ePlus Inc. (NASDAQ: PLUS) stock lost over 12.9% on May 23rd, 2019 (As of 10:53 am GMT-4; Source: Google finance) as the company posted lower than expected results for the fourth quarter of FY 19. Net earnings fell by 69.2% to $15.1 million. Adjusted EBITDA fell by 16.0% to $19.6 million, from $23.3 million. For FY19, the company’s consolidated gross margin expanded 130-basis points to 24.1%, due to 15.4% increase in higher-margin services revenues, which accounted for 10.9% of total annual revenue. Services have grown at a CAGR of 24% over the last three years.
PLUS in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.03, missing the analysts’ estimates for the adjusted earnings per share of $1.22, as per Zacks Consensus Estimate. The company had reported 1.3 percent decline in the adjusted revenue to $325.43 million in the fourth quarter of FY 19, missing the analysts’ estimates for revenue by 9.01%. The revenue declined mainly due to a larger portion of the sales that were recognized on a net basis.
Technology segment net sales declined by 1.9% to $313.2 million, from $319.1 million. Service revenues rose by 22.8% to $45.0 million, from $36.6 million. Service revenues includes revenues from professional services, managed services, and staff augmentation. Adjusted gross billings rose by 6.8% to $472.4 million due, in part, to the acquisition of SLAIT Consulting, LLC in January 2019 as well as organic growth. Financing segment net sales grew 14.2% to $12.3 million, from $10.7 million, due to a rise in transactional gains. Consolidated gross profit declined 0.4% to $81.3 million, from $81.6 million. Consolidated gross margin expanded 30 basis points to 25.0%, compared with 24.7% last year, on the back of a shift in mix towards third-party maintenance and software subscriptions, as well as higher services revenues.
Operating expenses rose 5.8% to $66.8 million, from $63.1 million, mainly on back of an rise in healthcare costs and additional expenses associated with the acquisition and operation of SLAIT Consulting, LLC in January 2019. Consolidated operating income declined by 21.8% to $14.5 million.
Additionally, as of March 31, 2019, PLUS had cash and cash equivalents of $79.8 million, compared with $118.2 million as of March 31, 2018. The decline in cash and cash equivalents was mainly driven by the purchase of SLAIT Consulting, LLC, increases in working capital in the technology segment, investments in the financing portfolio, and share repurchases. Total stockholders’ equity was $424.3 million as of March 31, 2019, compared with $372.6 million as of March 31, 2018.