | | 26,719 |
| Accounts payable—floor plan | 97,415 | | 85,911 |
| Salaries and commissions payable | 10,049 | | 9,500 |
| Accrued expenses and other liabilities | 39,800 | | 40,822 |
| Recourse notes payable | 1,727 | | 1,727 |
| Non-recourse notes payable | 32,780 | | 26,328 |
| Deferred tax liability | 5,786 | | 5,786 |
| Total Liabilities | 219,437 | | 214,061 |
| | | | |
| COMMITMENTS AND CONTINGENCIES | | | |
| | | | |
| STOCKHOLDERS' EQUITY | | | |
| | | | |
| Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued or outstanding | | | |
| Common stock, $.01 par value; 25,000,000 shares authorized; 12,787,999 issued and 8,059,049 outstanding at June 30, 2012 and 12,692,224 issued and 7,999,895 outstanding at March 31, 2012 | $ 128 | | $ 127 |
| Additional paid-in capital | 94,447 | | 93,545 |
| Treasury stock, at cost, 4,728,950 and 4,692,329 shares, respectively | (66,565) | | (65,416) |
| Retained earnings | 198,968 | | 190,906 |
| Accumulated other comprehensive income—foreign currency translation adjustment | 415 | | 465 |
| Total Stockholders' Equity | 227,393 | | 219,627 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 446,830 | | $ 433,688 |
ePlus inc. AND SUBSIDIARIES | |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| | Three Months Ended June 30, | |
| | 2012 | | 2011 As Restated | |
| | (amounts in thousands, except shares and per share data) | |
| | | | | |
| Sales of product and services | $ 234,282 | | $ 169,321 | |
| Financing revenue | 7,900 | | 7,434 | |
| Fee and other income | 2,542 | | 2,144 | |
| | | | | |
| TOTAL REVENUES | 244,724 | | 178,899 | |
| | | | | |
| COSTS AND EXPENSES | | | | |
| | | | | |
| Cost of sales, product and services | 194,391 | | 140,674 | |
| Direct lease costs | 2,243 | | 2,096 | |
| | | | | |
| | | | | |
| Professional and other fees | 3,113 | | 2,425 | |
| Salaries and benefits | 26,354 | | 23,006 | |
| General and administrative expenses | 4,655 | | 4,033 | |
| Interest and financing costs | 405 | | 382 | |
| | | | | |
| TOTAL COSTS AND EXPENSES | 34,527 | | 29,846 | |
| | | | | |
| EARNINGS BEFORE PROVISION FOR INCOME TAXES | 13,563 | | 6,283 | |
| | | | | |
| PROVISION FOR INCOME TAXES | 5,501 | | 2,580 | |
| | | | | |
| NET EARNINGS | $ 8,062 | | $ 3,703 | |
| | | | | |
| NET EARNINGS PER COMMON SHARE—BASIC | $ 1.04 | | $ 0.45 | |
| NET EARNINGS PER COMMON SHARE—DILUTED | $ 1.02 | | $ 0.44 | |
| | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC | 7,720,535 | | 8,307,389 | |
| WEIGHTED AVERAGE SHARES OUTSTANDING—DILUTED | 7,897,906 | | 8,489,703 | |
| | | | | |
ePlus inc. AND SUBSIDIARIES | | | | | | | |
STATEMENTS OF OPERATIONS BY SEGMENT |
| | Three Months ended June 30, |
| | 2012 | | 2011 As Restated |
| | Technology Sales Business Segment | | Financing Business Segment | | Technology Sales Business Segment | | Financing Business Segment |
| | (amounts in thousands) |
| | | | | | | | |
| Sales of product and services | $ 234,282 | | $ - | | $ 169,321 | | $ - |
| Financing revenues | - | | 7,900 | | - | | 7,434 |
| Fee and other income | 2,002 | | 540 | | 1,909 | | 235 |
| | | | | | | | |
| TOTAL REVENUES | 236,284 | | 8,440 | | 171,230 | | 7,669 |
| | | | | | | | |
| COSTS AND EXPENSES | | | | | | | |
| | | | | | | | |
| Cost of sales, products and services | 194,391 | | - | | 140,674 | | - |
| Direct lease costs | - | | 2,243 | | - | | 2,096 |
| Professional and other fees | 2,503 | | 610 | | 2,075 | | 350 |
| Salaries and benefits | 24,082 | | 2,272 | | 20,663 | | 2,343 |
| General and administrative expenses | 4,438 | | 217 | | 3,767 | | 266 |
| Interest and financing costs | 31 | | 374 | | 20 | | 362 |
| | | | | | | | |
| TOTAL COSTS AND EXPENSES | 225,445 | | 5,716 | | 167,199 | | 5,417 |
| | | | | | | | |
| EARNINGS BEFORE PROVISION FOR INCOME TAXES | $ 10,839 | | $ 2,724 | | $ 4,031 | | $ 2,252 |
