HERNDON, VA - June 13, 2012
- ePlus inc. (Nasdaq NGS: PLUS
), a leading provider of technology solutions, today announced financial results for its fourth quarter and year ended March 31, 2012. For the year, total revenues increased 14.9% to $825.6 million, an increase of $107.1 million, compared to $718.5 million for the year ended March 31, 2011. Net earnings decreased 1.5% to $23.4 million as compared to $23.7 million. Expenses incurred during the year included $6.0 million in legal fees relating to the Company's patent infringement lawsuit, and a $2.9 million reserve for credit losses recorded in the fourth quarter, relating to the bankruptcy of a single customer. Annual earnings per share increased to $2.84 per diluted share as compared to $2.82 per diluted share in the prior year. Gross margin on sales of products and services was 17.8% and 17.9% for the years ended March 31, 2012 and 2011, respectively. Certain past results included herein have been restated; however, earnings, net earnings and earnings per share are unchanged. Please refer to the paragraph titled "Restatement" below for more information.
For the fourth quarter ended March 31, 2012, revenues totaled $219.0 million, an increase of 24.4% as compared to $176.0 million for the quarter ended March 31, 2011. Net earnings for the quarter were $3.9 million and fully diluted earnings per share were $0.49, as compared to $3.6 million and $0.42 per diluted share, respectively, for the quarter ended March 31, 2011.
As of March 31, 2012, the Company had $41.2 million of cash and cash equivalents and short term investments, as compared to $75.8 million the prior year. Significant uses of cash were $19.0 million to repurchase 735,865 shares of common stock, and $11.8 million (net) for the acquisition of three companies. As of March 31, 2012, the Company had total shareholder's equity of $219.6 million as compared to $212.0 million, and 8.2 million diluted shares outstanding as compared to 8.4 million as of March 31, 2011.
"In addition to achieving significant year over year revenue growth this year, fiscal year 2012 was a year of investment to position ePlus for the future as we continued to execute our strategic plan to build out a national footprint," said Phillip G. Norton, Chairman, President and Chief Executive Officer. "Our technology sales business unit completed three acquisitions that expanded our presence in three markets, added more than 400 new customers, and broadened our technology offerings including security, Cisco Call Center Express, and managed services. We continue to capture the growing demand for IT equipment and services within our customer base. In particular, our focus on cloud enablement including architecture, design, integration and implementation of advanced public, private, and hybrid clouds, collaboration and mobility, and security solutions, is resonating with customers including some of the largest cloud providers in the world. On the services side, our Managed Services business booked its largest quarter of orders in Company history, and professional services is continuing to grow. We continue to invest in advanced technology solutions that are in high demand by our customers such as integrated multi-vendor solutions, FlexPod, vBlock, and HP CloudSystem Matrix, and we believe that our solution set and engineering delivery capabilities continue to differentiate ePlus from the competition."
Mr. Norton continued, "In the financing business segment, investments in leases and notes receivable increased from $123.5 million on March 31, 2011, to $140.3 million on March 31, 2012. We are focused on growing the business and hiring additional sales resources, and are developing new product offerings to capture market opportunities. In this segment, we recorded a pre-tax loss in the fourth quarter due to a reserve for credit losses of $2.9 million relating to a customer's bankruptcy, however, we are taking appropriate action to mitigate actual losses by recovering equipment and pursuing all legal remedies."
During the year, ePlus continued to execute its strategic plan to build a national footprint and expand its technology solutions by acquiring the following companies:
- On February 25, 2012, ePlus acquired Pacific Blue Micro (PBM), a Cisco-focused solutions provider located in Irvine, CA. With the acquisition, ePlus gains new customers, sales resources, and engineering delivery capabilities which complement its existing Data Center, Borderless Networks, Collaboration, and Managed Services practices and solutions.
- On January 6, 2012, ePlus acquired the operating business of VantiCore, LLC a Cisco-focused solutions provider headquartered in New Hampshire. With expertise in Advanced Unified Communications (UC), Collaboration, and Customer Contact Center solutions, ePlus gains increased market presence in New England as well as enhanced Cisco engineering delivery capabilities to complement its existing UC, Data Center, and Managed Services practices.
- On June 4, 2011, ePlus acquired the business operations of NCC Networks, Inc. (NCC), a security-focused solutions provider that operated a Security Operations Center located in metropolitan Chicago. With the acquisition, ePlus expands its information security capabilities, providing a wider variety of security risk assessments including vulnerability, web application, wireless, and cloud-based security assessments. NCC, which provided 24x7 security managed services, had numerous authorizations from leading security manufacturers and engineering expertise in cutting edge security technologies. Combined with ePlus' Cisco Master Security specialization, ePlus and NCC can provide customers a full suite of security solutions and services including penetration testing and remediation services.
On May 24, 2012, the Audit Committee of the Company's Board of Directors concluded that the Company's presentation of sales of third party software assurance, maintenance and services should be on a net basis rather than a gross basis as previously reported. Therefore, 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 correction of this error has had no effect on the Company's previously reported earnings, earnings per share, or consolidated statements of cash flows. The restated results are presented in this release. A more detailed description of the restatement will be included in the annual report on Form 10-K for the fiscal year ended March 31, 2012, to be filed with the Securities and Exchange Commission.
The Company manages its 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
The results of operations for the technology sales business segment for the quarters ended March 31, 2012 and 2011 were as follows (in thousands).