ePlus Reports First Quarter Fiscal Year 2024 Financial Results
ePlus Reports First Quarter Fiscal Year 2024 Financial Results
EPS increased 51.2% to $1.27; Net Sales up 25.3% to $574.2 million
First Quarter Fiscal Year 2024
HERNDON, Va.,?Aug. 7, 2023?/PRNewswire/ -- ePlus inc. (NASDAQ: PLUS), a leading provider of technology and financing solutions, today announced financial results for the three months ended June 30, 2023.
Management Comment
"In an evolving market environment for IT spending, our strong first quarter results reflect the continued successful execution of our growth strategy and our ability to provide customized solutions that deliver value quickly and effectively," said Mark Marron, president and CEO of ePlus. "Consolidated net sales grew approximately 25% year-over-year, driven by gains in cloud and networking, as well as contributions from recent acquisitions.?Revenue also benefited from some easing of supply chain constraints that enabled us to fulfill prior customer orders. The improvement in our sales revenue, coupled with continued operational discipline and effective cost management, fueled EPS growth of approximately 51%."
Mr. Marron continued, "Our first quarter technology business sales were diverse across end markets, and we were pleased to see demand broaden and show particular strength in the mid-market segment. As our customers' needs for technology modernization, AI, cybersecurity and workplace transformation continue, ePlus remains a trusted partner due to our deep expertise, extensive strategic relationships and comprehensive portfolio of high-value solutions."
First Quarter Fiscal 2024 Results
For the first quarter ended June 30, 2023, as compared to the first quarter of the prior fiscal year ended June 30, 2022:
Consolidated net sales increased 25.3% to $574.2 million, from $458.4 million.
Technology business net sales increased 26.0% to $565.7 million, from $448.8 million due to higher sales of product and managed services, offset by a decline in professional services. Technology business gross billings increased 17.6% to $842.0 million from $716.3 million.?
Product sales grew due to an increase in customer demand, as well as the acquisitions of Future Com, Ltd. on July 15, 2022, and Network Solutions Group (NSG), a division of CCI Systems, Inc. on April 30, 2023. The increase in gross profit from sales of product was due to higher sales combined with a shift in customer mix that resulted in higher margins.?
Managed service revenues increased due to ongoing growth in these offerings, including Enhanced Maintenance Support and Security Operations Center services. Gross profit from managed services increased due to the scaled growth in these services.?
Professional service revenues declined due to lower staff augmentation services from softer demand.?Gross margins increased due to the change in mix.
Financing segment net sales decreased 11.3% to $8.5 million, from $9.6 million due to decreases in post-contract earnings and transactional gains. Gross profit in the financing segment was lower by $1.5 million primarily due to the decline in net sales.
Consolidated gross profit increased 25.3% to $142.3 million, from $113.5 million. Consolidated gross margin was 24.8%, in line with last year.
Operating expenses were $95.9 million, up 19.4% from $80.3 million last year, primarily due to increases in salaries and benefits, from higher headcount and variable compensation stemming from higher gross profit, and an increase in acquisition related amortization expenses.?Our headcount at the end of the quarter was 1,853, up 216 from a year ago, partially due to the acquisitions of Future Com and NSG. Of the 216 additional employees, 170 were customer facing employees, including 84 professional services and technical support personnel.
Consolidated operating income increased 39.6% to $46.3 million.?
Our effective tax rate for the current quarter was 27.2%, lower than the prior year quarter of 28.0%, due to lower state and local income taxes and non-deductible executive compensation.
Net earnings increased 51.5% to $33.8 million.
Adjusted EBITDA increased 40.7% to $53.9 million.
Diluted earnings per share was $1.27, compared with $0.84 in the prior year quarter. Non-GAAP diluted earnings per share was $1.41, compared with $0.99 last year.?
Balance Sheet Highlights
As of June 30, 2023, ePlus had cash and cash equivalents of $101.6 million, compared with $103.1 million as of March 31, 2023.?Accounts receivable—trade, net increased 34.5% to $678.0 million from March 31, 2023 due to an increase in gross billings.?Total stockholders' equity was $813.3 million, compared with $782.3 million as of March 31, 2023.?Total shares outstanding were 26.9 million on both June 30, 2023 and March 31, 2023.?
Fiscal Year Guidance
ePlus is initiating fiscal year 2024 revenue guidance of $2.23 billion to $2.33 billion, and an adjusted EBITDA range of $200 million to $215 million, representing a margin of 9.0% to 9.2%. This guidance assumes, in part, continued improvement in the supply chain that will enable previously delayed customer projects.?The Company cannot predict with reasonable certainty and without unreasonable effort, the ultimate outcome of unusual gains and losses, the occurrence of matters creating GAAP tax impacts, fluctuations in interest expense and share-based compensation, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to the Company's results computed in accordance with GAAP.?Accordingly, the Company is unable to provide a reconciliation of GAAP net earnings to adjusted EBITDA and adjusted EBITDA margin for the full year 2024 forecast.
Summary and Outlook
"Our fiscal 2024 year is off to a promising start given our first quarter financial performance. Through consistent execution and our strategic focus on serving faster-growing end markets, ePlus has continued to generate solid sales and earnings growth, building long-term value for our stakeholders.
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Mr. Marron concluded, "Macroeconomic uncertainty continues to affect overall IT spending, leading organizations to prioritize projects that enhance operational efficiency, reduce risk and deliver faster returns. In this environment, we are acting with agility and meeting our customers' evolving needs with a range of high-value, cost-effective solutions and services. We remain confident in our ability to deliver above-market growth, supported by the resilient nature of our business, the strength of our backlog and the diversity of our end markets."
Recent Corporate Developments/Recognitions
In the month of July:
In the month of June:
In the month of May:
Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on August 7, 2023:
Date:
August 7, 2023
Time:
4:30 p.m. ET
Audio Webcast (Live & Replay):
Live Call:
(888) 330-2469 (toll-free/domestic)
(240) 789-2740 (international)
Replay:
(800) 770- 2030 (toll-free/domestic) or
(647) 362-9199 (international)
Passcode:
5403833 (live call and replay)
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A replay of the call will be available approximately two hours after the call through August 14, 2023.?A transcript of the call will also be available on the ePlus Investor Relations website at https://www.eplus.com/investors.