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EPlus Reports Third Quarter Financial Results

Mr. Norton continued, "In December, we declared and paid a special cash dividend of $2.50 per share. We are continuing to maintain a strong balance sheet, and ePlus is well positioned to take advantage of future opportunities as they arise."

As of December 31, 2012, the Company had $42.2 million of cash and cash equivalents, as compared to $33.8 million on March 31, 2012. As of December 31, 2012, the Company had total stockholders' equity of $229.6 million and 8.2 million shares outstanding, as compared to $219.6 million and 8.0 million shares, respectively, as of March 31, 2012.

Results of Operations

The Company presents its financial results in two segments, the technology sales business segment and the financing business segment. The technology sales business segment sells information technology equipment, 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 7.2% to $229.4 million compared to $214.1 million in the quarter ended December 31, 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.  Deferred costs and deferred revenues increased by $32.2 million and $35.4 million, respectively, from March 31, 2012, principally due to the advanced integration projects that were deferred as of December 31, 2012 because delivery had not occurred.  Open orders as of December 31, 2012 totaled $73.3 million compared to $56.0 million as of December 31, 2011.
  • Total costs and expenses were $219.2 million compared to $203.7 million in the same quarter last year, an increase of 7.6%. The increase in costs and expenses was primarily due to increases in personnel, as we had 810 employees as of December 31, 2012, an increase of 112, or 16.0%, from December 31, 2011. Most of the increase relates to sales, marketing and engineering personnel, as we continue to invest in sales and support personnel through hiring and strategic acquisitions in order to expand our geographical presence and solutions offerings.
  • Gross margin on sales of products and services was 17.5% and 18.2% during the quarters ended December 31, 2012 and 2011, respectively, and gross margin for the nine months ended December 31, 2012 was 17.5% as compared to 17.8% for the prior year period. The decreases in gross margin were primarily due to a decrease in the amount of vendor incentives earned during the periods as well as the product mix of sales to our customers. Gross margin on sales of products and services was 18.0% for the quarter ended September 30, 2012 and the sequential decrease in margins was primarily due to a decrease in the amount of third party software assurance, maintenance and services sold, which are presented on a net basis. 
  • Segment earnings before tax decreased $0.2 million to $10.2 million for the quarter.

Financing Business Segment

  • Total revenues increased 26.6% to $12.6 million compared to $10.0 million in the quarter ended December 31, 2011. The increase in revenues was driven by higher financing revenue, primarily as result of net gains realized from the early termination and buyout of certain leases.   
  • Total costs and expenses increased $1.4 million, or 23.0%, to $7.3 million, due to increases in depreciation expense for equipment under operating leases and commission expense as a result of the increase in revenues. 
  • Segment earnings before tax were $5.3 million compared to $4.1 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 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 and nine months ended December 31, 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.

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