HERNDON, VA - February 6, 2012
- ePlus inc. (Nasdaq NGS: PLUS
) today announced financial results for its third quarter ended December 31, 2011. Revenues for the third quarter totaled $272.6 million, an increase of $42.6 million or 18.5%, compared to $230.0 million in the same quarter last fiscal year. Total costs and expenses increased 19.2% to $258.2 million, as compared to $216.7 million the prior year's quarter. Net earnings increased 15.8% to $8.7 million, or $1.10 per diluted share, as compared to $7.5 million, or $0.89 per diluted share, in the same quarter last fiscal year.The Company's technology sales business segment, which comprises more than 96% of total revenue, had a 3% increase in year-over-year pre-tax earnings for the quarter as a result of strong revenue growth, which offset both a decline in gross margin and the Company's continuing investment in headcount and related costs. These investments relate to the Company's acquisitions and efforts to expand its geographic footprint and solution offerings. The financing business segment increased revenues by 9.9% and increased pre-tax earnings by 25.7% compared to the same quarter last year due to an increase in net gains on sales of leases, notes, and leased equipment.
For the nine months ended December 31, 2011, total revenue increased 14.6% to $747.0 million, and total costs and expenses increased 15.6% to $714.4 million. Net earnings were $19.5 million for the nine months, or $2.35 per diluted share, a decrease of 3.3%, as compared to $20.2 million, or $2.41 per diluted share during the nine months ended December 31, 2010.
Phillip G. Norton, ePlus' chairman, president, and CEO stated, "We are pleased to see the investments the Company made in the past year starting to drive positive results. On a sequential basis, gross margins on sales of products and services improved by almost 1%. We continue to execute our growth strategy by aggressively investing in new employees, geographies, and product offerings, while broadening our solution set and making selective acquisitions. We are building recurring revenue streams through the development of multi-faceted managed services, and utilizing our strengths in staff augmentation, video, collaboration, and security to capture the increased demand for advanced IT solutions."
Mr. Norton continued, "Over the past 15 months, including the VantiCore acquisition completed in January 2012, we acquired three companies which created three new branches. The majority of the acquired staff is customer-facing and revenue-producing sales and engineering positions. These acquisitions added more than 400 customers, creating additional cross-selling opportunities as we leverage our full range of products and solutions into these new accounts. We believe that our value-added solutions focus, strong balance sheet, and seasoned management team will enable us to continue to gain market share."
On January 6, 2012, ePlus acquired the operating business of VantiCore, LLC, a Cisco-focused solutions provider headquartered in New Hampshire. With expertise in Advanced Unified Communications (UC), Collaboration, and Customer Contact Center solutions, ePlus gains increased market presence in New England as well as enhanced Cisco engineering delivery capabilities to complement its existing UC, Data Center, and Managed Services practices. VantiCore's capabilities are a strong complement to ePlus' existing suite of integrated offerings and top Cisco certifications. With the acquisition of VantiCore, ePlus is better positioned to provide the highest level of service to customers in Massachusetts, Vermont, Maine, and New Hampshire.
On May 23, 2011, the trial court in the Company's litigation against Lawson Software, Inc. issued a permanent injunction, ordering Lawson and its successors to immediately stop selling and servicing products relating to its electronic procurement systems that infringe ePlus' patents. The injunction also prevents Lawson from any ongoing or future maintenance, training, or installation of its infringing software products. Lawson has appealed the ruling; however, its requests that the injunction be stayed have been denied. Additionally, we have filed a motion seeking a finding that Lawson is in contempt of the injunction; we anticipate that an evidentiary hearing on that motion will be held the week of February 27, 2012, and oral arguments will be held in the end of April 2012.
Stockholders' Equity and Share Repurchase Plan Results
As of December 31, 2011, stockholders' equity was $216.5 million, or $26.98 per share. Cash and cash equivalents decreased $21.7 million, or 28.6%, to $54.1 million at December 31, 2011, compared to March 31, 2011. For the nine months ended December 31, 2011, ePlus repurchased 705,403 shares of our common stock at an average cost of $25.68 per share for a total purchase price of $18.1 million.
The Company manages its business in two segments, the technology sales business segment and the financing business segment. The technology sales business segment sells information technology equipment and software and related services primarily to corporate customers on a nationwide basis, and also provides Internet-based business-to-business supply chain management solutions for information technology and other operating resources. The financing business segment offers lease-financing solutions to corporations and governmental entities nationwide.
Technology Sales Business Segment
The results of operations for the technology sales business segment for the three months ended December 31, 2011 and 2010 were as follows (in thousands):