ePlus Reports Second Quarter and First Half Financial Results Fiscal Year 2025

Rhea-AI Summary

ePlus reported financial results for Q2 and H1 Fiscal Year 2025, ending September 30, 2024.

For Q2 2025:

• Net sales decreased 12.3% to $515.2M.
• Service revenues increased 46% to $103.7M.
• Consolidated gross profit rose 2.5% to $148M.
• Net earnings fell 4.1% to $31.3M.
• Diluted EPS decreased 4.1% to $1.17.

For H1 2025:

• Net sales dropped 8.8% to $1,059.7M.
• Service revenues increased 31.3% to $181.9M.
• Consolidated gross profit decreased 1.5% to $282.5M.
• Net earnings decreased 11.8% to $58.6M.
• Diluted EPS fell 12% to $2.19.

Despite declining sales and earnings, gross margins improved, driven by higher-margin service revenues. The acquisition of Bailiwick Services, , contributed to revenue growth in professional services. ePlus maintains a solid balance sheet with a cash position of $187.5M and expects FY2025 net sales to be similar to FY2024.

Positive

• Consolidated gross profit increased 2.5% to $148M in Q2.
• Service revenues rose 46% to $103.7M in Q2.
• Gross margin improved to 28.7% in Q2 from 24.6% last year.
• Acquisition of Bailiwick Services, , enhanced professional service revenues.

Negative

• Net sales decreased 12.3% to $515.2M in Q2.
• Net earnings fell 4.1% to $31.3M in Q2.
• Adjusted EBITDA decreased 2.7% to $52.1M in Q2.
• Diluted EPS dropped 4.1% to $1.17 in Q2.
• Net sales decreased 8.8% to $1,059.7M in H1.
• Net earnings fell 11.8% to $58.6M in H1.
• Diluted EPS decreased 12% to $2.19 in H1.

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Second Quarter Gross Profit And Gross Margin Improved Year Over Year

Second Quarter Fiscal Year 2025
•	Net sales decreased 12.3% to $515.2 million; technology business net sales decreased 13.8% to $493.3 million; service revenues increased 46.0% to $103.7 million.
•	Technology business gross billings decreased 5.6% to $808.2 million.
•	Consolidated gross profit increased 2.5% to $148.0 million.
•	Consolidated gross margin was 28.7%, compared with 24.6% last year.
•	Net earnings decreased 4.1% to $31.3 million.
•	Adjusted EBITDA decreased 2.7% to $52.1 million.
•	Diluted earnings per share decreased 4.1% to $1.17. Non-GAAP diluted earnings per share decreased 2.9% to $1.36.

 

First Half Fiscal Year 2025
•	Net sales decreased 8.8% to $1,059.7 million; technology business net sales decreased 9.6% to $1,028.8 million; service revenues increased 31.3% to $181.9 million.
•	Technology business gross billings decreased 3.3% to $1,641.9 million.
•	Consolidated gross profit decreased 1.5% to $282.5 million.
•	Consolidated gross margin increased to 26.7%, compared with 24.7% last year.
•	Net earnings decreased 11.8% to $58.6 million.
•	Adjusted EBITDA decreased 11.3% to $95.3 million.
•	Diluted earnings per share decreased 12.0% to $2.19. Non-GAAP diluted earnings per share decreased 11.0% to $2.50.

HERNDON, Va., Nov. 12, 2024 /PRNewswire/ -- ePlus inc. (NASDAQ: PLUS), a leading provider of technology and financing solutions, today announced financial results for the three months and six months ended September 30, 2024, the second quarter of its 2025 fiscal year.

Management Comment

"Our results in the second quarter reflect the ongoing evolution of the industry towards ratable and subscription revenue models and slower product sales, partially offset by the continued strength of our services-led approach," said Mark Marron, president and CEO of ePlus. "Notably, we experienced a year on year increase in gross profit and gross margin on lower gross billings and net sales, driven by higher margin services revenues, which increased 46%, and strong financing revenues.

"During the quarter, we acquired Bailiwick Services, LLC, which will help us drive core to edge computing solutions for our enterprise customers. In addition, we continue to see a shift towards services and more software and subscription-based sales as a percentage of the whole, and these are often recognized ratably or on a net basis creating a net sales headwind. On the product front, artificial intelligence (AI) continues to progress, and our customers are exploring advantages to integrate AI into various aspects of their businesses."

Mr. Marron continued, "We ended the quarter with a solid balance sheet. Our healthy cash position enabled us to fund the acquisition of Bailiwick in the quarter, with ample additional liquidity to support our capital allocation priorities as we work to deliver increased shareholder value."

Second Quarter Fiscal Year 2025 Results 

For the second quarter ended September 30, 2024, as compared to the second quarter ended September 30, 2023:

Consolidated net sales decreased 12.3% to $515.2 million, from $587.6 million.

Technology business net sales decreased 13.8% to $493.3 million, from $571.9 million as lower product sales were offset by higher service revenues. Technology business gross billings decreased 5.6% to $808.2 million from $856.5 million.

Product sales declined 22.2% to $389.6 million, from $500.9 million, due to lower demand combined with a shift in mix. Product margin was 22.9%, up from 20.9% last year due to a higher proportion of third-party maintenance, software subscriptions and services sold in the current quarter, which are recorded on a net basis.

Professional service revenues increased 61.7% from last year to $61.9 million, from $ 38.3 million, due in part to the acquisition of Bailiwick Services, LLC. Gross margins remained consistent at 41.3%.

Managed service revenues increased 27.6% to $41.8 million due to ongoing growth in these offerings, including Enhanced Maintenance Support and Cloud services. Gross profit from managed services increased 21.0% from last year due to the increase in revenues. Managed service margins declined to 29.5% from 31.1%.

Financing business segment net sales increased 39.7% to $21.9 million, from $15.7 million, primarily due to increases in transactional gains. Gross profit in the financing business segment increased $7.1 million, from $13.6 million last year to $20.7 million this year, due to the increase in net sales.

Consolidated gross profit increased 2.5% to $148.0 million, from $144.4 million. Consolidated gross margin was 28.7%, compared with last year's gross margin of 24.6%.

Consolidated operating expenses were $105.3 million, up 5.8% from $99.5 million last year, primarily due to increases in salaries and benefits from additional headcount, as well as increases in acquisition-related expenses of $1.0 million. Our headcount at the end of the quarter was 2,323, up 446 from a year ago. The acquisition of Bailiwick Services LLC on August 19, 2024 added 441 employees, and Peak Resources on January 27, 2024 added 24 employees. Of the 446 additional employees, 328 were customer facing employees.

Consolidated operating income decreased 4.8% to $42.7 million and earnings before tax decreased 3.7% to $43.3 million. Other income was $0.6 million compared to $0.1 million last year, as higher interest income of $2.4 million was offset by foreign exchange losses of $1.8 million.

Our effective tax rate for the current quarter was 27.7%, slightly higher than the prior year quarter of 27.4%.

Net earnings decreased 4.1% to $31.3 million.

Adjusted EBITDA in the technology business declined 17.3% and increased 68.9% in the financing business segment, and when combined, resulted in consolidated adjusted EBITDA decreasing 2.7% to $52.1 million.

Diluted earnings per common share was $1.17 for the second quarter ended September 30, 2024, compared with $1.22 in the prior year quarter. Non-GAAP diluted earnings per common share was $1.36 for the second quarter ended September 30, 2024, compared with $1.40 last year.

First Half Fiscal Year 2025 Results 

For the six months ended September 30, 2024, as compared to the six months ended September 30, 2023:

Consolidated net sales decreased 8.8% to $1,059.7 million, from $1,161.8 million.

Technology business net sales decreased 9.6% to $1,028.8 million, from $1,137.6 million due to lower product sales, offset by higher service revenues. Technology business gross billings decreased 3.3% to $1,641.9 million from $1,698.5 million.

Product sales decreased 15.2% to $846.9 million, from $999.1 million, due to declines in customer demand, as well as a shift in product mix. Gross profit from sales of product decreased 13.1% to $187.9 million due to lower sales combined with a shift in mix towards third-party maintenance and services, which are recorded on a net basis.

Professional service revenues increased 34.3% due in part to the acquisition of Bailiwick Services, LLC. Gross margins increased slightly to 41.4%, from 41.3% for the same period in the prior year.

Managed service revenues increased 27.8% to $82.7 million, from $64.7 million, due to ongoing growth in these offerings, including Enhanced Maintenance Support, Cloud and Service Desk services. Gross profit from managed services increased 25.9% to $25.2 million, from $20.0 million, due to the increase in revenues. Gross margins declined slightly to 30.4% from 30.9% last year.

Financing business segment net sales increased 28.0% to $30.9 million, from $24.2 million, due to higher transactional gains and portfolio earnings offset by lower post-contract earnings. Gross profit in the financing business segment increased $8.4 million primarily due to the increase in sales.

Consolidated gross profit decreased to $282.5 million from $286.6 million. Consolidated gross margin was 26.7%, compared with last year's gross margin of 24.7%, due to higher product margins.

Operating expenses were $204.3 million, up 4.5% from $195.4 million last year, primarily due to increases in salaries and benefits as a result of increases in personnel and acquisition related amortization and expenses from the acquisition of Bailiwick Services LLC and Peak Resources.

Consolidated operating income decreased 14.3% to $78.2 million. Earnings before tax decreased 11.7% to $80.8 million. Other income was $2.7 million compared to $0.3 million last year, as higher interest income of $4.9 million was offset by foreign exchange losses of $2.3 million.

Our effective tax rate for the current year period was 27.4%, slightly higher than last year's 27.3%.

Net earnings decreased 11.8% to $58.6 million.

Adjusted EBITDA decreased 11.3% to $95.3 million.

Diluted earnings per common share was $2.19 for the six months ended September 30, 2024, compared with $2.49 in the prior year. Non-GAAP diluted earnings per common share was $2.50 for the six months ended September 30, 2024, compared with $2.81 last year.

Balance Sheet Highlights

As of September 30, 2024, cash and cash equivalents decreased to $187.5 million from $253.0 million as of March 31, 2024, due to the acquisition of Bailiwick Services, LLC, repurchases of our common stock, and working capital needs. Inventory decreased 32.8% to $93.9 million as of September 30, 2024, compared with $139.7 million as of March 31, 2024. Total stockholders' equity as of September 30, 2024 was $947.0 million, compared with $901.8 million as of March 31, 2024. Total shares outstanding were 26.8 million as of September 30, 2024, and 27.0 million as of March 31, 2024.

Fiscal Year Guidance

Fiscal year 2025 net sales are now expected to be similar to fiscal year 2024. The adjusted EBITDA range is now expected to be $195 million to $205 million. ePlus 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 or interest income and share-based compensation, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to the ePlus' results computed in accordance with GAAP.  Accordingly, ePlus is unable to provide a reconciliation of GAAP net earnings to adjusted EBITDA for the full year 2025 forecast.

Summary and Outlook 

"While we've seen some softening in enterprise demand due to prior absorption of purchases and global economic uncertainty, our outlook continues to reflect our prioritized investments in key high-growth categories such as AI, security and related software and services to drive long-term sustainable growth.  Our customer relationships are strong and their feedback for our AI Ignite offering reinforces our view that clients are at the early stage of adoption for these solutions. We are well positioned to serve this emerging demand, and over the longer term, our strong balance sheet supports our ability to build on the success that we have achieved over the past several years," concluded Mr. Marron.

Recent Corporate Developments/Recognitions

In the second quarter of its 2025 fiscal year, ePlus:

• Achieved renewal of the Cisco Environmental Sustainability Specialization.
• Acquired Bailiwick Services, LLC.
• Announced Storage-as-a-Service Leveraging NetApp.

Conference Call Information

ePlus will hold a conference call and webcast at 4:30 p.m. ET on November 12, 2024:

Date:	November 12, 2024
Time:	4:30 p.m. ET
Audio Webcast (Live & Replay):	https://events.q4inc.com/attendee/569325154
Live Call:	(888) 596-4144 (toll-free/domestic)
	(646) 968-2525 (international)
Archived Call:	(800) 770-2030 (toll-free/domestic)
	(609) 800-9909 (international)
Conference ID:	5394845# (live call and replay)

A replay of the call will be available approximately two hours after the call through November 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 is a customer-first, services-led, and results-driven industry leader offering transformative technology solutions and services to provide the best customer outcomes. Offering a full portfolio of solutions, including artificial intelligence, security, cloud and data center, networking, and collaboration, as well as managed, consultative and professional services, ePlus works closely with organizations across many industries to successfully navigate business challenges. With a long list of industry-leading partners and more than 2,300 employees, our expertise has been honed over more than three decades, giving us specialized yet broad levels of experience and knowledge. ePlus is headquartered in Virginia, with locations in the United States, United Kingdom, 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, X, 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. Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, exposure to fluctuation in foreign currency rates, interest rates, and inflation, including as a result of national and international political instability fostering uncertainty and volatility in the global economy, which may cause increases in our costs and wages and our ability to increase prices to our customers, negative impacts to the arrangements that have pricing commitments over the term of an agreement and/or the loss of key lenders or constricting credit markets as a result of changing interest rates, which may result in adverse changes in our results of operations and financial position; significant adverse changes in, reductions in, or loss of one or more of our larger volume customers or 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; our ability to remain secure during a cybersecurity attack or other information technology ("IT") outage, including disruptions in our, our vendors or other third party's IT systems and data and audio communication networks; 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 and appropriately providing required notice and disclosure of cybersecurity incidents when and if necessary; ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely and our ability to adequately train our personnel to prevent a cyber event; the possibility of a reduction of vendor incentives provided to us; our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel by recruiting and retaining highly skilled, competent personnel, and vendor certifications; risks relating to use or capabilities of artificial intelligence ("AI") including social and ethical risks; our ability to manage a diverse product set of solutions, including AI products and services, in highly competitive markets with a number of key vendors; changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service ("IaaS"), software as a service ("SaaS"), platform as a service ("PaaS"), and AI; supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling customer orders, or increase our need for working capital, or delay 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; our inability to identify acquisition candidates, perform sufficient due diligence prior to completing an acquisition, successfully integrate a completed acquisition, or identify an opportunity for or successfully complete a business disposition, may affect our earnings; our ability to raise capital, maintain or increase as needed our lines of credit with vendors or our floor plan facility, obtain debt for our financing transactions, or the effect of those changes on our common stock price; 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 either as a result of new information, future events or otherwise, except as required by applicable U.S. securities law.

ePlus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
		September 30, 2024		March 31, 2024
ASSETS
Current assets:
Cash and cash equivalents		$187,528		$253,021
Accounts receivable—trade, net		587,998		644,616
Accounts receivable—other, net		76,102		46,884
Inventories		93,857		139,690
Financing receivables—net, current		136,357		102,600
Deferred costs		61,874		59,449
Other current assets		58,663		27,269
Total current assets		1,202,379		1,273,529
Financing receivables and operating leases—net		90,561		79,435
Deferred tax asset		5,633		5,620
Property, equipment and other assets		104,081		89,289
Goodwill		203,233		161,503
Other intangible assets—net		94,167		44,093
TOTAL ASSETS		$1,700,054		$1,653,469
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accounts payable		$281,927		$315,676
Accounts payable—floor plan		115,660		105,104
Salaries and commissions payable		45,163		43,696
Deferred revenue		143,334		134,596
Non-recourse notes payable—current		28,970		23,288
Other current liabilities		34,868		34,630
Total current liabilities		649,922		656,990
Non-recourse notes payable—long-term		9,723		12,901
Other liabilities		93,412		81,799
TOTAL LIABILITIES		753,057		751,690
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         authorized; 26,798 outstanding at September 30, 2024 and         26,952 outstanding at March 31, 2024		276		274
Additional paid-in capital		187,330		180,058
Treasury stock, at cost, 750 shares at September 30, 2024 and
447 shares at March 31, 2024		(47,461)		(23,811)
Retained earnings		801,627		742,978
Accumulated other comprehensive income—foreign currency
translation adjustment		5,225		2,280
Total Stockholders' Equity		946,997		901,779
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$1,700,054		$1,653,469

 

ePlus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Net sales
Product	$411,505		$516,609		$877,854		$1,023,265
Services	103,667		71,002		181,856		138,521
Total	515,172		587,611		1,059,710		1,161,786
Cost of sales
Product	301,436		398,234		661,593		787,138
Services	65,745		45,012		115,645		88,010
Total	367,181		443,246		777,238		875,148
Gross profit	147,991		144,365		282,472		286,638
Selling, general, and administrative	98,971		92,652		192,579		182,950
Depreciation and amortization	5,765		5,630		10,584		10,422
Interest and financing costs	537		1,220		1,122		2,071
Operating expenses	105,273		99,502		204,285		195,443
Operating income	42,718		44,863		78,187		91,195
Other income (expense), net	579		117		2,652		307
Earnings before taxes	43,297		44,980		80,839		91,502
Provision for income taxes	11,987		12,316		22,190		24,991
Net earnings	$31,310		$32,664		$58,649		$66,511
Net earnings per common share—basic	$1.18		$1.23		$2.20		$2.50
Net earnings per common share—diluted	$1.17		$1.22		$2.19		$2.49
Weighted average common shares outstanding—basic	26,567		26,624		26,604		26,588
Weighted average common shares outstanding—diluted	26,676		26,679		26,750		26,659

 

Technology Business
	Three Months Ended September 30,						Six Months Ended September 30,
	2024		2023		Change		2024		2023		Change
	(in thousands)						(in thousands)
Net sales
Product	$389,613		$500,937		(22.2 %)		$846,925		$999,103		(15.2 %)
Professional services	61,900		38,270		61.7 %		99,179		73,826		34.3 %
Managed services	41,767		32,732		27.6 %		82,677		64,695		27.8 %
Total	493,280		571,939		(13.8 %)		1,028,781		1,137,624		(9.6 %)
Gross profit
Product	89,359		104,749		(14.7 %)		187,864		216,140		(13.1 %)
Professional services	25,583		15,796		62.0 %		41,038		30,520		34.5 %
Managed services	12,339		10,194		21.0 %		25,173		19,991		25.9 %
Total	127,281		130,739		(2.6 %)		254,075		266,651		(4.7 %)
Selling, general, and administrative	94,050		88,593		6.2 %		184,134		175,693		4.8 %
Depreciation and amortization	5,765		5,602		2.9 %		10,584		10,366		2.1 %
Interest and financing costs	-		661		(100.0 %)		-		1,211		(100.0 %)
Operating expenses	99,815		94,856		5.2 %		194,718		187,270		4.0 %
Operating income	$27,466		$35,883		(23.5 %)		$59,357		$79,381		(25.2) %
Gross billings	$808,229		$856,495		(5.6 %)		$1,641,937		$1,698,465		(3.3) %
Adjusted EBITDA	$36,804		$44,496		(17.3 %)		$76,305		$95,445		(20.1) %
Technology Business Gross Billings by Type
	Three Months Ended September 30,						Six Months Ended September 30,
	2024		2023		Change		2024		2023		Change
	(in thousands)						(in thousands)
Cloud	$195,852		$200,637		(2.4 %)		$437,126		$459,561		(4.9 %)
Networking	219,797		311,671		(29.5 %)		501,325		588,316		(14.8 %)
Security	163,565		143,340		14.1 %		315,448		290,683		8.5 %
Collaboration	46,717		51,770		(9.8 %)		79,693		73,931		7.8 %
Other	72,545		78,571		(7.7 %)		117,137		148,332		(21.0 %)
Product gross billings	698,476		785,989		(11.1 %)		1,450,729		1,560,823		(7.1 %)
Service gross billings	109,752		70,506		55.7 %		191,207		137,642		38.9 %
Total gross billings	$808,228		$856,495		(5.6 %)		$1,641,936		$1,698,465		(3.5 %)
Technology Business Net Sales by Type
	Three Months Ended September 30,						Six Months Ended September 30,
	2024		2023		Change		2024		2023		Change
	(in thousands)						(in thousands)
Cloud	$121,336		$135,068		(10.2 %)		$258,567		$307,112		(15.8 %)
Networking	186,776		268,636		(30.5 %)		421,516		513,824		(18.0 %)
Security	41,209		51,886		(20.6 %)		89,214		97,682		(8.7 %)
Collaboration	17,988		27,083		(33.6 %)		38,887		40,039		(2.9 %)
Other	22,304		18,264		22.1 %		38,741		40,446		(4.2 %)
Total product	389,613		500,937		(22.2 %)		846,925		999,103		(15.2 %)
Professional services	61,900		38,270		61.7 %		99,179		73,826		34.3 %
Managed services	41,767		32,732		27.6 %		82,677		64,695		27.8 %
Total net sales	$493,280		$571,939		(13.8 %)		$1,028,781		$1,137,624		(9.6 %)
Technology Business Net Sales by Customer End Market
	Three Months Ended September 30,						Six Months Ended September 30,
	2024		2023		Change		2024		2023		Change
	(in thousands)						(in thousands)
Telecom, Media, & Entertainment	$108,870		$124,306		(12.4 %)		$226,423		$265,641		(14.8 %)
Technology	54,988		110,948		(50.4 %)		164,094		184,351		(11.0 %)
SLED	97,687		94,906		2.9 %		189,783		204,311		(7.1 %)
Healthcare	78,235		72,022		8.6 %		153,515		158,678		(3.3 %)
Financial Services	34,759		69,885		(50.3 %)		84,484		135,575		(37.7 %)
All other	118,741		99,872		18.9 %		210,482		189,068		11.3 %
Total net sales	$493,280		$571,939		(13.8 %)		$1,028,781		$1,137,624		(9.6 %)
Financing Business Segment
	Three Months Ended September 30,						Six Months Ended September 30,
	2024		2023		Change		2024		2023		Change
	(in thousands)						(in thousands)
Portfolio earnings	$4,864		$3,339		45.7 %		$9,025		$6,412		40.8 %
Transactional gains	14,502		6,949		108.7 %		15,795		8,228		92.0 %
Post-contract earnings	2,105		5,038		(58.2 %)		5,420		8,672		(37.5 %)
Other	421		346		21.7 %		689		850		(18.9 %)
Net sales	21,892		15,672		39.7 %		30,929		24,162		28.0 %
Gross profit	20,710		13,626		52.0 %		28,397		19,987		42.1 %
Selling, general, and administrative	4,921		4,059		21.2 %		8,445		7,257		16.4 %
Depreciation and amortization	-		28		(100.0 %)		-		56		(100.0 %)
Interest and financing costs	537		559		(3.9 %)		1,122		860		30.5 %
Operating expenses	5,458		4,646		17.5 %		9,567		8,173		17.1 %
Operating income	$15,252		$8,980		69.8 %		$18,830		$11,814		59.4 %
Adjusted EBITDA	$15,319		$9,072		68.9 %		$18,961		$12,002		58.0 %

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 September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Consolidated
Net earnings	$31,310		$32,664		$58,649		$66,511
Provision for income taxes	11,987		12,316		22,190		24,991
Share based compensation	2,597		2,414		5,452		4,619
Acquisition related expenses	1,043		-		1,043		-
Interest and financing costs	-		661		-		1,211
Depreciation and amortization [1]	5,765		5,630		10,584		10,422
Other (income) expense, net [2]	(579)		(117)		(2,652)		(307)
Adjusted EBITDA	$52,123		$53,568		$95,266		$107,447
Technology Business Segments
Operating income	$27,466		$35,883		$59,357		$79,381
Share based compensation	2,530		2,350		5,321		4,487
Depreciation and amortization [1]	5,765		5,602		10,584		10,366
Acquisition related expenses	1,043		-		1,043		-
Interest and financing costs	-		661		-		1,211
Adjusted EBITDA	$36,804		$44,496		$76,305		$95,445
Financing Business Segment
Operating income	$15,252		$8,980		$18,830		$11,814
Share based compensation	67		64		131		132
Depreciation and amortization [1]	-		28		-		56
Adjusted EBITDA	$15,319		$9,072		$18,961		$12,002
	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
GAAP: Earnings before taxes	$43,297		$44,980		$80,839		$91,502
Share based compensation	2,597		2,414		5,452		4,619
Acquisition related expenses	1,043		-		1,043		-
Acquisition related amortization expense [3]	4,447		4,023		8,197		7,492
Other (income) expense [2]	(579)		(117)		(2,652)		(307)
Non-GAAP: Earnings before provision for income taxes	50,805		51,300		92,879		103,306
GAAP: Provision for income taxes	11,987		12,316		22,190		24,991
Share based compensation	730		665		1,529		1,272
Acquisition related expenses	293		-		293		-
Acquisition related amortization expense [3]	1,246		1,106		2,293		2,058
Other (income) expense, net [2]	(163)		(32)		(743)		(84)
Tax benefit (expense) on restricted stock	184		79		492		216
Non-GAAP: Provision for income taxes	14,277		14,134		26,054		28,453
Non-GAAP: Net earnings	$36,528		$37,166		$66,825		$74,853
	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
GAAP: Net earnings per common share – diluted	$1.17		$1.22		$2.19		$2.49
Share based compensation	0.07		0.07		0.15		0.13
Acquisition related expenses	0.03		-		0.03		-
Acquisition related amortization expense [3]	0.12		0.11		0.22		0.20
Other (income) expense, net [2]	(0.02)		-		(0.07)		-
Tax benefit (expense) on restricted stock	(0.01)		-		(0.02)		(0.01)
Total non-GAAP adjustments – net of tax	0.19		0.18		0.31		0.32
Non-GAAP: Net earnings per common share – diluted	$1.36		$1.40		$2.50		$2.81

[1] Amount consists of depreciation and amortization for assets used internally.

[2] 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.

FAQ

What were ePlus's net sales for Q2 Fiscal Year 2025?

ePlus reported net sales of $515.2M for Q2 Fiscal Year 2025, a decrease of 12.3% year-over-year.

How did ePlus's service revenues perform in Q2 Fiscal Year 2025?

Service revenues increased by 46% to $103.7M in Q2 Fiscal Year 2025.

What was ePlus's diluted EPS for Q2 Fiscal Year 2025?

ePlus reported a diluted EPS of $1.17 for Q2 Fiscal Year 2025, a decrease of 4.1% from the previous year.

How did ePlus's net earnings perform in H1 Fiscal Year 2025?

Net earnings decreased by 11.8% to $58.6M in H1 Fiscal Year 2025.

What is ePlus's FY2025 net sales guidance?

ePlus expects FY2025 net sales to be similar to FY2024.