ePlus Reports Third Quarter and First Nine Months Financial Results
HERNDON, Va., Feb. 6, 2024 /PRNewswire/ --
Third Quarter Fiscal Year 2024
-- Net sales decreased 18.4% to $509.1 million from last year's third
quarter; technology business net sales decreased 19.2% to $494.2
million; services revenues increased 10.7% to $74.7 million.
-- Technology business gross billings decreased 11.3% to $797.0 million.
-- Consolidated gross profit decreased 3.3% to $133.8 million.
-- Consolidated gross margin was 26.3%, 410 bps higher than last year's
22.2%.
-- Net earnings decreased 23.6% to $27.3 million.
-- Adjusted EBITDA decreased 13.4% to $46.2 million.
-- Diluted net earnings per common share decreased 23.9% to $1.02. Non-GAAP
diluted net earnings per common share decreased 14.5% to $1.18.
First Nine Months of Fiscal Year 2024
-- Net sales increased 6.0% to $1,670.8 million; technology business net
sales increased 6.5% to $1,631.8 million; services revenues increased
8.9% to $213.2 million.
-- Technology business gross billings increased 3.4% to $2,495.5 million.
-- Consolidated gross profit increased 9.2% to $420.4 million.
-- Consolidated gross margin was 25.2%, an 80-bps improvement from 24.4%
last year.
-- Net earnings increased 8.4% to $93.8 million.
-- Adjusted EBITDA increased 8.2% to $153.6 million.
-- Diluted net earnings per common share increased 8.6% to $3.52. Non-GAAP
diluted net earnings per common share increased 9.0% to $3.99.
ePlus inc. (NASDAQ: PLUS), a leading provider of technology and financing solutions, today announced financial results for the three months and nine months ended December 31, 2023.
Management Comment
"In the third quarter, demand within our technology business slowed as improved product availability in the first half of the fiscal year led our larger customers to focus on completing previously delayed projects. Additionally, we saw sales cycle timelines extend as customers work through their project backlog. As we enter our fiscal fourth quarter, customer purchasing trends have improved, which supports the lower end of our fiscal 2024 financial guidance range," said Mark Marron, President and CEO of ePlus. "We continued to experience favorable demand trends within our annuity-like services business in the third quarter, achieving 22% year-over-year growth in managed services revenue, which together with a shift in product mix and a favorable contribution from our financing segment, resulted in a significant improvement in consolidated gross margin.
Mr. Marron continued, "ePlus has delivered strong financial results on a fiscal year-to-date basis, which we attribute to the successful execution of our growth strategy and unwavering focus on providing value-added solutions to our customers. Supported by our extensive partnerships throughout the IT industry, we continue to focus on delivering superior solutions that optimize our customers' investments across the technology stack."
Third Quarter Fiscal Year 2024 Results
For the third quarter ended December 31, 2023, as compared to the third quarter ended December 31, 2022:
Consolidated net sales decreased 18.4% to $509.1 million, from $623.5 million.
Technology business net sales decreased 19.2% to $494.2 million, from $611.8 million due to lower product sales. Technology business gross billings decreased 11.3% to $797.0 million from $898.8 million.
Product sales decreased 22.9% to $419.5 million due to declines in net sales of networking equipment, cloud and security products. Product gross margin was 21.9%, higher than 19.2% last year mainly due to a larger proportion of third-party maintenance and services sold in the third quarter of 2024 which are recorded on a net basis.
Professional service revenues increased 2.3% from last year to $40.0 million. Gross profit increased 13.3% and gross margins expanded 420 bps to 43.3% from 39.1% last year due to an increase in project related services offset by declines in demand for staff augmentation services.
Managed service revenues increased 22.4% to $34.6 million due to ongoing growth in these offerings, including Enhanced Maintenance Support, Service Desk, and Security Operations Center services. Gross profit increased 36.4% from last year due to the scaled growth in these services resulting in a 330-bps gross margin improvement.
Financing business segment net sales increased 27.3% to $14.9 million, from $11.7 million due to increases in portfolio earnings and transactional gains. Gross profit in the financing business segment increased by $3.0 million due to higher net sales combined with higher gross margin.
Consolidated gross profit decreased 3.3% to $133.8 million, from $138.4 million, due to a decline in product net sales. Consolidated gross margin was 26.3%, increased by 410 bps from last year of 22.2%, which was primarily due to increases in both product and service margin along with higher gross margin in our financing business.
Consolidated operating expenses were $95.8 million, up 4.2% from $91.9 million last year, primarily due to increases in salaries and benefits from additional headcount, as well as increases in acquisition-related depreciation and amortization expenses. Our headcount at the end of the quarter was 1,897, up 152 from a year ago, partially due to the acquisition of Network Solutions Group ("NSG"). Of the 152 additional employees, 133 were customer facing employees.
Consolidated operating income decreased 18.1% to $38.0 million. Earnings before tax decreased 22.2% to $38.4 million as we had foreign currency transaction gain of $0.9 million last year and other income of $1.9 million related to our claim in a class action lawsuit received in December 2022.
Our effective tax rate for the current quarter was 29.0%, higher than the prior year quarter of 27.7% primarily due to an unfavorable return to provision adjustment in the three months ended December 31, 2023, compared to a favorable return to provision adjustment in same three-month period in the prior year.
Net earnings decreased 23.6% to $27.3 million.
Consolidated adjusted EBITDA decreased 13.4% to $46.2 million.
Diluted net earnings per common share was $1.02, compared with $1.34 in the prior year quarter. Non-GAAP diluted net earnings per common share was $1.18, compared with $1.38 last year.
First Nine Months of Fiscal Year 2024 Results
For the nine months ended December 31, 2023, as compared to the nine months ended December 31, 2022:
Consolidated net sales increased 6.0% to $1,670.8 million, from $1,575.5 million.
Technology business net sales increased 6.5% to $1,631.8 million, from $1,532.0 million due to higher sales of product and managed services. Technology business gross billings increased 3.4% to $2,495.5 million from $2,412.8 million.
Product sales grew 6.2% to $1,418.6 million due to an increase in net sales of networking equipment and collaboration products, offset by a decline in net sales of cloud and security products. Gross profit from sales of products increased 9.2% to $308.1 million due to higher sales combined with a shift in customer mix that resulted in higher margins.
Professional service revenues declined 0.4% due to lower staff augmentation services from softer demand. Gross profit increased 6.2% as the gross margins expanded 260 bps to 42.0% from 39.4% last year, due to the change in mix between project services and staff augmentation.
Managed service revenues increased 22.1% to $99.3 million due to ongoing growth in these offerings, including Enhanced Maintenance Support, Service Desk, and Security Operations Center services. Gross profit from managed services increased 36.6% to $31.0 million due to the scaled growth in these services combined with a 330-bps improvement in gross margin.
Financing business segment net sales decreased 10.2% to $39.1 million, from $43.5 million, due to lower post-contract earnings, resulting in a decrease of $1.9 million in gross profit, partially offset by a decline in cost of leased equipment sold.
Consolidated gross profit increased 9.2% to $420.4 million, from $385.2 million, due to increased net sales volume. Consolidated gross margin was 25.2%, higher than last year's 24.4% and attributed to improved margins in both product and services within our technology business and in our financing business segment.
Consolidated operating expenses were $291.2 million, up 11.4% from $261.5 million last year, primarily due to increases in salaries and benefits as a result of additional headcount, increasing by 152 employees due to organic and acquisition-related headcount, variable compensation stemming from higher gross profit, and acquisition-related amortization and expenses.
Consolidated operating income increased 4.4% to $129.2 million. During the nine months ended December 31, 2023, we had other income of $0.7 million compared to other expense of $3.1 million last year, which included foreign currency transaction losses of $5.2 million, partially offset by $1.9 million related to our claim in a class action lawsuit. Earnings before tax increased 7.7% to $129.9 million.
Our effective tax rate for the current year period was 27.8%, lower than last year's 28.3%, due to lower state effective tax rates and less non-deductible executive compensation in the current period.
Net earnings increased 8.4% to $93.8 million.
Consolidated Adjusted EBITDA increased 8.2% to $153.6 million.
Diluted net earnings per common share was $3.52, compared with $3.24 in the prior year. Non-GAAP diluted net earnings per common share was $3.99, compared with $3.66 last year.
Balance Sheet Highlights
As of December 31, 2023, cash and cash equivalents were $142.2 million, up from $103.1 million as of March 31, 2023, primarily due to improvements in working capital, offset by the acquisition of NSG and repurchases of our common stock. Inventory decreased 10.4% to $218.0 million compared with $243.3 million as of March 31, 2023. Total stockholders' equity was $877.8 million, compared with $782.3 million as of March 31, 2023. Total shares outstanding were 27.0 million and 26.9 million on December 31, 2023 and March 31, 2023, respectively.
Fiscal Year Guidance
ePlus expects to achieve the low end of its fiscal year 2024 revenue and adjusted EBITDA guidance ranges of $2.23 billion to $2.33 billion, and $200 million to $215 million, respectively. This guidance assumes, in part, continued improvement in the supply chain that will enable the execution of 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
"Following an extended period of robust IT investment, overall IT spending has moderated given economic uncertainty. Within this environment, ePlus has outperformed, driven by the efforts of our talented team and balanced growth across our portfolio of innovative products and services. We remain committed to delivering exceptional solutions for our customers in our strategic focus areas, while expanding our capabilities to capture new AI opportunities moving forward," concluded Mr. Marron.
Recent Corporate Developments/Recognitions
In the month of January 2024:
-- Acquired PEAK Resources, Inc., a data center solutions provider in
Denver, Colorado.
-- Joined the U.S. Chamber of Commerce.
-- Launched the 2024 GRIT: Girls Re-Imagining Tomorrow® program across the
U.S.
In the month of November 2023:
-- Achieved AWS Resilience Competency.
-- Awarded the Global Customer Experience (CX) Partner of the Year at Cisco
Partner Summit.
Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on February 6, 2024:
Audio Webcast (Live & Replay): https://events.q4inc.com/attendee/
945214899
Live Call: (888) 330-2469 (toll-free/
domestic)
(240) 789-2740 (international)
Archived Call: (800) 770-2030 (toll-free/
domestic)
(647) 362-9199 (international)
Passcode: 5403833 (live call and replay)
A replay of the call will be available approximately two hours after the call through February 13, 2024. A transcript of the call will also be available on the ePlus Investor Relations website at https://www.eplus.com/investors.
About ePlus inc.
ePlus has an unwavering and relentless focus on leveraging technology to create inspired and transformative business outcomes for its customers. Offering a robust portfolio of solutions, as well as a full set of consultative and managed services across the technology spectrum, ePlus has proudly achieved more than 30 years of success in the business, carrying customers forward through adversity, rapidly changing environments, and other obstacles. ePlus is a trusted advisor, bringing expertise, credentials, talent and a thorough understanding of innovative technologies, spanning security, cloud, networking, collaboration and emerging solutions, to organizations across all industry segments. With complete lifecycle management services and flexible payment solutions, ePlus' more than 1,890 associates are focused on cultivating positive customer experiences and are dedicated to their craft, harnessing new knowledge while applying decades of proven experience. ePlus is headquartered in Virginia, with offices in the United States, UK, Europe, and Asia-Pacific. For more information, visit www.eplus.com, call 888-482-1122, or email info@eplus.com. Connect with ePlus on LinkedIn, Twitter, Facebook, 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," including, among other things, statements regarding the future financial performance of ePlus (including the guidance for the full fiscal year 2024). Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, 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 our ability to increase prices to our customers which may result in adverse changes in our gross profit; significant adverse changes in, reductions in, or loss of one or more of our larger volume customers or vendors; supply chain issues, including a shortage of Information Technology ("IT") products, may increase our costs or cause a delay in fulfilling customer orders, or increase our need for working capital, or completing professional services, or purchasing IT products or services needed to support our internal infrastructure or operations, resulting in an adverse impact on our financial results; maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel, and vendor certifications; our ability to secure our own and our customers' electronic and other confidential information, while maintaining compliance with evolving data privacy and regulatory laws and regulations; ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely; our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, obtain debt for our financing transactions, or the effect of those changes on our common stock price; our ability to manage a diverse product set of solutions, including artificial intelligence ("AI") products, in highly competitive markets with a number of key vendors; reliance on third-parties to perform some of our service obligations to our customers, and the reliance on a small number of key vendors in our supply chain with whom we do not have long-term supply agreements, guaranteed price agreements, or assurance of stock availability; the possibility of a reduction of vendor incentives provided to us; our ability to remain secure during a cybersecurity attack, including both disruptions in our or our vendors' IT systems and data and audio communication networks; our ability to identify acquisition candidates, or perform sufficient due diligence prior to completing an acquisition, or failure to integrate a completed acquisition may affect our earnings; significant and rapid inflation may cause price, wage, and interest rate increases, as well as increases in operating costs that may impact the arrangements that have pricing commitments over the term of the agreement; a possible decrease in the capital spending budgets of our customers or a decrease in purchases from us; changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service, software as a service, platform as a service and AI; our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies; 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.
e
Plus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31, March 31,
2023 2023
ASSETS
Current assets:
Cash and cash equivalents $142,170 $103,093
Accounts receivable-trade, net 597,363 504,122
Accounts receivable-other, net 50,055 55,508
Inventories 218,046 243,286
Financing receivables-net, current 110,344 89,829
Deferred costs 54,279 44,191
Other current assets 47,057 55,101
Total current assets 1,219,314 1,095,130
Financing receivables and operating leases-net 87,012 84,417
Deferred tax asset 3,682 3,682
Property, equipment and other assets 84,335 70,447
Goodwill 158,284 136,105
Other intangible assets-net 42,970 25,045
TOTAL ASSETS $1,595,597 $1,414,826
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accounts payable $294,705 $220,159
Accounts payable-floor plan 92,518 134,615
Salaries and commissions payable 45,372 37,336
Deferred revenue 130,352 114,028
Recourse notes payable-current 5,997
Non-recourse notes payable-current 36,165 24,819
Other current liabilities 32,351 24,372
Total current liabilities 631,463 561,326
Non-recourse notes payable-long-term 12,233 9,522
Deferred tax liability 561 715
Other liabilities 73,587 60,998
TOTAL LIABILITIES 717,844 632,561
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 per share par value; 2,000 shares
authorized; none outstanding
Common stock, $0.01 per share par value; 50,000 shares 274 272
authorized; 26,954 outstanding at December 31, 2023 and
26,905 outstanding at March 31, 2023
Additional paid-in capital 177,465 167,303
Treasury stock, at cost, 446 shares at December 31, 2023 and
261 shares at March 31, 2023 (23,774) (14,080)
Retained earnings 720,995 627,202
Accumulated other comprehensive income-foreign currency
translation adjustment 2,793 1,568
Total Stockholders' Equity 877,753 782,265
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,595,597 $1,414,826
e
Plus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended December Nine Months Ended December
31, 31,
2023 2022 2023 2022
Net sales
Product $434,371 $556,018 $1,457,636 $1,379,813
Services 74,684 67,458 213,205 195,728
Total 509,055 623,476 1,670,841 1,575,541
Cost of sales
Product 328,908 441,015 1,116,046 1,062,352
Services 46,337 44,089 134,347 127,990
Total 375,245 485,104 1,250,393 1,190,342
Gross profit 133,810 138,372 420,448 385,199
Selling, general, and administrative 89,381 86,730 272,331 248,201
Depreciation and amortization 5,399 3,609 15,821 10,387
Interest and financing costs 983 1,575 3,054 2,863
Operating expenses 95,763 91,914 291,206 261,451
Operating income 38,047 46,458 129,242 123,748
Other income (expense), net 366 2,907 673 (3,112)
Earnings before taxes 38,413 49,365 129,915 120,636
Provision for income taxes 11,131 13,671 36,122 34,134
Net earnings $27,282 $35,694 $93,793 $86,502
Net earnings per common share-basic $1.02 $1.34 $3.53 $3.26
Net earnings per common share-diluted $1.02 $1.34 $3.52 $3.24
Weighted average common shares outstanding-basic 26,618 26,592 26,598 26,561
Weighted average common shares outstanding-diluted 26,697 26,648 26,665 26,688
Technology Business
---
Three Months Ended December Nine Months Ended December
31, 31,
2023 2022 Change 2023 2022 Change
(in thousands)
(in thousands)
Net sales
Product $419,478 $544,316 (22.9 %) $1,418,581 $1,336,309 6.2 %
Professional services 40,044 39,151 2.3 % 113,870 114,369 (0.4 %)
Managed services 34,640 28,307 22.4 % 99,335 81,359 22.1 %
Total 494,162 611,774 (19.2 %) 1,631,786 1,532,037 6.5 %
Gross profit
Product 91,919 104,485 (12.0 %) 308,059 282,042 9.2 %
Professional services 17,332 15,294 13.3 % 47,852 45,046 6.2 %
Managed services 11,015 8,075 36.4 % 31,006 22,692 36.6 %
Total 120,266 127,854 (5.9 %) 386,917 349,780 10.6 %
Selling, general, and administrative 86,001 81,874 5.0 % 261,694 235,147 11.3 %
Depreciation and amortization 5,381 3,582 50.2 % 15,747 10,304 52.8 %
Interest and financing costs 217 1,308 (83.4 %) 1,428 2,117 (32.5 %)
Operating expenses 91,599 86,764 5.6 % 278,869 247,568 12.6 %
Operating income $28,667 $41,090 (30.2 %) $108,048 $102,212 5.7 %
Gross billings $796,986 $898,843 (11.3 %) $2,495,451 $2,412,803 3.4 %
Adjusted EBITDA $36,725 $47,869 (23.3 %) $132,170 $120,135 10.0 %
Technology Business Gross Billings by Type
---
Three Months Ended December Nine Months Ended December
31, 31,
2023 2022 Change 2023 2022 Change
(in thousands)
(in thousands)
Cloud $181,559 $234,464 (22.6 %) $641,120 $708,080 (9.5 %)
Networking 251,322 314,709 (20.1 %) 839,638 676,761 24.1 %
Security 189,476 193,866 (2.3 %) 480,159 509,241 (5.7 %)
Collaboration 23,180 27,925 (17.0 %) 97,111 100,799 (3.7 %)
Other 55,473 60,803 (8.8 %) 203,805 205,603 (0.9 %)
Product gross billings 701,010 831,767 (15.7 %) 2,261,833 2,200,484 2.8 %
Service gross billings 95,976 67,076 43.1 % 233,618 212,319 10.0 %
Total gross billings $796,986 $898,843 (11.3 %) $2,495,451 $2,412,803 3.4 %
Technology Business Net Sales by Type
---
Three Months Ended December Nine Months Ended December
31, 31,
2023 2022 Change 2023 2022 Change
(in thousands)
(in thousands)
Cloud $120,253 $157,126 (23.5 %) $427,365 $470,851 (9.2 %)
Networking 209,936 275,774 (23.9 %) 723,760 584,311 23.9 %
Security 58,822 77,111 (23.7 %) 156,504 173,623 (9.9 %)
Collaboration 13,608 13,405 1.5 % 53,647 45,572 17.7 %
Other 16,859 20,900 (19.3 %) 57,305 61,952 (7.5 %)
Total product 419,478 544,316 (22.9 %) 1,418,581 1,336,309 6.2 %
Professional services 40,044 39,151 2.3 % 113,870 114,369 (0.4 %)
Managed services 34,640 28,307 22.4 % 99,335 81,359 22.1 %
Total net sales $494,162 $611,774 (19.2 %) $1,631,786 $1,532,037 6.5 %
Technology Business Net Sales by Customer End Market
---
Three Months Ended December Nine Months Ended December
31, 31,
2023 2022 Change 2023 2022 Change
(in thousands)
(in thousands)
Telecom, Media, & Entertainment $139,551 $184,539 (24.4 %) $405,192 $431,269 (6.0 %)
Technology 83,951 133,067 (36.9 %) 268,302 299,088 (10.3 %)
SLED 60,108 72,730 (17.4 %) 264,419 207,823 27.2 %
Healthcare 55,504 69,825 (20.5 %) 214,182 205,297 4.3 %
Financial Services 38,816 48,008 (19.1 %) 174,391 118,917 46.6 %
All other 116,232 103,605 12.2 % 305,300 269,643 13.2 %
Total net sales $494,162 $611,774 (19.2 %) $1,631,786 $1,532,037 6.5 %
Financing Business Segment
---
Three Months Ended December Nine Months Ended December
31, 31,
2023 2022 Change 2023 2022 Change
(in thousands)
(in thousands)
Portfolio earnings $3,701 $2,391 54.8 % $10,113 $7,952 27.2 %
Transactional gains 8,107 5,181 56.5 % 16,335 15,125 8.0 %
Post-contract earnings 2,685 4,036 (33.5 %) 11,357 19,281 (41.1 %)
Other 400 94 325.5 % 1,250 1,146 9.1 %
Net sales 14,893 11,702 27.3 % 39,055 43,504 (10.2 %)
Gross profit 13,544 10,518 28.8 % 33,531 35,419 (5.3 %)
Selling, general, and administrative 3,380 4,856 (30.4 %) 10,637 13,054 (18.5 %)
Depreciation and amortization 18 27 (33.3 %) 74 83 (10.8 %)
Interest and financing costs 766 267 186.9 % 1,626 746 118.0 %
Operating expenses 4,164 5,150 (19.1 %) 12,337 13,883 (11.1 %)
Operating income $9,380 $5,368 74.7 % $21,194 $21,536 (1.6 %)
Adjusted EBITDA $9,464 $5,456 73.5 % $21,466 $21,798 (1.5 %)
ePlus inc. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION
We included reconciliations below for the following non-GAAP financial measures: (i) Adjusted EBITDA, (ii) Adjusted EBITDA for business segments, (iii) non-GAAP Net Earnings and (iv) non-GAAP Net Earnings per Common Share - Diluted.
We define Adjusted EBITDA as net earnings calculated in accordance with US GAAP, adjusted for the following: interest expense, depreciation and amortization, share-based compensation, acquisition and integration expenses, provision for income taxes, and other income (expense). Adjusted EBITDA presented for the technology business segments and the financing business segment is defined as operating income calculated in accordance with US 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 business segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses. As such, they are not included in the amounts added back to net earnings in the Adjusted EBITDA calculation.
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.
We use the above non-GAAP financial measures as supplemental measures of our performance to gain insight into our operating performance and performance trends. We believe that such non-GAAP financial measures provide management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that such non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results.
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 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 December Nine Months Ended December
31, 31
,
2023 2022 2023 2022
(in thousands)
Consolidated
---
Net earnings $27,282 $35,694 $93,793 $86,502
Provision for income taxes 11,131 13,671 36,122 34,134
Depreciation and amortization [1] 5,399 3,609 15,821 10,387
Share based compensation 2,526 1,950 7,145 5,681
Interest and financing costs 217 1,308 1,428 2,117
Other expense, net [2] (366) (2,907) (673) 3,112
Adjusted EBITDA $46,189 $53,325 $153,636 $141,933
Technology Business Segment
---
Operating income $28,667 $41,090 $108,048 $102,212
Depreciation and amortization [1] 5,381 3,582 15,747 10,304
Share based compensation 2,460 1,889 6,947 5,502
Interest and financing costs 217 1,308 1,428 2,117
Adjusted EBITDA $36,725 $47,869 $132,170 $120,135
Financing Business Segment
---
Operating income $9,380 $5,368 $21,194 $21,536
Depreciation and amortization [1] 18 27 74 83
Share based compensation 66 61 198 179
Adjusted EBITDA $9,464 $5,456 $21,466 $21,798
Three Months Ended December Nine Months Ended December
31, 31
,
2023 2022 2023 2022
(in thousands)
GAAP: Earnings before taxes $38,413 $49,365 $129,915 $120,636
Share based compensation 2,526 1,950 7,145 5,681
Acquisition related amortization expense [3] 3,856 2,505 11,348 7,182
Other (income) expense [2] (366) (2,907) (673) 3,112
Non-GAAP: Earnings before provision for income taxes 44,429 50,913 147,735 136,611
GAAP: Provision for income taxes 11,131 13,671 36,122 34,134
Share based compensation 733 544 2,005 1,624
Acquisition related amortization expense [3] 1,115 693 3,173 2,030
Other (income) expense, net [2] (106) (811) (190) 933
Tax benefit (expense) on restricted stock 10 102 226 267
Non-GAAP: Provision for income taxes 12,883 14,199 41,336 38,988
Non-GAAP: Net earnings $31,546 $36,714 $106,399 $97,623
Three Months Ended December Nine Months Ended December
31, 31
,
2023 2022 2023 2022
GAAP: Net earnings per common share - diluted $1.02 $1.34 $3.52 $3.24
Share based compensation 0.07 0.05 0.19 0.15
Acquisition related amortization expense [3] 0.10 0.07 0.30 0.20
Other (income) expense, net [2] (0.01) (0.08) (0.01) 0.08
Tax benefit (expense) on restricted stock (0.01) (0.01)
Total non-GAAP adjustments - net of tax 0.16 0.04 0.47 0.42
Non-GAAP: Net earnings per common share - diluted $1.18 $1.38 $3.99 $3.66
[1] Amount consists of depreciation and amortization for assets used internally.
[2] Legal settlement, interest income and foreign currency transaction gains and losses.
[3] Amount consists of amortization of intangible assets from acquired businesses.
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SOURCE EPLUS INC.
