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ePlus Reports Fourth Quarter and Fiscal Year 2022 Financial Results



 


--Robust Sales Growth Drives Significant Gains in Operating Income and Earnings--

HERNDON, Va., May 25, 2022 /PRNewswire/ -- 

 

Fourth Quarter Fiscal Year 2022

  • Net sales increased 28.1% to $451.5 million; technology segment net sales increased 26.4% to $419.4 million; service revenues increased 16.6% to $61.6 million.
  • Adjusted gross billings increased 20.8% to $638.5 million.
  • Consolidated gross profit increased 17.8% to $115.4 million.
  • Consolidated gross margin was 25.5% compared to 27.8% in last year's quarter.
  • Net earnings increased 55.9% to $24.2 million.
  • Adjusted EBITDA increased 34.4% to $39.7 million.
  • Diluted earnings per share increased 56.9% to $0.91. Non-GAAP diluted earnings per share increased 42.3% to $1.01.

Fiscal Year 2022

  • Net sales increased 16.1% to $1,821.0 million; technology segment net sales increased 14.9% to $1,733.0 million; service revenues increased 19.0% to $240.6 million.
  • Adjusted gross billings increased 15.8% to $2,620.6 million.
  • Consolidated gross profit increased 17.1% to $461.0 million.
  • Consolidated gross margin was 25.3%, an increase of 20 basis points.
  • Net earnings increased 41.9% to $105.6 million.
  • Adjusted EBITDA increased 32.6% to $170.0 million.
  • Diluted earnings per share increased 41.9% to $3.93. Non-GAAP diluted earnings per share increased 37.6% to $4.39.

ePlus inc. (NASDAQ:  PLUS), a leading provider of technology and financing solutions, today announced financial results for the three months and fiscal year ended March 31, 2022.

Management Comment

"Fiscal 2022 marked a highly successful year for ePlus, as we generated strong financial results while investing in our people and capabilities to enhance long-term growth," said Mark Marron, president and chief executive officer of ePlus. "Reflecting broad-based growth in our technology segment, fourth quarter net sales rose 28% to nearly $452 million, capping off an outstanding year in which consolidated net sales grew 16% to $1.8 billion. Our results again demonstrated the scalability and operating leverage in our business, as diluted earnings per share increased nearly 57% in the fourth quarter and over 40% for fiscal 2022."

Mr. Marron continued, "Our wide range of capabilities, providing both services and solutions, empowers our customers to accelerate their digital transformation and harness the power of technology to drive innovation. We continue to experience strong demand for cloud infrastructure, cybersecurity and networking, where our expertise and strategic partnerships enable us to deliver integrated and agile solutions in these rapidly evolving, high-growth markets."

Prior Period Reclassifications due to Stock Split

Reclassifications of prior period amounts related to number of shares and per share amounts have been made to conform to the current period presentation due to the December 13, 2021, two-for-one stock split.

Fourth Quarter Fiscal 2022 Results

For the fourth quarter ended March 31, 2022, as compared to the fourth quarter ended March 31, 2021:

Consolidated net sales increased 28.1% to $451.5 million, from $352.6 million.

Technology segment net sales increased 26.4% to $419.4 million, from $331.8 million due to higher sales of product and services. Service revenues increased 16.6% to $61.6 million, from $52.9 million due to increases in professional services and managed services.  Adjusted gross billings increased 20.8% to $638.5 million from $528.6 million. 

Financing segment net sales increased 54.4% to $32.1 million, from $20.8 million mainly due to higher post-contract revenue from early lease buyouts. 

Consolidated gross profit increased 17.8% to $115.4 million, from $97.9 million. Consolidated gross margin was 25.5%, down from 27.8% last year, primarily due to lower margins from our financing segment combined with lower service margins, partially offset by higher product margin in our technology segment. The decrease in margins from our financing segment was due to a large early lease buyout in the current quarter, while the decline in service margins was due to an increase in both internal and third-party costs.

Operating expenses were $80.9 million, up 8.9% from $74.3 million last year, primarily due to increases in variable compensation stemming from higher gross profit, and higher salaries and benefits.  Our headcount at the end of the quarter was 1,577, up 17 from a year ago.

Consolidated operating income increased 46.1% to $34.5 million.

Our effective tax rate for the current quarter was 29.6%, lower than the prior year quarter of 32.6%, due to higher non-deductible compensation in the prior year.

Net earnings increased 55.9% to $24.2 million.

Adjusted EBITDA increased 34.4% to $39.7 million, from $29.6 million.

Diluted earnings per share was $0.91, compared with $0.58 in the prior year quarter. Non-GAAP diluted earnings per share was $1.01, compared with $0.71 last year.

Fiscal Year 2022 Results

For the fiscal year ended March 31, 2022, as compared to the fiscal year ended March 31, 2021:

Consolidated net sales increased 16.1% to $1,821.0 million, from $1,568.3 million.

Technology segment net sales increased 14.9% to $1,733.0 million, from $1,508.0 million due to higher sales of product and services. Service revenues increased 19.0% to $240.6 million, from $202.2 million due to increases in professional services and managed services.  Adjusted gross billings was $2,620.6 million, an increase of 15.8% from $2,263.9 million. 

Financing segment net sales increased 45.7% to $88.0 million, from $60.4 million, primarily due to higher proceeds from sales of equipment, including early lease buyouts as well as sales of equipment at the end of the lease term.

Consolidated gross profit increased 17.1% to $461.0 million, from $393.6 million. Consolidated gross margin was 25.3%, up from 25.1% last year, due to higher product margin and a higher proportion of sales recorded on a net basis in our technology segment.

Operating expenses were $313.7 million, up 9.2% from $287.2 million last year, primarily due to increases in variable compensation stemming from higher gross profit, higher healthcare costs, software license and maintenance, and travel expenses, as well as higher depreciation and amortization due to the acquisition of SMP on December 31, 2020.

Consolidated operating income increased 38.5% to $147.3 million.

Our effective tax rate for the current year period was 28.1%, lower than last year of 30.4% due to prior year's unfavorable adjustments to the federal benefit from state taxes and non-deductible executive compensation.

Net earnings increased 41.9% to $105.6 million.

Adjusted EBITDA increased 32.6% to $170.0 million, from $128.2 million.

Diluted earnings per share was $3.93, compared with $2.77 in the prior year. Non-GAAP diluted earnings per share was $4.39, compared with $3.19 last year.

Balance Sheet Highlights

As of March 31, 2022, ePlus had cash and cash equivalents of $155.4 million, compared with $129.6 million as of March 31, 2021.  Inventory, which represents equipment ordered by customers but not yet delivered, increased 121.6% from March 31, 2021, and 5.0% sequentially, due to ongoing projects with customers coupled with some impact from continued supply chain constraints.  Total stockholders' equity was $660.7 million, compared with $562.4 million as of March 31, 2021.  Total shares outstanding were 26.9 million on March 31, 2022 and 27.0 million on March 31, 2021.

Summary and Outlook

"We enter fiscal 2023 with solid momentum, supported by the strength of our backlog and healthy market fundamentals as enterprise technology investments remain a top priority. We continue to successfully execute on our growth strategy, expanding our market share by strengthening our relationships with existing customers and leveraging our expertise and capabilities across the technology stack to capture new business opportunities.

Mr. Marron concluded, "We believe the outlook for IT spending in 2022 remains favorable, positioning ePlus for continued growth. Against this backdrop, lead times are extending for certain technologies, which we anticipate will serve to extend project implementations throughout the year. To navigate this environment, we continue to work closely with our extensive roster of technology partners to deliver timely, innovative solutions that solve our customers' complex IT challenges."

Recent Corporate Developments/Recognitions

In the month of March, ePlus:

  • Announced the commencement of its 2022 Girls Re-Imagining Tomorrow Program, which introduces school-aged girls to technology-based careers with an emphasis on cybersecurity and artificial intelligence.
  • Was named to the CRN 2022 Tech Elite 250 list for the ninth year.
  • Announced a stock repurchase program with the authorization to purchase up to one million shares.
  • Announced it earned multiple attestations for controls surrounding its Managed Services Center, Cloud Hosted Services, Services Desk, Warehousing Operations and OneSource family of products.

In the month of February, ePlus:

  • Was recognized on CRN's 2022 Managed Service Provider (MSP) 500 List in the Elite 150 category for the fifth consecutive year.

Conference Call Information

ePlus will hold a conference call and webcast at 4:30 p.m. ET on May 25, 2022:

Audio Webcast (Live & Replay): https://events.q4inc.com/attendee/586961564

Live Call:

(888) 330-2469 (toll-free/domestic)


(240) 789-2740 (international)

Replay:

(800) 770- 2030 (toll-free/domestic)


(647) 362-9199 (international)

Passcode:

5403833 (live call and replay)

The replay of this webcast will be available approximately two hours after the call concludes and be available through June 1, 2022.

About ePlus inc.

ePlus is a leading consultative technology solutions provider that helps customers imagine, implement, and achieve more from their technology.  With the highest certifications from top technology partners and lifecycle services expertise across key areas including security, cloud, data center, collaboration, networking, and emerging technologies, ePlus transforms IT from a cost center to a business enabler.  Founded in 1990, ePlus has more than 1,500 associates serving a diverse set of customers in the U.S., Europe, and Asia-Pac.  The Company is headquartered at 13595 Dulles Technology Drive, Herndon, VA, 20171.  For more information, visit www.eplus.com, call 888-482-1122, or email info@eplus.com.  Connect with ePlus on Facebook, LinkedIn, Twitter 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."  Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, the duration and impact of the COVID-19 pandemic and the efficacy of vaccine roll-outs, which could materially adversely affect our financial condition and results of operations and has resulted worldwide in governmental authorities imposing numerous unprecedented measures to try to contain the virus that has impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners; national and international political instability fostering uncertainty and volatility in the global economy including exposure to fluctuation in foreign currency rates, interest rates, and  inflation, including increases in our costs and price increases to our customers which may result in adverse changes in our gross profit; reduction of vendor incentives provided to us; significant and rapid inflation may cause price, wage, and interest rate increases, as well as increases in operating costs which may impact the arrangements that have pricing commitments over the term of the agreement; restrictions on our access to capital necessary to fund our operations; our ability to successfully perform due diligence and integrate acquired businesses; disruptions or a security breach in our or our vendors' IT systems and data and audio communication networks; supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling orders, or completing professional services, resulting in an adverse impact on our financial results; the possibility of goodwill impairment charges in the future; significant adverse changes in, reductions in, or losses of relationships with one or more of our larger volume customers or vendors; a possible decrease in the capital spending budgets of our customers or a decrease in purchases from us; our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, or obtain debt for our financing transactions; 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 implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration and other key strategies; the creditworthiness of our customers and our ability to reserve adequately for credit losses; our ability to secure our own and our customers' electronic and other confidential information and remain secure during a cyber-security attack; future growth rates in our core businesses; the impact of competition in our markets; domestic and international economic regulations uncertainty (e.g., tariffs, sanctions, and trade agreements); our reliance on third parties to perform some of our service obligations to our customers; the possibility of defects in our products or catalog content data; our ability to adapt to changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service and software as a service; our ability to realize our investment in leased equipment; maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel and vendor certifications; 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





CONSOLIDATED BALANCE SHEETS





(in thousands, except per share amounts)












March 31, 2022


March 31, 2021

ASSETS










Current assets:





  Cash and cash equivalents


$155,378


$129,562

  Accounts receivable—trade, net


430,380


391,567

  Accounts receivable—other, net


48,673


41,053

  Inventories


155,060


69,963

  Financing receivables—net, current


61,492


106,272

  Deferred costs


32,555


28,201

  Other current assets


13,944


10,976

  Total current assets


897,482


777,594






Financing receivables and operating leases—net


64,292


90,165

Deferred tax asset—net


5,050


1,468

Property, equipment and other assets


45,586


42,289

Goodwill


126,543


126,645

Other intangible assets—net


27,250


38,614

TOTAL ASSETS


$1,166,203


$1,076,775






LIABILITIES AND STOCKHOLDERS' EQUITY










LIABILITIES










Current liabilities:





  Accounts payable


$136,161


$165,162

  Accounts payable—floor plan


145,323


98,653

  Salaries and commissions payable


39,602


36,839

  Deferred revenue


86,469


72,802

  Recourse notes payable—current


7,316


5,450

  Non-recourse notes payable—current


17,070


50,397

  Other current liabilities


28,095


30,061

  Total current liabilities


460,036


459,364






Non-recourse notes payable—long term


5,792


12,658

Deferred tax liability—net


4,108


5,664

Other liabilities


35,529


36,679

TOTAL LIABILITIES 


505,465


514,365






COMMITMENTS AND CONTINGENCIES










STOCKHOLDERS' EQUITY





Preferred stock, $.01 per share par value; 2,000 shares authorized; none outstanding


-


-

Common stock, $.01 per share par value; 50,000 shares authorized; 26,886 outstanding at March 31, 2022 and 27,006 outstanding at March 31, 2021


270


145

Additional paid-in capital


159,480


152,366

Treasury stock, at cost, 130 shares at March 31, 2022 and 1,987 shares at March 31, 2021


(6,734)


(75,372)

Retained earnings


507,846


484,616

Accumulated other comprehensive income—foreign currency translation adjustment


(124)


655

Total Stockholders' Equity


660,738


562,410

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$1,166,203


$1,076,775

 

ePlus inc. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)



Three Months Ended March 31,


Year Ended March 31,


2022


2021


2022


2021









Net sales








     Product

$389,870


$299,750


$1,580,394


$1,366,158

     Services

61,649


52,857


240,625


202,165

          Total

451,519


352,607


1,821,019


1,568,323









Cost of sales








     Product

296,277


222,566


1,210,943


1,049,677

     Services

39,891


32,157


149,094


125,092

          Total

336,168


254,723


1,360,037


1,174,769









Gross profit

115,351


97,884


460,982


393,554









Selling, general, and administrative

76,964


69,517


297,117


271,263

Depreciation and amortization

3,270


3,951


14,646


13,951

Interest and financing costs

641


826


1,903


2,005

Operating expenses

80,875


74,294


313,666


287,219









Operating income

34,476


23,590


147,316


106,335









Other income (expense)

(55)


(524)


(432)


571









Earnings before taxes

34,421


23,066


146,884


106,906









Provision for income taxes

10,176


7,513


41,284


32,509









Net earnings

$24,245


$15,553


$105,600


$74,397









Net earnings per common share—basic

$0.91


$0.58


$3.96


$2.79

Net earnings per common share—diluted

$0.91


$0.58


$3.93


$2.77









Weighted average common shares outstanding—basic

26,553


26,646


26,638


26,674

Weighted average common shares outstanding—diluted

26,703


26,832


26,866


26,834

 

Technology Segment


Three Months Ended March 31,




Year Ended March 31,




2022


2021


Change


2022


2021


Change


(in thousands)




(in thousands)















Net sales












    Product

$357,753


$278,944


28.3%


$1,492,411


$1,305,789


14.3%

    Services

61,649


52,857


16.6%


240,625


202,165


19.0%

          Total

419,402


331,801


26.4%


1,733,036


1,507,954


14.9%













Cost of sales












     Product

276,352


215,768


28.1%


1,175,789


1,036,627


13.4%

     Services

39,891


32,157


24.1%


149,094


125,092


19.2%

          Total

316,243


247,925


27.6%


1,324,883


1,161,719


14.0%













Gross profit

103,159


83,876


23.0%


408,153


346,235


17.9%













Selling, general, and administrative

73,321


65,691


11.6%


283,690


256,210


10.7%

Depreciation and amortization

3,243


3,923


(17.3%)


14,535


13,839


5.0%

Interest and financing costs

235


255


(7.8%)


928


521


78.1%

Operating expenses

76,799


69,869


9.9%


299,153


270,570


10.6%













Operating income

$26,360


$14,007


88.2%


$109,000


$75,665


44.1%

Adjusted gross billings

$638,452


$528,582


20.8%


$2,620,614


$2,263,865


15.8%

Adjusted EBITDA

$31,542


$19,907


58.4%


$131,353


$97,219


35.1%

 

Technology Segment Net Sales by Customer End Market


Twelve Months Ended March 31,




2022


2021


Change







Telecom, Media, & Entertainment

29%


25%


4%

Healthcare

16%


13%


3%

Technology

14%


17%


(3%)

SLED

14%


16%


(2%)

Financial Services 

9%


13%


(4%)

All others

18%


16%


2%

Total

100%


100%



 

Financing Segment


Three Months Ended March 31,




Year Ended March 31,




2022


2021


Change


2022


2021


Change


(in thousands)




(in thousands)















Net sales

$32,117


$20,806


54.4%


$87,983


$60,369


45.7%

Cost of sales

19,925


6,798


193.1%


35,154


13,050


169.4%

Gross profit

12,192


14,008


(13.0%)


52,829


47,319


11.6%













Selling, general, and administrative

3,643


3,826


(4.8%)


13,427


15,053


(10.8%)

Depreciation and amortization

27


28


(3.6%)


111


112


(0.9%)

Interest and financing costs

406


571


(28.9%)


975


1,484


(34.3%)

Operating expenses

4,076


4,425


(7.9%)


14,513


16,649


(12.8%)













Operating income

8,116


$9,583


(15.3%)


$38,316


$30,670


24.9%

Adjusted EBITDA

8,198


$9,668


(15.2%)


$38,651


$31,026


24.6%

ePlus inc. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION

We included reconciliations below for the following non-GAAP information: (i) Adjusted Gross Billings, (ii) Adjusted EBITDA, (iii) Segment Adjusted EBITDA, (iv) non-GAAP Net Earnings and (v) non-GAAP Net Earnings per Common Share - Diluted.

We define adjusted gross billings as our technology segment net sales calculated in accordance with GAAP, adjusted to exclude the costs incurred related to sales of third-party maintenance, software assurance and subscription/SaaS licenses, and services.   

We define adjusted EBITDA as net earnings calculated in accordance with GAAP, adjusted for the following: interest expense, depreciation and amortization, share based compensation, acquisition and integration expense, provision for income taxes, and other income (expense). Segment adjusted EBITDA is defined as operating income calculated in accordance with 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 segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses. 

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.

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 non-GAAP adjusted gross billings, 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 March 31,


Year Ended March 31,


2022


2021


2022


2021


(in thousands)

















Technology segment net sales

$419,402


$331,801


$1,733,036


$1,507,954

Costs incurred related to sales of third-party maintenance, software assurance and subscription / SaaS licenses, and services

219,050


196,781


887,578


755,911

Adjusted gross billings

$638,452


$528,582


$2,620,614


$2,263,865



Three Months Ended March 31,


Year Ended March 31,


2022


2021


2022


2021


(in thousands)

Consolidated
















Net earnings

$24,245


$15,553


$105,600


$74,397

Provision for income taxes

10,176


7,513


41,284


32,509

Depreciation and amortization [1]

3,270


3,951


14,646


13,951

Share based compensation

1,759


1,740


7,114


7,167

Acquisition and integration expense

-


39


-


271

Interest and financing costs

235


255


928


521

Other (income) expense [2]

55


524


432


(571)

Adjusted EBITDA

$39,740


$29,575


$170,004


$128,245










Three Months Ended March 31,


Year Ended March 31,


2022


2021


2022


2021


(in thousands)

Technology Segment








Operating income

$26,360


$14,007


$109,000


$75,665

Depreciation and amortization [1]

3,243


3,923


14,535


13,839

Share based compensation

1,704


1,683


6,890


6,923

Acquisition and integration expense

-


39


-


271

Interest and financing costs

235


255


928


521

Adjusted EBITDA

$31,542


$19,907


$131,353


$97,219









Financing Segment








Operating income

$8,116


$9,583


$38,316


$30,670

Depreciation and amortization [1]

27


28


111


112

Share based compensation

55


57


224


244

Adjusted EBITDA

$8,198


$9,668


$38,651


$31,026










Three Months Ended March 31,


Year Ended March 31,


2022


2021


2022


2021


(in thousands)

GAAP: Earnings before taxes

$34,421


$23,066


$146,884


$106,906

Share based compensation

$1,759


1,740


7,114


7,167

Acquisition and integration expense

-


39


-


271

Acquisition related amortization expense [3]

2,218


2,730


10,072


9,116

Other (income) expense [2]

55


524


432


(571)

Non-GAAP: Earnings before taxes

38,453


28,099


164,502


122,889









GAAP: Provision for income taxes

10,176


7,513


41,284


32,509

Share based compensation

520


567


2,014


2,188

Acquisition and integration expense

-


13


-


78

Acquisition related amortization expense [3]

647


874


2,803


2,730

Other (income) expense [2]

16


171


120


(143)

Tax benefit on restricted stock

-


-


317


(40)

Non-GAAP: Provision for income taxes

11,359


9,138


46,538


37,322









Non-GAAP: Net earnings

$27,094


$18,961


$117,964


$85,567










Three Months Ended March 31,


Year Ended March 31,


2022


2021


2022


2021









GAAP: Net earnings per common share – diluted

$0.91


$0.58


$3.93


$2.77









Share based compensation

0.05


0.05


0.20


0.19

Acquisition and integration expense

-


-


-


0.01

Acquisition related amortization expense [3]

0.05


0.07


0.26


0.24

Other (income) expense [2]

-


0.01


0.01


(0.02)

Tax benefit on restricted stock

-


-


(0.01)


-

Total non-GAAP adjustments – net of tax

0.10


0.13


0.46


0.42









Non-GAAP: Net earnings per common share – diluted

$1.01


$0.71


$4.39


$3.19


[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.

 



Contact: Kleyton Parkhurst, SVP, ePlus inc., kparkhurst@eplus.com, 703-984-8150 


 




Contact

Kley Parkhurst, SVP
ePlus inc.
kparkhurst@eplus.com 
703-984-8150

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