Conference Call Discussing Earnings for Fiscal 2011 First Quarter Results
August 6, 2010
Good day, ladies and gentlemen, and welcome to the ePlus inc. Earnings Results Conference Call. At this time all participants are in a listen-only mode. Later we will have a question and answer session and instructions will follow at that time. [Operator Instructions]. As a reminder today's conference is being recorded.
I would now like to turn the conference over to your host for today Mr. Kley Parkhurst, Senior Vice President. Sir you may begin.
Thank you, Mary, and thank you, everyone, for joining us. With me today are Phil Norton, Chairman, President and CEO of ePlus, and Elaine Marion, our Chief Financial Officer.
- possible adverse effects resulting from the recent financial crisis in the credit markets and general slowdown in 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,
- restrictions on our access to capital necessary to fund our operations,
- the demand for and acceptance of our products and services,
- our ability to adapt our services to meet changes and market developments,
- the possibility of defects in our products or catalog content data,
- our ability to protect our intellectual property,
- our ability to reserve adequately for credit losses, and
- other risks and uncertainties detailed in the earnings release we issued yesterday and in our periodic filings with the Securities and Exchange Commission.
As Phil touched upon, we started off the fiscal year on a strong note with significant growth in revenues and earnings. Total revenues for the quarter were $189 million, an increase of $36.6 million or 24%, compared to $152.4 million in the June quarter of last year. On a sequential basis, revenues grew 4.8%, or $8.6 million, over the quarter ending March 31, 2010. For the quarter, net earnings totaled $4.7 million or $0.57 per diluted share, compared to $1.9 million or $0.23 per diluted share in the June quarter last year.
From a segment perspective, fiscal first quarter revenues in the technology sales business segment totaled $177.8 million, up $35.6 million or 25% on a year over year basis. The gross margin percentage for sales of products and services in the segment was steady as compared to the prior year, at 14.2%.
In the financing business segment, total revenues for the first quarter were $11.2 million, up $2.1 million or 10.1% compared to the first quarter last year. At June 30, 2010, we had $133.4 million of investment in leases - net compared to $153.6 million at March 31, 2010, a decrease of $20 million. This decline in our lease portfolio and resulting increase in lease revenue was driven, in part, by the sale of two large leases totaling approximately $29.0 million. The transactions were classified as transfers of financial assets, and as such the net gain was recorded in lease revenues while the investment in leases on our balance sheet was reduced by the book value of the leases transfered.
For the first quarter, professional and other fees, salaries and benefits, and general and administrative expenses increased approximately $3.5 million year over year due to increased legal fees related to the patent infringement litigation, higher commissions and bonuses related to the increase in sales, and slightly higher headcount.
Turning to the balance sheet, cash and cash equivalents totaled $79.3 million at June 30, 2010 compared to $85.1 million at March 31, 2010. Non-recourse notes payable totaled $46.9 million as of June 30, 2010, down from $53.6 million as of March 31, 2010. Shareholder’s equity was $190.4 million as compared to $185.5 million as of March 31, 2010.
During the quarter, we continued to repurchase stock and we spent approximately $400,000 to repurchase 23,719 shares at an average cost of $17.17 per share. As of June 30, 2010, there were approximately 415,000 shares available for repurchase under our current buyback authorization. Since the inception of our initial repurchase program on September 20, 2001 to June 30, 2010, we have repurchased approximately 3.8 million shares of our outstanding common stock at an average cost of $11.46 per share for a total purchase price of almost $44 million.
In summary, the business performed well during the quarter, and we continue to have sizeable cash balances and shareholder equity, with recourse debt of approximately $100 thousand. We are well positioned to take advantage of opportunities as they arise, such as strategic acquisitions, and to invest in the business to continue to build our customer base and advanced technology services. We remain an attractive employer for top-notch talent in the business, and we are continuing to hire new personnel to meet customer demand and broaden our geographic reach and engineering capabilities.
That completes my portion of today's call. Operator, we'd like to open the call to questions.
Thank you for participating in our call this morning. We appreciate your interest in ePlus and hope you can join us again next quarter.