ePlus Reports Fourth Quarter and Fiscal Year 2021 Financial Results

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, 2021.

Management Comment

“Our fourth quarter earnings performance reflected continued progress driving profitable growth from our IT solutions, particularly in the areas of security, cloud/data center, collaboration and annuity services, coupled with a steady focus on managing our cost structure. In the fourth quarter, gross profit increased 6.6%, and we realized an strong gross profit margin of 27.8%, our highest ever, due to growth in services revenue, increased product margins, and a high gross to net conversion. Our improved margins and lower costs drove operating income up 31.9% in the quarter and 11.6% for the year. EPS increased 17.2%, to $1.16, and adjusted EBITDA grew 25.7%, reflecting the strength and resilience of our business model,” said Mark Marron, President and Chief Executive Officer.

“In what was an unprecedented year, I am extremely proud of the entire ePlus team for responding with agility and unwavering commitment to support our customers’ evolving needs for integrated technology solutions. For fiscal 2021, lower net sales were due, in part, to the industry’s continuing conversion to the XaaS revenue model and revenues recorded on a net basis. We grew our services revenue, a key focus area that offers enhanced visibility due to our annuity-quality services offerings. Importantly, we recorded substantive increases in operating income, adjusted EBITDA, and earnings per share.”

Fourth Quarter Fiscal 2021 Results

For the fourth quarter ended March 31, 2021 as compared to the fourth quarter of the prior fiscal year ended March 31, 2020:

Consolidated net sales decreased 3.8% to $352.6 million, from $366.5 million.

Technology segment net sales decreased 6.1% to $331.8 million, from $353.3 million due to lower product sales. Service revenues increased 8.2% to $52.9 million, from $48.9 million due to an increase in managed services. Adjusted gross billings increased 2.8% to $528.6 million from $514.1 million.

Financing segment net sales increased 57.4% to $20.8 million, from $13.2 million due to an increase from sales of off lease equipment.

Consolidated gross profit increased 6.6% to $97.9 million, from $91.8 million. Consolidated gross margin was 27.8%, up from 25.1% last year, due to higher product margin in our technology segment as well as higher service margins.

Operating expenses were $74.3 million, up 0.5% from $73.9 million last year, primarily due to increases in variable compensation stemming from higher gross profit, partially offset by lower travel expenses and changes in reserve for credit losses. Our headcount at the end of the quarter was 1,560, down 19 from a year ago.

Consolidated operating income increased 31.9% to $23.6 million.

Our effective tax rate for the current quarter was 32.6%, higher than the prior year quarter of 24.9%, primarily due to an increase of non-deductible compensation.

Net earnings increased 17.4% to $15.6 million.

Adjusted EBITDA increased 25.7% to $29.6 million, from $23.5 million.

Diluted earnings per share was $1.16, compared with $0.99 in the prior year quarter. Non-GAAP diluted earnings per share was $1.41, compared with $1.24 last year.

Fiscal Year 2021 Results

For the fiscal year ended March 31, 2021 as compared to the prior fiscal year ended March 31, 2020:

Consolidated net sales decreased 1.3% to $1,568.3 million, from $1,588.4 million.

Technology segment net sales decreased 1.4% to $1,508.0 million, from $1,530.1 million due to a larger portion of our sales that were recognized on a net basis. Service revenues increased 4.7% to $202.2 million, from $193.1 million primarily due to an increase in managed services. Adjusted gross billings was $2,263.9 million, an increase of 1.6% from $2,227.9 million.

Financing segment net sales increased 3.6% to $60.4 million, from $58.3 million, primarily due to an increase in proceeds from sales of off lease equipment.

Consolidated gross profit increased 0.6% to $393.6 million, from $391.2 million. Consolidated gross