ePlus Inc. Reports Operating Results (10-Q)
Inc. (PLUS) filed Quarterly Report for the period ended 2010-09-30.
Inc. has a market cap of $169.4 million; its shares were traded at around $21 with a P/E ratio of 11.4 and P/S ratio of 0.2. Eplus
Inc. had an annual average earning growth of 3.3% over the past 10 years.PLUS is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:During the three months ended September 30, 2010, total revenue increased 35.8% to $234.5 million while total costs and expenses increased 35.1% to $221.4 million, compared to the same period last year. Net earnings increased 58.3% to $7.9 million, as compared to the same period last fiscal year. During the six months ended September 30, 2010, total revenue increased 30.2% to $423.5 million while total costs and expenses increased 28.6% to $402.6 million. Total revenue included patent settlement income of $125 thousand and $3.4 million for both the three and six months ended September 30, 2010 and 2009, respectively. The increase in revenue was primarily driven by strong sales in the technology segment. The economy appears to be stabilizing somewhat and we have had sequential revenue growth over the past six quarters.
At September 30, 2010, our open orders from customers was $32.3 million, compared to $62.0 million at June 30, 2010, and $46.2 million at September 30, 2009, as previously constrained products were shipped from our vendors. In addition, we had deferred revenue of $32.8 million at September 30, 2010, compared to $14.8 million at September 30, 2009, which related to bundled hardware and service arrangements that were not completed by the end of the quarter. We will recognize revenue on multiple deliverable revenue arrangements when the services are completed.
Lease revenues. Lease revenues can be broadly categorized into two types: 1) income generated from the lease portfolio, including income from direct-financing leases and rent from operating leases, and 2) other lease-related income, including profit from transfer of financial assets, sales of leased assets to lessees and end of lease term income. Lease revenues decreased $325 thousand, or 3.7% to $8.6 million for the three months ended September 30, 2010, compared to $8.9 million during the same period in the prior year. The decrease is primarily driven by lower sales of leased assets to lessees and transfer of financial assets, partially offset by increases in earnings from direct financing leases. Lease revenues increased $1.7 million or 10.2% to $18.7 million for the six months ended September 30, 2010, compared to the same period last year. The increase was primarily due to an increase of $750 thousand in profit from the transfer of financial assets, which satisfied the conditions for sale accounting in accordance with Transfers and Servicing in the Codification, and increase in earnings from direct financing leases of about $1.0 million.
At September 30, 2010, we had $124.7 million of investment in leases on our balance sheet compared to $153.6 million at March 31, 2010, a decrease of $28.8 million or 18.8%. The decrease in lease portfolio was primarily due to the transfer of two leases of approximately $32.0 million, which qualified as a sale in accordance with Transfers and Servicing, partially offset by the addition of new leases. The profit from the transfer of these financial assets is reported as a component of our lease revenues, while the carrying value of these leases is reduced from our lease portfolio. We retain the residual value of the equipment during these types of sales.
Patent license and settlement income. As previously disclosed, during the year ended March 31, 2010, we entered into settlement and license agreements with three defendants wherein the complaint was dismissed with prejudice and each defendant was granted a license in specified ePlus patents, which resulted in total payments of $3.65 million. These settlement agreements were the result of a lawsuit filed against four defendants alleging that they used or sold products, methods, processes, services and/or systems that infringe on certain of our patents. As of September 30, 2010, we received payment of the full amount of $3.65 million. During the three and six months ended September 30, 2009, we received $3.4 million of settlement agreement payments. We received payment of $125 thousand in February 2010 and the remaining payment of $125 thousand in September 2010. All payments have been recorded as Patent Settlement Income in our unaudited condensed consolidated statement of operations. For additional information, see Note 15, “Legal Settlement” and “Legal Proceedings” included elsewhere in this report.
Cost of sales, product and services. During the three months ended September 30, 2010, cost of sales, product and services increased 41.3% to $189.8 million, compared to $134.4 million during the same period last year. During the six months ended September 30, 2010, cost of sales, product and services increased 33.7% to $340.8 million compared to $254.9 million during the same period last year. These increases corresponded to the increase in sales of product and services in our technology sales business segment. Cost of sales, product and services is also affected by incentives from vendors, product mix and volume. Cost of sales, leased equipment was $1.1 million during the three and six months ended September 30, 2010, compared to $800 thousand and $2.2 million during the same periods last year.
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