Science & Technology
Science and Technology
Science and Technology
Thu, June 18, 2009
Wed, June 17, 2009 ePlus inc.: ePlus Reports Fiscal Year 2009 Financial Results
HERNDON, VA--(Marketwire - June 17, 2009) - ePlus inc. (
For the year, revenues totaled $698.0 million, a decrease of $151.3 million or 17.8%, as compared to $849.3 million last fiscal year. Net earnings totaled $12.8 million, or $1.52 per diluted share, as compared to $16.4 million, or $1.95 per diluted share last fiscal year. Results for the year ended March 31, 2009 include a pre-tax goodwill impairment charge of $4.6 million related to the Company's technology sales business segment. The impairment is a non-cash charge to earnings, and did not affect the Company's liquidity, cash flows from operating activities or covenants. Excluding this impairment charge, non-GAAP net earnings totaled $15.5 million or $1.84 per diluted share.
"IT spending has been very volatile in the past few months, and it is difficult to predict when IT spending will stabilize or increase," said Phillip G. Norton, Chairman, President and Chief Executive Officer. "We believe that ePlus has multiple advantages that will allow us to endure current economic challenges and be well positioned to capture growth when the economy rebounds. These advantages include our strong balance sheet, a continued focus on advanced technologies that deliver high value to customers, software and supply chain processes that differentiate us from the competition, and leasing that facilitates customer spend to meet their IT needs within capital and budget constraints. ePlus is helping our customers by providing real value in this marketplace."
Fourth Quarter Results
Sales of product and services totaled $119.3 million, a decrease of $47.7 million or 28.6%, as compared to $167.0 million in the fiscal fourth quarter of 2008. The decline in revenue was primarily attributable to the economic downturn, which led many customers to defer investments in technology equipment. The gross margin percentage improved slightly to 13.1%, as compared to the same quarter last year.
Revenues generated from the combination of lease revenues, sales of leased equipment, fee and other income totaled $14.8 million, a decrease of $5.3 million or 26.5%, as compared to $20.2 million in the fiscal fourth quarter of 2008. This decline was largely a result of the Company's decision to sell more of its leases in the prior year period, as part of a risk mitigation process conducted to diversify the portfolio by customer, equipment type and residual value. As a result of fewer leases in the Company's portfolio in the fiscal year, lease revenues decreased 11.7% to $10.3 million this quarter, representing approximately 8% of the total revenue mix.
Selling, general and administrative expenses, which includes professional and other fees, salaries and benefits, and general and administrative expenses, totaled $23.4 million, a decrease of $2.1 million or 8.1%, as compared to $25.4 million in the fiscal fourth quarter of 2008. The decrease was primarily related to lower professional and other fees, as well as the Company's increased focus on controlling spending, efforts to improve productivity and a reduction in depreciation resulting from a smaller portfolio of leases. Salaries and benefits expenses increased due to the establishment of a telesales unit earlier this year and the employment of several former consultants as professional services staff.
Interest and financing costs totaling $1.5 million were unchanged from the fiscal fourth quarter of 2008. Non-recourse notes payable totaled $85.0 million at March 31, 2009, a decrease of 9.4%, as compared to $93.8 million at March 31, 2008. ePlus is not directly liable for its non-recourse debt, except under certain limited circumstances, as the loans are secured by equipment and assigned lease payments, which collateralizes the customers' obligations.
As of March 31, 2009, cash and cash equivalents totaled $107.8 million. At March 31, 2009, shareholders' equity was $174.5 million and book value totaled $21.57 per share, compared to shareholders' equity of $163.7 million and book value of $19.89 per share at March 31, 2008.
During the quarter, ePlus invested $1.4 million to repurchase an additional 133,791 shares of its common stock at an average cost of $10.64 per share. For the full year ended March 31, 2009, ePlus repurchased 436,664 shares of its outstanding common stock at an average cost of $9.95 per share for a total purchase price of $4.3 million.
Full Year Results
Sales of product and services totaled $636.1 million, a decrease of $95.5 million or 13.1%, as compared to $731.7 million last fiscal year. The decrease in revenue was primarily attributable to the economic downturn, which has led many customers to defer investments in technology equipment. Gross margin percentage improved to 13.9% as compared to 11.8% recorded the prior fiscal year.
Revenues generated from the combination of lease revenues, sales of leased equipment, fee and other income totaled $61.9 million, a decrease of $55.8 million or 47.4%, as compared to $117.7 million last fiscal year. The decrease in sales of leased equipment, which totaled $45.5 million last fiscal year, represented nearly three-quarters of the overall decline in revenues. This decline was largely a result of the Company's decision to sell more of its leases in the prior fiscal year, as part of a risk mitigation process conducted to diversify the portfolio by customer, equipment type and residual value.
Selling, general and administrative expenses totaled $98.9 million, a decrease of $2.3 million or 2.3%, as compared to $101.2 million last fiscal year. The decrease resulted from lower professional and other fees, in addition to slightly lower general and administrative expenses, which more than offset an increase in salaries and benefits. Salaries and benefits expense increased $4.1 million or 5.7% primarily due to staff additions the Company made earlier this year to support its long-term growth plans. Professional and other fees decreased $5.7 million or 44.1% from heightened expense levels incurred last year from delayed SEC filings and other legal fees.
For the 2009 fiscal year, interest and financing costs declined 28.5%, to $5.8 million from $8.1 million recorded the prior fiscal year, as a result of lower overall non-recourse debt.
Percentage changes stated throughout this press release are calculated on rounded numbers from the Company's financial statements (which are stated in thousands of dollars), not on the rounded numbers used herein. Investors are encouraged to read the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2009. Copies are available via the Company's Web site at: [ http://www.eplus.com ], via the SEC's website at: [ http://www.sec.gov ], or by contacting the Company.
Conference Call Information
The Company will host a conference call at 11:00 a.m. Eastern on Thursday, June 18. To participate in the call, please dial 877-856-1960 (international participants may dial 719-325-4784) and reference access code 8754140. A live webcast will be available via the Company's investor relations Web site at: [ www.eplus.com ].
A replay of the teleconference will be accessible through midnight Sunday, June 28th. To access the replay, please call 719-457-0820 and reference access code 8754140. The webcast will also remain available for replay via the Company's investor relations Web site.
Use of Non-GAAP Financial Information
In this release, ePlus discloses non-GAAP measures of net earnings and earnings per share showing the effect of the goodwill impairment charge. A "non-GAAP financial measure" is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of the company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. ePlus uses the financial measures that are included in this news release in its internal evaluation and management of its business. Management believes that these measures and the information they provide are useful to investors because they permit investors to view the Company's performance using the same tools that ePlus uses and to better evaluate the Company's ongoing business performance. These measures should not be considered an alternative to measurements required by accounting principles generally accepted in the United States (GAAP), such as net income and earnings per share. These non-GAAP measures are unlikely to be comparable to non-GAAP information provided by other companies. In accordance with SEC regulations, reconciliation of the ePlus GAAP information to the pro forma information is provided in the table below. We will also make available on the investor relations page of our web site at [ www.eplus.com ] this press release, and a reconciliation of the difference between the GAAP and non-GAAP financial measures.
Forward-Looking Statements
Statements in this press release that are not historical facts may be deemed to be "forward-looking statements" Within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. 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; the demand for and acceptance of, our products and services; our ability to adapt our services to meet changes in market developments; the impact of competition in our markets; the possibility of defects in our products or catalog content data; our ability to hire and retain sufficient personnel; our ability to protect our intellectual property; a decrease in the capital spending budgets of our customers; 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; 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.
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, professional services, flexible lease financing, proprietary software, and patented business methods. Founded in 1990, ePlus has more than 650 associates in 20+ locations serving more than 2,500 customers. 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.
ePlus inc. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of As of March 31, 2009 March 31, 2008 -------------- -------------- ASSETS (in thousands) Cash and cash equivalents $ 107,788 $ 58,423 Accounts receivable - net 82,734 109,706 Notes receivable 2,632 726 Inventories - net 9,739 9,192 Investment in leases and leased Equipment - net 119,256 157,382 Property and equipment - net 3,313 4,680 Other assets 16,809 13,514 Goodwill 21,601 26,125 -------------- -------------- TOTAL ASSETS $ 363,872 $ 379,748 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Accounts payable - equipment $ 2,904 $ 6,744 Accounts payable - trade 18,833 22,016 Accounts payable - floor plan 45,127 55,634 Salaries and commissions payable 4,586 4,789 Accrued expenses and other liabilities 29,002 30,372 Income taxes payable 912 - Recourse notes payable 102 - Non-recourse notes payable 84,977 93,814 Deferred tax liability 2,957 2,677 -------------- -------------- Total Liabilities 189,400 216,046 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; 11,504,167 issued and 8,088,513 outstanding at March 31, 2009 and 11,210,731 issued and 8,231,741 outstanding at March 31, 2008 115 112 Additional paid-in capital 80,055 77,287 Treasury stock, at cost, 3,415,654 and 2,978,990 shares, respectively (37,229) (32,884) Retained earnings 131,452 118,623 Accumulated other comprehensive income - foreign currency translation adjustment 79 564 -------------- -------------- Total Stockholders' Equity 174,472 163,702 -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 363,872 $ 379,748 ============== ============== ePlus inc. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Year Ended March 31, March 31, 2009 2008 2009 2008 --------- --------- --------- --------- (in thousands, except for per share amounts) REVENUES Sales of product and services $ 119,335 $ 167,026 $ 636,142 $ 731,654 Sales of leased equipment 1,186 4,949 4,633 45,493 --------- --------- --------- --------- 120,521 171,975 640,775 777,147 Lease revenues 10,286 11,649 44,483 55,459 Fee and other income 3,352 3,575 12,769 16,699 --------- --------- --------- --------- TOTAL REVENUES 134,159 187,199 698,027 849,305 --------- --------- --------- --------- COSTS AND EXPENSES Cost of sales, product and services 103,680 145,191 548,035 645,393 Cost of leased equipment 1,113 4,783 4,373 43,702 --------- --------- --------- --------- 104,793 149,974 552,408 689,095 Direct lease costs 2,957 4,602 14,220 20,955 Professional and other fees 1,269 3,239 7,199 12,889 Salaries and benefits 18,671 18,314 76,380 72,285 General and administrative expenses 3,424 3,881 15,320 16,016 Impairment of goodwill - - 4,644 - Interest and financing costs 1,501 1,533 5,808 8,123 --------- --------- --------- --------- TOTAL COSTS AND EXPENSES 132,615 181,543 675,979 819,363 --------- --------- --------- --------- EARNINGS BEFORE PROVISION FOR INCOME TAXES 1,544 5,656 22,048 29,942 --------- --------- --------- --------- PROVISION FOR INCOME TAXES 790 2,911 9,219 13,582 --------- --------- --------- --------- NET EARNINGS $ 754 $ 2,745 $ 12,829 $ 16,360 ========= ========= ========= ========= NET EARNINGS PER COMMON SHARE - BASIC $ 0.10 $ 0.34 $ 1.56 $ 1.99 ========= ========= ========= ========= NET EARNINGS PER COMMON SHARE - DILUTED $ 0.10 $ 0.32 $ 1.52 $ 1.95 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 8,059,518 8,231,741 8,219,318 8,231,741 WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 8,256,718 8,396,712 8,453,333 8,378,683 RECONCILIATION OF NON-GAAP INFORMATION Year Ended March 31, 2009 2008 [2] -------- --------- (in thousands, except per share amounts) GAAP earnings before provision for income taxes as reported $ 22,048 $ 29,942 Plus: Impairment of goodwill 4,644 - --------- --------- Non-GAAP Earnings before provision for income taxes 26,692 29,942 --------- --------- Non-GAAP Provision for income taxes [1] 11,161 13,582 --------- --------- Non-GAAP proforma net earnings $ 15,531 $ 16,360 ========= ========= GAAP net earnings per common share - diluted $ 1.52 $ 1.95 ========= ========= Non-GAAP proforma net earnings per common share - Diluted $ 1.84 $ 1.95 ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 8,219,318 8,231,741 WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 8,453,333 8,378,683 [1] Non-GAAP tax rate is calculated at the same tax rate as GAAP earnings [2] Figures in the 2008 column are GAAP and provided for comparative purposes.
