ePlus (PLUS) Tops Q4 EPS by 29c, Revenues Beat

ePlus (NASDAQ: PLUS) reported Q4 EPS of $1.24, $0.29 better than the analyst estimate of $0.95. Revenue for the quarter came in at $366.5 million versus the consensus estimate of $354.6 million.

Fourth Quarter Ended March 31, 2020

• Net sales increased 12.6% to $366.5 million; technology segment net sales increased 12.8% to $353.3 million; service revenues increased 8.6% to $48.9 million; financing segment net sales increased 7.8% to $13.2 million.
• Adjusted gross billings increased 8.8% to $514.1 million.
• Consolidated gross profit increased 13.0% to $91.8 million.
• Consolidated gross margin was 25.1%, an increase of 10 basis points.
• Net earnings decreased 12.0% to $13.2 million, reflecting $5.6 million of other income last year.
• Adjusted EBITDA increased 20.0% to $23.5 million.
• Diluted earnings per share decreased 11.6% to $0.99. Non-GAAP diluted earnings per share increased 20.4% to $1.24.

Management Comment

“Fourth quarter results represented a strong finish to fiscal 2020, despite an impact from COVID-19. We achieved double-digit growth in revenue, gross profit and adjusted EBITDA, reflecting our ongoing focus on IT solutions that are in high demand,” said Mark Marron, President and Chief Executive Officer.

“For fiscal 2020, net sales increased by 15.7% year-over-year, with strong contributions from both segments. Services grew by 29% in fiscal 2020, reflecting greater demand for our expertise in assisting customers in designing, configuring, managing, and staffing their IT infrastructures. Adjusted gross billings for security products and services increased over 15% year-on-year, and revenue grew 35% in our financing segment. Gross margin of 24.6% expanded 50 basis points, driving both operating leverage and adjusted EBITDA growth.

“With the onset of the COVID-19 health crisis, we prioritized the health and safety of our employees, customers, and partners, and quickly activated business continuity plans to ensure ePlus remained fully operational. We implemented protocols to support our remote workforce and provided critical on-site staffing and engineering services in conformance with local ordinances and our customers’ COVID-19 requirements. The transition was smooth and accentuates our agile work environment. I am very proud of the tremendous effort and dedication shown by the ePlus team to transition our workforce, and provide exceptional service during a time of need by our customers.

“The financial impact of COVID-19 during the quarter was modest, as delayed or cancelled orders were mostly offset by new pandemic-related revenues, however the future is difficult to predict given the substantial impact of the pandemic on the overall economy. We have minimal exposure to the hardest-hit industries, and a proven ability to pivot to meet customers’ new COVID-19-driven requirements such as enabling remote workers, strengthening network and data center capabilities, and increasing security, especially in the cloud. With a strong balance sheet, we are able to meet our customers’ needs and execute opportunistic initiatives to support our growth strategy.

Summary and Outlook

“Fiscal 2020 was a year of strong growth for ePlus, and we are well positioned in the marketplace to provide the digital infrastructure, cloud, and security solutions required by our customers. We continue to execute on our strategy of expanding services, including our managed and helpdesk services, and our cloud hosted offerings to strengthen our annuity-type revenues. Our industry-leading gross margin demonstrates the value of our service offerings in today’s dynamic marketplace.

“ePlus entered this challenging period with a strong balance sheet and a resilient business model. We continue to innovate and develop our offerings which support remote workforces while securing and optimizing customer’s network, data, cloud, and collaboration infrastructure, and we remain well-positioned to support the next phase of IT evolution,” Mr. Marron concluded.

For earnings history and earnings-related data on ePlus (PLUS) click here.

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